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{ "title": [ "", "Overview", "Funding Issues", "Authorization Status", "Ongoing Funding Issues", "Infrastructure Issues", "The Northeast Corridor Commission", "NEC Improvement Plans", "Amtrak Gateway Program", "The Northeast Corridor Commission's Capital Investment Plan", "NEC FUTURE", "Washington Union Station Redevelopment Proposal", "Fleet Replacement Strategy", "Train Station Compliance with Americans with Disabilities Act", "Positive Train Control Implementation", "Operational Issues", "Ridership Levels", "Operating Efficiency", "Passenger Load Factor", "Operating Ratio", "Amtrak's On-Time Performance", "Amtrak's Terms of Access to Freight Track", "PRIIA Initiatives to Improve On-Time Performance", "Food and Beverage Service", "Restoration of Amtrak Service Along Gulf Coast", "Privatization of Intercity Passenger Rail Services", "All Aboard Florida", "Texas Central High Speed Railway", "XpressWest Southern California to Las Vegas", "California High-Speed Rail Project", "Appendix. Federal Funding for Amtrak" ], "paragraphs": [ "", "Amtrak—officially, the National Railroad Passenger Corporation—is the nation's primary provider of intercity passenger rail service. Amtrak is structured as a private company, but virtually all its shares are held by the U.S. Department of Transportation (DOT). Amtrak was created by Congress in 1970 to preserve a basic level of intercity passenger rail service, while relieving private railroad companies of the obligation to provide money-losing passenger service. Although created as a for-profit corporation, Amtrak has never made a profit; in this it resembles both the passenger rail experience of the private-sector companies that preceded it and of intercity passenger rail operators in many other countries. During the 47 years from 1971 to 2017, federal assistance to Amtrak amounted to approximately $81 billion in constant 2017 dollars (see Appendix , Table A-1 ).\nAmtrak's approximately 20,000 employees operate trains and maintain its infrastructure. It carries around 31 million passengers annually, providing slightly less than 1% of total U.S. intercity passenger miles traveled by common carrier (see Table 1 ). The company operates approximately 44 routes over 21,300 miles of track. Most of that track is owned by freight rail companies; Amtrak owns about 625 route miles. The primary section it owns—most of the Northeast Corridor (NEC)—includes some of the most heavily used segments of track in the nation. Amtrak also operates corridor routes (covering distances under 750 miles) and long-distance routes (over 750 miles in length). Most of its corridor routes are financially supported by states they serve. Amtrak also operates commuter service under contract with state and local commuter authorities in various parts of the country.", "Amtrak's expenses exceed its revenues each year. In FY2016, Amtrak's revenues totaled $3.2 billion, against expenses of $4.3 billion, for a net loss of $1.1 billion (see Table 2 ). That loss was covered by federal grants made to Amtrak by DOT. In recent years, Congress has typically divided Amtrak's grant into two categories: operating and capital grants. Roughly, the operating grant could be thought of as relating to Amtrak's annual cash loss, and the capital grant as relating to the depreciation of Amtrak's assets, as well as an amount for Amtrak debt repayments.\nAmtrak's federal funding is primarily provided within the DOT's appropriation. The Administration requests funding for Amtrak each year as part of its DOT budget request. Amtrak also submits a separate appropriation request directly to Congress each year; typically, that request is larger than the Administration request. Table 3 shows the difference in the requests that were submitted for FY2016.\nCongress changed the structure of federal grants to Amtrak in the Passenger Rail Reform and Investment Act of 2015 (Title XI of the Fixing America's Surface Transportation (FAST) Act; P.L. 114-94 ) . Previously, Congress had divided Amtrak funding into two pots, one for capital expenditures and one for operating costs. Starting in FY2017, the grants are divided between funding for Amtrak's NEC service (which is operationally self-sufficient but has billions of dollars in capital needs) and the rest of Amtrak's network (the National Network, which has modest capital needs but runs an operating deficit of several hundred million dollars). The change is intended to increase transparency of the costs of Amtrak's two major lines of business and eliminate cross-subsidization between them; operating profits from the NEC and state access payments for use of the NEC will be reinvested in that corridor, and passenger revenue, state payments, and federal grants for the National Network will be used for that account.", "Amtrak funding was authorized through FY2020 in the Passenger Rail Reform and Investment Act of 2015 (Title XI of the FAST Act, P.L. 114-94 ). This was the first time that it was included in the larger surface transportation act that authorizes highway and transit programs, fulfilling a longtime goal of Amtrak supporters. Amtrak's funding, however, is still drawn from the general fund, rather than from a transportation trust fund, and therefore it must still compete with other programs in the Transportation, Housing and Urban Development, and Related Agencies appropriations bill under the bill's overall limit on discretionary spending. Amtrak typically is appropriated less funding than is authorized, and funding Amtrak from a transportation trust fund likely would improve the odds that it receives the amount Congress authorized for it, as well as increasing the predictability of its future funding (see discussion of funding stability below). Table 4 shows the funding authorized and appropriated for Amtrak from FY2009 through FY2020.", "Amtrak is able to cover about three-fourths of its total costs from its revenues. That leaves a portion of its operating (i.e., cash) expenses—and virtually all of its capital expenses, including depreciation—to be covered by outside funding, primarily federal funding. The federal grants Amtrak receives have, in recent years, typically been enough to cover its annual losses, with small amounts left over for capital projects. Amtrak reports a backlog of capital maintenance of many billions of dollars, and says this backlog grows larger each year because the amount available for capital expenses is not enough to keep up with maintenance needs.\nThe stability, or predictability, of Amtrak's federal funding levels is a perennial issue. Roughly one-third of Amtrak's revenue comes from federal funding appropriated on a year-to-year basis by Congress. DOT's Inspector General has noted that the lack of long-term funding \"has significantly affected Amtrak's ability to maintain safe and reliable infrastructure and equipment, and increased its capital program's annual cost.\"\nCongressional authorizations for highway and transit programs are typically in the form of special budget authority (contract authority) drawn from a trust fund, which provides more predictable funding. There have been proposals to create a trust fund for Amtrak, in order to provide a greater level of financial stability. Such efforts have faced objections from some Members of Congress opposed to Amtrak receiving federal funding. There is also a practical challenge to identify where the revenues for an Amtrak trust fund would come from. If such a trust fund were to be funded solely from a tax on Amtrak passengers, the tax would need to be roughly two-thirds of the current ticket cost, potentially reducing ridership.\nAnother potential funding source, the existing Highway Trust Fund, also has challenges, as the revenues flowing into the fund are far below the level required to maintain the existing level of federal highway and transit spending. The Highway Trust Fund has received several transfers of money from the general fund since 2008.", "Amtrak owned no infrastructure at the time of its creation. It was structured as a contracting agency, and Amtrak trains were operated by private railroads over tracks they owned.\nSeveral years later, as Congress was dealing with the bankruptcy of the Penn Central Railroad, Congress decided to give Amtrak much of the trackage owned by the Penn Central in the 450-mile corridor running from Washington, DC, north through Philadelphia and New York City to Boston, along with shorter lines serving Harrisburg, PA, and Springfield, MA. The line running from Washington to Boston, known as the Northeast Corridor (NEC), traverses 8 states and hosts 2,200 daily trains carrying over 800,000 passengers (mostly on commuter trains). The line includes more than 200 bridges, tunnels dating to the 1870s, and electric traction systems relying on 1930s-era components. While Amtrak owns the vast majority of the right-of-way and track, there are sections owned by state governments and commuter rail agencies. In addition to Amtrak, eight commuter rail agencies operate on the NEC, as well as four freight railroads.\nThe NEC is Amtrak's flagship corridor, with its fastest service. The premium-fare Acela service attains speeds of up to 125 miles per hour on the southern section between Washington, DC, and New York City, and up to 150 mph on the northern section between New York City and Boston. But those high speeds are possible only in limited stretches: the average speed of the Acela service is around 70 to 80 miles per hour.\nTravel time improvements on the NEC likely would be valuable. A 2008 analysis by the DOT Inspector General estimated that reducing the New York-Washington travel time from nearly three to two and a half hours and the New York-Boston travel time from over three and a half to three hours would result in an average of $500 million in annual benefits (in 2006 dollars). Most of that was estimated to come from air passengers shifting to the train as its travel times shrank. The impact might be less now, as Amtrak's share of the combined air/rail market in the Northeast has increased since that report was written.", "Recognizing that improvements to the NEC would require collaboration between many groups, in the Passenger Rail Investment and Improvement Act of 2008 (PRIIA; Division B, P.L. 110-432 ) Congress directed DOT to create a Northeast Corridor Infrastructure and Operations Advisory Commission. The commission is made up of members from each of the states (including the District of Columbia) traversed by the NEC, plus representatives of DOT, Amtrak, and (as nonvoting members) freight rail companies that operate on the NEC.\nThe commission's purpose is to promote cooperation and planning for rail operations and improvements on the NEC. Toward this end, the commission has published several reports on the infrastructure needs of the NEC. Also, the commission was directed to develop a formula for determining and allocating costs, revenues, and compensation for NEC commuter rail operators that use Amtrak facilities or services or that provide such facilities or services to Amtrak to ensure there is no cross-subsidization among commuter, intercity, and freight services on the NEC. In January 2015, the commission published a policy to allocate the annual operating costs and normal asset replacement on the NEC. This policy does not address the capital maintenance backlog, which the commission has estimated at around $38 billion.", "Portions of the NEC date from before the Civil War. In addition to the advanced age of much of the NEC infrastructure, its alignment was laid out at a time when the top speed of trains was much less than is possible today. These two factors have complicated Amtrak's efforts to improve service on the NEC. Amtrak has identified three general issues:\na large backlog of capital projects needed to bring the railway to a state of good repair; limits on the number of trains that can operate on the NEC, especially due to bottlenecks at tunnels; and increasing demands for service, including service by commuter operators.\nThere are three plans for improvements to the NEC: Amtrak's Gateway Program, a set of projects between Newark, NJ, and New York; the Northeast Corridor Commission's Capital Investment Plan; and the Federal Railroad Administration's (FRA's) NEC FUTURE plan for the entire corridor.", "Amtrak says that no further significant expansion of intercity service on the NEC is possible without increasing capacity into and through Manhattan. Also, the reliability of that service is threatened due to the aftereffects of the flooding of the rail tunnel under the Hudson River during Hurricane Sandy in 2012. The Gateway Program is a package of eight projects proposed to increase both reliability and capacity (see Table 5 for a list of the projects and their status). The centerpiece is a new two-track tunnel under the Hudson River, supplementing the current tunnel. The cost estimates for the entire program of work are in the range of $24 billion to $29 billion.\nMost parts of the Gateway Program are currently in the planning stage. For the Hudson Tunnel project, FRA and New Jersey Transit published a Draft Environmental Impact Statement in July 2017.", "The commission publishes a five-year investment plan (currently for the period FY2018-2022). The plan identifies the top 10 unfunded priority projects (3 of which are included in Amtrak's Gateway Program); it calculates the state-of-good-repair backlog to be $38 billion, and calls for $29 billion in work over the next 5 years to address that backlog, $19 billion more than the commission sees as being available under current arrangements.", "FRA is leading a program called NEC FUTURE, which developed a long-range plan to bring the infrastructure to a state of good repair and make improvements to accommodate faster and more frequent passenger service through the year 2040. Public meetings were held in the fall of 2012, a preliminary alternatives evaluation was published in 2014, and FRA issued a Record of Decision describing the Selected Alternative for development in July 2017.\nThe Selected Alternative includes a range of possible improvements to the NEC, represented at a conceptual level. The estimated cost of these improvements is $121 billion to $153 billion (in 2014 dollars). Improvements to the NEC based on this plan will depend on the decisions of Amtrak and commuter railroads and the pertinent states; these entities would be responsible for implementing and securing funding for individual projects. The individual projects will generally require a Tier 2 Environmental Impact Statement as part of their planning and permitting process.\nThe next step in this long-range planning process is for FRA and the NEC Commission to complete a service development plan, which would prioritize improvements to the NEC.", "Union Station in Washington, DC, is the second-busiest station in Amtrak's system, with 100,000 passenger boardings or alightings each day. Amtrak says that the station is operating over its capacity; during rush hours lines of Amtrak passengers waiting to board trains extend beyond the waiting areas, obstructing movement through the station. Also, the tracks and platforms are not in compliance with Americans with Disabilities Act (ADA) requirements or with life safety codes.\nAmtrak and the other transportation agencies using Union Station have proposed a redevelopment plan to address these problems. The plan envisions 4 phases of construction over a period of roughly 20 years. The first 3 phases, which focus on reconstruction of the station and increasing the capacity of the terminal, are estimated to cost around $7 billion (in 2012 dollars). While FRA prepares an Environmental Impact Statement for the station reconstruction, Amtrak has begun a much more modest $50 million modernization of its passenger concourse.", "Amtrak owns or leases more than 1,500 passenger cars, almost 400 locomotives, and 25 trainsets (in which locomotives and passenger cars stay together in a unit). The average age of Amtrak's passenger car equipment in 2015 was almost 31 years, the highest figure in its history, and considerably older than the average age (22 years) of the equipment it inherited from the private railroads in 1971.\nIn 2017, Amtrak finished replacing aging locomotives used on the NEC with 70 new electric locomotives from Siemens at a cost of $466 million. This is intended to increase the reliability of the NEC fleet. The purchase was financed by a $563 million loan from FRA under the Railroad Rehabilitation and Improvement Financing (RRIF) program (45 U.S.C. §821); that loan was paid off with part of the proceeds of a much larger RRIF loan to Amtrak in 2016. The primary purpose of that loan, for $2.45 billion, is the purchase of 28 Acela trainsets.\nAmtrak's plan to replace equipment used in parts of its network other than the NEC was published in 2012. At that time, Amtrak planned to purchase about 700 new single-level passenger cars between 2016 and 2022 (ordering about 100 per year) and about 500 bi-level cars between 2018 and 2022 (also ordering 100 per year). In its 2018 budget request, Amtrak notes that the funding needed to implement that fleet replacement plan was not received; \"Absent a new approach to funding the capital investment needs of intercity rail passenger service, the lack of adequate capital investment in fleet will at some point become a significant, perhaps the most significant factor, in what services are provided.\"\nAmtrak ordered 130 cars for long-distance trains at a cost of $298 million from CAF USA for delivery in 2013-2015. That schedule was missed. The current schedule has deliveries through 2020.\nFleet replacement raises several oversight issues for Congress, including the following:\nHigh costs due to lack of scale economies. Amtrak does not purchase enough equipment with enough frequency to establish a robust domestic manufacturing base. Section 305 of PRIIA attempted to address that by creating a mechanism to create standardized passenger railcar designs. The intent of this provision was to achieve economies of scale not only in the cars' manufacture, but also in repair and parts replacement. However, there is a risk that equipment standardization could retard development of innovative car designs and dampen competition among manufacturers. Lack of import competition. By law, passenger rail equipment must abide by certain domestic manufacturing requirements. Also, FRA safety standards put greater emphasis on crash survivability than crash avoidance compared to foreign standards. The need for bulkheads at the ends of cars generally makes U.S. equipment much heavier than foreign equipment, meaning that foreign car designs cannot simply be produced in U.S. plants. This likely increases Amtrak's cost to acquire equipment. Equipment lease arrangements. Much of Amtrak's rolling stock is owned by banks that can claim tax benefits (depreciation) while Amtrak rents the equipment from them. In Section 205 of PRIIA, Congress authorized the Secretary of the Treasury, in consultation with Amtrak and the Secretary of Transportation, to restructure Amtrak's capital leases. This authorization expired in October 2010. Under this authority, Amtrak restructured 13 capital leases, including sale and lease-back arrangements for its locomotive and passenger car fleet, at a cost of $420 million, but with ultimate savings of $152 million. The Amtrak Inspector General reported that 39 additional capital leases that could result in savings of $426 million, at a cost of $638 million, are still available if Congress were to extend the authorization to negotiate early buyout options. Also, it is unclear how well the remaining economic life of Amtrak's equipment corresponds with the length of its lease agreements, and therefore whether the lease agreements interfere with fleet replacement plans.", "The Americans with Disabilities Act of 1990 (ADA) required that intercity passenger rail stations be made usable by persons with disabilities no later than 2010. PRIIA directed Amtrak to produce a schedule for bringing all stations into compliance by the 2010 deadline. The legislation did not provide any specific funding for this purpose, authorizing \"such sums as may be necessary\" for the improvements.\nAmtrak's 2009 schedule for achieving full compliance estimated that it would take until 2015, 5 years past the statutory deadline, and cost $1.564 billion. According to Amtrak, a subsequent DOT rule on ADA compliance, issued in 2011, significantly delayed its plans for making its stations ADA-compliant because \"in order to ascertain whether a level boarding platform is required, a freight usage determination must first be made for every track adjacent to every platform at each station.\" In 2015, the Department of Justice found that Amtrak had violated the ADA by failing to make stations accessible. The department also found that Amtrak had incorrectly classified some stations as \"flag stop\" stations in an attempt to avoid having to make those stations accessible.\nAs of March 2017, Amtrak had determined that it had 517 stations, of which 512 were required to be ADA-accessible. Of those 512, Amtrak had determined that its responsibilities were\nsole ADA responsibility for 138 stations; shared ADA responsibility for 246 stations; and no ADA responsibility for 128 stations.\nThus, Amtrak had sole or shared responsibility for 384 stations. Of those, the following work tasks had been completed:\nland survey: 368 ADA assessment: 301 design: 99 construction awarded: 83 construction complete: 57\nThe basic challenge in making Amtrak trains accessible to individuals with disabilities is that the boarding platforms typically are not at the same height as the seating areas of the trains. One complicating factor is that the various models of Amtrak passenger cars do not have uniform seating area heights above the wheels. Another complicating factor is that most station platforms used by Amtrak are owned by freight railroads, which generally do not permit platforms higher than 8 inches above the top of the rails in order to prevent physical conflicts with the freight rail rolling stock. Consequently, in most stations where freight and passenger trains operate on the same track, it is difficult to provide wheelchair-accessible level boarding platforms.", "Section 104 of the Rail Safety Improvement Act of 2008 (Division A of P.L. 110-432 ) required that intercity passenger railroads, commuter railroads, and freight railroads that haul certain toxic or poisonous products install a \"positive train control\" (PTC) system by the end of 2015; Congress subsequently extended that deadline to December 31, 2018. The distinctive feature of PTC is that an automatic override system or a dispatcher from a remote location could slow a train or stop it in order to avoid a collision if the engineer fails to comply with a signal indication. The system relies on radio communications among a locomotive, track-side equipment, and a control center. PTC is intended to prevent accidents due to excessive train speed or conflicting train movements. As currently conceived, it will not address accidents caused by trespassers on railroad property, vehicles blocking tracks at grade crossings, or other factors.\nBefore enactment of Section 104, passenger and freight railroads were developing systems that could remotely control train movements, but there was no requirement that these systems be interoperable. Interoperability is a significant concern for Amtrak, which operates its trains over track owned by many different railroads and hosts freight and commuter railroads' trains on its own tracks.\nAmtrak began installation of a PTC system in 2000 on some NEC tracks as part of FRA requirements for higher-speed Acela service. An Amtrak train derailed due to excessive speed on a curved section of the NEC outside of Philadelphia on May 12, 2015; 8 passengers died and 185 were taken to hospitals for treatment. Investigators said the crash could have been prevented by PTC; Amtrak said PTC had been installed in that area but was not yet operational. Outside the NEC, Amtrak has had to install a different version of PTC on tracks it owns in Michigan, and must install PTC equipment on its diesel locomotives that is compatible with the host railroads' versions of PTC.\nIn some cases, the presence of Amtrak trains on freight lines is the sole trigger of the PTC requirement, because the lines in question do not carry poisonous or toxic products. As Amtrak is required to pay host railroads for the incremental costs of operating its trains, it would be responsible for PTC installation in these circumstances, but Amtrak has stated it does not have the funds to install PTC on tracks it does not own.", "", "Amtrak ridership has grown slowly over the past decade. As Table 6 shows, these increases have been seen on all types of trains. The corridor/short-distance trains have overtaken the flagship NEC service in terms of ridership, although the Northeast Corridor still provides the majority of ticket revenue.", "The number of passengers carried is not the only measure that should be considered when evaluating Amtrak's performance. A railroad may boost ridership by increasing the supply of seats (running more trains or offering more seats per train) or by increasing demand (improving service or reducing fares absolutely or relative to competitors). Thus, measures of efficiency and measures that incorporate financial results are also useful to assess performance.", "One measure of efficiency is the passenger load factor, which measures what percentage of the available seats is being used by passengers. As Figure 1 shows, Amtrak's load factor has varied within a fairly narrow band since 1986. Its current load factor, 51%, is near the record load factor Amtrak reported in FY1988. In certain respects Amtrak's circumstances were more favorable at that time than today: its fleet was newer and the rail network was less congested.", "The most basic measure of financial performance may be operating ratio (the percentage of costs covered by revenues). Amtrak is able to cover about three-fourths of its operating costs from its revenues. As Figure 2 shows, that ratio has been fairly constant over the past two decades, but Amtrak's operating ratio is currently about as high as it has ever been over that period.", "Amtrak's ability to keep trains running on time has a direct bearing on its operating profit or loss. First and foremost, low on-time performance reduces ridership (and ticket revenue). Secondly, it increases crew, fuel, and other operating costs. For Acela service, a train is considered on time if it arrives at its final destination within 10 minutes of the scheduled time. This is also the standard for any routes of less than 250 miles. For longer routes, the standard depends on distance, with 30 minutes being the allowance for trips over 550 miles.\nAmtrak's on-time performance over a recent three-month period, compared to its performance in 2012, is shown in Table 7 . The data suggest that Amtrak's on-time performance has deteriorated, even on the NEC, where Amtrak controls train operations.\nOutside of the NEC, Amtrak trains run predominantly on track owned by freight railroads, and much of the delay on these routes is related to sharing track with freight trains. The host freight railroad controls all the trains running on its network, including Amtrak trains. Freight railroads use automated systems that dispatch trains when all trains are running on schedule, but delays or unanticipated problems usually require that a human dispatcher intervene to make train control decisions. According to data recorded by Amtrak train conductors, \"host railroad delays\" is by far the leading cause of Amtrak trains being delayed, and within that category, freight train interference is the leading factor. \"Slow order\" track—track that is subject to a temporarily reduced speed limit until repair or maintenance can be performed—was the second-leading cause of Amtrak delays. Signal problems and interference from other passenger trains were the third- and fourth-leading causes of delay.\nFigures on the causes of delays are based on the recordings of Amtrak train conductors. Freight railroads contend that the data are inaccurate because conductors may not be aware of the root causes of delay; for instance, the conductor of an Amtrak train stuck behind a freight train might record the cause of delay as \"freight train interference\" even though the freight train could be stopped because of a railroad crossing accident farther ahead.\nSeveral circumstances exacerbate interference between freight and Amtrak trains. A surge in rail shipments of oil from the Bakken formation in North Dakota led to frequent delays on routes in the upper Midwest in 2013 and 2014. In some areas, construction to add trackage in response to this increased traffic has caused delays in train movements. On some route segments, Amtrak uses a secondary route of the owning freight railroad, which may not want to invest in improving the performance of that segment. Off the NEC, about 70% of the mileage over which Amtrak operates consists of a single track with sidings, meaning that a single late train can cause many other trains to be delayed. Amtrak trains, which travel faster than most freight trains, require more headway clearance, complicating operations on a heavily used freight corridor.", "In 1973, shortly after Amtrak's creation, Congress granted Amtrak \"preference\" over freight trains in using a rail line, junction, or crossing ( P.L. 93-146 , §10(2), 87 Stat. 548). In Amtrak's view, this \"preference\" should be enforced each time a dispatcher makes a decision involving an Amtrak train and a freight train. The freight railroads contend that the entire fluidity of the route has to be taken into consideration, and that this sometimes may involve giving priority to a freight train over an Amtrak train in order to avoid delays on a larger scale.\nUnder the Rail Passenger Service Act of 1970 (P.L. 91-518, 84 Stat. 1327), Amtrak pays the host railroads for the incremental costs specific to Amtrak's usage of track—for instance, the additional track maintenance costs required for passenger trains. Amtrak is not required to contribute any share to a freight railroad's overhead costs. Based on agreements it has negotiated with each freight railroad, Amtrak provides incentive payments to host railroads when its trains arrive on time. Part of this negotiation involves agreeing on a schedule for Amtrak trains. The DOT Inspector General reported in 2008 that three of the four host freight railroads visited regard the incentive payments as insufficient to influence the way they dispatch Amtrak trains. There are also penalty provisions for late trains, but they come into effect only if the host railroad has received incentive payments within the last 12 months. In recent years, Amtrak has paid an average of $100 million annually to the freight railroads for track usage and on-time incentive payments. This equates to about 0.2% of the freight railroads' annual freight revenues and about 1% of their annual capital expenditures.", "In PRIIA §207, Congress directed FRA and Amtrak to develop metrics and standards for measuring the performance and service quality of intercity passenger train operations, including on-time performance and delays incurred by Amtrak trains on the rail lines of each carrier. In Section 207 and Section 213, Congress gave the Surface Transportation Board (STB) the power to investigate, in certain circumstances, failures by Amtrak to meet the on-time performance standards. The statute provided that if the STB determined that a host freight railroad has failed to provide preference to Amtrak trains, the STB could award damages against the host freight railroad and order other relief.\nThe freight railroads challenged the constitutionality of this statute, arguing that Amtrak, as a private corporation, cannot have rule-making authority in developing performance standards and that the statute violates their due-process rights. On March 9, 2015, the Supreme Court ruled that Amtrak is a government entity for the purpose of developing the performance standards; it remanded the case to the U.S. Court of Appeals for the D.C. Circuit to consider the lawfulness of the standards. The Appeals Court then found Section 207 to be an unconstitutional delegation of power and voided the associated standards that FRA issued in 2011.\nWith the on-time performance standards developed by FRA and Amtrak suspended due to pending litigation, and with a complaint by Amtrak against host railroads causing delays, the STB developed its own standard for on-time performance through the rule-making process, and used that to rule against a host railroad. This action was challenged by freight railroads, and ultimately overturned. So Congress's effort in PRIIA to address the persistent problem of host railroad delays to Amtrak trains has thus far had little impact.\nAs freight traffic increases and states implement plans to increase passenger train speeds over certain routes (from a prevailing maximum of 79 mph to 110 mph), tension between freight and passenger use of track is likely to intensify.", "Amtrak has served food and beverages since it began operating in 1971, continuing the practice of its predecessor companies. As far back as 1981, Congress prohibited Amtrak from providing food and beverage service at a loss, and this prohibition is still in the statutes governing Amtrak: \"Amtrak may ... provide food and beverage services on its trains only if revenues from the services each year at least equal the cost of providing the services.\"\nThe law does not define what is to be included in the \"cost of providing the services.\" Amtrak has stated that providing food and beverage service is essential to meeting the needs of passengers, especially on long-distance trains, and it has interpreted the law as requiring that revenues cover the costs of food and beverage items and commissary operations but not the labor cost of Amtrak employees providing food service on-board trains. When on-board labor costs are excluded, Amtrak says, the service covers its costs. When labor costs are included, however, the service operates at a significant deficit (see Table 8 ).\nAmtrak has taken measures, at Congress's direction, to reduce costs for food and beverage service. In 1999, it shifted from handling food and beverage supplies internally to contracting out such activities. A House proposal in the 112 th Congress would have required FRA to contract out Amtrak's on-board food and beverage service but acknowledged that the service may operate at a loss. Section 11207 of the FAST Act requires Amtrak to develop a plan to eliminate food and beverage service losses, and prohibits federal funds from being used to cover losses starting five years after enactment—but also provides that no Amtrak employee shall lose his or her job as a result of any changes made to eliminate losses. Congress provided that Amtrak could eliminate the losses on food and beverage service through \"ticket revenue allocation.\" Although that phrase is not defined in the law, it implies that Amtrak could declare that a portion of the ticket prices paid by certain passengers is dedicated to food and beverage service.", "In 1993, service on Amtrak's Sunset Limited, which had operated between Los Angeles, CA, and New Orleans, LA, was extended east to Jacksonville, FL. The Sunset Limited route operated three trains a week in each direction. In August 2005, service east of New Orleans was suspended due to damage to the rail infrastructure between New Orleans and Mobile, AL, as a result of a hurricane. Although CSX, the owner of the rail infrastructure, restored the line to service in 2006, Amtrak did not restore its passenger service east of New Orleans. This eliminated service at 12 stations that were not served by any other Amtrak route.\nIn Section 226 of PRIIA, Congress directed Amtrak to develop a plan for restoring passenger rail service between New Orleans and Sanford, FL. Amtrak presented a plan to Congress in July 2009 with three options for meeting this requirement. All three would have required tens of millions of dollars in capital improvements (including making the stations be reopened compliant with ADA accessibility requirements and installing positive train control on that section of the rail network) and would have produced operating losses. Amtrak sought funding to implement any of the options, but no further action was taken by Congress.\nAmtrak looked at the issue of resuming Gulf Coast service again in 2015 at the request of the Southern Rail Commission. This study examined a slightly different set of options, omitting the option of extending the thrice-weekly Sunset Limited Service eastward.\nIn Section 11304 of the FAST Act, Congress directed DOT to establish a working group to evaluate restoration of passenger rail service along the Gulf Coast. The working group's final report, published in July 2017, found that opening passenger service from New Orleans to Orlando, FL, via Jacksonville, would require capital expenditures of at least $10 million and perhaps as much as $102 million. CSX has stated that it needs $2.3 billion in infrastructure upgrades to provide reliable service that does not interfere with its freight operations. The interested parties have yet to verify the need for the recommended improvements and develop a funding plan.", "When discussing privatization of intercity passenger rail service, details are important. Amtrak itself can be considered a privatized rail provider, as it is legally a for-profit company that receives grants from federal and state governments. Similarly, the rail service providers in Great Britain, for example, are not owned by the British government, but they receive government funding to operate routes that are not profitable on the basis of passenger-related revenues. The differences lie in how the government payments are structured; Amtrak receives annual funding directly from the federal government as a line item in DOT's appropriations act, while the British government awards franchises to rail companies to operate trains over a route for a certain amount of government funding over a period of years.\nSuggestions for privatizing intercity passenger rail in the United States range from encouraging Amtrak to contract out more activities to encouraging private operators to compete with Amtrak on individual routes. One challenge to the latter is that, unlike in many other countries, the majority of the U.S. rail network is owned by private freight companies that control who can use their tracks and under what circumstances. Freight railroads have a statutory obligation to carry Amtrak trains, but they have discouraged the notion of having other passenger rail providers operating on their tracks. There has been one recent effort to replace Amtrak with a private operator. In that instance, the State of Indiana contracted in 2015 with Iowa Pacific Holdings, a private company, to provide passenger service between Indianapolis and Chicago for a subsidy amount less than the state was paying Amtrak to serve the route. The company made improvements to the passenger experience in hopes of increasing ridership, but the increased revenue did not cover the costs. The company decided to stop operating the service several months before its contract period was completed, saying it was losing money. In 2017, the state turned to Amtrak to resume operation of the service.\nOne obstacle to privatization is that if a state or a private operator other than Amtrak wishes to begin passenger service over freight-owned right-of-way, it would likely have to pay more than Amtrak does to gain access to freight property. Under laws enacted during Amtrak's first decade, Amtrak enjoys eminent domain power over freight railroad facilities and can use freight track at the railroad's incremental cost of hosting Amtrak trains. To enforce these terms, Amtrak can appeal to the STB. No other potential passenger rail operator has access to freight track on these favorable terms. These provisions may make it difficult for other companies to compete directly with Amtrak, or to offer passenger service over any existing trackage without the support of the freight railroads that control the track.\nIn December 2016, Congress directed DOT to establish a pilot program for competitive selection of applicants to operate up to three long-distance routes currently operated by Amtrak. The winning bidder would have the right to operate a route for four years, and the contract could be renewed for another four years. Amtrak would be eligible to bid; if a bidder other than Amtrak is selected, the winning bidder would have the same right to operate over the freight railroad's tracks as Amtrak, subject to performance standards set by DOT, and could receive an operating subsidy of not more than 90% of the amount provided for service on that route in the year before the bid to operate the route was received, adjusted for inflation.\nSeveral pending initiatives involve proposed construction of new privately owned lines specifically for high-speed passenger rail services. One major obstacle to such ventures is the financial challenge of building the infrastructure before receiving any revenue.", "All Aboard Florida, a subsidiary of Florida East Coast Industries (FECI), plans to run a passenger service called Brightline between Miami and Orlando (a distance of approximately 240 miles), with intermediate stops at Fort Lauderdale and West Palm Beach. It has said that it will begin service on the section between Miami and West Palm Beach in 2017.\nThe company already owns most of the right-of-way; it plans to construct 40 miles of track that would allow it to serve a station at the Orlando Airport. The trains would travel at up to 110 miles per hour over much of the route, and up to 125 miles per hour on the section of track yet to be built. The company also owns land in downtown Miami where it is building a passenger terminal and a mixed-use development, using the availability of passenger rail service to enhance the value of its real estate development projects. The entire rail project is estimated to cost $3 billion; construction began in 2015.\nThe sponsor applied for an RRIF loan, but suspended the application and instead sought state approval to sell $1.75 billion in tax-free qualified private activity bonds, an amount subsequently reduced to $600 million. As of summer 2017 it had not issued the bonds. The project, which has encountered opposition from communities unhappy about the prospect of increased train frequencies interfering with road traffic in their downtowns, is dealing with a variety of permitting challenges as it approaches its scheduled opening of service.", "This project, which is being pursued by a group including the Central Japan Railway Company, one of the leading rail companies in Japan, would build a dedicated high-speed line connecting Dallas-Fort Worth and Houston. Trains on the 240-mile route would operate at up to 200 miles per hour, offering a 90-minute ride. The project's initial cost estimate was $8 billion; that has now grown to $12 billion. The initial target completion date was 2021, now moved to 2023. FRA has completed an alternatives analysis for the project and is working on a Draft Environmental Impact Statement, expected to be completed in 2017.\nThe project group says it does not expect to request government grants, though it may seek a federal loan. As of February 2017, Texas Central Partners, the company seeking to build the rail line, said it had contracts for about 30% of the land parcels estimated to be needed for the entire project. Some landowners whose properties would be crossed by the rail line have been vocal in their opposition to the project. In 2017, the Texas State Legislature enacted a bill to ensure that the state will not be responsible for any costs of the train.", "XpressWest (formerly known as DesertXpress) has proposed to build a dedicated high-speed rail line from Victorville, CA (a community northeast of Los Angeles), to Las Vegas, NV, following the Interstate 15 right-of-way, a distance of 185 miles. It proposes to run nonstop trains over this route at 150 mph, with trains operating at 20-minute intervals during peak periods, transporting tourists from southern California to Las Vegas and back. The project has been in development since 2005, and has completed various environmental and regulatory requirements. The project reportedly had private funding commitments of $1.5 billion, and applied for a $5.5 billion loan from the RRIF program, which would have been the largest RRIF loan to date. FRA halted review of the loan request in 2013, citing the railroad's unwillingness to meet the RRIF program's Buy America requirements. In 2015 XpressWest announced a partnership with China Railway International, which was to help provide financing for the project; in 2016, they announced the partnership was ended. The company reports that it is continuing discussions with potential partners and investors.\nIn 2016, the High Desert Corridor Joint Powers Authority, which was examining construction of a high-speed rail line linking the proposed XpressWest line with the California High Speed Rail project between Los Angeles and San Francisco, estimated that a high-speed line connecting Las Vegas with points close to Los Angeles and an average round-trip fare of around $100 would carry 6.5 million passengers by 2024. It estimated that the Las Vegas ridership would grow if completion of the California High Speed Rail project allowed direct service between Las Vegas, Burbank, CA, and Los Angeles Union Station, producing passenger revenues of over $1 billion each year.", "The California High-Speed Rail Authority proposes to build a dedicated rail line between Sacramento and San Diego that will allow trains to reach speeds of up to 220 mph. The first phase of the project will link San Francisco and Los Angeles, with trains covering the 520-mile distance in as little as 2 hours and 40 minutes. A recent change to the first phase would also provide service between San Francisco and the Central Valley city of Merced. The Authority expects to open service on the portion of the route in 2025, with the first phase completed by 2029. The Authority will need to select an operating company to run the trains, which may or may not be Amtrak.", "" ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 2, 3, 3, 3, 2, 2, 2, 2, 1, 2, 2, 3, 3, 2, 3, 3, 2, 2, 2, 3, 3, 3, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h1_full", "h0_full", "h1_full", "h2_full", "", "h2_title", "", "", "h2_full", "", "", "", "", "h2_title h1_title", "h2_full", "h2_full", "h2_full", "", "", "", "", "", "", "h1_full", "", "", "", "", "" ] }

{ "question": [ "What purpose does Amtrak serve?", "Why was Amtrak created?", "How is Amtrak supported by the government?", "What is the state of the authorization legislation that Amtrak relies on?", "What is Congress's attitude regarding Amtrak?", "Why is Amtrak criticized?", "What evidence is used in this criticism?", "Why was Amtrak created?", "How is Amtrak performing?", "What are some examples to support or contradict this?", "What improvements does Amtrak believe would improve its quality of service?", "What are the downsides to these improvements?" ], "summary": [ "Amtrak is the nation's primary provider of intercity passenger rail service.", "It was created by Congress in 1970 to preserve some level of intercity passenger rail service while enabling private rail companies to exit the money-losing passenger rail business.", "It is a quasi-governmental entity, a corporation whose stock is almost entirely owned by the federal government. It runs a deficit each year, and relies on congressional appropriations to continue operations.", "Amtrak was last authorized in the Passenger Rail Reform and Investment Act of 2015 (Title XI of the Fixing America's Surface Transportation (FAST Act; P.L. 114-94). That authorization expires at the end of FY2020. Amtrak's annual appropriations do not rely on separate authorization legislation, but authorization legislation does allow Congress to set multiyear Amtrak funding goals and federal intercity passenger rail policies.", "Since Amtrak's inception, Congress has been divided on the question of whether it should even exist.", "Amtrak is regularly criticized for failing to cover its costs.", "The need for federal financial support is often cited as evidence that passenger rail service is not financially viable, or that Amtrak should yield to private companies that would find ways to provide rail service profitably. Yet it is not clear that a private company could perform the same range of activities better than Amtrak does.", "Indeed, Amtrak was created because private-sector railroad companies in the United States lost money for decades operating intercity passenger rail service and wished to be relieved of the obligation to do so.", "By some measures, Amtrak is performing as well as or better than it ever has in its 47-year history.", "For example, it is carrying a near-record number of passengers, and its passenger load factor and its operating ratio are at the upper end of their historic ranges. On the other hand, Amtrak's ridership is barely growing at a time when other transportation modes are seeing ridership increases.", "Amtrak contends that improvements to its infrastructure in the Northeast Corridor (NEC), between Washington, DC, and Boston, would enable it to offer faster and more reliable service and thus boost ridership.", "However, such improvements are expected to be extremely costly." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, 1, -1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Overview of the Multilateral Development Banks", "Historical Background", "World Bank", "Regional Development Banks", "Inter-American Development Bank", "African Development Bank", "Asian Development Bank", "European Bank for Reconstruction and Development", "Operations: Financial Assistance to Developing Countries", "Financial Assistance over Time", "Recipients of MDB Financial Assistance", "Funding: Donor Commitments and Contributions", "Non-concessional Lending Windows", "Concessional Lending Windows", "Structure and Organization", "Relation to Other International Institutions", "Internal Organization and U.S. Representation", "The Role of Congress in U.S. Participation", "Authorizing and Appropriating U.S. Contributions to the MDBs", "Congressional Oversight of U.S. Participation in the MDBs", "Policy Issues for Congress", "U.S. Funding for the MDBs", "Effectiveness of MDB Financial Assistance", "Multilateral vs. Bilateral Aid", "The Changing Landscape of the MDBs", "U.S. Commercial Interests" ], "paragraphs": [ "", "Multilateral development banks (MDBs) are international institutions that provide financial assistance, typically in the form of loans and grants, to developing countries in order to promote economic and social development. The United States is a member and significant donor to five major MDBs. These include the World Bank and four smaller regional development banks: the African Development Bank (AfDB); the Asian Development Bank (AsDB); the European Bank for Reconstruction and Development (EBRD); and the Inter-American Development Bank (IDB). Congress plays a critical role in shaping U.S. policy at the MDBs through funding and oversight of U.S. participation in the institutions.\nThis report provides an overview of the MDBs and highlights major issues for Congress. The first section discusses how the MDBs operate, including the history of the MDBs, their operations and organizational structure, and the effectiveness of MDB financial assistance. The second section discusses the role of Congress in the MDBs, including congressional legislation authorizing and appropriating U.S. contributions to the MDBs and congressional oversight of U.S. participation in the MDBs. The third section discusses broad policy debates about the MDBs, including their effectiveness, the trade-offs between providing aid on a multilateral or bilateral basis, the changing landscape of multilateral aid, and U.S. commercial interests in the MDBs.", "MDBs provide financial assistance to developing countries, typically in the form of loans and grants, for investment projects and policy-based loans. Project loans include large infrastructure projects, such as highways, power plants, port facilities, and dams, as well as social projects, including health and education initiatives. Policy-based loans provide governments with financing in exchange for agreement by the borrower country government that it will undertake particular policy reforms, such as the privatization of state-owned industries or reform in agriculture or electricity sector policies. Policy-based loans can also provide budgetary support to developing country governments. In order for the disbursement of a policy-based loan to continue, the borrower must implement the specified economic or financial policies. Some have expressed concern over the increasing budgetary support provided to developing countries by the MDBs. Traditionally, this type of support has been provided by the International Monetary Fund (IMF).\nMost of the MDBs have two major funds, often called lending windows or lending facilities. One type of lending window is primarily used to provide financial assistance on market-based terms, typically in the form of loans, but also through equity investments and loan guarantees. Non-concessional assistance is, depending on the MDB, extended to middle-income governments, some creditworthy low-income governments, and private-sector firms in developing countries. The other type of lending window is used to provide financial assistance at below market-based terms (concessional assistance), typically in the form of loans at below-market interest rates and grants, to governments of low-income countries. In recent years, two MDBs (the AsDB and the IDB) have transferred concessional lending to their main, non-concessional lending facilities to increase their lending capacities.", "", "The World Bank is the oldest and largest of the MDBs. The World Bank Group comprises three subinstitutions that make loans and grants to developing countries: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), and the International Finance Corporation (IFC).\nThe 1944 Bretton Woods Conference led to the establishment of the World Bank, the IMF, and the institution that would eventually become the World Trade Organization (WTO). The IBRD was the first World Bank affiliate created, when its Articles of Agreement became effective in 1945 with the signatures of 28 member governments. Today, the IBRD has near universal membership with 189 member nations. Only Cuba and North Korea, and a few microstates such as the Vatican, Monaco, and Andorra, are nonmembers. The IBRD lends mainly to the governments of middle-income countries at market-based interest rates.\nIn 1960, at the suggestion of the United States, IDA was created to make concessional loans (with low interest rates and long repayment periods) to the poorest countries. IDA also now provides grants to these countries. The IFC was created in 1955 to extend loans and equity investments to private firms in developing countries. The World Bank initially focused on providing financing for large infrastructure projects. Over time, this has broadened to also include social projects and policy-based loans.", "", "The IDB was created in 1959 in response to a strong desire by Latin American countries for a bank that would be attentive to their needs, as well as U.S. concerns about the spread of communism in Latin America. Consequently, the IDB has tended to focus more on social projects than large infrastructure projects, although the IDB began lending for infrastructure projects as well in the 1970s. From its founding, the IDB has had both non-concessional and concessional lending windows. The IDB's concessional lending window was called the Fund for Special Operations (FSO), whose assets were largely transferred to the IDB in 2016. The IDB Group also includes the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF), which extend loans to private-sector firms in developing countries, much like the World Bank's IFC.", "The AfDB was created in 1964 and was for nearly two decades an African-only institution, reflecting the desire of African governments to promote stronger unity and cooperation among the countries of their region. In 1973, the AfDB created a concessional lending window, the African Development Fund (AfDF), to which non-regional countries could become members and contribute. The United States joined the AfDF in 1976. In 1982, membership in the AfDB non-concessional lending window was officially opened to non-regional members. The AfDB makes loans to private-sector firms through its non-concessional window and does not have a separate fund specifically for financing private-sector projects with a development focus in the region.", "The AsDB was created in 1966 to promote regional cooperation. Similar to the World Bank, and unlike the IDB, the AsDB's original mandate focused on large infrastructure projects, rather than social projects or direct poverty alleviation. The AsDB's concessional lending facility, the Asian Development Fund (AsDF), was created in 1973. In 2017, concessional lending was transferred from the AsDF to the AsDB, although the AsDF still provides grants to low-income countries. Like the AfDF, the AsDB does not have a separate fund specifically for financing private-sector projects, and makes loans to private-sector firms in the region through its non-concessional window.", "The EBRD is the youngest MDB, founded in 1991. The motivation for creating the EBRD was to ease the transition of the former communist countries of Central and Eastern Europe (CEE) and the former Soviet Union from planned economies to free-market economies. The EBRD differs from the other regional banks in two fundamental ways. First, the EBRD has an explicitly political mandate: to support democracy-building activities. Second, the EBRD does not have a concessional loan window. The EBRD's financial assistance is heavily targeted on the private sector, although the EBRD does also extend some loans to governments in CEE and the former Soviet Union.\nTable 1 summarizes the different lending windows for the MDBs, noting what types of financial assistance they provide, who they lend to, when they were founded, and how much financial assistance they committed to developing countries in 2017. The World Bank Group accounted for half of total MDB financial assistance commitments to developing countries in 2017. Also, about three-quarters of the financial assistance provided by the MDBs to developing countries was on non-concessional terms.", "", "Figure 1 shows MDB financial commitments to developing countries since 2000 financed from their ordinary capital resources (OCR), the lending facility traditionally focused on non-concessional financial assistance. As a whole, financial assistance funded out of OCR resources was relatively stable in nominal terms until the global financial crisis prompted major member countries to press for increased financial assistance. In response to the financial crisis and at the urging of its major member countries, the IBRD dramatically increased lending between FY2008 and FY2009. Regional development banks also had upticks in lending between 2008 and 2009. MDB non-concessional assistance, particularly by the IBRD, fell to pre-crisis levels as the financial crisis stabilized, but has been rising again in the past few years.\nFigure 2 shows concessional financial assistance provided by the MDBs to developing countries since 2000. The World Bank's concessional lending arm, IDA, has grown steadily over the decade in nominal terms, although it has decreased over the past two years, while the regional development bank concessional lending facilities, by contrast, have remained relatively stable in nominal terms.", "Figure 3 lists the top recipients of MDB financial assistance in 2017. It shows that several large, emerging economies, such as Brazil, India, China, and Turkey, receive a steady flow of financial assistance from the MDBs. Figure 3 also shows the top recipients of concessional financial assistance. In 2017, Nigeria and Vietnam were top recipients of financial assistance from IDA, and Nepal and Afghanistan were top recipients of financial assistance from the AsDF.", "MDBs are able to extend financial assistance to developing countries due to the financial commitments of their more prosperous member countries. This support takes several forms, depending on the type of assistance provided. The MDBs use money contributed or \"subscribed\" by their member countries to support their assistance programs. They fund their operating costs from money earned on non-concessional loans to borrower countries. Some of the MDBs transfer a portion of their surplus net income annually to help fund their concessional aid programs.", "To offer non-concessional loans, the MDBs borrow money from international capital markets and then relend the money to developing countries. MDBs are able to borrow from international capital markets because they are backed by the guarantees of their member governments. This backing is provided through the ownership shares that countries subscribe as a consequence of their membership in each bank. Only a small portion (typically less than 5%-10%) of the value of these capital shares is actually paid to the MDB (\"paid-in capital\").\nThe bulk of these shares are a guarantee that the donor stands ready to provide to the bank if needed. This is called \"callable capital,\" because the money is not actually transferred from the donor to the MDB unless the bank needs to call on its members' callable subscriptions. Banks may call upon their members' callable subscriptions only if their resources are exhausted and they still need funds to repay bondholders. To date, no MDB has ever had to draw on its callable capital. In recent decades, the MDBs have not used their paid-in capital to fund loans. Rather it has been put in financial reserves to strengthen the institutions' financial base.\nDue to the financial backing of their member country governments, the MDBs are able to borrow money in world capital markets at the lowest available market rates, generally the same rates at which developed country governments borrow funds inside their own borders. The banks are able to relend this money to their borrowers at much lower interest rates than the borrowers would generally have to pay for commercial loans, if, indeed, such loans were available to them. As such, the MDBs' non-concessional lending windows are self-financing and even generate net income.\nPeriodically, when donors agree that future demand for loans from an MDB is likely to expand, they increase their capital subscriptions to an MDB's non-concessional lending window in order to allow the MDB to increase its level of lending. This usually occurs because the economy of the world or the region has grown in size and the needs of their borrowing countries have grown accordingly, or in response to a financial crisis. An across-the-board increase in all members' shares is called a \"general capital increase\" (GCI). This is in contrast to a \"selective capital increase\" (SCI), which is typically small and used to alter the voting shares of member countries. The voting power of member countries in the MDB is determined largely by the amount of capital contributed and through selective capital increases; some countries subscribe a larger share of the new capital stock than others to increase their voting power in the institutions. GCIs happen infrequently. Quite unusually, all the MDBs had GCIs following the global financial crisis of 2008-2009; simultaneous capital increases for all the MDBs had not occurred since the mid-1970s.\nFigure 4 summarizes current U.S. capital subscriptions to the MDB non-concessional lending windows. Currently, the largest U.S. share of subscribed MDB capital is with the IDB at 30%, while its smallest share among the MDBs is with the AfDB at 6.6%.\nFigure 5 lists the top donors to the MDBs's non-concessional facilities. The United States is the largest donor to the non-concessional lending windows to the IBRD, the IFC, the EBRD, and the IDB. The United States is tied with Japan for the largest financial commitment to the AsDB and is the second-largest donor to the AfDB.\nOther top donor states include Western European countries, Japan, and Canada. Additionally, several regional members have large financial stakes in the regional banks. For example, among the regional members, China and India are large contributors to the AsDB; Nigeria, Egypt, South Africa, and Algeria are major contributors to the AfDB; Argentina, Brazil, and Venezuela are large contributors to the IDB; and Russia is a large contributor to the EBRD.", "Concessional lending windows do not issue bonds; their funds are contributed directly from the financial contributions of their member countries. Most of the money comes from the more prosperous countries, while the contributions from borrowing countries are generally more symbolic than substantive. The MDBs have also transferred some of the net income from their non-concessional windows to their concessional lending windows in order to help fund concessional loans and grants.\nAs the MDB extends concessional loans and grants to low-income countries, the window's resources become depleted. The donor countries meet together periodically to replenish those resources. Thus, these increases in resources are called replenishments, and most occur on a planned schedule ranging from three to five years. If these facilities are not replenished on time, they will run out of lendable resources and have to reduce their levels of aid to poor countries.\nFigure 6 summarizes cumulative U.S. contributions to the MDB concessional lending windows. The United States has made the largest financial commitment to IDA over time, relative to the other concessional lending facilities.\nFigure 7 shows the top donor countries to the MDB concessional facilities. The United States is been the largest donor to IDA and is a major donor to the AsDF and the AsDB. Other top donor states include the more prosperous member countries, including Japan, Canada, and those in Western Europe.", "", "The World Bank is a specialized agency of the United Nations. However, it is autonomous in its decisionmaking procedures and its sources of funds. It also has autonomous control over its administration and budget. The regional development banks are independent international agencies and are not affiliated with the United Nations system. All the MDBs must comply with directives (for example, economic sanctions) agreed to (by vote) by the U.N. Security Council. However, they are not subject to decisions by the U.N. General Assembly or other U.N. agencies.", "The MDBs have similar internal organizational structures. Run by their own management and staffed by international civil servants, each MDB is supervised by a Board of Governors and a Board of Executive Directors. The Board of Governors is the highest decisionmaking authority, and each member country has its own governor. Countries are usually represented by their Secretary of the Treasury, Minister of Finance, or Central Bank Governor. The United States is represented by the Treasury Secretary. The Board of Governors meets annually, though it may act more frequently through mail-in votes on key decisions.\nWhile the Boards of Governors in each of the banks retain power over major policy decisions, such as amending the founding documents of the organization, they have delegated day-to-day authority over operational policy, lending, and other matters to their institutions' Board of Executive Directors. The Board of Executive Directors in each institution is smaller than the Board of Governors. There are 24 members on the World Bank's Board of Executive Directors, and fewer for some of the regional development banks. Some major donors, including the United States, are represented by their own Executive Director. Other Executive Directors represent groups of member countries. Each MDB Executive Board has its own schedule, but they generally meet at least weekly to consider MDB loan and policy proposals and oversee bank activities.\nDecisions are reached in the MDBs through voting. Each member country's voting share is weighted on the basis of its cumulative financial contributions and commitments to the organization. Figure 8 shows the current U.S. voting power in each institution. The voting power of the United States is large enough to veto major policy decisions at the World Bank and the IDB. However, the United States cannot unilaterally veto more day-to-day decisions, such as individual loans.", "Congress plays an important role in authorizing and appropriating U.S. contributions to the MDBs and exercising oversight of U.S. participation in these institutions. For more details on U.S. policymaking at the MDBs, see CRS Report R41537, Multilateral Development Banks: How the United States Makes and Implements Policy , by [author name scrubbed] and [author name scrubbed].", "Authorizing and appropriations legislation is required for U.S. contributions to the MDBs. The Senate Committee on Foreign Relations and the House Committee on Financial Services are responsible for managing MDB authorization legislation. During the past several decades, authorization legislation for the MDBs has not passed as freestanding legislation. Instead, it has been included through other legislative vehicles, such as the annual foreign operations appropriations act, a larger omnibus appropriations act, or a budget reconciliation bill. The Foreign Operations Subcommittees of the House and Senate Committees on Appropriations manage the relevant appropriations legislation. MDB appropriations are included in the annual foreign operations appropriations act or a larger omnibus appropriations act.\nIn recent years, the Administration's budget request for the MDBs has included three major components: funds to replenish the concessional lending windows, funds to increase the size of the non-concessional lending windows (the \"general capital increases\"), and funds for more targeted funds administered by the MDBs, particularly those focused on climate change and food security. Replenishments of the MDB concessional windows happen regularly, while capital increases for the MDB non-concessional windows occur much more infrequently. Quite unusually, all the MDBs increased their non-concessional windows in response to the global financial crisis of 2008-2009 and the resulting increased demand for financing.", "As international organizations, the MDBs are generally exempt from U.S. law. The President has delegated the authority to manage and instruct U.S. participation in the MDBs to the Secretary of the Treasury. Within the Treasury Department, the Office of International Affairs has the lead role in managing day-to-day U.S. participation in the MDBs. The President appoints the U.S. Governors and Executive Directors, and their alternates, with the advice and consent of the Senate. Thus, the Senate can exercise oversight through the confirmation process.\nOver the years, Congress has played a major role in U.S. policy toward the MDBs. In addition to congressional hearings on the MDBs, Congress has enacted a substantial number of legislative mandates that oversee and regulate U.S. participation in the MDBs. These mandates generally fall into one of four major types. More than one type of mandate may be used on a given issue area.\nFirst, some legislative mandates direct how the U.S. representatives at the MDBs can vote on various policies. Examples include mandates that require the U.S. Executive Directors to oppose (a) financial assistance to specific countries, such as Burma, until sufficient progress is made on human rights and implementing a democratic government; (b) financial assistance to broad categories of countries, such as major producers of illicit drugs; and (c) financial assistance for specific projects, such as the production of palm oil, sugar, or citrus crops for export if the financial assistance would cause injury to United States producers. Some legislative mandates require the U.S. Executive Directors to support, rather than oppose, financial assistance. For example, a current mandate allows the Treasury Secretary to instruct the U.S. Executive Directors to vote in favor of financial assistance to countries that have contributed to U.S. efforts to deter and prevent international terrorism.\nSecond, legislative mandates direct the U.S. representatives at the MDBs to advocate for policies within the MDBs. One example is a mandate that instructs the U.S. Executive Director to urge the IBRD to support an increase in loans that support population, health, and nutrition programs. Another example is a mandate that requires the U.S. Executive Directors to take all possible steps to communicate potential procurement opportunities for U.S. firms to the Secretary of the Treasury, the Secretary of State, the Secretary of Commerce, and the business community. Mandates that call for the U.S. Executive Director to both vote and advocate for a particular policy are often called \"voice and vote\" mandates.\nThird, Congress has also passed legislation requiring the Treasury Secretary to submit reports on various MDB issues (reporting requirements). Some legislative mandates call for one-off reports; other mandates call for reports on a regular basis, typically annually. For example, current legislation requires the Treasury Secretary to submit an annual report to the appropriate congressional committees on the actions taken by countries that have borrowed from the MDBs to strengthen governance and reduce the opportunity for bribery and corruption.\nFourth, Congress has also attempted to influence policies at the MDBs through \"power of the purse,\" that is, withholding funding from the MDBs or attaching stipulations on the MDBs' use of funds. For example, the FY2010 Consolidated Appropriations Act stipulates that 10% of the funds appropriated to the AsDF will be withheld until the Treasury Secretary can verify that the AsDB has taken steps to implement specific reforms aimed at combating corruption.", "The United States has historically played a strong leadership role at the MDBs, including key roles in creating the institutions and shaping their policies and lending to developing countries. Under a number of Administrations, the MDBs have been viewed as critical to promoting U.S. foreign policy , economic interests, and national security interests abroad, although various Administrations have had different views on the appropriate level of U.S. funding for the MDBs and policy reforms to improve the effectiveness of the MDBs.\nThere are a number of MDB policy issues that Congress may consider during the 115 th Congress, particularly as it considers U.S. funding levels for the MDBs and confirmations for U.S. Governors and Executive Directors at the MDBs. Some of these issues are discussed below.", "U.S. funding for the MDBs may shift under President Trump, who campaigned on an \"America First\" platform and has signaled a reorientation of U.S. foreign policy. In March 2017, the Trump Administration proposed cutting $650 million over three years compared to the commitments made under the Obama Administration.\nIn the FY2019 budget request, the Trump Administration requested a 20% cut ($354 million) from Treasury's international programs, which includes the multilateral development banks, compared to the amount enacted in FY2017. The bulk of the Treasury international programs request (over 90%) would fund U.S. commitments to concessional lending facilities at the MDBs. The request would provide $1.1 billion to IDA, compared to $1.2 billion in FY2017. It would also provide funding $47 million to the AsDF and $171 million to the AfDF, among other funding initiatives.\nIn April 2018, the World Bank members, including the United States, endorsed a capital increase for the IBRD, which would require congressional legislation and appropriations to implement. This commitment is not reflected in the FY2019 budget request, but would require appropriations and authorization to implement. Congress sets U.S. fundi ng for the MDBs as part of the State and Foreign O perations authorization and appropriations process.", "There is a broad debate about the effectiveness of foreign aid, including the aid provided by the MDBs. Many studies of foreign aid effectiveness examine the effects of total foreign aid provided to developing countries, including both aid given directly by governments to developing countries (bilateral aid) and aid pooled by a multilateral institution from multiple donor countries and provided to developing countries (multilateral aid). The results of these studies are mixed, with conclusions ranging from (a) aid is ineffective at promoting economic growth; (b) aid is effective at promoting economic growth; and (c) aid is effective at promoting growth in some countries under specific circumstances (such as when developing-country policies are strong). The divergent results of these academic studies make it difficult to reach firm conclusions about the overall effectiveness of aid.\nCritics of the MDBs argue that they are international bureaucracies focused on getting money \"out the door\" to developing countries, rather than on delivering results in developing countries; that the MDBs emphasize short-term outputs like reports and frameworks but do not engage in long-term activities like the evaluation of projects after they are completed; and that they put enormous administrative demands on developing-country governments. Many of the MDBs were also created when developing countries had little access to private capital markets. With the globalization and the integration of capital markets across countries, some analysts have expressed concerns that MDB financing might \"crowd out\" private-sector financing, which developing countries now generally have readily accessible. Some analysts have also raised questions about whether there is a clear division of labor among the MDBs.\nProponents of the MDBs argue that, despite some flaws, such aid at its core serves vital economic and political functions. With about 767 million people living on less than $1.90 a day in 2013 (most recent estimate available), they argue that not providing assistance is simply not an option; they argue it is the \"right\" thing to do and part of \"the world's shared commitments to human dignity and survival.\" These proponents typically point to the use of foreign aid to provide basic necessities, such as food supplements, vaccines, nurses, and access to education, to the world's poorest countries, which may not otherwise be financed by private investors. Additionally, proponents of foreign aid argue that, even if foreign aid has not been effective at raising overall levels of economic growth, foreign aid has been successful in dramatically improving health and education in developing countries over the past four decades.\nSome analysts have also highlighted a number of reforms that they believe could increase the effectiveness of the MDBs. For example, it has been proposed that the MDBs adopt more flexible financing arrangements, for example to allow crisis lending or lending at the subnational level, and more flexibility in providing concessional assistance to address poverty in middle-income countries. There are also arguments that, as countries continue to develop, there need to be clearer guidelines on when countries should \"graduate\" from receiving concessional and/or non-concessional financial assistance from the MDBs.", "There has been debate about whether U.S. policymakers should prioritize bilateral or multilateral aid. Bilateral aid gives donors more control over where the money goes and how the money is spent. For example, donor countries may have more flexibility to allocate funds to countries that are of geopolitical strategic importance, but not facing the greatest development needs, than might be possible by providing aid through a multilateral organization. By building a clear link between the donor country and the recipient country, bilateral aid may also garner more goodwill from the recipient country toward the donor than if the funds had been provided through a multilateral organization.\nProviding aid through multilateral organizations offers different benefits for donor countries. By pooling the resources of several donors, multilateral organizations allow donors to share the cost of development projects (often called burden-sharing). Additionally, donor countries may find it politically sensitive to attach policy reforms to loans or to enforce these policy reforms. Multilateral organizations can usefully serve as a scapegoat for imposing and enforcing conditionality that may be politically sensitive to attach to bilateral loans. Additionally, because MDBs can provide aid on a larger scale than many bilateral agencies, they can generate economies of scale in knowledge and lending.\nData from the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) show that in 2017, 14% of U.S. foreign aid disbursed to developing countries with the purpose of promoting economic and social development was provided through multilateral institutions, while 86% was provided bilaterally.", "In recent years, several countries have taken steps to launch two new multilateral development banks. First, Brazil, Russia, India, China, and South Africa (the BRICS countries) signed an agreement in July 2014 to establish the New Development Bank (NDB), often referred to as the \"BRICS Bank.\" The agreement outlines the bylaws of the bank and a commitment to a capital base of $100 billion. Headquartered in Shanghai, the NDB was formally launched in July 2015. The BRICS leaders have emphasized that the bank's mission is to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies.\nSecond, China has led the creation of the Asian Infrastructure Investment Bank (AIIB). Launched in October 2014, the AIIB focuses on the development of infrastructure and other sectors in Asia, including energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development, and logistics. The AIIB currently has 66 members, and 21 prospective members. Members include several advanced European and Asian economies, such as France, Germany, Italy, the United Kingdom, Australia, New Zealand, and South Korea. The United States and Japan are not members. The AIIB's initial total capital is expected to be $100 billion.\nThese two institutions are the first major MDBs to be created in decades, and there is debate about how they will fit in with existing international financial institutions. Proponents of the new MDBs argue that the infrastructure and financing needs of developing countries are beyond what can be met by existing MDBs and private capital markets, and that new institutions to meet the financing needs of developing institutions should be welcomed. Proponents also argue that the new MDBs address the long-held frustrations of many emerging markets and developing countries that the governance of existing institutions, including the World Bank and the IMF, has not been reformed to reflect their growing importance in the global economy. For example, the NDB has stressed that, unlike the World Bank and the IMF, each participant country will have equivalent voting rates and none of the countries will have veto power.\nOther analysts and policymakers have been more concerned about what the new MDBs could mean for the existing institutions and whether they will diminish the influence of existing institutions, where the United States for decades has held a powerful leadership. They point to an already crowded landscape of MDBs, and express concerns that new MDBs could exacerbate existing concerns about mission creep and lack of clear division of labor among the MDBs. Some analysts have also raised questions about whether the new institutions will adopt the best practices on transparency, procurement, and environmental and social safeguards of the existing MDBs that have been developed over the past several decades. Some analysts have also raised questions about why many emerging markets are top recipients of non-concessional financial assistance from the World Bank and regional development banks, if they have the resources to capitalize new MDBs.\nThe Obama Administration initially lobbied several key allies to refrain from joining the AIIB. Ultimately, these lobbying efforts were largely unsuccessful, as several key allies in Europe and Asia, including the United Kingdom and South Korea, joined. The tone of the Obama Administration shifted, most notably during Chinese President Xi's visit to Washington in September 2015 when the White House emphasized that \"the United States welcomes China's growing contributions to financing development and infrastructure in Asia and beyond.\" During the visit, Xi also reportedly committed that the AIIB would abide by the highest international environmental and governance standards. Xi also pledged to increase China's financial contributions to the World Bank and regional development banks, signaling its continuing commitment to existing institutions. Congress may want to exercise oversight of the Trump Administration's policy on and engagement with these new MDBs.", "Billions of dollars of contracts are awarded to private firms each year in order to acquire the goods and services necessary to implement projects financed by the MDBs. MDB contracts are awarded through international competitive bidding processes, although most MDBs allow the borrowing country to give some preference to domestic firms in awarding contracts for MDB-financed projects in order to help spur development.\nU.S. commercial interest in the MDBs has been and may continue to be a subject of congressional attention, particularly if the banks expand their lending capacity for infrastructure projects through the GCIs. One area of focus may be the Foreign Commercial Service (FCS) representatives to the MDBs, who are responsible for protecting and promoting American commercial interests at the MDBs. Some in the business community are concerned about the impacts of possible budget cuts to the U.S. FCS, particularly if other countries are taking a stronger role in helping their businesses bid on projects financed by the MDBs." ], "depth": [ 0, 1, 1, 2, 3, 3, 4, 4, 4, 4, 2, 3, 3, 2, 3, 3, 2, 3, 3, 1, 2, 2, 1, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "", "h0_full h2_title", "h2_title", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "h1_full", "h3_full h2_full", "h2_full", "h3_full", "h3_full", "", "" ] }

{ "question": [ "What are the main functions of the MDBs?", "What other functions do the MDBs perform?", "What types of concessional assistance do they provide?", "How does Congress oversee U.S. participation in the MDBs?", "What effect do legislative mandates have on the MDBs?", "What other actions have Congress taken regardin MDBs?", "How might Trump's presidency affect the MDBs?", "How does the Trump Administration's proposal differ from that of the Obama Administration?", "What was the Trump Administration's pledge regardin the IBRD?", "How does Congress affect funding for the MDBs?", "Why do people criticize MDBs?", "What are the criticisms against providing aid multilaterally?", "Why do people support MDBs?", "What are other arguments of the proponents of MDBs?" ], "summary": [ "The MDBs primarily fund large infrastructure and other development projects and provide loans tied to policy reforms by the government.", "The MDBs provide non-concessional financial assistance to middle-income countries and some creditworthy low-income countries on market-based terms.", "They also provide concessional assistance, including grants and loans at below-market rate interest rates, to low-income countries.", "Congress exercises oversight over U.S. participation in the MDBs, managed by the Treasury Department, through confirmations of U.S. representatives at the MDBs, hearings, and legislative mandates.", "For example, legislative mandates direct the U.S. Executive Directors to the MDBs to advocate certain policies and how to vote on various issues at the MDBs.", "Congress also has issued reporting requirements for the Treasury Department on issues related to MDB activities, and tied MDB funding to specific institutional reforms.", "U.S. funding for the MDBs may shift under President Trump.", "In March 2017, the Trump Administration proposed cutting $650 million over three years compared to the commitments made under the Obama Administration.", "However, in the spring of 2018, the Trump Administration pledged to support an expansion of the World Bank's non-concessional lending facility, the International Bank for Reconstruction and Development (IBRD).", "Congress sets U.S. funding for the MDBs as part of the annual state and foreign operations authorization and appropriations process.", "Critics argue that the MDBs focus more on \"getting money out the door\" than delivering results, are not transparent, and lack a clear division of labor.", "They also argue that providing aid multilaterally relinquishes U.S. control over where and how the money is spent.", "Proponents argue that providing assistance to developing countries is the \"right\" thing to do and has been successful in helping developing countries make strides in health and education over the past four decades.", "They also argue that the MDBs leverage funds from other donors, promote policy reforms in developing countries, and enhance U.S. leadership." ], "parent_pair_index": [ -1, 0, 0, -1, 0, -1, -1, 0, 0, -1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 4, 4, 4, 6, 6, 6, 6, 7, 7, 7, 7 ] }

{ "title": [ "Weaknesses in CVN 78’s Business Case Manifested by Less Capability at Higher Cost", "Business Case for Follow-On Ship Assumes Ambitious Efficiency Gains", "Ford Class Program Emblematic of Incentives Which Discourage Implementing Sound Acquisition Practices", "Concluding Remarks", "GAO Contact and Staff Acknowledgments", "Appendix I: Prior GAO Recommendations for Ford Class Carriers and Department of Defense (DOD) Responses and Subsequent Actions" ], "paragraphs": [ "In July 2007, we reported on weaknesses in the Navy’s business case for the Ford-class aircraft carrier and focused mainly on the lead ship, CVN 78. We noted that costs and labor hours were underestimated and critical technologies were immature. Today, all of this has come to pass in the form of cost growth, testing delays, and reduced capability—in other words, less for more. In August 2007, we also observed that in consequence of its optimistic business case, the Navy would likely face the choice of (1) keeping the ship’s construction schedule intact while deferring key knowledge-building events—such as land-based tests of technologies—until later, or (2) slipping the ship’s construction schedule to accommodate technology and other delays. Today, those choices have been made—the ship’s construction schedule has been delayed slightly by a few months, while other events, like land-based tests for critical technologies, have slid by years. The result is a final acquisition phase in which construction and key test events are occurring concurrently, with no margin for error without giving something else up.\nIn its simplest form, a business case requires a balance between the concept selected to satisfy warfighter needs and the resources— technologies, design knowledge, funding, and time—needed to transform the concept into a product, in this case a ship. In a number of reports and assessments since 2007, we have consistently reported on concerns related to technology development, ship cost, construction issues, and overall ship capabilities. Absent a strong business case, the CVN 78 program deviated from its initial promises of cost and capability, which we discuss below.\nIn August 2007, before the Navy awarded a contract to construct the lead ship, we reported on key risks in the program that would impair the Navy’s ability to deliver CVN 78 at cost, on time, and with its planned capabilities (as seen in table 1 below).\nSpecifically, we noted that the Navy’s cost estimate of $10.5 billion and 2 million fewer labor hours made the unprecedented assumption that the CVN 78 would take fewer labor hours than its more mature predecessor—the CVN 77. The shipbuilder’s estimate—22 percent higher in cost was more in line with actual historical experience. Moreover, key technologies, not part of the shipbuilder’s estimates because they would be furnished by the government, were already behind and had absorbed much of their schedule margin.\nCongress expressed similar concerns about Ford-class carrier costs. The John Warner National Defense Authorization Act for Fiscal Year 2007 included a provision that established (1) a procurement cost cap for CVN 78 of $10.5 billion, plus adjustments for inflation and other factors, and (2) a procurement cost cap for subsequent Ford-class carriers of $8.1 billion each, plus adjustments for inflation and other factors. The legislation in effect required the Navy to seek statutory authority from Congress in the event it determined that adjustments to the cost cap were necessary, and the reason for the adjustments was not one of six factors permitted in the law.\nThe risks we assessed in 2007 have been realized, compounded by additional construction and technical challenges. Several critical technologies, in particular, EMALS, AAG, and DBR, encountered problems in development, which resulted in delays to land-based testing. It was important for these technologies to be thoroughly tested on land so that problems could be discovered and fixes made before installing production systems on the ship. In an effort to meet required installation dates aboard CVN 78, the Navy elected to largely preserve the construction schedule and produce some of these systems prior to demonstrating their maturity in land-based testing. This strategy resulted in significant concurrency between developmental testing and construction, as shown in figure 1 below.\nThe burden of completing technology development now falls during the most expensive phase of ship construction. I view this situation as latent concurrency in that the overlap between technology development, testing, and construction was not planned for or debated when the program was started. Rather, it emerged as a consequence of optimistic planning. Concurrency has been made more acute as the Navy has begun testing the key technologies that are already installed on the ship, even as land based testing continues. Moreover, the timeframes for post-delivery testing, i.e. the period when the ship would demonstrate many of its capabilities, are being compressed by ongoing system delays. This tight test schedule could result in deploying without fully tested systems if the Navy maintains the ship’s ready-to-deploy date in 2020.\nThe issues described above, along with material shortfalls, engineering challenges, and delays developing and installing critical systems, drove inefficient out-of-sequence work, which resulted in significant cost increases. This, in turn, required the Navy to seek approval from Congress to raise the legislative cost cap, which it attributed to construction cost overruns and economic inflation (as shown in figure 2 below).\nAlong with costs, the Navy’s estimates of the number of labor hours required to construct the ship have also increased (see table 2).\nRecalling that in 2007, the Navy’s estimate was 2 million hours lower than the shipbuilder’s, the current estimate is a big increase. On the other hand, it is more in line with a first-in-class ship like CVN 78; that is to say, it was predictable. To manage remaining program risks, the Navy deferred some construction work and installation of mission-related systems until after ship delivery. Although this strategy may provide a funding reserve in the near term, it still may not be sufficient to cover all potential cost risks. In particular, as we reported in November 2014, the schedule for completing testing of the equipment and systems aboard the ship had become increasingly compressed and continues to lag behind expectations. This is a particularly risky period for CVN 78 as the Navy will need to resolve technical deficiencies discovered through testing—for critical technologies or the ship—concurrent with latter stage ship construction activities, which is generally more complex than much of the work occurring in the earlier stages of construction.\nRisks to the ship’s capability we identified in our August 2007 report have also been realized. We subsequently found in September 2013 and November 2014 that challenges with technology development are now affecting planned operational capability beyond the ship’s delivery (as shown in table 3).\nSpecifically, CVN 78 will not demonstrate its increased sortie generation rate due to low reliability levels of key aircraft launch and recovery systems before it is ready to deploy to the fleet. Further, required reductions in personnel remain at risk, as immature systems may require more manpower to operate and maintain than expected. Ultimately, these limitations signal a significant compromise to the initially promised capability. The Navy believes that, despite these pressures, it will still be able to achieve the current $12.9 billion congressional cost cap. While this remains to be seen, the Navy’s approach, nevertheless, results in a more expensive, yet less complete and capable ship at delivery than initially planned. Even if the cost cap is met, it will not alter the ultimate cost of the ship. Additional costs will be borne later—outside of CVN 78’s acquisition costs—to account for, for example, reliability shortfalls of key systems. In such cases, the Navy will need to take costly actions to maintain operational performance by adding maintenance personnel and spare parts. Reliability shortfalls, in turn, will drive ship life cycle cost increases related to manning, repairs, and parts sparing. Deferred systems and equipment will at some point be retrofitted back onto the ship.", "Although increases have already been made to the CVN 79’s cost cap and tradeoffs made to the ship’s scope, it still has an unrealistic business case. In 2013, the Navy requested congressional approval to increase CVN 79’s cost cap from $8.1 billion to $11.5 billion, citing inflation as well as cost increases based on CVN 78’s performance. Since the Ford-class program’s formal system development start in 2004, CVN 79’s planned delivery has been delayed by 4 years and the ship will be ready for deployment 15 months later than expected in 2013.\nThe Navy recently awarded a construction contract for CVN 79 which it believes will allow the program to achieve the current $11.5 billion legislative cost cap. Similar to the lead ship, the business case for CVN 79 is not commensurate with the costs needed to produce an operational ship. By any measure, CVN 79 should cost less than CVN 78, as it will incorporate important lessons learned on construction sequencing and other efficiencies. While it may cost less than its predecessor, CVN 79 is likely to cost more than estimated. As we reported in November 2014, the Navy’s strategy to achieve the cost cap: 1) relies on optimistic assumptions of construction efficiencies and cost savings; (2) shifts work—including installation of mission systems—needed to make the ship fully operational until after ship delivery; and (3) delivers the ship with the same baseline capability as CVN 78, with the costs of a number of planned mission system upgrades and modernizations postponed until future maintenance periods. Even with ambitious assumptions and planned improvements, the Navy’s current estimate for the CVN 79 stands at $11.5 billion—already at the cost cap. For perspective, the Director of the Department of Defense’s (DOD) Cost Assessment and Program Evaluation office projects that the Navy will exceed the congressional cost cap by about $235 million. The Congressional Budget Office estimates for CVN 79 are even higher; at a total cost of over $12.5 billion—which, if realized, would be over $1 billion above the current congressional cost cap.\nSimilar to CVN 78, the Navy is assuming the shipbuilder will achieve efficiency gains that are unprecedented in aircraft carrier construction. While the shipbuilder has initiated significant revisions in its processes for building the ship that are expected to reduce labor hours, the Navy’s cost estimate for CVN 79 is predicated on an over 9 million labor hour reduction compared to CVN 78. For perspective, this estimate is not only lower than the 42.7 million hours originally estimated for CVN 78, it is 10 percent lower than what was achieved on CVN 77, the last Nimitz-class carrier. Previous aircraft carrier constructions have reduced labor hours by 3.2 million hours at most. Further, the Navy estimates that it will save over $180 million by replacing the dual band radar in favor of an alternative radar system, which it expects will provide a better technological solution at a lower cost. Cost savings are assumed, in part, because the Navy expects the radar to work within the current design parameters of the ship’s island. However, the Navy has not yet awarded a contract to develop the new radar solution. If design modifications are needed to the ship’s island, CVN 79 costs will increase, offsetting the Navy’s estimate of savings. Again for perspective, the Navy initially planned to install DBR on CVN 77 and it has taken the Navy over 10 years to develop the DBR, which is still not yet through testing.\nFinally, achieving the legislative cost cap of $11.5 billion is predicated on executing a two-phased delivery strategy for CVN 79, which will shift some construction work and installation of the warfare and communications systems to after ship delivery. By design, this strategy will result in a less capable and less complete ship at delivery—the end of the first phase—as shown in figure 3 below: According to the Navy, delaying procurement and installation of warfare and communications systems will prevent obsolescence before the ship’s first deployment in 2027 and allow the Navy to introduce competition for the ship’s systems and installation work after delivery.\nAs we reported in November 2014, the Navy’s two-phased approach transfers the costs of a number of known capability upgrades, including decoy launching systems, torpedo defense enhancements, and Joint Strike Fighter aircraft related modifications, previously in the CVN 79 baseline to other (non-CVN 79 shipbuilding) accounts, by deferring installation to future maintenance periods. While such revisions reduce the end cost of CVN 79 in the near term, they do not reduce the ultimate cost of the ship, as the costs for these upgrades will eventually need to be paid—just at a later point in the ship’s life cycle.", "That CVN 78 will deliver at higher cost and less capability, while disconcerting, was predictable. Unfortunately, it is also unremarkable, as it is a typical outcome of the weapon system acquisition process. Along these lines, what does the CVN 78’s experience say about the acquisition process and what lessons can be learned from it? In many ways, CVN 78 represents a familiar outcome in Navy shipbuilding programs. Across the shipbuilding portfolio, cost growth for recent lead ships has been on the order of 28 percent (see figure 4).\nFigure 4 above further illustrates the similarity between CVN 78 and other shipbuilding programs authorized to start construction around the same time. Lead ships with the highest percentages of cost growth, such as the Littoral Combat Ships and DDG 1000, were framed by steep programmatic challenges. Similar to the CVN 78, these programs have been structured around unexecutable business cases in which ship construction begins prior to demonstrating key knowledge, resulting in costly, time-consuming, and out-of-sequence work during construction and undesired capability tradeoffs.\nSuch outcomes persist even though DOD and Congress have taken steps to address long-standing problems with DOD acquisitions. These reforms emphasize sound management practices—such as realistic estimating, thorough testing, and accurate reporting—and were implemented to enhance DOD’s acquisition policy, which already provided a framework for managers to successfully develop and execute acquisition programs. Today these practices are well known. However, outcomes of the Ford-class program illustrate the limits of focusing on policy-and-practice related aspects of weapon system development without understanding incentives to sacrifice realism to win support for a program.\nStrong incentives encourage deviations from sound acquisition practices. In the commercial marketplace, investment in a new product represents an expense. Company funds must be expended and will not provide a return until the product is developed, produced, and sold. In DOD, new products represent a revenue, in the form of a budget line. A program’s return on investment occurs as soon as the funding is initiated. The budget process results in funding major program commitments before knowledge is available to support such decisions. Competition with other programs vying for funding puts pressure on program sponsors to project unprecedented levels of performance (often by counting on unproven technologies) while promising low cost and short schedules. These incentives, coupled with a marketplace that is characterized by a single buyer (DOD), low volume and limited number of major sources, create a culture in weapon system acquisition that encourages undue optimism about program risks and costs. To the extent Congress funds such programs as requested, it sanctions—and thus rewards—optimism and unexecutable business cases. To be sure, this is not to suggest that the acquisition process is foiled by bad actors. Rather, program sponsors and other participants act rationally within the system to achieve goals they believe in. Competitive pressures for funding simply favor optimism in setting cost, schedule, technical, and other estimates.\nThe Ford-class program illustrates the pitfalls of operating in this environment. Optimism has pervaded the program from the start. Initially, the program sought to introduce technology improvements gradually over a number of successive carriers. However, in 2002, DOD opted to forgo the program’s evolutionary acquisition strategy, in favor of achieving revolutionary technological achievements on the lead ship. Expectations of a more capable ship were promised, with cost and schedule goals that were out of balance with the technical risks. Further, the dynamics of weapon system budgeting—and in particular, shipbuilding—resulted in significant commitments made well in advance of critical acquisition decisions, most notably, the authorization to start construction. Beginning in 2001, the Ford Class program began receiving advanced procurement funding to initiate design activities, procure long-lead materials, and prepare for construction, as shown in figure 5 below.\nBy the time the Navy requested funding for construction of CVN 78 in 2007 it had already received $3.7 billion in advance procurement. It used some of these funds to build 13 percent of the ship’s construction units. Yet, at that time the program had considerable unknowns—technologies were immature and cost estimates unreliable. Similarly, in 2013, Congress had already appropriated nearly $3.3 billion in funding for CVN 79 construction. This decision was made even though the Navy’s understanding of the cost required to construct and deliver the lead ship was incomplete. A similar scenario exists today, as the Navy is requesting funding for advanced procurement of CVN 80, while also constructing CVN 78 and CVN 79. While these specifics relate to the Ford-class carrier, the principles apply to all major weapon system acquisitions. That is, commitments to provide funding in the form of budget requests, Congressional authorizations, and Congressional appropriations are made well in advance of major program commitments, such as the decision to approve the start of a program. At the time the funding commitments are made, less verifiable knowledge is available about a program’s cost, schedule, and technical challenges. This creates a vacuum for optimism to fill. When the programmatic decision point arrives, money is already on the table, which creates pressure to make a “go” decision, regardless of the risks now known to be at hand.\nThe environment of Navy shipbuilding is unique as it is characterized by a symbiotic relationship between buyer (Navy) and builder. This is particularly true in the case of aircraft carriers, where there is only one domestic entity capable of constructing, testing, and delivering nuclear- powered aircraft carriers. Consequently, the buyer has a strong interest in sustaining the shipbuilder despite shortfalls in performance. Under such a scenario, the government has a limited ability to negotiate favorable contract terms in light of construction challenges and virtually no ability to walk away from the investment once it is underway.", "The experiences of the Ford-class program are not unique—rather, they represent a typical acquisition outcome. The cost growth and other problems seen today were known to be likely in 2007—before a contract was signed to construct the lead ship. Yet CVN 78 was funded and approved despite a knowingly deficient business case; in fact, the ship has been funded for nearly 15 years. It is too simplistic to look at the program as a product of a broken acquisition process; rather it is indicative of a process that is in equilibrium. It has worked this way for decades with similar outcomes: weapon systems that are the best in the world, but cost significantly more, take longer, and perform less than advertised. The rules and policies are clear about what to do, but other incentives force compromises of good judgment. The persistence of undesirable outcomes such as cost growth and schedule delays suggests that these are consequences that participants in the process have been willing to accept. It is not broken in the sense that it is rational; that is, program sponsors must promise more for less in order to win funding approval. This naturally leads to an unexecutable business case. Once funded and approved, reality sets in and the program must then offer less for more.\nWhere do we go from here? Under consideration this year are a number of acquisition reforms. While these aim to change the policies that govern weapon system acquisition, they do not sufficiently address the incentives that drive the behavior. As I described above, the acquisition culture in general rewards programs for moving forward with unrealistic business cases. Early on, it was clear that the Ford-class program faced significant risks due to the development, installation and integration of numerous technologies. Yet, these risks were taken on the unfounded hope that they were manageable and that risk mitigation plans were in place. The budget and schedule did not account for these risks. Funding approval— authorizing programs and appropriating funds are some of the most powerful oversight tools Congress has. The reality is once funding starts, other tools of oversight are relatively weak—they are no match for the incentives to over-promise. Consequently, the key is to ensure that new programs exhibit desirable principles before they are approved and funded. There is little that can be done from an oversight standpoint on the CVN 78. In fact, there is little that can be done on the CVN 79, either. Regardless of how costs will be measured against cost caps, the full cost of the ships—as yet unknown—will ultimately be borne. For example, while the Joint Precision Approach and Landing System has been deferred from the first two ships, eventually it will have to be installed on them to accept the F-35 fighter. The next real oversight opportunity is on the CVN 80, which begins funding in fiscal year 2016.\nGoing forward, there are two acquisition reform challenges I would like to put on the table. The first is what to do about funding. Today, DOD and Congress must approve and fund programs ahead of major decision points and key information. With money in hand, it is virtually impossible to disapprove going forward with the program. There are sound financial reasons for making sure money is available to execute programs before they are approved. But they are also a cause of oversold business cases. Second, in the numerous acquisition reform proposals made recently, there is much for DOD to do. But, Congress, too, has a role in demanding realistic business cases through the selection and timing of the programs it chooses to authorize and fund. What it does with funding sets the tone for what acquisition practices are acceptable.\nMr. Chairman and Members of the Committee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.", "If you or your staff has any questions about this statement, please contact Paul L. Francis at (202) 512-4841 or FrancisP@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 are Diana Moldafsky, Assistant Director; Charlie Shivers; Burns C. Eckert; Laura Greifner; Kelsey Hawley; Jenny Shinn; Ozzy Trevino; Abby Volk; and Alyssa Weir.", "Improve the realism of CVN 78’s budget estimate. Improve Navy’s cost surveillance capability.\nDOD Response and actions\nWhile the department agreed with our recommendations in concept, it has not fully taken action to implement them. The CVN 78 cost estimate continues to reflect undue optimism.\nConduct a cost-benefit analysis on required CVN 78\nDOD agreed with the need for a cost-benefit capabilities, namely reduced manning and the increased sortie generation rate prior to ship delivery. analysis, but did not plan to fully assess CVN 78 capabilities until the completion of operational testing after ship delivery.\nUpdate the CVN 78 test plan before ship delivery to allot sufficient time after ship delivery for land based testing to complete prior to shipboard testing. Adjust the CVN 78 planned post-delivery test schedule to ensure that system integration testing is completed before IOT&E.\nDOD agreed with our recommendation to update\nDefer the CVN 79 detail design and construction the CVN 78 test plan before delivery and has since updated the test and evaluation master plan (TEMP). However, it did not directly address our recommendation related to ensuring that sufficient time is allotted to complete land-based testing prior to beginning integrated testing. contract until land-based testing for critical systems was complete and update the CVN 79 cost estimate on the basis of actual costs and labor hours needed to construct CVN 78 during the recommended contract deferral period of CVN 79.\nDOD partially agreed with our recommendation to adjust the CVN 78 planned post-delivery schedule but current test plans still show significant overlap between integrated test events and operational testing.\nDOD disagreed with our recommendation to defer the award of the CVN 79’s detail design and construction contract. However, shortly after we issued our report, the Navy postponed the contract award citing the need to continue contract negotiations. While DOD did not agree to defer the CVN 79 contract as recommended, it did agree to update the CVN 79 cost estimate on the basis of CVN 78’s actual costs and labor hours. DOD has updated CVN 79’s budget estimate which we note is based on optimistic assumptions.\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, 1, 1, 1 ], "alignment": [ "h0_full h3_full", "h1_full", "h0_full h3_full h2_full", "h2_full", "", "h2_full" ] }

{ "question": [ "How did the Ford-class aircraft carrier's lead ship begin construction?", "How does a sound business case benefit construction?", "How was the business case unrealistic?", "How has the business case since worsened?", "What are the current estimates for the CVN 78's performance?", "Why is the business case for CVN 79 not realistic?", "What are the predictions for the cost of CVN 79?", "How does the Navy plan to achieve the cost cap?", "What effect does the near-completeness of CVN 78 have?", "What concept does the carrier's acquisition history illustrate?", "How do these problems persist for other projects?", "How does the budget and funding for programs affect their acquisitions?", "What else can affect acquisition?", "How were the Navy's goals for the Ford-class program ambitious?", "How has the program's output differed from expected?", "How can the program prevent further disappointment?" ], "summary": [ "The Ford-class aircraft carrier's lead ship began construction with an unrealistic business case.", "A sound business case balances the necessary resources and knowledge needed to transform a chosen concept into a product.", "Yet in 2007, GAO found that CVN 78 costs were underestimated and critical technologies were immature—key risks that would impair delivering CVN 78 at cost, on-time, and with its planned capabilities.", "Over the past 8 years, the business case has predictably decayed in the form of cost growth, testing delays, and reduced capability—in essence, getting less for more. Today, CVN 78 is more than $2 billion over its initial budget. Land-based tests of key technologies have been deferred by years while the ship's construction schedule has largely held fast.", "The CVN 78 is unlikely to achieve promised aircraft launch and recovery rates as key systems are unreliable. The ship must complete its final, more complex, construction phase concurrent with key test events. While problems are likely to be encountered, there is no margin for the unexpected. Additional costs are likely.", "Similarly, the business case for CVN 79 is not realistic. The Navy recently awarded a construction contract for CVN 79 which it believes will allow the program to achieve the current $11.5 billion legislative cost cap. Clearly, CVN 79 should cost less than CVN 78, as it will incorporate lessons learned on construction sequencing and other efficiencies.", "While it may cost less than its predecessor, CVN 79 is likely to cost more than estimated.", "As GAO found in November 2014, the Navy's strategy to achieve the cost cap relies on optimistic assumptions of construction efficiencies and cost savings—including unprecedented reductions in labor hours, shifting work until after ship delivery, and delivering the ship with the same baseline capability as CVN 78 by postponing planned mission system upgrades and modernizations until future maintenance periods.", "Today, with CVN 78 over 92 percent complete as it reaches delivery in May 2016, and the CVN 79 on contract, the ability to exercise oversight and make course corrections is limited.", "Yet, it is not too late to examine the carrier's acquisition history to illustrate the dynamics of shipbuilding—and weapon system—acquisition and the challenges they pose to acquisition reform.", "The carrier's problems are by no means unique; rather, they are quite typical of weapon systems. Such outcomes persist despite acquisition reforms the Department of Defense and Congress have put forward—such as realistic estimating and “fly before buy.”", "Competition with other programs for funding creates pressures to overpromise performance at unrealistic costs and schedules. These incentives are more powerful than policies to follow best acquisition practices and oversight tools. Moreover, the budget process provides incentives for programs to be funded before sufficient knowledge is available to make key decisions.", "Complementing these incentives is a marketplace characterized by a single buyer, low volume, and limited number of major sources. The decades-old culture of undue optimism when starting programs is not the consequence of a broken process, but rather of a process in equilibrium that rewards unrealistic business cases and, thus, devalues sound practices.", "The Navy set ambitious goals for the Ford-class program, including an array of new technologies and design features that were intended to improve combat capability and create operational efficiencies, all while reducing acquisition and life-cycle costs.", "The lead ship, CVN 78, has experienced significant cost growth with a reduced capability expected at delivery. More cost growth is likely.", "While CVN 78 is close to delivery, examining its acquisition history may provide an opportunity to improve outcomes for the other ships in the class and illustrate the dynamics of defense acquisition." ], "parent_pair_index": [ -1, 0, 0, 2, 0, -1, 0, -1, -1, -1, 1, 1, 1, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Overview of CJS", "Department of Commerce", "Department of Justice", "The Science Agencies", "The Office of Science and Technology Policy", "The National Aeronautics and Space Administration", "The National Science Foundation", "Related Agencies", "FY2015 and FY2016 Appropriations for CJS", "FY2015 Appropriations", "The Administration's FY2016 Request", "The House-Passed FY2016 CJS Appropriations Bill", "The Senate Committee-Reported FY2016 CJS Appropriations Bill", "FY2016 Appropriations", "Historical Funding for CJS" ], "paragraphs": [ "", "This report tracks and provides an overview of actions taken by the Administration and Congress to provide FY2016 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. It also provides an overview of enacted FY2015 appropriations for agencies and bureaus funded as part of the annual appropriation for CJS.\nThe amounts in this report reflect only new appropriations. Therefore, the amounts do not include any rescissions of unobligated or de-obligated balances that may be counted as offsets to newly enacted appropriations, nor do they include any scorekeeping adjustments (such as the balance on the Crime Victims Fund).\nThe FY2015-enacted amounts were taken from the joint explanatory statement to accompany P.L. 113-235 , printed in the December 11, 2014, Congressional Record . The FY2016-requested amounts were taken from H.Rept. 114-130 . The House-passed amounts were taken from the text of H.R. 2578 and H.Rept. 114-130 . The Senate committee-reported amounts were taken from S.Rept. 114-66 . The FY2016-enacted appropriations were taken from the text of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) and the joint explanatory statement to accompany the act, printed in the December 17, 2015, Congressional Record .\nThis report only provides an overview of the appropriations for CJS. For a more detailed review of the appropriations for some of the CJS departments and agencies, please see the following reports:\nCRS Report R44141, FY2016 Appropriations for the Census Bureau and Bureau of Economic Analysis , by [author name scrubbed]. CRS Report R44112, Economic Development Administration: FY2016 Appropriations , by [author name scrubbed]. CRS Report R43908, The National Institute of Standards and Technology: An Appropriations Overview , by [author name scrubbed] CRS Report RS20906, U.S. Patent and Trademark Office Appropriations Process: A Brief Explanation , by [author name scrubbed]. CRS Report R43866, The National Telecommunications and Information Administration (NTIA): An Overview of Programs and Funding , by [author name scrubbed]. CRS Report R44098, The National Oceanic and Atmospheric Administration (NOAA) Budget for FY2016 , by [author name scrubbed]. CRS Report R43985, FY2016 Appropriations for the Department of Justice (DOJ) , coordinated by [author name scrubbed]. CRS Report R44189, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF): FY2016 Appropriations , by [author name scrubbed]. CRS Report R43419, NASA Appropriations and Authorizations: A Fact Sheet , by [author name scrubbed]. CRS Report R44170, The National Science Foundation: FY2016 Budget Request and Funding History , by [author name scrubbed]. CRS Report R43935, Office of Science and Technology Policy (OSTP): History and Overview , by [author name scrubbed] and [author name scrubbed] CRS Report R43970, Commerce, Justice, Science, and Related Agencies Appropriations (CJS): Trade-Related Agencies , by [author name scrubbed]. CRS Report RL34016, Legal Services Corporation: Background and Funding , by [author name scrubbed].", "The annual CJS appropriations act provides funding for the Departments of Commerce and Justice, the science agencies, and several related agencies. Appropriations for the Department of Commerce include funding for agencies such as the Census Bureau, the U.S. Patent and Trademark Office, the National Oceanic and Atmospheric Administration, and the National Institute of Standards and Technology. Appropriations for the Department of Justice provide funding for agencies such as the Federal Bureau of Investigation, the Bureau of Prisons, the U.S. Marshals, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives, along with funding for a variety of grant programs for state, local, and tribal governments. The vast majority of funding for the science agencies goes to the National Aeronautics and Space Administration and the National Science Foundation. The annual appropriation for the related agencies includes funding for agencies such as the Legal Services Corporation and the Equal Employment Opportunity Commission.", "The mission of the Department of Commerce is to promote \"job creation, economic growth, sustainable development and improved standards of living ... by working in partnership with businesses, universities, communities and ... workers.\" The department has wide-ranging responsibilities including trade, economic development, technology, entrepreneurship and business development, monitoring the environment, forecasting weather, managing marine resources, and statistical research and analysis. The Department of Commerce affects trade and economic development by working to open new markets for U.S. goods and services and promoting pro-growth business policies. The department also invests in research and development to foster innovation. The Department of Commerce manages and monitors coastal and ocean resources and assets to support both environmental and economic health. It also conducts the constitutionally mandated decennial census. Finally, the Department of Commerce operates the national patent system.\nThe following agencies within the Department of Commerce carry out these missions:\nInternational Trade Administration (ITA) seeks to develop the export potential of U.S. firms and improve the trade performance of U.S. industry; Bureau of Industry and Security (BIS) enforces U.S. export laws consistent with national security, foreign policy, and short-supply objectives; Economic Development Administration (EDA) provides grants for economic development projects in economically distressed communities and regions; Minority Business Development Agency (MBDA) seeks to promote private- and public-sector investment in minority businesses; Economics and Statistics Administration (ESA) , excluding the Census Bureau, provides (1) information on the state of the economy through preparation, development, and interpretation of economic data, and (2) analytical support to department officials in meeting their policy responsibilities; Census Bureau , a component of ESA, collects, compiles, and publishes a broad range of economic, demographic, and social data; National Telecommunications and Information Administration (NTIA) advises the President on domestic and international communications policy, manages the federal government's use of the radio frequency spectrum, and performs research in telecommunications sciences; United States Patent and Trademark Office (USPTO) examines and approves applications for patents of claimed inventions and registration of trademarks; National Institute of Standards and Technology (NIST) assists industry in developing technology to improve product quality, modernize manufacturing processes, ensure product reliability, and facilitate rapid commercialization of products on the basis of new scientific discoveries; and National Oceanic and Atmospheric Administration (NOAA) provides scientific, technical, and management expertise to (1) promote safe and efficient marine and air navigation; (2) assess the health of coastal and marine resources; (3) monitor and predict the coastal, ocean, and global environments (including weather forecasting); and (4) protect and manage the nation's coastal resources.", "The mission of the Department of Justice (DOJ) is to \"enforce the law and defend the interests of the United States according to the law; to ensure public safety against threats foreign and domestic; to provide federal leadership in preventing and controlling crime; to seek just punishment for those guilty of unlawful behavior; and to ensure fair and impartial administration of justice for all Americans.\" DOJ provides legal advice and opinions, upon request, to the President and executive branch department heads. It prosecutes individuals accused of violating federal laws and represents the U.S. government in court. The department enforces federal criminal and civil laws, including antitrust, civil rights, environmental, and tax laws. DOJ, through agencies such as the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, investigates organized and violent crime, illegal drugs, and gun and explosives violations. The department, through the U.S. Marshals Service, protects the federal judiciary, apprehends fugitives, and detains individuals who are not granted pretrial release. It incarcerates individuals convicted of violating federal laws. DOJ also provides grants and training to state, local, and tribal law enforcement agencies.\nThe major functions of DOJ agencies and offices are described below:\nUnited States Attorneys prosecute criminal offenses against the United States, represent the federal government in civil actions, and initiate proceedings for the collection of fines, penalties, and forfeitures owed to the United States; United States Marshals Service (USMS) provides security for the federal judiciary, protects witnesses, executes warrants and court orders, manages seized assets, detains and transports prisoners who have not been sentenced, and apprehends fugitives; Federal Bureau of Investigation (FBI) investigates violations of federal criminal law; helps protect the United States against terrorism and hostile intelligence efforts; provides assistance to other federal, state, and local law enforcement agencies; and shares jurisdiction with the Drug Enforcement Administration over federal drug violations; Drug Enforcement Administration (DEA) investigates federal drug law violations; coordinates its efforts with state, local, and other federal law enforcement agencies; develops and maintains drug intelligence systems; regulates legitimate controlled substances activities; and conducts joint intelligence-gathering activities with foreign governments; Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforces federal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives (it was transferred from the Department of the Treasury to DOJ by the Homeland Security Act of 2002 ( P.L. 107-296 )); Federal Prison System ( Bureau of Prisons, BOP ) provides for the custody and care of the federal prison population, the maintenance of prison-related facilities, and the boarding of sentenced federal prisoners incarcerated in state and local institutions; Office on Violence Against Women (OVW) coordinates legislative and other initiatives relating to violence against women and administers grant programs to help prevent, detect, and stop violence against women, including domestic violence, sexual assault, and stalking; Office of Justice Programs (OJP) manages and coordinates the activities of the Bureau of Justice Assistance, Bureau of Justice Statistics, National Institute of Justice, Office of Juvenile Justice and Delinquency Prevention, and Office of Victims of Crime; and Community Oriented Policing Services (COPS) advances the practice of community policing by awarding grants to law enforcement agencies to hire and train community policing professionals, acquire and deploy crime-fighting technologies, and develop and test innovative policing strategies.", "The science agencies fund and otherwise support research and development (R&D) and related activities across a wide variety of federal missions, including national competitiveness, energy and the environment, and fundamental discovery.", "Congress established the Office of Science and Technology Policy (OSTP) through the National Science and Technology Policy, Organization, and Priorities Act of 1976 ( P.L. 94-282 ). The act states that \"the primary function of the OSTP director is to provide, within the Executive Office of the President, advice on the scientific, engineering, and technological aspects of issues that require attention at the highest level of Government.\" The OSTP director also manages the National Science and Technology Council (NSTC), which coordinates science and technology policy across the executive branch of the federal government, and co-chairs the President's Council of Advisors on Science and Technology (PCAST), a council of external advisors that provides advice to the President on matters related to science and technology policy.", "The National Aeronautics and Space Administration (NASA) was created by the National Aeronautics and Space Act of 1958 (P.L. 85-568) to conduct civilian space and aeronautics activities. It has four mission directorates. The Human Exploration and Operations Mission Directorate is responsible for human spaceflight activities, including the International Space Station and development efforts for future crewed spacecraft. The Science Mission Directorate manages robotic science missions, such as the Hubble Space Telescope, the Mars rover Curiosity, and satellites for Earth science research. The Space Technology Mission Directorate develops new technologies for use in future space missions, such as advanced propulsion and laser communications. The Aeronautics Research Mission Directorate conducts research and development on aircraft and aviation systems. In addition, NASA's Office of Education manages formal and informal education programs for school children, college and university students, and the general public.", "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 \"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.", "The annual CJS appropriations act includes funding for seven related agencies with missions or responsibilities similar to those of the Departments of Commerce and Justice or the science agencies. The related agencies are the U.S. Commission on Civil Rights, the Equal Employment Opportunity Commission, the International Trade Commission, the Legal Services Corporation, the Marine Mammal Commission, the Office of the U.S. Trade Representative, and the State Justice Institute.", "", "On December 16, 2014, President Obama signed into law the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ). The act provided a total of $61.753 billion for the agencies and bureaus funded by the annual CJS appropriations act, including $8.467 billion for the Department of Commerce, $27.030 billion for DOJ, $25.360 billion for the science agencies, and $896 million for the related agencies.", "The Administration requested a total of $66.332 billion for CJS for FY2016, which was 7.4% more than what Congress appropriated for FY2015. The Administration proposed increasing funding for the Department of Commerce by 15.8%, DOJ by 8.2%, the science agencies by 3.5%, and the related agencies by 15.1%. The FY2016 budget request for CJS included the following:\nA proposed 37.9% increase for the Census Bureau, which was mostly the result of a request for a $382 million increase (45.5%) for the Periodic Censuses and Programs account. A request for $150 million under NIST's Industrial Technology Services account for a National Network for Manufacturing Innovation program, which would have sought to create an effective manufacturing research infrastructure for industry and academia to solve industry-relevant problems. A requested 45.9% increase ($96 million) in the COPS program, most of which would have gone to the COPS hiring program. A proposed 39.6% increase in funding for the Administrative Review and Appeals account. A request for a $152 million (17.2%) increase for DOJ's General Legal Activities account, most of which would have gone to DOJ's Criminal Division. A proposed $959 million (193.6%) increase in the USMS's Federal Prisoner Detention account. The proposed increase was the result of Congress supplementing the Federal Prisoner Detention account for FY2015 by transferring $1.1 billion in unobligated balances from the Assets Forfeiture Fund. A request for an increase of $129 million (21.6%) in funding for NASA's Space Technology account, $149 million (3.4%) for the Exploration account, and $176 million (4.6%) for the Space Operations account. The FY2016 budget request also proposed an $80 million (12.2%) reduction in NASA's Aeronautics account. A proposed $253 million (4.3%) increase for NSF's Research and Related Activities account. A request for a 55.6% increase in funding for the International Trade Commission and a 20.5% increase in funding for the Legal Services Corporation.", "H.R. 2578 would have provided a total of $62.845 billion for CJS. The proposed funding level would have been 1.8% more than the FY2015 appropriation, but 5.3% less than the Administration's request. The House recommended $8.086 billion for the Department of Commerce, $28.007 billion for DOJ, $25.929 billion for the science agencies, and $823 million for the related agencies. In general, the House recommended funding all of the accounts in CJS at an amount below the Administration's request. The House-passed bill included the following:\nA recommended $501.1 million for DOJ's Office on Violence Against Women account, an amount that was 5.8% greater than the Administration's request and 16.5% greater than the FY2015 appropriation. A recommended 8.9% reduction in funding for the Census Bureau compared to the FY2015 appropriation. The amount recommended by the House would have been 33.9% below the Administration's request. A proposed reduction in funding for NOAA by 5.0% compared to FY2015 funding, which was mostly a result of a proposed 10.1% reduction in the Procurement, Acquisition, and Construction account. A proposed 21.8% increase in funding for the Administrative Review and Appeals account. A recommended 113.6% increase in the Federal Prisoner Detention account. The proposed increase was the result of Congress supplementing the Federal Prisoner Detention account for FY2015 by transferring $1.1 billion in unobligated balances from the Assets Forfeiture Fund. A proposal to eliminate the Research, Evaluation, and Statistics account. The committee recommended allowing DOJ to fund the Bureau of Justice Statistics and the National Institute of Justice with set-asides from DOJ grant programs. A recommendation to reduce funding for the State and Local Law Enforcement Assistance and Juvenile Justice Programs accounts by 8.0% and 25.8%, respectively. A proposal to increase the obligation cap on the Crime Victims Fund to $2.705 billion, which would have been approximately 170% more than what the Administration requested for FY2016. A proposal to increase funding for NASA's Exploration and Space Technology accounts by 9.2% and 4.9%, respectively, but the House also proposed to reduce funding for the Aeronautics account by 7.8%. A proposed 20.0% reduction in funding for the Legal Services Corporation.", "The Senate Committee on Appropriations recommended $62.849 billion for CJS, an amount that was 1.8% greater than the FY2015 appropriation, 5.3% below the Administration's request, and nearly equal to the House-passed amount. The amount recommended by the committee included $8.477 billion for the Department of Commerce, $27.828 billion for DOJ, $25.639 billion for the science agencies, and $906 million for the related agencies. Like the House, the Senate Committee on Appropriations recommended funding most of the accounts in CJS at a level below the Administration's request. The amount recommended by the committee included the following:\nA proposed 5.0% increase in funding for NIST's Industrial Technology Services account, compared to FY2015 funding. The amount was also 11.5% more than what was recommended by the House. However, it was 52.6% below the Administration's proposal, which was largely the result of the committee not recommending $150 million in funding the Administration requested for a national network and manufacturing innovation program. A proposal to fund the Census Bureau at a level that was 13.7% greater than what the House recommended and 3.7% greater than the FY2015 appropriation, but 24.8% below the Administration's request. A recommendation to fund NOAA at a level that would have been 4.1% greater than the House-passed amount. However, the Senate committee-reported amount would have been 1.1% less than the FY2015 appropriation and 9.9% less than the Administration's request. A proposed 17.3% increase in funding for DOJ's Administrative Review and Appeals account, compared to FY2015 funding. However, the recommendation would have been 16.0% less than the Administration's request and 3.7% less than what the House recommended. A recommended 193.6% increase in the Federal Prisoner Detention account, compared to FY2015 funding. The committee-reported amount would have been 37.5% more than the House-passed amount. The proposed increase is the result of Congress supplementing the Federal Prisoner Detention account for FY2015 by transferring $1.1 billion in unobligated balances from the Assets Forfeiture Fund. The Senate Committee on Appropriations would have provided $234 million for the Office on Violence against Women account, an amount that would have been 45.6% less than the FY2015 appropriation, 50.6% less than the Administration's request, and 53.3% less than what the House recommended. A proposed 10.2% increase in the obligation cap for the Crime Victims Fund. A recommended 18.7% reduction in funding for the State and Local Law Enforcement Assistance account. The recommended amount was also 11.6% less than the House-passed amount. A proposal to increase funding for NASA's Space Operations account by 24.3% and to decrease NASA's Exploration account by 12.1%. These changes would have resulted mostly from moving funds for the Commercial Crew program from Exploration to Space Operations; without that move, the recommendation for Space Operations would have been nearly flat and the recommendation for Exploration would have been an increase. The Senate Committee on Appropriations also recommended reducing funding for NASA's Aeronautics (19.4%), Education (9.2%), and Construction and Environmental Compliance and Restoration (15.8%) accounts relative to the FY2015 appropriation. The Senate Committee on Appropriations would have provided 28.3% more for the Legal Services Corporation than the House, but the committee-reported amount would have been 14.8% less than the Administration's request.", "On December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). Division B of the act (the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2016) provides $66.000 billion for CJS, which includes $9.246 billion for the Department of Commerce, $29.090 billion for the Department of Justice, $26.754 billion for the science agencies, and $910 million for the related agencies. The FY2016 appropriation for CJS is 6.9% greater than the FY2015 appropriation, but 0.5% less than the Administration's request. The FY2016-enacted appropriation for CJS is 5.0% greater than the amount recommended by the House and the Senate Committee on Appropriations. In general, the FY2016 appropriation for CJS accounts is greater than the FY2015 appropriation, but below or equal to the Administration's request. The Commerce, Justice, Science, and Related Agencies Appropriations Act, 2016 includes the following:\nA 25.9% increase in funding for the Census Bureau compared to the FY2015 appropriation. However, the FY2016 appropriation is 8.7% below the Administration's request. Of note, Congress agreed to the Administration's proposal to realign the Census Bureau's funding into two new accounts. An 11.6% increase in funding for NIST, which is largely the result of a 12.2% increase in funding for the Industrial Technology Services account, due to the addition of $25 million for the National Network for Manufacturing Innovation, and a more than doubling of funding for the Construction of Research Facilities account (from $50 million to $119 million). The FY2016 appropriation for NIST is 13.9% below the Administration's request. A 6.0% increase in funding for NOAA, which includes a 10.1% increase in the Procurement, Acquisition, and Construction account. The FY2016 appropriation is 3.5% below the Administration's request. A 21.8% increase for DOJ's Administrative Review and Appeals account. The FY2016 appropriation is 12.7% below the Administration's request. A 58.8% increase in funding for the U.S. Marshals Service, which is largely the result of Congress funding the Federal Prisoner Detention account through appropriated funds rather than supplementing the account with a transfer from the Assets Forfeiture Fund. A 4.3% increase in funding for the FBI, which includes a near tripling in funding for the FBI's Construction account (from $110 million to $309 million). The increased funding for this account is partially to help the FBI build a new headquarters in the National Capital region. An 8.1% increase in funding for the BOP, which is largely due to a quadrupling of funding for the BOP's Buildings and Facilities account (from $106 million to $530 million). The additional funding is to help the BOP build new prisons to meet their capacity demands and to help the BOP maintain and repair existing prisons. A 13.5% increase in funding for the State and Local Law Enforcement Assistance account. The FY2016 appropriation is 23.3% greater than the Administration's request. A 28.8% increase in the obligation cap on the Crime Victims Fund, from $2.361 billion to $3.042 billion. The obligation cap is more than triple what the Administration requested. Of note, $379 million was transferred from the Crime Victims Fund to the Office on Violence Against Women (for purposes outside of those authorized by the Victims of Crime Act) and $10 million was designated for the Office of the Inspector General for oversight and auditing purposes. A 7.1% increase in appropriations for NASA. The FY2016 appropriation includes a 15.2% and a 31.4% increase, respectively, in the Space Technology and Space Operations accounts. However, the FY2016 appropriation also includes reductions for the Aeronautics (-1.7%), Exploration (-7.5%), Education (-3.4%), and Construction and Environmental Compliance and Restoration (7.2%) accounts. The FY2016 appropriation for NASA includes some increases compared to the Administration's request in the Science (5.7%); Aeronautics (12.0%); Space Operations (25.6%); and Education (29.4%) accounts. On the other hand, Congress also funded some of NASA's accounts at a level below the Administration's request: Space Technology (-5.3%); Exploration (-10.6%); Safety, Security, and Mission Services (-2.6%); and Construction and Environmental Compliance and Restoration (-16.4%). Of note, Congress provided up to $1.244 billion for the Commercial Crew program in the Space Operations account, rather than in the Exploration account, which previously funded this program.\nTable 1 shows the FY2015-enacted appropriation, the Administration's FY2016 request, the House-passed amount, the Senate committee-reported amount, and the FY2016-enacted appropriation for the Departments of Commerce and Justice, the science agencies, and the related agencies. Table 2 shows enacted appropriations for these agencies, in detail, for FY2006 through FY2015 (the FY2013 amounts shown in Table 2 reflect sequestration).", "Figure 1 shows the total appropriations, in both nominal and inflation-adjusted dollars, for CJS for FY2006-FY2015 (more detailed historical appropriations data can be found in Table 2 ). The data show that nominal appropriations for CJS increased starting with FY2006. Appropriations for CJS peaked in FY2009 at $76.782 billion if emergency supplemental appropriations from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) are included. If ARRA funding is not considered, appropriations peaked in FY2010 at $69.146 billion. ARRA provided a substantial increase in appropriations for FY2009. The $15.992 billion Congress appropriated for CJS under ARRA was equal to approximately 25% of the amount Congress provided for it through regular appropriations.\nAppropriations for CJS decreased in each of the three fiscal years after FY2010. Nominal appropriations for CJS were relatively flat in FY2014 and FY2015, though appropriations in both FY2014 and FY2015 were higher than they were in FY2013. If not for sequestration, which cut nearly $4 billion out of the total amount Congress appropriated for CJS for FY2013, funding for CJS would have held steady at approximately $61 billion between FY2011 and FY2015.\nAfter adjusting for inflation, appropriations for CJS for FY2013-FY2015 were generally at the same level they were in FY2006.\nFigure 2 shows total appropriations for CJS for FY2006-FY2015 by major component (i.e., the Departments of Commerce and Justice, the National Aeronautics and Space Administration, and the National Science Foundation). The data show that the increases in CJS appropriations in FY2009 (not including ARRA funding), FY2010, and FY2011 resulted from Congress appropriating more funding for the Department of Commerce in support of the 2010 decennial census.\nWhile decreased appropriations for the Department of Commerce mostly explain the overall decrease in CJS appropriations since FY2010, there have also been cuts in funding for DOJ and NASA. DOJ's FY2015 appropriation is 4.4% below its FY2010 appropriation, and NASA's FY2014 appropriation was 3.8% below its FY2010 appropriation. However, even though NASA received less in FY2015 than it did in FY2010, NASA's FY2015 appropriation is $1.379 billion more than its FY2006 appropriation. In addition, even with cuts to DOJ's appropriation since FY2010, Congress still appropriated $5.316 billion more for DOJ in FY2015 than it did in FY2006. Appropriations for DOJ increased because Congress appropriated increasing amounts for federal law enforcement and counter-terrorism efforts (e.g., the Federal Bureau of Investigation), and for the Office of the Federal Detention Trustee and the Bureau of Prisons to cover expenses associated with a rising number of federal detainees and prisoners.\nFunding for the NSF has, for the most part, steadily increased over the past 10 fiscal years. The NSF's appropriation increased in 8 of the 10 fiscal years between FY2006 and FY2015, and the decrease in the NSF's funding for FY2013 was the result of sequestration. Increased funding for the NSF has mostly resulted from Congress increasing funding for the NSF's Research and Related Activities account." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 2, 1, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "", "", "", "", "", "", "", "", "", "h0_title h1_title", "", "", "h0_full", "h1_full", "", "" ] }

{ "question": [ "What are the details of the FY2015 CJS appropriations bill?", "What bill was passed by the House on June 3, 2015?", "What were the effects of this bill?", "What was approved by the Senate?", "Why was the FY2016 CJS appropriations bill offered?", "What was the budget for this bill?" ], "summary": [ "The House passed the FY2016 CJS appropriations bill (H.R. 2578) on June 3, 2015. The House-passed bill included a total of $62.845 billion for CJS, which included $8.086 billion for the Department of Commerce, $28.007 billion for the Department of Justice, $25.929 billion for the science agencies, and $823 million for the related agencies.", "The House passed the FY2016 CJS appropriations bill (H.R. 2578) on June 3, 2015.", "The House-passed bill included a total of $62.845 billion for CJS, which included $8.086 billion for the Department of Commerce, $28.007 billion for the Department of Justice, $25.929 billion for the science agencies, and $823 million for the related agencies.", "The Senate Committee on Appropriations approved its FY2016 CJS appropriations bill, which was offered as an amendment in the nature of a substitute to H.R. 2578, on June 16, 2015. The Senate committee-reported bill recommended $62.849 billion for CJS, which included $8.477 billion for the Department of Commerce, $27.828 billion for the Department of Justice, $25.639 billion for the science agencies, and $906 million for the related agencies.", "The Senate Committee on Appropriations approved its FY2016 CJS appropriations bill, which was offered as an amendment in the nature of a substitute to H.R. 2578, on June 16, 2015.", "The Senate committee-reported bill recommended $62.849 billion for CJS, which included $8.477 billion for the Department of Commerce, $27.828 billion for the Department of Justice, $25.639 billion for the science agencies, and $906 million for the related agencies." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "Excise Tax on High-cost Employer-sponsored Health Insurance", "Age and Gender Adjustment", "Experts Cited Benefits and Limitations of the FEHBP BCBS Standard Plan Data and Identified Alternative Data Sources, Which Also Have Limitations", "Experts Noted That the BCBS Standard Plan Is a Large and Convenient Source of Cost Data, but Underlying and Changing Member Demographics Limit Its Strengths", "Experts Identified Potential Alternative Data Sources; However, Those Data Sources Also Have Limitations", "Some Experts Cited Concerns about how Premiums Might Be Used in Determining the Adjustment Amount", "Combining Premium Cost Data from Multiple FEHBP Plans Could Mitigate Standard Plan Data Limitations", "Conclusion", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Internal Revenue Service", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "PPACA’s excise tax on high-cost employer-sponsored health insurance is imposed when the value of employees’ health coverage exceeds a threshold, referred to as the tax’s applicable dollar limit. The applicable dollar limit was established in statute for 2018, the year the tax was originally to be implemented. PPACA stipulated that for 2019, the applicable dollar limit would increase by the amount of the Consumer Price Index for All Urban Consumers (CPI-U), plus an additional 1 percent. Starting in 2020, the applicable dollar limit would then increase in step with the CPI-U each year thereafter. The Consolidated Appropriations Act, 2016 delayed the tax’s implementation until 2020. Some economists have noted that because health care premiums have historically outpaced the CPI-U, it can be expected that the share of employers impacted by the tax should grow over time.\nThe basis for determining the value of employees’ health coverage that is measured against the applicable dollar limit of the tax—referred to as applicable coverage—is defined in statute. Applicable coverage includes both the employer’s and the employee’s pre-tax contributions to the premium for a group health plan and to a flexible spending arrangement, Archer Medical Savings Account, health savings account, or health reimbursement arrangement. The amount of an employee’s applicable coverage that exceeds their applicable dollar limit—known as the excess benefit—is subject to the tax. Because applicable coverage can vary by employee, for example, depending on whether or not they chose to contribute to a flexible spending arrangement or health savings account, the tax is determined separately for each employee. As a result, the tax could be owed for some employees and not others.", "The age and gender adjustment is designed to make the applicable dollar limit—the threshold for the tax—higher for employers with workforce demographics that are typically costlier than average. Specifically, the law stipulates that the age and gender adjustment would increase the applicable dollar limit by an amount equal to the excess of a) the premium cost of the BCBS Standard plan, if priced for the age and gender characteristics of all employees of an employer, over b) the premium cost of the BCBS Standard plan, if priced for the age and gender characteristics of the national workforce. In 2015, the IRS released a notice outlining a draft proposal for how the age and gender adjustment might be implemented. The notice proposed using BCBS Standard plan premium and claims cost data (including claims costs classified into 5- year age and gender groups), as well as CPS national workforce data, to produce published tables that an employer could use to calculate its age and gender adjustment based on its specific workforce data. In its notice, IRS asked for comments on whether the calculation of group costs should rely on actual claims data from the BCBS Standard plan or, as an alternative, on “national claims data reflecting plans with a design similar to that of the .”\nFEHBP provides health care coverage to federal employees, retirees, and their dependents through health insurance carriers that contract with OPM. In 2015, FEHBP provided an estimated $47.9 billion in health care benefits to roughly 8.2 million individuals, according to agency officials. Carriers offer plans in which eligible individuals may enroll to receive health care coverage. For the 2015 plan year, FEHBP options included fee-for-service plans that were available nationwide, plans available only to certain types of federal employees (e.g., postal workers), and plans offered by health maintenance organizations that were available only in certain regions. Of these plans, some were high-deductible plans and consumer-driven plans. Generally, individuals are able to choose from several plans, but most FEHBP contract holders were in plans offered by the BCBSA. In addition to offering the Standard plan, BCBSA also offers the Basic plan, and combined, these two plans are among the most popular of FEHBP plans.", "The BCBS Standard plan has many characteristics that experts cited as important when considered for use as the basis of the age and gender adjustment. However, they also noted that it has limitations because it is not fully representative of the national workforce, has selection bias, and has experienced declining enrollment in recent years. Experts identified alternative cost data sources, but these data sources also have limitations. Some experts also expressed concern with the use of a premium value as the basis for the adjustment and suggested alternative approaches.", "According to industry and actuarial experts we interviewed and stakeholders that commented on IRS’s notices for the age and gender adjustment, BCBS Standard plan data have several benefits when considered for use as the basis of an age and gender adjustment, as stipulated in the law. Specifically, it is a large dataset that includes several years of data and is readily available (convenient). Experts we spoke with identified these as important characteristics for cost data that is to be used as the basis of an age and gender adjustment. Specifically, experts noted that the data source should have the following characteristics:\nBe representative. Several experts noted that the data source should reflect the demographics of the broader U.S. population, the national workforce, or the population eligible for employer-sponsored insurance, to the extent possible. Differences in the demographics between the broader population and the data source used for an adjustment could have an impact on health care costs and utilization and, thus, have an impact on the adjustment.\nBe large. Several experts pointed out that an ideal data source would be large, in terms of the number of individuals covered, in part due to the fact that there needs to be sufficient data within each of the age and gender groups.\nContain several years of data. Some experts pointed out the benefit of using a data source that has been in existence for some time and that has several years of data so that one would have confidence that the data for a given year are not unusual.\nBe convenient. For the purposes of the government’s use, several experts also noted that convenience of the data source could be important to consider—such as the ease with which the government can access and use the data and the costs for obtaining them.\nNotably, the data from the BCBS Standard plan meet several of these characteristics because the plan is large, relatively popular, and covered just over 3 million members across the United States in 2015, making it the FEHBP plan with the highest enrollment. It is also a mature plan that has been in existence since 1959. Finally, it is convenient in that it is already available and familiar to the federal government, and BCBSA already provides summary cost and enrollment data to OPM on an annual basis.\nHowever, experts and stakeholders identified two important limitations to using BCBS Standard plan cost data as the basis of an age and gender adjustment: 1) not being representative of the national workforce due to selection bias and 2) declining enrollment.\nSelection bias. Enrollment in the BCBS Standard plan is affected by selection bias among the FEHBP options that may result in it not being representative of the national workforce. Within the FEHBP, federal employees can choose among many different health plan options. The BCBS Standard plan is a relatively expensive plan within the FEHBP and covers older and sicker members compared to other, less expensive plans, such as the other nationwide BCBS FEHBP option, BCBS Basic. Actuarial experts also noted that the BCBS Standard plan may be less attractive to healthier individuals and younger families who may be more attracted to the FEHBP health maintenance organization options, including high-deductible and consumer-driven plans, or the BCBS Basic plan. Officials from OPM noted, and our review of two years of cost data confirm, that members in the BCBS Standard plan generally have higher health care costs than their counterparts in BCBS Basic and that this is particularly true for younger members. While other employers may offer more than one plan, most employers do not provide the number of options that the federal government provides, so selection bias among plans offered by other employers may be less extreme.\nExperts and stakeholders noted that the selection bias within the FEHBP of more young members with higher health care costs in the BCBS Standard plan may result in an age and gender adjustment that is not adequate. For example, in part because the BCBS Standard plan disproportionately covers young members with higher health care costs, the ratio of the average claims costs of the older age groups to the average claims costs of the younger age groups is smaller than it would be in a plan that did not have that particular selection bias issue. As such, the ratios of costs for older age groups to costs for younger age groups would be understated compared to the ratios calculated based on data of a more representative population. If the claims cost data used for the adjustment had ratios that were understated in this way, then the adjustment based on these data might also be too small, for example, for employers with older demographics.\nSome experts and stakeholders also noted selection bias in the FEHBP more broadly, in that its members, who include employees as well as retired former employees and their dependents, are not representative of the national workforce. For example, they noted that the federal workforce is skewed to a higher proportion of older workers than the national workforce. However, some experts we spoke with asserted that this may not be a limitation that would generally affect the use of FEHBP data for the age and gender adjustment because relative costs between older and younger employees in the federal workforce are likely similar to those of the national workforce.\nDeclining enrollment. In addition, while the BCBS Standard plan is large, it has experienced declining enrollment in recent years. Specifically, from 2010 through 2015, enrollment in the BCBS Standard plan decreased by over 10 percent. In contrast, enrollment in the BCBS Basic plan increased significantly from 2010 through 2015—a 46 percent increase in contract holders. (See table 1.) Notably, the cumulative enrollment for the two BCBS FEHBP plans has been relatively stable over time. OPM officials noted that over time, this shift in enrollment from the Standard to the Basic plan may further exaggerate the demographic differences between Standard plan members and other populations, including the Basic plan and the general employed population. They also noted that it was possible that the BCBS Standard plan could continue to experience an enrollment decline, becoming more disproportionately skewed to older and higher-cost members. Finally, OPM, IRS, and Treasury officials all noted that any one plan offering could be discontinued. For example, in 2002, BCBSA merged its High Option plan in FEHBP with the Standard plan and added the Basic Option plan.", "Experts cited other potential cost data sources, but each of these sources also has limitations. These sources and their limitations include the following:\nThe Agency for Healthcare Research and Quality—a research agency within the HHS—maintains Medical Expenditure Panel Survey data collected through its annual survey, which contains cost information based on respondent recollection and provider reported data. According to agency officials, its 2014 dataset includes information on over 7,500 employer-sponsored insurance contract holders. While these data are grounded in a nationally representative probability sample and include the years 1996 to present, the survey’s relatively smaller size may prove to be a limitation when classified into the necessary age and gender groups. Agency officials noted that several years of data could be pooled to ameliorate this issue.\nBlue Health Intelligence—an independent licensee of BCBSA— maintains data from many, but not all, BCBS plans across markets. Its dataset is large; however, because the members covered in the data only include BCBS members, it is not known whether the data are representative of national demographics. In addition, using these data would likely require contracting with Blue Health Intelligence for proprietary data, making this option potentially inconvenient.\nThe Health Care Cost Institute (HCCI)—a research institute— maintains claims data from plans offered by Aetna, Humana, Kaiser Permanente, and UnitedHealthcare. According to HCCI representatives, its most recent year of data covers over 40 million employer-sponsored members. HCCI’s dataset is large and includes the years 2007 to 2015, but it is not known whether the data are representative of the national workforce. HCCI representatives told us that the data contain members in all 50 states and the District of Columbia, but some states have lower counts of members. They also noted that the data can be adjusted through weighting to make them more representative. However, as of June 2017, HCCI data did not contain information from BCBS plans, which represent the majority of enrollment in the insurance market in many states. In addition, it is not possible to identify costs by coverage type, such as self-only, which is needed to calculate the age and gender adjustment.\nTruven Health Analytics, an IBM company (Truven) is a healthcare data and consulting company that maintains the MarketScan claims database. According to Truven representatives, its 2015 dataset covers claims from 28.5 million members across its various clients and includes data mostly from large employers with self-funded health plans. Truven’s MarketScan dataset is large and goes back to 1995, but Truven’s data are comprised of a convenience sample—data collected from organizations that happen to be clients of Truven—and it is not known whether the data are representative of the national workforce. Truven representatives told us that the data contain members in all 50 states, but some states have lower counts of members. They also noted that the data can be adjusted through weighting to make them more representative. In addition, using Truven data would likely require contracting with Truven for proprietary data, making this option potentially inconvenient.\nBecause these alternative data sources also have limitations, coupled with benefits identified related to the BCBS Standard plan, some experts stated that, while imperfect, the BCBS Standard plan is a fairly reasonable option for the basis of the age and gender adjustment. However, because of its noted limitations, its use could result in adjustments to the tax threshold that are not as effective as they could be for certain employers—in particular, for employers with older employees.", "Some experts we interviewed and stakeholders that commented on IRS’s notices for the age and gender adjustment raised concerns about tying an adjustment to a premium value. As stipulated by PPACA, the age and gender adjustment would increase the applicable dollar limit by “…an amount equal to the excess of aa) the premium cost of the [BCBS Standard plan], if priced for the age and gender characteristics of all employees of the individual’s employer, over bb) the premium cost of the , if priced for the age and gender characteristics of the national workforce.”\nThis could be achieved by establishing a dollar value for the adjustment by taking an employer-specific premium cost and subtracting a national premium cost, both priced using the BCBS Standard plan costs applied to the national and employer-specific workforces, respectively. This would create a specific dollar difference that would represent the adjustment for that employer. It could also be achieved by creating an adjustment factor by taking the percentage difference of these employer-specific and national premium costs.\nTwo actuarial experts and one industry expert we spoke with suggested that a percentage difference approach would be more appropriate than a dollar difference approach. Specifically, one actuarial expert contended that the value of the adjustment could be distorted if the value of the BCBS premium cost in any given year was unusually high or low. In either year, the percentage difference between costs priced for the national workforce compared to the employer’s workforce should be the same (assuming no changes to the workforce makeup), but the dollar difference would not be the same. (See table 2.)\nIf a percentage difference approach were used, the adjustment factor created through this approach would need to be converted to a dollar value to determine a specific adjustment amount. All three experts who suggested this approach noted that the adjustment factor could simply be applied to the tax’s applicable dollar limit, which will increase over time in line with the CPI-U. A similar approach could be to apply the adjustment factor to a portion of the tax’s applicable dollar limit, for example, a portion estimated to represent health premium costs, excluding estimated costs associated with other health benefits such as flexible spending arrangements or health savings accounts. Another approach could be to apply the adjustment factor to a value that represents actual health care costs, such as an estimated average employer-sponsored premium, which would increase over time in line with health care inflation.\nWe note that the decision on what to apply the adjustment factor to when using a percentage difference approach would be dependent on the policy goal:\nLimit the rate of growth of the adjustment value to general inflation. If the adjustment factor were applied to the applicable dollar limit for the tax year or a portion of that limit, then the adjustment dollar amount would be expected to increase somewhat more slowly over time than it would if it were tied to an amount representing actual health care costs, which would rise at the steeper rate of health care inflation. This could be preferable if the policy goal were to limit the rate of growth of the adjustment dollar amount to a rate lower than the typical health care inflation rate.\nKeep the rate of growth of the adjustment value in line with health care inflation. If the policy goal were to allow the adjustment dollar amount to increase in step with health care inflation, then it would be preferable to tie the adjustment to an amount representing employer-sponsored health plan costs.\nThe number of employers who received the age and gender adjustment that became subject to the tax would increase more quickly over time if the adjustment were tied to the applicable dollar limit that increases with the CPI-U than it would if tied to an amount representing health care costs.", "Combining data from multiple FEHBP plans could mitigate some of the limitations of sole reliance on the BCBS Standard plan data as the basis for the age and gender adjustment, including concerns regarding selection bias. Several experts and stakeholders who commented on IRS’s notices suggested this approach. They noted that combining data from multiple FEHBP plans, such as data from the BCBS Standard and Basic plans, could mitigate concerns. They specifically said that an adjustment based on data from the BCBS Standard plan alone may not be adequate due to the plan’s selection bias within the FEHBP, as previously discussed. The BCBS Standard plan is a relatively expensive plan within the FEHBP and covers members with higher health care costs compared to other less expensive plans, including the BCBS Basic plan. We found that combining the data from these two plans could mitigate this selection bias. Specifically, we found that the adjustment may be particularly affected by selection bias among young Standard plan contract holders with higher health care costs. In particular, combining 2015 data from these two plans increased the percentage of young contract holders, and also increased the ratio of the average claims costs of older contract holders to the average claims costs of younger contract holders. (See fig. 1.)\nIn addition to mitigating certain selection bias concerns, combining data from multiple FEHBP plans could address concerns regarding the BCBS Standard plan’s declining enrollment. Combining data from multiple FEHBP plans—such as the BCBS Standard and BCBS Basic plans— would result in a more stable underlying enrollment population, based on current enrollment trends. Our analysis of OPM data shows that increases in BCBS Basic plan enrollment exceeded declines in BCBS Standard plan enrollment, resulting in a net increase in combined enrollment. Specifically, the number of contract holders enrolled in BCBS Standard and BCBS Basic plans combined increased 3.2 percent from 2010 through 2015. (See table 3.) In addition, combined contract holders accounted for 65 percent of all FEHBP contract holders. Some experts and stakeholders also suggested that combining data from more FEHBP plans could further improve the data, by capturing individuals who select other types of plans, such as health maintenance organizations or high-deductible health plans. However, we note that combining data from different plans would require appropriate actuarial adjustments to account for cost differences that result from benefit design and other differences among the plans.\nUsing combined FEHBP data as the basis for the age and gender adjustment to include a broader selection of younger members could result in a different adjustment that could increase the adjustment amount for some employers. For example, we calculated a hypothetical, illustrative adjustment amount using the BCBS Standard plan only, as well as using BCBS Standard plan data combined with BCBS Basic plan data. We did this for a hypothetical employer with a workforce that is, on average, older than the national workforce—an employer that would likely receive an age and gender adjustment—without making any actuarial adjustments to the data. We found that combining 2015 cost data for active federal government workers enrolled in the BCBS Standard and BCBS Basic self-only coverage plans resulted in a higher adjustment amount for the hypothetical employer than did an adjustment based on BCBS Standard data alone. This also resulted in a higher percentage difference adjustment factor for the hypothetical employer. (See table 4.) According to our analysis, combining the BCBS Standard and BCBS Basic data resulted in an increase in the ratio between the average claims costs of the oldest and youngest groups, yielding higher age and gender adjustment amounts for our hypothetical employer.\nWe found that different adjustment amounts could have an impact on the total amount of taxes owed for an employer’s workforce depending on the number of employees to which the tax was applied. For example, the adjustment amounts could determine whether or not an employee’s coverage is subject to the tax and, if the employee’s coverage is subject to the tax, how much tax is owed. Using the previously presented hypothetical example of an employer with a workforce that is older, on average, than the national workforce can illustrate the potential impact. In this example, we compare the hypothetical tax owed for 100 similar workers employed by that employer to illustrate the difference in the total taxes owed depending on whether the data used as the basis for the age and gender adjustment are the BCBS Standard data alone or the combined BCBS Standard and Basic data. (See table 5.)\nStandards for internal control suggest that effective information is vital for an entity to achieve its objectives. Although the current law specifies the use of premium cost data from the BCBS Standard plan, relying on BCBS Standard plan data alone does not provide IRS with the comprehensive information it may need to determine an appropriate and adequate age and gender adjustment. Because the Consolidated Appropriations Act, 2016 delayed the implementation of the age and gender adjustment until 2020, an opportunity exists for IRS to consider options for mitigating the limitations of the BCBS Standard plan premium cost data. IRS and Treasury officials told us they are considering what flexibility they have under the statute to do so.", "The age and gender adjustment was designed to increase the applicable dollar limit of the tax for employers with employees that are expected to be costlier than average so that taxes are owed based on the plan design and not based on member costs. Use of the BCBS Standard plan premium costs as the basis of the age and gender adjustment, as stipulated in the law, has certain limitations, primarily because of selection bias. Further, data limitations may become more pronounced over time because the plan has been experiencing declining enrollment. Other potential data source options exist, but these options also have limitations. Combining data from multiple FEHBP plans could mitigate selection bias concerns, as well as any concerns about the future of the BCBS Standard plan alone. However, if data were pooled from plans with different benefit structures, the data may need to be actuarially adjusted. Nonetheless, because of its limitations, using the BCBS Standard plan data alone as the basis of the age and gender adjustment could result in an adjustment that is not as effective as it could be at increasing the applicable dollar limit for employers with costlier than average employees.", "We recommend that, in implementing the age and gender adjustment, the Commissioner of Internal Revenue consider taking steps to mitigate the limitations of the BCBS Standard plan premium cost data—such as by combining data from multiple FEHBP plans. If combining the costs of plans with different benefit structures, the Commissioner should consider whether an appropriate actuarial adjustment should be used. If the Commissioner interprets that the statute does not provide the flexibility to mitigate the limitations of the BCBS Standard plan premium cost data by combining data from multiple sources or by other means, we recommend seeking that authority from Congress.", "We provided a draft of this report to IRS and OPM for review and comment. The draft report was also reviewed by Treasury. Subsequent to reviewing the draft, IRS and Treasury officials contacted us to share some of their concerns with the wording of the recommendation related to combining claims costs of multiple health plans with varying designs. As a result of these discussions, we clarified our recommendation language so that it more explicitly focused on the need to mitigate the limitations of the BCBS Standard plan data. We continue to believe that it is worthwhile to consider using cost data from multiple FEHBP plans, but, as we note in the report, if this is done, an actuarial adjustment should be considered. We then shared the clarified recommendation language with the agencies.\nWe later received written comments from IRS, which are reproduced in appendix I. We also received technical comments on the draft from both IRS and OPM, which we incorporated as appropriate. We did not receive additional comments from Treasury. In its written comments, IRS neither agreed nor disagreed with our recommendation, but stated that it would consider the recommendation as it continues to review comments received in response to an agency notice and work with the Department of the Treasury to issue guidance on the age and gender adjustment.\nWe are sending copies of this report to the Commissioner of Internal Revenue and the Acting Director of the Office of Personnel Management. 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 dickenj@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, Gerardine Brennan (Assistant Director), Kate Nast Jones (Analyst-in-Charge), Barbara Hansen, and Laurie Pachter made key contributions to this report. Also contributing were Sandra George, Emei Li, Vikki Porter, Jennifer Rudisill, and Jennifer Stratton." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title", "h0_full", "h0_full", "h0_title h1_title", "h0_full h1_full", "h1_full", "h0_full", "h2_full", "h0_full h1_full", "", "", "", "", "", "" ] }

{ "question": [ "What were the provisions of PPACA?", "How would the tax be imposed?", "Why is this adjustment included?", "What is the adjustment designed to do?", "What would this adjustment be based on?", "How might selection bias make the BCBS Standard plan adjustment inadequate?", "Why might the age and gender adjustment be too small?", "Why would alternative sources not improve the adjustment?", "How could the limitations of the BCBS Standard plan be mitigated?", "How does using combined data result in different adjustments?", "Why is it important to use more than just BCBS Standard plan data?" ], "summary": [ "The Patient Protection and Affordable Care Act (PPACA) included a revenue provision for a 40 percent excise tax on high-cost employer-sponsored health coverage to be administered by the Internal Revenue Service (IRS).", "The tax would be imposed when an employee's annual cost of coverage exceeds an established dollar limit. This limit could be adjusted upward if an employer's workforce—based on its age and gender characteristics—was likely to have higher health costs than the national workforce, on average.", "This adjustment, known as the age and gender adjustment, is based on the premise that older individuals and younger females tend to have higher health care costs than other individuals.", "It is designed to lower the tax burden so that taxes are owed based on the plan design and not based on the health care costs of its members.", "PPACA stated that this adjustment would be made based on the premium costs of the Blue Cross and Blue Shield (BCBS) Standard plan under the Federal Employees Health Benefits Program (FEHBP).", "The selection bias in the BCBS Standard plan may result in an age and gender adjustment that is not adequate. For example, because the BCBS Standard plan covers young members with higher health care costs, the ratio between the average claims costs of the younger and older members in that plan is smaller than it would be in a plan that did not have that particular selection bias issue. Therefore, the age and gender adjustment could be too small.", "For example, because the BCBS Standard plan covers young members with higher health care costs, the ratio between the average claims costs of the younger and older members in that plan is smaller than it would be in a plan that did not have that particular selection bias issue. Therefore, the age and gender adjustment could be too small.", "While experts GAO spoke with identified several potential alternative sources of cost data for use as the basis of the adjustment, those alternatives also had limitations, such as not being convenient sources of data and potentially not being representative of the national workforce.", "To mitigate limitations of the BCBS Standard plan, these data could be supplemented with data from other FEHBP plans, such as the BCBS Basic plan, which is known to have younger members with lower health care costs and increasing enrollment.", "GAO found that using combined data from these two sources could result in a different adjustment for some employers—in particular, for those with older employees.", "Standards for internal control suggest that effective information is vital for an entity to achieve its objectives. Relying on BCBS Standard plan data alone does not provide IRS with the comprehensive information it may need to determine an adequate age and gender adjustment." ], "parent_pair_index": [ -1, 0, 1, 1, 1, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 6, 6, 6, 7, 7, 7 ] }

{ "title": [ "Background", "Marine Corps Organizational Structure", "Marine Corps Unit-Level Training", "Marine Corps Readiness", "Marine Corps O&M Budget", "The Marine Corps Cannot Fully Track All Unit-Level Training Funds for Ground Combat Forces through the Budget Cycle", "The Marine Corps Has Made Limited Progress Establishing a Link between Training Funds for Ground Combat Forces and Readiness", "The Marine Corps Identified a Need to Link Training Funds to Readiness, but Did Not Designate Responsibility to Meet That Need", "Marine Corps Has Not Assessed Its Current Initiative to Link Dollars to Readiness", "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": [ "", "The Marine Corps, within the Department of the Navy, organizes itself into different Marine Air Ground Task Forces. Each Marine Air Ground Task Force consists of a command element that includes a ground combat element, air combat element, and logistics combat element that can conduct operations across a broad range of crisis and conflict situations. As shown in figure 1, there are four types of Marine Air Ground Task Forces: Marine Expeditionary Forces (MEFs), Marine Expeditionary Brigades, Marine Expeditionary Units, and Special Purpose Marine Air Ground Task Forces. The MEF is the principal warfighting organization for the Marine Corps and consists of one or more divisions, including subordinate units such as regiments and battalions. There are three MEFs in the active component of the Marine Corps: I MEF—Camp Pendleton, California; II MEF—Camp Lejeune, North Carolina; and III MEF—Okinawa, Japan.\nHeadquarters Marine Corps consists of the Commandant of the Marine Corps (Commandant) and the staff organizations, which are responsible for advising and assisting the Commandant to carry out duties. For example, the Deputy Commandant for Programs and Resources is responsible for developing, defending, and overseeing the Marine Corps’ financial requirements and the Deputy Commandant for Plans, Policies, and Operations is responsible for establishing policy, procedures, training, and guidance on unit readiness reporting.", "Marine Corps units train to their core missions—the fundamental missions a unit is organized or designed to perform—and their assigned missions—those missions which an organization or unit is tasked to carry out. Units train to a list of Mission Essential Tasks that are assigned based on the unit’s required operational capabilities and projected operational environments. For example, the Mission Essential Tasks for a Marine Corps infantry battalion include amphibious operations, offensive operations, defensive operations, and stability operations. Marine Corps 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.", "Unit commanders are responsible for their units’ readiness, including assessing and reporting their units’ capabilities to accomplish Mission Essential Tasks to specified conditions and standards. Unit readiness assessments are tracked in the Defense Readiness Reporting System– Marine Corps. This information provides Marine Forces Command, Headquarters Marine Corps, the Office of the Secretary of Defense, Joint Staff, and Combatant Commands, among others, a means to assess ground combat forces’ readiness trends and to assist with strategic and operational planning.", "The Marine Corps’ O&M budget funds a wide range of activities, including the recruiting, organizing, training, sustaining, and equipping of the service. The Department of Defense (DOD) uses the Planning, Programming, Budgeting, and Execution (PPBE) process to allocate resources to provide capabilities necessary to accomplish the department’s missions. In this report, we refer to the PPBE process as the budget cycle. The budget cycle includes the following phases:\nThe planning phase of the budget cycle examines the military role and defense posture of the United States and DOD in the world environment and considers enduring national security objectives, as well as the need for efficient management of defense resources.\nThe programming phase of the budget cycle involves developing proposed programs consistent with planning, programming, and fiscal guidance, reflecting, among other things, the effective allocation of resources.\nThe budgeting phase of the budget cycle refers to developing and submitting detailed budget estimates for programs.\nThe execution phase of the budget cycle involves spending funds.\nThe Marine Corps’ Office of Programs and Resources has multiple divisions that support Program Objective Memorandum (POM) development, strategy, independent analysis, budget justification and legislative coordination, among others. Two key divisions that have responsibilities regarding Marine Corps resources are:\nThe Budget and Execution Division is responsible for leading development and submission of the POM, providing quality control over programmatic and financial data, and allocating funds to major commands. According to a Marine Corps official, the division also assists with defending the Marine Corps’ budget request to Congress and others.\nThe Program Analysis and Evaluation Division is responsible for providing Marine Corps senior leaders with independent and objective analysis to inform resource allocation decisions and assessing institutional risk.\nThe Program Budget Information System (PBIS) is the primary information system used by the Navy and Marine Corps in the programming and budgeting phases of the budget cycle to develop and submit financial plans (i.e., the POM and the budget) to the Office of the Secretary of Defense. Once appropriated, funds are passed via allocation and allotment to subordinate units and executed via the Standard Accounting, Budgeting, and Reporting System (SABRS). SABRS is used to (1) record and report financial information; (2) provide an accounting and reporting system for the execution of appropriations; and (3) record financial transactions that originate from source systems.", "Our analysis of data from the three MEFs for fiscal year 2017 funds shows that the MEFs had some data available that could be used to track some training funds from budget request to obligation. According to the Marine Corps’ Financial Guidebook for Commanders, as part of the budget cycle, commanders should determine the cost involved in meeting requirements, among other things. To help develop a sound budget, commanders need to know what they were and were not able to accomplish as a result of funding in previous years. However, Marine Corps officials told us they faced limitations tracking training funds, as discussed below. Specifically, as shown in table 1, we found that I MEF and II MEF were able to provide data on their fiscal year 2017 budget request, allotment, and obligations for training exercises directed at the MEF and division level, but data on exercises at smaller unit levels, such as regiments and battalions, were not consistently available because officials at those levels do not always track funds for these exercises. We found that III MEF was able to provide obligations data for fiscal year 2017 training exercises at all unit levels, but was not able to provide data on funds requested and allotted by training exercise. Officials at III MEF stated that these data were not available because III MEF incurs several large one-time expenses that contribute to training, but allocating those costs across specific training exercises is difficult.\nOne of the primary reasons that the Marine Corps cannot fully track all training funds through the budget cycle is that the Office of Programs and Resources has not established the consistent use of fiscal codes to provide greater detail about the use of funds across the budget cycle phases, and the accuracy of these fiscal codes is sometimes questionable. The Marine Corps uses a variety of fiscal codes to track funds in the programming and execution phases of the budget cycle in the PBIS and SABRS systems, respectively. Some of these codes are used across DOD, while others are specific to the Marine Corps. Two key fiscal codes that officials identified as relevant to efforts to track funds for unit-level training are the Marine Corps Programming Code (MCPC) and the Special Interest Code (SIC). However, we identified limitations with how these fiscal codes are applied, as detailed below.\nMCPCs are used to program funds for intended use, but are not clearly linked to executed funds. When the Marine Corps programs funds for intended use, it uses MCPCs to identify the funds; however, when it executes those funds, it uses a different set of fiscal codes to identify them. As a result, the Marine Corps cannot link the programmed intent of the funds to the execution of the funds, making it difficult to track funds through the budget cycle. In fiscal years 2011, 2012, and 2013, the Marine Corps found in a series of reports that it faced challenges tracking funds through the budget cycle, in part because MCPCs were used to program funds, but not to track them in the execution phase. According to the fiscal year 2012 report, such tracking would enable the Marine Corps to improve financial traceability and add consistently reliable program execution data that would promote an understanding of the current fiscal environment to Marine Corps financial managers, comptrollers and others.\nIn 2014, the Marine Corps implemented a process to include MCPCs in the execution phase of the budget cycle. The process enabled SABRS to automatically generate MCPCs for executed funds, based on the fiscal codes already used in the execution phase of the budget cycle. According to officials in the Office of Programs and Resources, this process increased the amount of executed funding that could be linked to an MCPC. However, Marine Corps officials told us that the mapping of MCPCs used in the programming phase to those used in the execution phase were not cleanly aligned, causing uncertainty about their linkage. The MCPCs associated with executed funds are estimates based on subject matter expert and working group mapping of fiscal codes to an MCPC and require continuous manual validation to ensure their accuracy. Additionally, the data quality of the multiple execution fiscal codes that are used to generate MCPCs is questionable because the data quality of the various underlying systems that feed data into SABRS is poor, according to officials in the Office of Programs and Resources. Senior Marine Corps officials from the Office of Programs and Resources told us that due to these limitations, analysts cannot be certain that executed funds associated with an MCPC as reflected in SABRS correspond to the purpose for which the funds associated with the same MCPC were programmed in the Program Budget Information System. This limits the Marine Corps’ ability to assess the extent to which funds were executed consistent with their programmed intent and track funds through the budget cycle.\nSICs are not used consistently across units. The Marine Corps uses SICs to track funds associated with individual training exercises. However, units, including the MEF and its subordinate units, do not consistently use SICs in identifying funds associated with all training exercises. Specifically, officials at all three MEFs told us that units generate SICs for large-scale training exercises directed at the MEF or division level, but may not generate SICs to track expenses for small-scale exercises at lower unit levels such as the regiment and battalion, making it difficult to track those funds. Officials at I MEF and II MEF stated that tracking costs associated with small-scale exercises is less consistent because units are not required to use SICs to track funds associated with exercises at those levels, and SICs associated with each exercise may change from year to year. Further, officials at I MEF and II MEF stated that supply officers are responsible for financial management at units below the division level, and they may not prioritize use of SICs. Officials at III MEF stated that tracking costs associated with specific exercises was difficult because officials could not attribute several large one-time training expenses to specific training exercises. Officials at all three MEFs stated that there is currently no systematic way to ensure that SICs are used accurately to associate funds executed with training exercises, which means they do not have complete or consistent data on costs associated with individual training exercises. As a result, commanders may lack accurate data for making resource decisions about training exercises needed to complete Mission Essential Tasks and improve units’ training readiness.\nIn 2014, the Marine Corps issued Marine Corps Order 5230.23, Performance Management Planning, with the mission of linking resources to readiness and requiring the Deputy Commandant for the Office of Programs and Resources to ensure visibility and traceability of funds through the budget cycle and accounting systems for all organizational units and programs.\nOfficials in the Office of Programs and Resources cited one effort to align inconsistent fiscal codes, but this effort will not directly address the challenges we have identified. According to officials in the Office of Programs and Resources, the Marine Corps is currently conducting a fiscal code alignment effort to address inconsistent use of fiscal codes, but this effort is in its early stages, and the Marine Corps has not yet developed clear guidance for implementation of the effort. Further, while the Marine Corps uses a variety of fiscal codes to track funds in the programming and execution phases of the budget cycle, an official from the Budget and Execution division told us that this effort will focus on fiscal codes that are used across DOD due to manpower limitations. However, MCPCs are unique to the Marine Corps and not recognized in larger DOD budgeting systems. As a result, the fiscal code alignment effort will not include aligning MCPCs across the programming and execution phases of the budget cycle, even though the Marine Corps will continue to use MCPCs. Additionally, although an official told us that SIC codes will be a part of this effort, implementation guidance for the effort was still under development and as a result, it is unclear whether the effort will address the inconsistent use of SICs across unit-level training exercises. Without the ability to track unit-level training funds through the budget cycle, including aligning MCPCs and ensuring consistent use of SIC codes, the Marine Corps lacks data to assess the extent to which funds were obligated consistent with their programmed intent and to adequately forecast and defend budget requests for training. As a result, commanders may face challenges making informed resource decisions.", "", "Although internal Marine Corps assessments and guidance state that the Marine Corps needs an enterprise-wide process to link resources to readiness, the Marine Corps has made little progress fulfilling this need. The Marine Corps has been aware for years of the challenges it faces in explaining its resource needs in its budget estimates to Congress. As stated in its 2009 Financial Guidebook for Commanders, “Many of the congressional cuts the Marine Corps receives are because of an inability to explain why we spent the money the way we did.” From fiscal years 2009 through 2014, the Marine Corps Office of Programs and Resources issued a series of classified and unclassified reports—referred to as the Marine Corps Strategic Health Assessments—that evaluated the health of the Marine Corps. The reports cited a number of factors inhibiting the Marine Corps’ ability to link funding to readiness, including stove-piped efforts, lack of an analytical framework, limited data availability, and poor data quality. For example, the fiscal year 2013 and 2014 reports found that the lack of a comprehensive model to connect the output of institutional processes to readiness measures hindered the Marine Corps’ ability to link funding to readiness. Table 2 below summarizes some of the key related findings in the reports.\nIn fiscal year 2014, the Marine Corps stopped issuing the Marine Corps Strategic Health Assessments, in part, because the person responsible for preparing the analyses moved to another position. A senior Marine Corps official also told us that the reports were discontinued because producing them was no longer a priority for Marine Corps leadership. However, the Marine Corps also issued guidance in August 2014 calling for an enterprise-wide effort to link institutional resources to readiness. Specifically, Marine Corps Order 5230.23 called for the development and implementation of an enterprise-wide performance management process that links resources to institutional readiness via a robust analytic framework. The order included requirements to, among other things, identify readiness goals, develop strategic performance indicators, and improve data and business processes to include ensuring the visibility and traceability of funds.\nWhile implementing this order could address a number of the findings in the Marine Corps Strategic Health Assessments, Marine Corps officials told us that the service had not prioritized implementation of this order. Specifically, the Marine Corps did not designate a single oversight entity with the authority to enforce the order and directly oversee and coordinate efforts to link training funds to readiness. For example, although the order directed the Deputy Commandant for Programs and Resources to organize a quarterly coordination event of key stakeholders to synchronize activities within each major line of effort, officials from this office told us that they have not been given the authority to direct the various efforts. As a result, problems identified in the Marine Corps Strategic Health Assessments have persisted, and the Marine Corps does not have a comprehensive model to connect the output of institutional processes to readiness measures, as called for in the fiscal year 2013 Marine Corps Strategic Health Assessment.\nAccording to Standards for Internal Control in the Federal Government, management should establish an organizational structure, assign responsibility, and delegate authority to achieve its objective. Marine Corps officials told us the benefits of having a single entity to oversee efforts to tie funds to readiness include having one authority responsible for ensuring a consistent data architecture—how data will be collected, stored and transferred across the Marine Corps—and data quality. Further, having a single entity would help ensure a unified approach that would help analysts better answer questions about how funds affect readiness.", "In the absence of a single entity responsible for overseeing the Marine Corps’ efforts to link training funds to readiness, two different organizations within the Marine Corps developed separate and overlapping initiatives. First, in 2012, the Commanding General of II MEF directed the development of C2RAM, a tool that attempts to link funding to readiness for ground combat forces by capturing and correlating resources and requirements associated with specific unit-level training exercises. C2RAM was developed in response to our recommendation that the Marine Corps develop results-oriented performance metrics that can be used to evaluate the effectiveness of its training management initiatives. The tool, a complex excel-based spreadsheet, is used to capture day-to-day operating costs for training exercises to meet a unit’s core and assigned Mission Essential Tasks for training readiness requirements. For example, unit operations and resource officials enter data on training exercise costs and the Mission Essential Tasks expected to be accomplished by each exercise, and the tool uses this data to project the unit’s expected training readiness levels. Further, commanders can use the tool to project the expected effect of decreases in funding on training readiness levels. According to Marine Corps officials, they spent approximately $11 million on the C2RAM initiative from fiscal years 2012 through 2017.\nSecond, in 2015, the Headquarters Marine Corps Office of Programs and Resources adopted and made adjustments for Marine Corps purposes to the Air Force’s Predictive Readiness Assessment system and test-piloted it with Marine Corps units. The Marine Corps’ system was known as the Predictive Readiness Model (PRM). PRM was designed to evaluate the complex interactions between resources and readiness to help inform decisions about resource allocations and readiness outcomes. According to Headquarters Marine Corps officials, PRM attempted to map approximately 500 causal factors related to readiness ratings. The effort involved input from more than 70 subject matter experts from multiple Marine Corps organizations. In addition, data input into PRM was obtained from various authoritative sources, including readiness, financial, and training systems of record, as well as other unauthoritative sources, including C2RAM. According to Marine Corps officials, as of June 2018, the Corps had spent approximately $4 million to develop PRM. In March 2019, while responding to a draft of this report, the Marine Corps stated that it decided to discontinue development of PRM because the model did not meet its objectives.\nWhile these initiatives were both designed to help the Marine Corps link dollars to readiness, each had its own particular use and design. For example, unlike C2RAM, which focuses only on the training pillar of readiness for ground combat forces, PRM focused on all pillars of readiness tracked by the Marine Corps for ground combat forces and air combat forces. In addition, while PRM attempted to capture all training data, C2RAM does not. For example, it does not capture data on individual training. Moreover, while C2RAM is primarily used at the MEF level and below to help inform commanders’ decisions about how much training funding to request and identify the effect of funding on readiness, PRM was designed to help officials in Marine Corps Headquarters make service-wide decisions about budget development and resource allocation.\nDuring our review, we found data quality and classification challenges faced by both PRM and C2RAM, as discussed below.\nData quality limitations. Some Headquarters Marine Corps officials questioned the accuracy and reliability of some of the data planned for use in PRM because the data had to be aggregated from multiple sources that have varying degrees of internal control. In addition, officials told us that existing data were insufficient or are not currently collected, so, in some cases, PRM had to rely on the opinion of subject matter experts to determine how causal factors affect readiness. According to Marine Corps officials at various levels, C2RAM data quality is questionable because data is manually input by various sources with varying degrees of expertise. This is exacerbated by weak processes for conducting quality checks of the data. Moreover, officials stated that cost data may be inaccurate because units may neglect to update cost estimates with actual costs after a training event is completed. Further, C2RAM is not consistently used across all three MEFs. For example, when we visited II MEF, we learned that their resource management officials do not use C2RAM to build their budgets because of concerns about data quality.\nClassification of Data. Another challenge that both efforts faced is the classification of aggregated data. Readiness data are classified; budget data are generally not. When these data are combined, the resulting data are classified, potentially making the tool less useful and available to officials seeking to make informed decisions about resource allocation. For example, C2RAM is currently an unclassified system that captures fiscal and training data, but not readiness data. However, officials at I Marine Expeditionary Force told us that if readiness data were incorporated into the tool, it could become classified, which would limit its availability and usefulness to lower unit levels.\nAs the Marine Corps found in its Fiscal Year 2012 Strategic Health Assessment, its stove-piped processes often require integration at the senior leadership level to develop a comprehensive view of issues, including the effect of dollars on readiness. Development of C2RAM and PRM, however, was not integrated, resulting in two separate systems— each devoted to tackling the same problem, but in different ways and with similar weaknesses, such as data quality limitations. Moreover, there was some overlap between the two systems. For example, C2RAM was one of the many data sources for PRM. In addition, both PRM and C2RAM used some of the same data sources. For instance, both systems relied on information captured in the Marine Corps Training Information Management System as well as on data captured in SABRS.\nThe Marine Corps assessed the feasibility of moving forward with the PRM tool and, in March 2019, while responding to a draft of this report, the Marine Corps stated that they decided to discontinue its development. However, the Marine Corps has not assessed C2RAM as part of an enterprise wide performance management process that links resources to readiness. For example, the Marine Corps could learn from the experience of commanders at the MEF level who find C2RAM useful and consider the extent to which those usability considerations could and should be brought into a service-wide model. Without conducting this analysis, the Marine Corps is unlikely to make headway in tackling the challenges posed by trying to link resources to readiness.", "To meet the demands of its missions, the future security environment will require military forces to train across the full range of military operations, according to DOD. While the Marine Corps continues to ask for increased funding, according to a congressional report, the Marine Corps is unable to provide sufficient detail in its O&M budget estimates for training that would allow Congress to determine the benefits gained from additional funding. The Marine Corps has been aware for many years of the importance of providing accurate budget justifications to Congress. A number of factors have made it challenging for the Marine Corps to provide Congress the information it needs. First, the Marine Corps cannot fully track training funds through the budget cycle, making it difficult for the Marine Corps to, among other things, show that training funds were spent as planned. Second, the Marine Corps has not prioritized tackling the longstanding problem of how to link training resources to readiness. Although the Marine Corps has a standing order to develop an enterprise- wide performance management framework that links resources to readiness via a robust analytical framework, no single entity has been assigned the authority to enforce this order. In the absence of that leadership, certain components of the Marine Corps have developed their own, independent initiatives that were designed to achieve the same objective of linking funding to readiness, but had their own specific approaches and intended uses. Moreover, the Marine Corps has not assessed whether C2RAM provides an enterprise-wide performance management process linking resources to readiness. Until the Marine Corps assigns the authority needed to oversee development and implementation of a methodologically sound approach and assesses the degree to which C2RAM could be used, it will continue to face challenges making fully informed decisions about how much money it needs for training purposes and what it can reasonably expect to deliver for that money in terms of readiness gains.", "We are making the following three recommendations: The Secretary of the Navy should ensure that the Deputy Commandant for the Office of Programs and Resources oversee development and implementation of an approach to enable tracking of unit-level training funds through the budget cycle. This approach should include aligning MCPCs across the Marine Corps and ensuring consistent use of SIC codes. (Recommendation 1)\nThe Secretary of the Navy should ensure that the Commandant of the Marine Corps designates a single entity responsible for directing, overseeing, and coordinating efforts to achieve the objective of establishing an enterprise-wide performance management process that links resources to readiness. (Recommendation 2)\nThe Secretary of the Navy should ensure that the Commandant of the Marine Corps assesses C2RAM to determine the extent to which this system, or elements of this system, should be adapted for use in an enterprise-wide performance management process linking resources to readiness. (Recommendation 3)", "We provided a draft of this report to DOD for review and comment. In written comments, DOD concurred with all three of the recommendations in the draft report and stated that the Marine Corps would take actions to track unit-level training funds, link resources to readiness, and examine C2RAM, as discussed below. DOD’s comments are reprinted in appendix II. DOD also provided technical comments, which we incorporated as appropriate.\nDOD concurred with the third recommendation in the draft report that the Secretary of the Navy should ensure that the Commandant of the Marine Corps assesses C2RAM and PRM and determine the extent to which these systems or elements of these systems could and should be adapted for use in the enterprise-wide performance management process linking resources to readiness. In its comments, the Marine Corps stated that work to develop PRM had been discontinued because the model did not satisfy the Marine Corps objectives. Given that the Marine Corps’ decision to stop development of PRM mitigates the potential for overlapping initiatives moving forward, we revised the report and recommendation to focus on the Marine Corps assessing C2RAM for use in the enterprise-wide performance management process linking resources to readiness. The Marine Corps stated in its written response that C2RAM has potential utility for supporting an understanding of resources to readiness and it will examine the system further.\nWe are sending copies of this report to the appropriate congressional committees, the Acting Secretary of Defense, the Secretary of the Navy, and the Commandant of the Marine Corps. 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 about this report, please contact me at (202) 512-2775 or FieldE1@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 evaluates the extent to which the Marine Corps (1) tracks unit- level Operations and Maintenance (O&M) training funds for ground combat forces through the budget cycle; and (2) links unit-level training funds for ground combat forces to readiness. This report focuses on ground combat forces which conduct a myriad of training at the Marine Expeditionary Forces (MEF).\nFor our first objective, we requested and analyzed budget request, allocation, and obligations training exercise data for fiscal year 2017 from I Marine Expeditionary Force (MEF), II MEF, and III MEF. We collected data for this fiscal year because it was the most recently completed fiscal year for which actual obligated amounts could be obtained. We used this data request to determine the Marine Corps’ ability to provide the data as well as determine the source or sources they used to provide the data. We discussed the systems—Cost to Run a Marine Expeditionary Force (C2RAM) and Standard Accounting, Reporting, and Budgeting System (SABRS)—used to provide this data with knowledgeable Marine Corps officials, including discussion of the data reliability concerns with these systems which are identified in this report. We interviewed knowledgeable officials about the systems, reviewed the user guide for one of the systems, and observed how data was input and extracted to form reports. Although we found the data to be insufficient to consistently identify and fully track unit-level O&M training funding data though the budget cycle, we determined that the data we obtained were sufficiently reliable to provide information about the availability of fiscal year 2017 funding amounts requested, allotted, and obligated for unit-level training exercises, as discussed in this report.\nWe also reviewed and analyzed data from a series of classified and unclassified reports that were issued by the Marine Corps from fiscal year 2009 through fiscal year 2014. These reports, known as the Marine Corps Strategic Health Assessment (MCSHA), evaluated the health of the Marine Corps, including its use of fiscal codes, through an enterprise- wide study of resource investments, organizational activities, and readiness outcomes. We also reviewed data about Marine Corps Programming Codes (MCPC) and Special Interest Codes (SIC) in Marine Corps documents such as the MCSHAs as well as the Standard Accounting, Budgeting, and Reporting System (SABRS) Customer Handbook. We assessed this information against Marine Corps Order 5230.23, Performance Management Planning, which requires the Deputy Commandant for Programs and Resources to ensure visibility and traceability of funds through the budget cycle and accounting systems for all organizational units and programs, as well as Standards for Internal Control in the Federal Government, which states that management should design an entity’s information system to ensure, among other things, that data is readily available to users when needed.\nFor our second objective, we reviewed reports and supporting documentation on Marine Corps efforts to evaluate readiness levels achieved from O&M obligations for ground combat forces training and observed the operation of systems used to track training funds and readiness. Specifically, we reviewed and analyzed the MCSHAs to identify challenges that the Marine Corps reported facing in attempting to link training funds to readiness. As a part of our review of supporting documentation, we reviewed and analyzed the MCSHAs from fiscal years 2011 through 2014 issued by the Marine Corps Office of Program Analysis and Evaluation to summarize some of the key findings identified by the Marine Corps related to linking training funds to readiness. We reviewed these reports because they intended to provide a comprehensive overview of the health of the Marine Corps. From these reports, we identified and summarized key findings related to our review. Specifically, one GAO analyst reviewed the four reports to identify reported findings that prevent the Marine Corps from linking resources to readiness, such as stove-piped processes and inconsistent data management processes, while a second analyst confirmed the summary from this review. We shared our summary of key findings with Marine Corps officials and they concurred.\nIn addition, we reviewed guidance and other related documents on the Predictive Readiness Model (PRM) and Cost to Run a Marine Expeditionary Force (C2RAM). We were briefed on and observed data being input into the C2RAM model and queries being run from that data. We were able observe the summary reports that resulted from the queries which helped to enhance our understanding of the Marine Corps efforts to link training funds to readiness. In addition, we reviewed previously issued GAO reports related to the issue. We assessed this information against Marine Corps Order 5230.23, Performance Management Planning, which calls for the development and implementation of an enterprise-wide performance management process that links resources to institutional readiness via a robust analytic framework, as well as Standards for Internal Control in the Federal Government, which states that management should establish an organizational structure, assign responsibility, and delegate authority to achieve its objective.\nTo answer the two objectives for this review, we interviewed knowledgeable officials from the following offices:\nOffice of the Secretary of Defense\nCost Assessment and Program Evaluation\nPersonnel and Readiness, Force Readiness\nHeadquarters Marine Corps, Washington, D.C.\nOffice of Programs and Resources\nBudget and Execution Division\nProgram Analysis and Evaluation Division\nCommand, Control, Communications, and Computers\nMarine Forces Command – Norfolk, Virginia\nMarine Corps Training and Education Command – Quantico, Virginia I Marine Expeditionary Force – Camp Pendleton, California II Marine Expeditionary Force – Camp Lejeune, North Carolina III Marine Expeditionary Force – Okinawa, Japan.\nWe conducted this performance audit from August 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.", "", "", "", "In addition to the contact name above, Margaret Best, Assistant Director; William J. Cordrey; Pamela Davidson; Angela Kaylor; Amie Lesser; Tamiya Lunsford; Samuel Moore, III; Shahrzad Nikoo; Clarice Ransom; Cary Russell; Matthew Ullengren; and Sonja Ware made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_title", "", "", "", "h1_full", "h0_full", "", "", "", "h1_full", "", "", "h2_full", "", "", "", "" ] }

{ "question": [ "How was it determined that The Marine Corps cannot track all training funds?", "Why can't the Marine Corps track their training funds?", "What fiscal codes could be used to fix this?", "How does the Marine Corps currently use MCPCs?", "How does the Marine Corps currently use SICs?", "How is the Marine Corps trying to improve its use of fiscal codes?", "Why is the inability to track unit-level training funds through the budget cycle an issue?", "Why is training important for a military?", "How does the Marine Corps interact with the DOD budget cycle?", "How have the Marine Corps' training budget estimates been questioned?", "What is the purpose of House Report 115-200?", "How does this report examine the Marine Corps' operations?", "How has the GAO analyzed the Marine Corps?" ], "summary": [ "The Marine Corps cannot fully track all unit-level training funds for ground combat forces through the budget cycle. According to GAO's analysis of data provided by the Marine Expeditionary Forces (MEFs), the principal warfighting organization for the Marine Corps, units can track some, but not all, funds for training exercises from the budget request through use of the funds.", "The Marine Corps cannot fully track all training funds through the budget cycle, in part, because it has not established the consistent use of fiscal codes.", "Two key fiscal codes that officials identified as relevant to track funds for unit-level training are the Marine Corps Programming Code (MCPC) and the Special Interest Code (SIC).", "The Marine Corps uses MCPCs to program funds, but GAO found that when the Marine Corps spends those funds, it uses a different set of fiscal codes. This makes it difficult to link the programmed intent of funds to the execution of those funds.", "The Marine Corps uses SICs to track funds associated with training exercises, but GAO found that units do not use SICs consistently. For example, officials at all three MEFs told GAO that units generate SICs for large-scale training exercises, but may not do so for small-scale exercises.", "The Marine Corps is taking steps to align fiscal codes across the budget cycle, but this effort is in its early stages and will not include MCPCs, and may not address the inconsistent use of SICs.", "Without the ability to track unit-level training funds through the budget cycle, the Marine Corps lacks readily available data to assess whether funds were obligated consistent with their programmed intent and to adequately forecast and defend budget requests for training.", "Training is key to building readiness—the military's ability to fight and meet the demands of its missions.", "Through the Department of Defense (DOD) budget cycle, the Marine Corps estimates or programs its funding needs for training and spends funds to accomplish its training mission.", "Questions have been raised about whether the Marine Corps' training budget estimates are sufficiently detailed to determine training costs at the unit level or the expected readiness generated by those costs.", "House Report 115-200 included a provision for GAO to examine the military services' budgeting processes to build unit-level training readiness.", "This report examines the extent to which the Marine Corps (1) tracks unit-level training funds for ground combat forces through the budget cycle, and (2) links ground combat forces' unit-level training funds to readiness.", "GAO analyzed budget data and studies conducted by the Marine Corps and others, examined tools used by units to link training funds with readiness, and interviewed knowledgeable officials at various levels in the Marine Corps." ], "parent_pair_index": [ -1, 0, 1, 2, 2, 1, 0, -1, -1, 1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 2, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "HHS Agencies Responded to the CAA by Establishing New Autism Activities and Continuing Others", "HRSA Routinely Collects and Reviews Information to Oversee CAA Grantees", "Agency Comments", "Appendix I: National Institutes of Health’s (NIH) and Centers for Disease Control and Prevention’s (CDC) Autism Activities", "Appendix II: List of Interagency Autism Coordinating Committee (IACC) Reports", "Appendix III: Department of Health and Human Services (HHS) Funding for Autism Activities for Fiscal Years 2006 through 2011", "Appendix IV: Combating Autism Act Grantees from Fiscal Years 2008 through 2011 by Program", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Autism—a complex and pervasive developmental disability—usually becomes evident in early childhood, although signs and symptoms vary.According to CDC, autism begins before age 3 and lasts throughout a person’s life. Some children show signs of autism within the first few months of life. In others, symptoms might not appear until 24 months or later. Still other children with autism seem to develop typically until 18 to 24 months of age and then stop gaining new skills or lose the skills they once had. Signs and symptoms of autism include a child not responding to his or her name by 12 months; not pointing at objects to show interest by 14 months; avoiding eye contact and wanting to be alone; repeating words or phrases over and over; and flapping hands, rocking, or spinning in circles. Individuals with autism might have challenges with showing or talking about their feelings and might also have trouble understanding the feelings of others.\nDiagnosing autism can be difficult; however, early intervention services can greatly improve a child’s development. There is no medical diagnostic test available for autism. As a result, doctors consider a child’s behavior and development to make a clinical diagnosis. By age 2, a diagnosis by an experienced professional can be considered very reliable. However, according to CDC most children do not receive a diagnosis until after age 4. There is no single cause of autism, but a variety of factors are suspected of causing or contributing to autism, including environmental, biological, and genetic sources. While there is no known cure, research shows that early intervention services can greatly improve a child’s development. Because of the complexity of this disorder, individuals with autism have diverse needs for medical and mental health care as well as an array of educational and social services.\nThe CAA authorizes and directs HHS to conduct specific autism-related activities, which may include funding external organizations to conduct these activities through grants, contracts, and cooperative agreements. The CAA amended sections of the Children’s Health Act of 2000—which required HHS to conduct activities related to autism research, surveillance, and coordination—by revising some sections and repealing other sections of that law as well as establishing new requirements.CAA authorized, but did not appropriate, federal funding to carry out these activities in fiscal year 2007 through fiscal year 2011.", "HHS agencies responded to the CAA with new or continuing autism activities. In fiscal year 2008, HRSA created the Combating Autism Act Initiative in response to specific directives included in the CAA. Through this initiative, HRSA expanded its existing training programs to include an autism-specific component and established new autism research and state grants. HRSA conducts all of its Combating Autism Act Initiative programs under the authority of the CAA. HRSA staff told us that they have not analyzed whether the agency’s new programs could be conducted under other HRSA authority.\nHRSA expanded two of its preexisting training programs—the Leadership Education in Neurodevelopmental and Other Related Disabilities (LEND) and the Developmental-Behavioral Pediatrics (DBP) training programs— through supplemental funding to existing grantees and awards to new grantees. These two training programs account for the majority of HRSA spending under its Combating Autism Act Initiative; however, HRSA was funding these programs prior to enactment of the CAA.Combating Autism Act Initiative, LEND and DBP grantees are required to include an autism component in their training. Among other things, the programs train health care professionals, such as pediatric practitioners, residents, and graduate students, to provide evidence-based services to children with autism and other developmental disabilities and their families; and train specialists to provide comprehensive diagnostic evaluations to address the shortage of professionals who can confirm or Under the rule out an autism diagnosis. According to HRSA, as a result of these training programs, the number of health professionals enrolled in autism courses increased from 1,887 in academic year 2008-2009 to 4,256 in academic year 2010-2011 and the number of diagnostic evaluations increased from 12,390 in academic year 2008-2009 to 44,102 in academic year 2010-2011.\nAdditionally, HRSA created new autism research programs to fund studies that are intended to advance the current autism knowledge base and lead to improvements in interventions that address the health and well-being of children and adolescents with autism and other developmental disabilities. HRSA also provided grants to establish two research networks that focus on the physical and behavioral health needs of children and adolescents with autism. These networks conduct research on evidence-based practices for interventions, promote the development of evidence-based guidelines for intervention, validate tools for autism intervention, and disseminate information to health professionals and the public, especially families affected by autism.\nHRSA also funded new state implementation and planning grants to implement plans to improve access to comprehensive, coordinated health care and related services for children and youth with autism and other developmental disabilities. Twenty-two states received grants from fiscal years 2008 to 2011 to implement their autism plans. These plans vary by state, but common elements include a focus on partnerships between professionals and families of children and youth with autism, access to a culturally competent family-centered medical home, access to adequate health insurance and financing of services, early and continuous screening for autism and other developmental disabilities, community services organized for easy use by families, and transition services for youth entering adult health care. Table 1 provides information on the specific autism-related programs HRSA initiated or expanded—by increasing funding and the number of grantees—as a result of the CAA.\nNIH and CDC continued the autism activities each implemented prior to the enactment of the CAA, but did not create new programs as a direct result of the CAA. Some of these activities had been undertaken in response to the Children’s Health Act of 2000, which, like the CAA, charges NIH with expanding, intensifying, and coordinating research on autism. In addition, under both laws, CDC is required to conduct activities related to establishing regional centers of excellence to collect and analyze certain information on autism. Since the enactment of the CAA, NIH continued to fund, expand, and coordinate autism research through its Autism Centers of Excellence and autism-specific grants and contracts. According to agency officials, NIH awards these grants and contracts under its general Public Health Service Act authorities and not under the specific authorities provided in the CAA.fund its regional centers of excellence for autism epidemiology and other activities, such as an awareness campaign on autism and other developmental disabilities. While enactment of the CAA did not result in any change to CDC’s autism activities, CDC officials stated that the CAA provided additional focus on these efforts. According to CDC officials, the CAA’s enactment also strengthened the agency’s Learn the Signs. Act Early. awareness campaign by elevating the importance of increasing awareness of developmental milestones to national visibility. See appendix I for a list of NIH’s and CDC’s autism efforts.\nAs required by the CAA, the Interagency Autism Coordinating Committee (IACC)—initially established under the Children’s Health Act— restructured its membership and assumed additional responsibilities to coordinate autism efforts within HHS. The CAA reauthorized the IACC and specified that the IACC include both federal and nonfederal members. IACC membership expanded to include 11 nonfederal members that represented individuals with autism and parents of children with autism. In addition, it included members of the autism advocacy, research, and service-provider communities in accordance with the CAA’s membership requirements. The CAA also directed the IACC to develop and annually update a strategic plan and summary of advances in autism research, and monitor federal autism activities. Since fiscal year 2007, the IACC issued several reports as a means to coordinate HHS autism efforts and monitor federal autism activities, some of which were specifically required by the CAA, such as the development of an autism strategic plan and a summary of advances in autism research.appendix II for a description of the documents produced by the IACC.\nIn addition to the changes to the IACC, in 2008, NIH created the Office of Autism Research Coordination (OARC) within the National Institute of Mental Health (NIMH) to coordinate and manage the IACC and related cross-agency activities, programs, and policies. OARC assists the IACC by conducting analyses and preparing reports for the IACC, assisting with the IACC’s strategic planning and autism research monitoring, and providing logistical support for IACC meetings. It also supports communications through the IACC website and press releases, and responds to inquiries from the public and other government agencies.OARC officials told us that although HHS could establish an advisory committee similar to the IACC under other authority, the CAA has provided the IACC with greater visibility and increased involvement of the public and federal agencies, through, for example, the annual update of the IACC’s autism strategic plan.\nWhile the CAA authorized appropriations for HRSA, NIH, and CDC autism activities, the CAA did not appropriate funds for this purpose. Instead, to fund these activities, HRSA, NIH, and CDC used funds appropriated to the agencies annually through the budget and appropriations process for the purpose of carrying out a variety of programs.\nReinvestment Act of 2009. And, according to CDC officials, the agency redirected a portion of its funding for infant health activities to support pilot projects implementing the agency’s awareness campaign on autism and other developmental disabilities. The IACC’s funding increased significantly from fiscal year 2006 to 2011. From fiscal year 2008 through fiscal year 2011, as directed by Congress in the annual HHS appropriations act, the Secretary of Health and Human Services transferred funds to NIMH for the IACC. From fiscal year 2006 through fiscal year 2011, the IACC also received funds from the annual NIH appropriation. See appendix III for information on the funding for these agencies’ and the IACC’s autism-related activities.", "HRSA, the only HHS agency that awarded grants specifically as a result of the CAA, regularly collects and reviews information from grantees to oversee individual CAA grantees as well as to provide oversight to its CAA programs. HRSA awarded approximately $164 million in grants to 110 CAA grantees from fiscal years 2008 to 2011. The majority of funding—about $107 million—was awarded to 47 grantees within HRSA’s LEND training program, some of which were already receiving funds prior to the CAA. In addition, nearly $24 million was awarded to two grantees to support HRSA’s two autism intervention research networks. For all grantees, the amount of the grant award per year ranged widely from about $36,000 to $4 million depending on the CAA program, as shown in appendix IV.\nAs part of the agency’s oversight of its CAA grantees, HRSA requires periodic reports from these grantees, which are reviewed by HRSA staff. HRSA project officers within the Maternal and Child Health Bureau—the bureau that administers the CAA programs—are responsible for working with CAA grantees in overseeing the programmatic and technical aspects of the grant. HRSA grants management specialists and their supervisors—grants management officers—oversee compliance with financial reporting requirements and agency grant policies and regulations. The required reports that are reviewed by HRSA staff include the following:\nAnnual federal financial report. The annual federal financial report is an accounting of expenditures under the project in the budget period—the period for which HRSA has awarded funds to the grantee—and cumulatively for the project period.after the end of the budget year.\nAnnual progress reports. The annual progress report is part of a grantee’s noncompeting continuing application and describes grantees’ progress on their grant objectives. Progress reports are due before the end of the budget period because HRSA staff use these reports to assess progress and, except for final progress reports, to determine whether to provide funding for the budget period subsequent to that covered by the report.\nMid-project progress reports. Mid-project progress reports provide information on grantees’ progress on research objectives. These reports are required of certain research grantees and are due midway through the project period.\nSemiannual progress reports. Semiannual progress reports include information on the grantees’ most significant achievements and problems encountered during the reporting period as well as the grantees’ progress on established objectives. These reports are required of research network grantees and are due midway through each budget period.\nIn addition to reports, HRSA also requires grantees to submit written requests before making certain changes to the grant project, known as prior-approval requests. For example, a change in the director of the grant project requires prior approval, as does a request to carry over unobligated funds to the next budget period or a request for a no-cost extension—an extension for a limited period beyond the end of the project period so that the grantee can complete project activities.\nWhen reviewing these reports and grantee prior-approval requests, HRSA staff are required to fill out checklists in the EHB in which they indicate their review and approval of the report or request. The content of the review checklists varies by the type of report or request being reviewed. For example, among other questions, a progress report checklist asks if the report reflects the program’s goals. The federal financial report checklist asks HRSA staff to compare the report with data in HRSA’s payment management system. All review checklists include a question where HRSA staff can indicate if they have identified any issues or concerns with the report or request. In addition, when reviewing grantee information, HRSA staff may request that a report be revised with additional or corrected information.\nOur review found that HRSA routinely collects and reviews information submitted by CAA grantees. Generally, grantees submitted required reports and HRSA staff documented their review of these reports. Specifically, the 22 grantees in our unbiased random sample submitted all of the 106 reports they were required to submit and most of these reports were submitted on time. We found that HRSA staff filled out checklists approving all of the reports submitted or required report revisions. In many cases, HRSA staff filled out a checkbox indicating a “yes,” “no,” or “n/a” response to the questions. However, we noted that there were some cases where staff provided a narrative description to support their response to the question, such as a description of how the grantee is meeting the program’s goals—a question in the progress report checklist. HRSA officials stated that staff are required to answer the questions in the checklist, but they are not required to provide a narrative supporting their answers.\nWe observed that there were few instances of HRSA staff either documenting a concern or asking for a report revision before approving the report. We encountered seven instances where a project officer approved a report, but documented a concern in a checklist. In all these instances, the project officer provided narrative describing the concern. For example, in one instance, the project officer wrote that the grantee’s recruitment of study subjects—parents of children with autism or other developmental disabilities—was slow. However, the project officer also stated that the grantee modified its enrollment process, which seemed to be having some positive effect and that the project officer and grantee were working together to monitor enrollment. We also identified another seven instances where HRSA staff asked for a report to be revised either with additional or corrected information. In almost all instances, the grantees submitted a revised report and HRSA staff completed a checklist indicating approval of the revised report.\nThe question in the checklist is: “Are there any areas of concern: programmatic, budgetary, or other?” the next budget period. For example, 13 of the 22 grantees in our review requested to carry over unobligated balances at least once during the period of our review, and many of them requested it for multiple years— equaling 32 separate requests. The amount of unobligated balances that grantees requested to carry over in a given year ranged from $1,518 to $172,514. In all instances, HRSA approved these requests as indicated by the issuance of a revised notice of award. Almost all requests related to awards in fiscal year 2010 and later contained an associated checklist in the EHB filled out by HRSA staff approving the request to carry over unobligated balances.\nIn addition to reviewing information submitted by grantees, HRSA provides additional oversight to grantees. First, it conducts site visits in person or by means of the web. During a site visit, HRSA staff may collect information on preliminary research findings, data and analysis, and any challenges the grantee is facing. Site visits are only required of certain research grantees, although HRSA may conduct site visits with other grantees, depending on available resources. HRSA officials target site visits for CAA grantees on the basis of six criteria: (1) the grantee is new, (2) there has been a change in the grantee’s project director, (3) there has been a change in the grantee’s scope of work, (4) there are budgetary issues or the grantee has not made adequate progress on the project goals, (5) the grantee has requested technical assistance, or (6) there has been a change in the project officer overseeing the grantee. HRSA uses a site-visit report to document the visit and has guidance on what should be included in the report. For example, for training grants, the report should include a narrative summary of the visit including highlights, performance measure progress, strengths and challenges, and any technical assistance needed by the grantee. Second, HRSA officials stated that HRSA project officers provide routine technical assistance to certain grantees and others on an as-needed basis. For example, all research grantees have either a monthly, biweekly, or mid-project telephone call with HRSA project officers.\nOur review confirmed that HRSA has conducted a number of site visits to monitor CAA grantees. For example, nine of the grantees in our review had documentation indicating that a site visit had been conducted, with only two of these being required site visits. While none of the site-visit reports identified major issues that required corrective action, some did record challenges the grantees were facing or made suggestions. For example, one report stated that the grantee may encounter challenges in the recruitment of trainees. We identified documentation related to technical assistance that HRSA staff provided to some grantees but not all. For example, we did not always see documentation of routine telephone calls with research grantees that HRSA officials say occur on a regular basis. In response, HRSA officials stated that not all technical assistance is recorded in the EHB; only when a significant issue arises is the telephone call, e-mail, or other assistance recorded.\nBesides overseeing specific grantees, HRSA monitors its CAA activities at the program level by regularly collecting performance reports from grantees. The 22 CAA grantees in our sample submitted all the required performance reports. According to HRSA officials, the primary purpose of performance reports is to gauge program performance. For example, data in performance reports is currently being used by a HRSA contractor to prepare a report on the progress of the CAA programs for Congress. In addition, according to HRSA officials, performance data can be used to modify program performance measures over time. While performance reports are used to monitor CAA programs—as opposed to grantees— HRSA officials stated that some performance information is also included in annual progress reports, which are used to oversee specific grantees. For example, progress reports require grantees to include information on whether they are having problems meeting their performance measures. Finally, to further help oversee CAA programs and consolidate information on its monitoring approach for these programs, in December 2012 HRSA released a grant-management operations manual to outline its overall approach for monitoring these programs. According to HRSA officials, this manual will be included in the program folder of the EHB for each of its CAA programs and will be reviewed annually, consistent with HHS guidance.", "We provided a draft of this report to HHS for comment. HHS provided technical comments that we incorporated, as appropriate.\nWe are sending a copy of this report to the Secretary of Health and Human Services. 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 crossem@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.", "During fiscal year 2006 through fiscal year 2011, NIH and CDC funded a number of autism activities. Table 2 lists the activities these agencies funded, including the type and purpose of each activity.", "Appendix II: List of Interagency Autism Coordinating Committee (IACC) Reports Description According to the IACC, the Strategic Plan provides a blueprint for autism research that is advisory to the Department of Health and Human Services and serves as a basis for partnerships with other agencies and private organizations involved in autism research and services. The 2011 Strategic Plan is organized around seven questions asked by individuals with autism and their families (such as “When should I be concerned?”). Each of the seven sections includes a description of what is generally known from autism research for that particular question and what gaps remain, followed by what was learned during the previous year. The report also sets up short- and long-term research objectives based on autism research opportunities. The Combating Autism Act of 2006 (CAA) requires that the Strategic Plan be updated on an annual basis.\nThe Portfolio Analysis features autism project and funding information for certain federal agencies and private organizations. According to officials within the National Institutes of Health Office of Autism Research Coordination (OARC), the agencies and organizations in these reports have been identified by the IACC and OARC as being involved in autism research and have agreed to participate. According to the IACC, the intent of these analysis reports is to better inform the IACC and interested stakeholders about the funding landscape for a particular year. Additionally, the analysis examines the extent to which a particular year’s funding and research topics align with the IACC’s most recent Strategic Plan. The IACC reports that the Portfolio Analysis may also be used by federal agencies and private research organizations to help guide future funding priorities by outlining current gaps and opportunities in autism research, as well as serving to highlight current activities and research progress. OARC officials told us that they plan to issue the 2011 report in 2013.\nSummary of Advances in Autism Spectrum Disorder Research (2007, 2008, 2009, 2010, 2011)\nEach year the IACC releases its list of scientific advances in autism research. As reported by the IACC, the report highlights studies on autism published in the previous year in peer-reviewed journals and selected by members of the IACC. The number of studies featured over the years ranges from 20 to 54. The CAA requires that the IACC produce the Summary of Advances annually.\nAs reported by the IACC, this report describes several key aspects of worldwide autism research publications, which may be used to inform planning and strategic funding decisions for future autism research. Autism-related research articles published between 1980 and 2010 were analyzed to identify historical trends and publication outputs across the seven questions and research areas of the 2011 IACC Strategic Plan. Information found in research publications was also used to assess the institutions conducting autism research, funding organizations supporting the research publications, and the extent of collaboration between authors from different countries and research institutions. Additionally, measures, such as citation counts, were used as an assessment of the impact of the published research. OARC officials told us that there are no plans to update this report annually.\nIn 2008 and 2010, OARC, National Institute of Mental Health, prepared this report on behalf of the IACC. In 2009, OARC, National Institute of Mental Health, and Acclaro Research Solutions, Inc., prepared this report on behalf of the IACC.", "HHS component Health Resources and Services Administration (HRSA)\nCenters for Disease Control and Prevention (CDC)\nHRSA’s totals include autism grant awards, as well as, for example, funding used for HRSA’s personnel expenses, travel, supplies, and overhead related to reviewing these grants. NIH’s totals include funding for research that is conducted outside of NIH’s autism-specific grant announcements. According to NIH officials, much of the autism research funded by NIH is done under general grant announcements soliciting biomedical research. IACC’s totals for fiscal years 2008 through 2011 include funding for the Office of Autism Research Coordination within NIMH.\nIn fiscal year 2008, certain agencies, including HHS agencies, were subject to an across-the-board rescission. All nondefense discretionary programs were subject to an across-the-board rescission in fiscal year 2011. According to HRSA officials, HRSA spent less on its autism activities in these years as a result of the rescissions. NIH officials told us that the agency reduced funding for research grants as a result of the rescissions, but could not measure the precise effect on autism-related grants. According to CDC officials, CDC spent less on its autism activities in fiscal year 2011 as a result of the rescission in that year. In addition, the IACC received less funding in fiscal years 2008 and 2011 as a result of the rescissions.\nHRSA’s fiscal year 2006 and 2007 funding represents total funding for its Leadership Education in Neurodevelopmental and Other Related Disabilities and Developmental-Behavioral Pediatrics training programs, through which the agency awarded grants that could have had an autism-specific component; however, an autism-specific component was not a requirement of the grants. Beginning in fiscal year 2008, these training programs were required to have an autism-specific component.", "In fiscal year 2008, in response to the Combating Autism Act, the Health Resources and Services Administration (HRSA) created the Combating Autism Act Initiative. Under this initiative, HRSA has a number of programs that fund grants specific to autism. This appendix includes a description of the purpose of each program. Tables 3 through 11 list the grants that have been awarded under each program for fiscal years 2008 through 2011.\nProgram: Leadership Education in Neurodevelopmental and Other Related Disabilities (LEND) Training Program. The purpose of this program is to improve the health of children who have, or are at risk for developing, neurodevelopmental and other related disabilities by training professionals to assume leadership roles, and to ensure high levels of interdisciplinary clinical competence in an effort to increase diagnosis of or rule out individuals’ developmental disabilities, including autism.\nProgram: Developmental-Behavioral Pediatrics (DBP) Training Program. The purpose of this program is to train the next generation of leaders in developmental-behavioral pediatrics; and provide pediatric practitioners, residents, and medical students with essential biopsychosocial knowledge and clinical expertise. This program is focused on developmental disabilities, including autism.\nProgram: National Combating Autism Interdisciplinary Training Resource Center. The purpose of this program is to improve the health of children who have, or are at risk for developing, autism and other developmental disabilities by providing technical assistance to LEND and DBP programs to better train professionals to utilize valid and reliable screening tools for diagnosing or ruling out autism, and provide evidence- based interventions for children.\nProgram: Autism Intervention Research Program and Autism Intervention Secondary Data Analysis Studies Program. The purpose of this program is to support research on evidence-based practices for interventions to improve the health and well-being of children and adolescents with autism and other developmental disabilities. The Autism Intervention Secondary Data Analysis Studies Program utilizes the analysis of existing secondary data.\nProgram: Autism Intervention Research Network on Physical Health. The purpose of this program is to establish and maintain a network infrastructure designed to be the platform from which to conduct research on evidence-based practices for interventions to improve the physical health and well-being of individuals with autism and other developmental disabilities; develop evidence-based guidelines and validate tools for interventions; and disseminate critical information on its research findings, guidelines, and tools.\nProgram: Autism Intervention Research Network on Behavioral Health. The purpose of this program is to establish and maintain a network infrastructure designed to be the platform from which to conduct research on evidence-based interventions to improve the behavioral, mental, social, or cognitive health, or a mix of those, and well-being of children and adolescents with autism and other developmental disabilities; develop evidence-based guidelines and validate tools for interventions; and disseminate critical information on its research findings, guidelines, and tools.\nProgram: Developmental-Behavioral Pediatrics Research Network. The purpose of this program is to establish a multicenter scientific and clinical research network that will promote coordinated research activities and address health issues. The program is intended to build a developmental behavioral pediatric research infrastructure that supports multidisciplinary research, focuses on the translation of research to practice, and provides the environment in which to train a new generation of developmental behavioral pediatric researchers.\nProgram: State Implementation and Planning Grants. The purpose of this program is to improve access to comprehensive, coordinated health care and related services by implementing state plans to improve the system of services.\nProgram: State Public Health Coordinating Center. The program purpose is to improve the health of children who have, or are at risk for developing, autism and other developmental disabilities by coordinating with the state demonstration grantees; and by developing a strategy for defining, supporting, and monitoring the role of state public health agencies in assuring early and timely identification, diagnosis, and intervention.", "", "", "In addition to the contact named above, Geri Redican-Bigott, Assistant Director; Katherine L. Amoroso; George Bogart; Deirdre Brown; Sandra George; Cathleen Hamann; Kristin Helfer Koester; Drew Long; and Sarah Resavy made key contributions to this report." ], "depth": [ 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full h2_full h4_full", "h0_full h2_full", "h4_full h1_full", "", "h0_full", "h2_full", "h2_full", "", "", "", "" ] }

{ "question": [ "How did the HHS respond to the CAA?", "What were the effects of HRSA's new initiative?", "How does HRSA award its autism grants?", "What other agencies were involved with the CAA?", "How did HHS's Interagency Autism Coordinating Committee help aide in the efforts?", "How were the efforts of the CAA funded?", "What does HRSA do?", "How has HRSA awarded grants?", "What did GAO find by reviewing grantees?", "What else has HRSA done to oversee grantees?", "How else does HRSA monitor its CAA programs?", "What is the CDC's stance regarding autism?", "What data has CDC collected on autism?", "What is autism?", "How do HHS agencies help fund services for individuals diagnosed with autism?", "How has the CAA changed the Children's Health Act of 2000?", "What else has the CAA done to support people with autism?", "How did GAO attempt to detail the effects and oversight of the CAA?", "How did GAO examine the HHS's spending?", "How did GAO review files for CAA grantees?" ], "summary": [ "Department of Health and Human Services (HHS) agencies responded to the Combating Autism Act of 2006 (CAA) by establishing some new autism activities and continuing others. The Health Resources and Services Administration (HRSA) created a new initiative to address specific directives in the CAA.", "Through this initiative, HRSA expanded its existing training programs by requiring grantees to include training specific to autism. It also established new autism research grants and funded new state grants to improve services for children with autism.", "HRSA awards its autism grants under the authority of the CAA.", "The National Institutes of Health (NIH) and Centers for Disease Control and Prevention (CDC) continued their autism activities--some of which were undertaken in response to the Children's Health Act of 2000--but did not create new programs as a direct result of the CAA. NIH continued to fund, expand, and coordinate autism research through its Autism Centers of Excellence and autism-specific grants and contracts. CDC continued to fund its regional centers of excellence for autism epidemiology and other activities, such as an awareness campaign.", "HHS's Interagency Autism Coordinating Committee (IACC)--reauthorized by the CAA--assumed additional responsibilities to coordinate autism efforts within HHS and restructured its membership to include more nonfederal members. NIH created the Office of Autism Research Coordination to coordinate and manage the IACC.", "The CAA did not appropriate funds to any HHS agency. Nevertheless, overall spending on HRSA, NIH, CDC, and IACC autism activities increased from approximately $143.6 million in fiscal year 2006 to approximately $240.4 million in fiscal year 2011.", "HRSA, the only HHS agency that has awarded grants specifically as a result of the CAA, regularly collects and reviews information from grantees to oversee individual CAA grantees and programs.", "HRSA awarded approximately $164 million in grants to 110 CAA grantees from fiscal years 2008 to 2011; though, some of these grantees were already receiving funds prior to the CAA. To oversee these grantees, HRSA requires they regularly submit progress reports and financial reports. The agency also requires grantees to obtain prior approval before making certain changes to their projects.", "GAO reviewed documentation for an unbiased random sample of 22 grantees, which were representative of the 110 CAA grantees. GAO found that CAA grantees submitted all required reports. Many grantees submitted prior-approval requests for changes to their projects. Most frequently, grantees requested to carry over unobligated funds from the current year to the next budget period. GAO found that HRSA staff routinely collected and reviewed information submitted by the grantees and appropriately documented their review and approval of these submissions.", "HRSA also conducted site visits and provided technical assistance as a means of overseeing grantees. HRSA conducted site visits with 9 of the grantees in our sample during the period of our review, while only 2 of these were required sites visits.", "Besides overseeing grantees, HRSA monitors its overall CAA programs by regularly collecting performance reports from grantees. In addition, in December 2012, HRSA released a grant-management operations manual to outline its overall approach for monitoring its CAA programs.", "CDC considers autism to be an important public health concern.", "In 2012, CDC reported that an estimated 1 in 88 children in the United States has been identified as having autism—a 23 percent increase from its estimate of 1 in 110 reported in 2009.", "Autism is a developmental disorder involving communication and social impairment. Symptoms usually become evident in early childhood. There are many suspected causes and no known cure.", "HHS agencies fund educational and support services for individuals diagnosed with autism and fund research in a variety of areas, such as identifying the causes of autism and intervention options.", "The CAA amended sections of the Children’s Health Act of 2000 related to autism and established new requirements.", "The CAA, enacted in December 2006, authorized the expansion of HHS’s activities related to autism research, surveillance, prevention, intervention, and education through fiscal year 2011. The CAA authorized, but did not appropriate, federal funding to carry out these activities.", "In this report, GAO (1) describes the actions that HHS agencies have taken as a result of the CAA, and (2) examines the oversight of CAA grantees. To address these objectives, GAO reviewed CAA and HHS documents and interviewed agency officials to identify the autism activities resulting from the CAA.", "GAO also determined the amount certain HHS agencies spent on autism activities from fiscal year 2006—prior to the CAA—through fiscal year 2011.", "In addition, GAO reviewed files for a random sample of CAA grantees to examine oversight from 2008 to 2011." ], "parent_pair_index": [ -1, 0, 1, -1, -1, -1, -1, 0, 1, 1, 0, -1, 0, -1, -1, -1, 1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Background", "SSI Eligibility, Continuing Disability Reviews, and Redeterminations", "Vocational Rehabilitation", "Schools’ Role in Transition Planning for Youth with Disabilities", "SSA’s Efforts to Encourage Employment Reach Few Transition-Age Youth and SSA Does Not Consistently Convey Information About Working", "SSA Administers Work Incentives, but Few Transition-Age Youth Benefit from Them", "Other Employment Supports", "Demonstration Projects", "SSA Misses Opportunities to Convey Information to Encourage Work and Allay Fears that Work May Result in Loss of Benefits", "SSA Does Not Have a Systematic Way to Connect Transition- Age Youth on SSI to Vocational Rehabilitation Services and Data Sharing is Limited", "SSA Does Not Have a Systematic Way to Connect Transition-Age Youth to Vocational Rehabilitation Services", "Data and Information Sharing About SSI Youth is Limited Among SSA, Vocational Rehabilitation Agencies, and Education", "Conclusions", "Recommendations", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Social Security Administration", "Appendix III: Comments from the Department of Education", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "SSA administers the SSI program, one of the largest federal programs providing assistance to people with disabilities. The SSI program was established in 1972 under Title XVI of the Social Security Act. The program provides cash benefits to low-income individuals, including children and youth, who meet financial eligibility requirements and who are blind or have disabilities. In December 2016, SSA paid SSI benefits to over 8.25 million individuals, including more than 1.2 million under age 18. In calendar year 2015, SSA paid almost $55 billion in SSI benefits. The average monthly payment in December 2016 was $542; however, the average payment for recipients under 18 was higher ($650). According to SSA, in many states, eligibility for SSI also confers eligibility for Medicaid benefits.", "To be eligible for SSI on the basis of disability, an individual must meet both financial and medical requirements. To determine eligibility, SSA staff, located in more than 1,200 field offices across the country, review SSI applications and verify financial eligibility. Following SSA’s initial review, state disability determination services (DDS) offices assess applicants’ medical eligibility for SSI. SSI has two sets of medical eligibility requirements to determine disability; one for adults (individuals age 18 and older) and one for individuals under 18. To be considered disabled, individuals under age 18 must have a medically determinable physical or mental impairment (or combination of impairments) that causes marked and severe functional limitations and that has lasted or is expected to last for a continuous period of at least 12 months or result in death. For adults to be considered disabled, they must have a medically determinable physical or mental impairment (or combination of impairments) that prevents them from doing any substantial gainful activity (SGA), and that has lasted or is expected to last for a continuous period of at least 12 months or result in death.\nSSI recipients, including those under age 18, undergo periodic continuing disability reviews (CDR) to ensure they continue to meet medical eligibility criteria. When a DDS first finds an individual medically eligible for SSI, it also assesses the likelihood that his or her disability will improve and, depending on that likelihood, develops a schedule for future CDRs. For SSI recipients under age 18 whose impairment is considered likely to improve, federal law requires SSA to conduct a CDR at least once every 3 years. Under SSA policy, in cases in which medical improvement is not expected, a CDR is scheduled once every 5 to 7 years. During these CDRs, DDS collects evidence such as medical and educational records to determine whether the individual continues to meet medical eligibility criteria based on their disability. In addition, SSA also periodically conducts redeterminations on a sample of SSI case files to determine whether individuals continue to meet financial eligibility requirements. All SSI recipients are required to report certain information to SSA to help ensure that they continue to receive the correct benefit amounts. For example, SSI recipients must notify SSA when their earnings change and this reported information, in turn, may trigger a redetermination.\nFederal law also requires that SSI recipients undergo a redetermination at age 18 to evaluate whether they meet adult (rather than youth) medical eligibility criteria. At the same time, SSA assesses whether the recipient continues to meet nonmedical (financial) eligibility requirements. This redetermination generally occurs within the year after a youth turns 18. If SSA determines a recipient does not meet adult eligibility criteria, he or she receives an unfavorable redetermination and ceases to receive SSI benefits. SSA reported that in fiscal year 2015, almost 57 percent of age 18 redeterminations resulted in an initial unfavorable determination by DDS; however, approximately half of those decisions were appealed, so the final percent with unfavorable redeterminations is likely lower.", "Education’s VR State Grants program, authorized under the Rehabilitation Act of 1973, as amended, assists individuals with disabilities, including transition-age youth who may also be receiving SSI, find and keep employment, among other things. This program, administered by Education’s Rehabilitation Services Administration (RSA) within the Office of Special Education and Rehabilitative Services, is the largest program authorized under this Act and provided approximately $3.1 billion in formula grants to state VR agencies in fiscal year 2016. The grants support a wide range of services, individualized based upon the needs of the eligible individual with a disability, including: assessments; counseling, guidance, referrals, and job placements; vocational and other training; transportation; and, in certain circumstances, postsecondary education and training. Individuals must apply and be determined eligible by the state VR agency to receive individualized VR services. If VR agencies lack the financial and staff resources to serve all eligible individuals in the state, they are generally required to prioritize individuals with the most significant disabilities. Individuals receiving disability benefits, including transition-age youth on SSI, are generally presumed eligible for VR services and considered individuals with a significant disability. However, depending on their disability, including level of functional impairment, SSI recipients may not be considered as having a “most significant” disability by the VR agency; and, if the VR agency has implemented an order of selection, the individual may be put on a waiting list to receive services.\nIn 2014, the Workforce Innovation and Opportunity Act (WIOA) was enacted, which, among other things, amended the Rehabilitation Act of 1973 and required VR agencies to provide additional services to students and youth with disabilities. Specifically, WIOA requires that states reserve at least 15 percent of their state’s allotment of federal VR funds for the provision of pre-employment transition services to students with disabilities. To receive pre-employment transition services, a student with a disability need only be potentially eligible for VR services and does not have to apply to VR.", "The Individuals with Disabilities Education Act (IDEA) provides formula grants to states, which pass them to eligible local education agencies to assist in providing special education and related services. IDEA generally requires schools to provide special education and related services to students with disabilities specified under IDEA. For each student with an IDEA-specified disability, schools must establish an individualized education program (IEP) team that generally includes the child’s teacher and other school and school district personnel, the student’s parents, the student (as appropriate), and, at the discretion of the parent or public agency, others with relevant knowledge, including related service providers. The IEP team is required to develop a written IEP for each student that includes, among other information, a statement of the student’s academic achievement and functional performance, measurable academic and functional goals, and the special education and related services to be provided. Also under IDEA, beginning with the first IEP to be in effect when a student turns 16, or earlier if determined appropriate by the IEP team, and updated annually thereafter, the IEP must include, among other things, appropriate, measurable postsecondary goals for training, education, employment, and, where appropriate, independent living skills, and transition services needed to help the student reach these goals. Schools may invite representatives from VR agencies to these transition planning meetings.\nStudents with disabilities who do not qualify for special education and an IEP under IDEA may qualify for services under section 504 of the Rehabilitation Act of 1973, as amended (section 504). Education’s section 504 regulations require school districts to provide qualified students regular or special education and related aids and services designed to meet the educational needs of students with disabilities as adequately as the needs of students without disabilities are met. Transition services may be documented in a 504 plan, but they are not a requirement of such plans.", "", "SSA’s role in encouraging employment for transition-age youth on SSI as they move into adulthood is focused on administering work incentives and other employment supports that allow them to keep at least some of their benefits even if they have earnings. However, very few youth on SSI benefit from these supports.\nAs a provider of means-tested transfer payments, SSA does not provide direct employment services to SSI recipients, including youth on SSI. However, for recipients who want to work, the SSI program is designed to support their efforts and reduce their reliance on benefits, according to SSA’s Annual Report of the Supplemental Security Income Program. Federal law provides several work incentives and other employment supports that help SSI recipients—including youth—to enter, re-enter, or stay in the workforce. Most transition-age youth are also students, and the importance of education is emphasized by the primary work incentive for this population, the Student Earned Income Exclusion (SEIE), which encourages work, but requires recipients to attend school to be eligible for the exclusion. SSA also administers other work incentives and employment supports that are available, but not targeted to transition-age youth. See table 1 for a list of key work incentives and employment supports available to this population.\nFew transition-age youth on SSI benefit from SEIE—the only SSA- administered work incentive targeted specifically to younger SSI recipients. SEIE allows SSI recipients under age 22 who also regularly attend school, college, university, or vocational or technical training to exclude a portion of their earnings—$1,790 a month, up to $7,200 a year, in 2017—from their countable income for the purposes of determining SSI eligibility and benefit amounts. Based on data provided by SSA, we found that 1.3 percent and 1.4 percent of all transition-age youth (ages 14 to 17) on SSI had income excluded under SEIE in calendar years 2012 and 2013, respectively.\nOur analysis of SSA data further suggests the possibility that some youth who may be eligible may not be benefiting from this SSI provision. SSA data show that few transition-age youth benefit from SEIE, in part, because few have earned income. For example, in 2012, 3.3 percent (15,234 out of 455,363) of transition-age youth reported earned income. However, our analysis of SSA data found that even among those transition-age youth with earned income, most often less than half benefited from SEIE. The percentage of youth with earnings who benefited from SEIE in 2012 varied by age and month, but ranged from a low of 28 percent to a high of 53 percent. (See fig. 1.) These percentages were similar in 2013 through 2015.\nGiven that SEIE should be applied automatically for all eligible students who have reported earned income, SSA officials offered the following possible reasons, other than SSA user or system error, for why youth with earnings might not have benefited from SEIE: they were not students or they did not report their student status to SSA. However, previous research found more than 94 percent of transition-age youth on SSI reported being enrolled in school. Further, although some youth on SSI may not report their student status, SSA policy instructs staff to develop and verify school attendance for youth under 18 who report that they expect to earn over $65 in a month. SSA also has procedures for capturing an individual’s student status during his or her initial application and during a redetermination. Despite these procedures, the fact that many youth with earnings are not receiving SEIE suggests that SSA may not be confirming student status or applying SEIE in a timely manner or in accordance with policy.\nSSA officials told us that the agency does not regularly analyze SEIE data and said they do not believe doing so would help them better understand SEIE’s effectiveness or reach. However, our recent data request uncovered potential undercounting of earnings and SEIE use. Federal standards for internal control state that an agency should identify, analyze, and respond to risks related to achieving its objectives. Absent this analysis, SSA cannot know the extent to which various factors may contribute to the low percentage of transition-age youth with earnings receiving SEIE, or whether errors made by staff or data system errors are precluding some SSI recipients from receiving an income exclusion for which they are eligible.", "Similarly, the number of transition-age youth on SSI who benefited from other SSA-administered work incentives and employment supports was either unknown or low. For example, SSI’s Earned Income Exclusion, which excludes the first $65 of income earned each month from benefit calculations and half of earnings after that, is available to the broadest set of SSI recipients with earnings. However, SSA officials told us that SSA has not conducted analysis to determine the extent to which transition- age youth on SSI benefit from this incentive. SSA officials told us that their systems automatically apply this exclusion to any earned income remaining after the SEIE has been applied and that any individual with earned income (whether or not the SEIE applies) automatically receives this exclusion.\nSSA data for Impairment-Related Work Expenses (IRWE), Blind Work Expenses (BWE), and the Plan to Achieve Self-Support (PASS) show low uptake by transition-age youth on SSI for each of these provisions as well. For example, SSA data show that no transition-age SSI recipients benefited from IRWE or BWE and no more than five had a PASS in any calendar year 2012 through 2015, the most recent data available. SSA staff at three field offices told us that, in their view, use of PASS by transition-age youth may be low because it is complex and has many requirements, including that the recipient develop long-term career goals.\nAnother provision of federal law—referred to as the section 301 provision—allows certain individuals to continue receiving SSI benefits even when SSA determines through an age 18 redetermination or CDR that they no longer have a medical disability. For example, recipients may retain their benefits if they are 18 to 21 years old and are receiving special education and related services through an IEP, or if they have a PASS, or if they are enrolled in VR or a similar program and meet other requirements. The possibility of these continued payments underscores the importance of ensuring transition-age youth are aware of the section 301 provision and of the services that qualify them for it, such as IEPs, PASS, and VR. In 2015, the most recent year for which data are available, about 1,200 adults ages 18 and 19 benefited from this provision. SSA officials told us that this provision has not been widely used because eligibility through an IEP only applies to individuals ages 18 through 21, and because few youth under 18 were likely served by VR agencies. However, SSA officials were unable to provide data on the number of individuals who applied for and ultimately did not benefit because the agency does not maintain these data in a format that would allow for this type of analysis.\nLastly, other legal provisions may encourage work by allowing SSI recipients to maintain SSI benefits or Medicaid even if they earn over SGA, in certain circumstances, but the number of transition-age youth who benefit from these provisions is not known. Specifically, SSA does not analyze data to determine the extent to which transition-age youth may maintain SSI benefits or Medicaid under these provisions. Because youth typically do not exceed SGA, the number affected is likely small, according to SSA officials.", "SSA has been involved in two initiatives to test ways to encourage employment of transition-age youth. The SSA-sponsored Youth Transition Demonstration (YTD) did not result in changes to SSA’s work provisions, according to SSA officials. The Promoting the Readiness of Minors in Supplemental Security Income (PROMISE) initiative, led by Education, is ongoing.\nSSA’s YTD targeted individuals ages 14 to 25 at six demonstration sites who received or were likely to receive SSI or Social Security Disability Insurance (SSDI) benefits. YTD tested the impact of various waivers of SSA-administered work incentive rules in combination with a range of strategies and work supports on employment, income, and other outcomes. According to the YTD final evaluation in 2014, all six site locations were required to include certain program components, such as work-based experiences; benefits counseling; family supports, including transition-related information; and connections to service providers, including health care and transportation services. The sites had flexibility in the approaches they used to implement those program components.\nThe final evaluation showed inconsistent results and SSA was unable to determine whether waivers contributed to positive outcomes at some sites. On the positive side, site-specific interim evaluations showed that, after 1 year, YTD increased participants’ use of benefits and incentive counseling, and their awareness of at least some work incentives, at all six sites. YTD also increased participants’ understanding of the effects of work on SSI benefits, medical coverage, or both, at three sites. However, the final 2014 YTD evaluation report found mixed results. For example, two of the six sites showed positive impacts on employment, two sites showed positive impacts on annual earnings, and two sites showed positive impacts on participation in productive activities, such as education, employment, or training. However, none of the sites saw an improvement in these 14- to 25-year olds’ self-determination and one site saw an increase in delinquency. Moreover, SSA officials told us that the final evaluation could not determine the extent to which changes to work incentives had led to any of the positive effects experienced at some sites. SSA officials said that because all YTD participants were eligible for work incentive waivers and other services, isolating the effects of changes to work incentives from the effects of the other services was not possible. SSA officials also said they have not made program changes based on YTD results, but that YTD informed the development of the PROMISE initiative. Officials said SSA is conducting an internal study of YTD to assess longer term outcomes, which they hope to complete by the end of 2017.\nSSA is currently a partner in the ongoing PROMISE initiative, which is being led by Education. Through PROMISE, Education provided funds to selected states to design and implement demonstration projects to improve outcomes for youth on SSI and their families. PROMISE targets transition-age youth who are 14, 15, and 16 years old and receiving SSI and their families with interventions including vocational rehabilitation, case management, benefits counseling, financial literacy training, career and work-based learning experiences, and parent training and information. SSA provided data on youth receiving SSI to the PROMISE demonstration projects for enrollment purposes, is funding the PROMISE research evaluation of the demonstration, and, according to SSA officials, is providing technical assistance regarding SSA policies to project sites. SSA does not have a role in direct delivery of services. Education awarded six 5-year PROMISE grants in 2013, with most projects beginning services within the first year. An interim impact report is scheduled for release in summer 2018, and a long-term evaluation is scheduled for winter 2022. During our New York site visit, we spoke with staff from organizations providing services under the PROMISE initiative who told us that, although they did not yet have outcome data, their early observations suggest positive effects, such as that youth are engaged, families are interested in having their children work and in receiving services to encourage work, and PROMISE is creating a more collaborative environment among service providers, VR, and schools.", "According to SSA officials, VR staff, and other stakeholders with whom we spoke, transition-age youth and their families are often unaware of or do not understand SSA-administered work incentives and supports, and may fear that working will negatively affect their SSI or Medicaid benefits. Although we were unable to identify recent research or data corroborating these perspectives, a 2007 study using data collected in 2001 and 2002, found that only 22 percent SSI recipients ages 14 to 17 knew about the work incentives or discussed them with an SSA representative. Experts believe this lack of knowledge and associated concerns about the effect of work on benefits may reduce work attempts by transition-age youth. For example, in a planning report for YTD, the research organization Mathematica stated that “lack of knowledge about how work experiences, benefits, and SSA incentives interact leads to low utilization of the incentives among beneficiaries.” Similarly, staff in SSA field offices and state VR agencies, researchers, and others we spoke to said fear of losing health care or SSI benefits creates a barrier to employment for transition-age youth and some said that families may not encourage youth on SSI to work because of these fears. SSA officials also said that some families believe they are helping their children by preventing them from working because it will enable them to keep benefits longer or reduce the chance of an unfavorable age 18 redetermination.\nDespite such gaps in knowledge or understanding of work incentives and the age 18 redetermination process among youth on SSI and their families, and contrary to general SSA policy, SSA staff may not be systematically conveying information about these topics during CDRs and other interviews. SSA policy states that interviewers are responsible for providing accurate and meaningful information about the SSI program, and for making the process of applying for and maintaining eligibility as understandable and uncomplicated as possible. SSA policy also states that recipients may not know the right questions to ask to obtain the information they need to make informed decisions. SSA officials we interviewed said, consistent with SSA policy, field staff collecting information during a CDR, financial eligibility redetermination, or age 18 redetermination, would discuss work incentives with recipients. However, SSA field office staff we interviewed did not confirm such information sharing consistently occurs in SSA field offices. Staff said such conversations may not occur for a variety of reasons. For example, they said youth and their families do not generally seek out information on work incentives, and staff may not have time for such discussions or be experts on work incentives.\nSSA may also be missing opportunities to allay certain fears about how work might affect age 18 redeterminations. SSA policy indicates, and officials from the Office of Disability Determinations (ODD) confirmed, that although information on work history is collected and may be considered when determining whether a person meets medical criteria, it only influences financial eligibility when specific conditions are met. According to SSA officials, earnings are only considered when determining capacity to work if an individual has worked at or above SGA for a period long enough to gain work skills necessary for the job, and that such instances are rare. SSA officials told us that virtually all unfavorable age 18 redeterminations result from a medical evaluation, not work history. The medical evaluation takes into account the medical evidence and, if needed, the physical and mental functional capacity of the individual. SSA officials could not provide specific data on the relationship of prior work to redetermination outcomes. However, they said few youth undergoing an age 18 redetermination have a work history, and among those who do, a very small number have worked sufficiently above SGA to result in an unfavorable redetermination on that basis. At the same time, SSA’s policies do not instruct staff to consistently convey information explaining how work may or may not affect the age 18 redetermination when speaking with youth and their families. Federal standards for internal control state that an agency should communicate the information necessary to achieve its objectives. Without standard procedures and language to guide SSA representatives and ensure they regularly and consistently discuss how work incentives can allow transition-age youth on SSI to work without jeopardizing their benefits, SSA may miss opportunities to allay misplaced fears, encourage work, and potentially reduce future dependence on benefits.\nAs part of its effort to increase awareness and understanding of work incentives and supports available to SSI recipients, SSA funds Work Incentives Planning and Assistance (WIPA) projects in every state, and relies on the projects to provide benefits information and counseling to transition-age youth. The projects typically provide general information on benefits or work supports and referrals to additional services, as needed, and individualized counseling on benefits and related services. WIPA projects are supposed to conduct outreach and provide information to disabled individuals, including transition-age youth, including advising them of work incentives available to them. However, the WIPA projects’ reach is limited. According to data from SSA’s contracted technical assistance provider for WIPA projects, WIPA projects served just 345 youth ages 14 to 17 on SSI between July 2013 and June 2016. While staff at one of the two WIPA project locations we visited said that they work with youth under age 18 to the extent possible, they said schools typically assist this age group rather than WIPA projects. At the other location, WIPA project staff told us that most of their clients are adults because beneficiaries typically do not seek services until they are working. WIPA project staff said funding constraints limit their ability to serve everyone and to conduct outreach. When the WIPA program was established in 1999, the law put a limit of $23 million on the amount of grants, cooperative agreements, and contracts that can be awarded each fiscal year under this program, and the limit has not changed since then.\nMore recently, SSA has taken additional steps to provide written information about work incentives and supports to transition-age youth on SSI and their families by developing a new brochure; however, this brochure—while helpful for some—may not be sufficient to allay fear of work affecting benefits. SSA officials told us that lessons learned from YTD influenced the agency’s development of the brochure to inform youth, their families, and service providers about the age 18 redetermination process and available resources. While the new brochure is a positive step, it does not contain key information that could help alleviate fear that work will mean losing benefits, such as how work is considered during the age 18 redetermination process or the circumstances under which youth can work and maintain Medicaid coverage. In addition, some stakeholders, including WIPA project and VR staff, told us that written material, such as a brochure, may not be sufficient to convey complex information on work incentives and how working affects benefits. For example, although SSA officials said one purpose of the brochure is to increase awareness of available resources, staff from WIPA’s technical assistance provider told us in December 2016 that they did not believe the brochure, mailed in August 2016, had led to an increase in youth seeking WIPA project services. Federal standards for internal control state that an agency should communicate quality information needed to achieve its objectives with external parties, and that this information should be communicated using appropriate methods that consider factors including the intended audience and the nature of the information, among others. For example, results from YTD suggest that increased benefits counseling was associated with increased awareness of work incentives.", "", "Having access to individualized training and employment services provided by VR agencies helps transition-age youth on SSI develop the skills they need to transition to adulthood and the workforce. However, SSA does not have a systematic way to connect these youth to state VR agencies that provide employment-oriented and other services to individuals with disabilities. To achieve successful transition to adulthood, it is important that transition-age youth with disabilities receive transition planning and employment-related services that help them prepare for and engage in gainful employment to the extent of their capabilities. Such services are provided by state VR agencies under the VR State Grants program, which is administered by Education’s Rehabilitation Services Administration, and may include individualized: assessments; counseling, guidance, referrals, and job placements; vocational and other training; transportation; and, in certain circumstances, postsecondary education and training. Participation in VR also may allow transition-age youth who would otherwise lose SSI benefits due to an unfavorable CDR or age 18 redetermination to continue receiving SSI payments. Despite the advantages of participating in VR programs, our review of data from five state VR agencies found few transition-age youth (ages 14 to 17) receiving SSI who had open VR service records in calendar year 2015. Specifically, in four of the five states, the percentage of transition-age youth ages 14 to 17 on SSI with open VR service records was less than 1 percent. In the fifth state, approximately 3 percent of such youth had an open VR service record.\nAlthough there may be many reasons for low VR participation by transition-age SSI recipients at the five state VR agencies we spoke with, SSA’s stated inability to directly refer these youth to VR agencies does not help to improve participation rates. Prior to the enactment of the Ticket to Work and Work Incentives Improvement Act of 1999, SSA was required to consider each claimant’s need for vocational rehabilitation and refer SSI recipients ages 16-64 to state VR agencies. While the enactment of this Act expanded the pool of employment service providers available to recipients of SSI and other disability benefits, SSA limited the Ticket to Work and Self-Sufficiency (Ticket to Work) program to adults. In addition, the Act removed the language that had required SSA to make direct referrals of benefit recipients to VR providers. SSA has interpreted this legal change as “eliminat SSA’s authority to refer recipients for vocational rehabilitation (VR) services” in states in which the Ticket to Work program has been implemented. Because the Ticket to Work program has been implemented in all states, it is SSA’s view that it is prohibited from directly referring adults and youth on SSI to VR services.\nBecause SSA states that it can no longer makes direct referrals to VR agencies for services and the Ticket to Work program only supports adults, SSA lacks a mechanism to help connect youth on SSI to VR services. In contrast, the Ticket to Work program provides SSA a well- developed structure to connect SSI recipients age 18 and older to VR agencies or other employment networks. Specifically, SSI recipients ages 18 to 64 are issued a ticket that can be used to obtain vocational rehabilitation, employment, or other support services from a state VR agency or an approved employment network of their choice. SSA has a Helpline number for the Ticket to Work program, and the program has its own website containing information on its benefits and how to access VR agencies and other service providers. Since SSI recipients under age 18 are not eligible for tickets, SSA has no structure in place to ensure transition-age youth are made aware of and encouraged to take advantage of available employment programs that can help reduce their reliance on benefits as they transition into adulthood.\nIn February 2016, SSA issued an advanced notice of proposed rulemaking in which it solicited public input on how to improve the Ticket to Work program, including how the program could encourage youth to pursue work-related opportunities. SSA officials said that they have no timeline for further actions related to this notice at this time. In addition, an SSA official said they are in the early stages of considering a new initiative under SSA’s demonstration authority that would test whether having a state DDS make direct referrals of age 18 redetermination cases to VR agencies would result in increased VR services, increased employment outcomes, and reduced dependency on SSI. This initiative would involve the DDS and VR agencies located in one state. The SSA official said they are still working out the details, but said that if the project is feasible it would ideally begin sometime in 2017 and last at least 1 to 2 years.\nWithout direct referrals from SSA and access to the Ticket to Work program, the primary way that youth on SSI are connected to VR is through their schools. While referrals to VR agencies can come from other sources, national Education data show elementary and secondary schools are the primary source of referrals for transition-age youth (see fig. 2). Specifically, for transition-age youth with VR service records that were closed in fiscal year 2015, over 80 percent had been referred to VR agencies by elementary and secondary schools.\nStudents with disabilities can be connected to VR agencies through transition services provided by their schools as required under IDEA. IDEA requires states and school districts to identify, locate, and evaluate children suspected of having a disability, as defined in IDEA, and who are in need of special education and related services. For students age 16, or younger if determined appropriate by the IEP team, schools must develop and implement an IEP that incorporates postsecondary goals and provides access to appropriate transition services. The transition planning process develops a student’s postsecondary goals for training, education, and employment, among other things. Although IDEA does not specifically require school districts to include VR agencies in transition planning, Education’s regulations require school districts to invite a representative from a VR agency or from other agencies likely to be providing transition services to a student’s IEP team meetings, when appropriate, and with the prior consent of the parents or student who has reached the age of majority. According to Education guidance, VR agency involvement during the transition planning phase of an IEP helps provide a bridge to VR services for eligible students preparing for life after school.\nRehabilitation Services Administration officials and a few VR agencies told us that staff from VR agencies are invited to transition planning meetings by schools, but due to capacity constraints, these staff may not attend all such meetings. Furthermore, the relationship between VR agencies and schools and school districts varies, based on interviews we had with school and school district officials in the two states we visited. For example, school officials in two districts said that the VR agency staff are more involved and meet with students weekly, and as a result, students with IEPs are more likely to be connected to VR services. Some officials in the other school districts we visited described the relationship more as a “hand-off” of the student from the school to the VR agency. For example, VR agency staff would typically meet with students approaching graduation. Regardless of the relationship, a student makes the choice to apply or not to apply for VR services.\nWhile VR and SSA officials we interviewed said that most students on SSI have IEPs, and that their IEPs can help connect them to VR services, we found that neither schools nor SSA collect or analyze data that would allow them to determine the extent to which youth on SSI do, in fact, have IEPs that would help them connect with VR services. Although schools document information on students with IEPs, school officials told us they do not collect information on whether students are receiving SSI benefits, and they have no systematic way to obtain this information. SSA maintains data on whether a student is receiving SSI and collects information on whether a recipient is receiving special education, or has an IEP, in certain cases. However, SSA officials said they do not analyze these data to determine how many youth on SSI have IEPs that could facilitate connecting them to VR services. Based on data collected in 2001-2002 for the National Survey of SSI Children and Families, one study found that approximately 70 percent of surveyed youth on SSI had an IEP at some point during their schooling, which seems to indicate that about one-third of these youth lack an established path that may connect them to services to help them transition into employment or postsecondary education, and potentially reduce their dependence on SSI. In addition, youth who have dropped out of school also lack an IEP pathway to VR services. Federal standards for internal control state that agencies should use quality information to achieve their objectives. Absent data on whether youth on SSI have IEPs that can help them connect to transition services or additional options for connecting youth to VR services, SSA cannot ensure that these youth are receiving or have access to services they need to help them prepare for adulthood and the workforce.\nWith enactment of WIOA in 2014, more transition-age SSI recipients are potentially connected to VR services, although the extent to which this occurs is not known. Under WIOA’s amendments to the Rehabilitation Act of 1973, VR agencies are now required to provide pre-employment transition services to students with disabilities beginning at age 16 (or younger if a state elects a younger minimum age). WIOA’s amendments to the Rehabilitation Act of 1973 also require states to reserve at least 15 percent of their state allotment of federal VR funds to provide these services to students, including job exploration counseling, work-based learning experiences, transition or postsecondary educational programs counseling, workplace readiness training, and instruction in self- advocacy. Students with disabilities are eligible for pre-employment transition services even if they have not applied or been found eligible for VR’s regular services. Most VR agencies we interviewed are in the early stages of implementing WIOA’s amendments to the Rehabilitation Act of 1973, and as such, the extent to which the new provisions will increase participation by youth on SSI is not known. While certain WIOA amendments broadly support all students with disabilities, they do not specifically target youth on SSI. In addition, some state VR agency officials told us they do not determine an individual’s SSI status prior to the application process for VR services, and thus may not be able to capture data on the number of youth on SSI they serve through pre- employment transition services.", "Data and information sharing about transition-age youth on SSI—which could potentially facilitate provision of services—is limited between SSA, VR agencies, and Education, and officials said there are privacy considerations about sharing information. SSA does not systematically provide Education or VR agencies with data that would allow them to identify transition-age youth on SSI for outreach on services. VR agency staff we interviewed told us that when an individual applies to VR for services, the agency can query SSA on the individual’s disability benefits, including SSI benefits. However, this query can only be conducted on a case-by-case basis, some VR officials said, and VR agencies do not have access to broader information about the population of youth on SSI who would be eligible for VR services in their area. VR officials in four of five states where we conducted interviews said having such data would be beneficial because it would help them conduct outreach in a more focused way. Officials in the fifth state said that having such information might be useful because it would allow them to determine the extent to which they are reaching the population of youth on SSI. Education officials also told us that, if available and consistent with applicable privacy laws, VR agencies might use information on youth receiving SSI to conduct outreach to youth who may not be connected to the school system, such as youth who have dropped out of school, are homeless, migrants, or seasonal workers. Education officials within the Rehabilitation Services Administration also said that generally state VR agencies have the capacity to conduct outreach, and additional data from SSA would be helpful.\nAlthough access to more comprehensive SSA data might improve outreach by VR agencies, privacy concerns and other factors inhibit data sharing by SSA. Both SSA and Education have raised privacy and legal concerns about sharing SSI recipient data, indicating that such sharing may be prohibited under federal law; however, SSA has participated in other data sharing arrangements. In each instance, steps were taken to protect personal information and address privacy requirements. SSA officials told us that, as part of the Ticket to Work program, SSA has provided information on eligible beneficiaries to non-VR employment networks that asked for this information. While the agency stopped this practice in March 2015, due to privacy concerns, SSA officials said they are currently conducting an initiative in which SSA provides employment networks encrypted data on eligible beneficiaries via secure messaging. This includes the name and address or the name and phone number of potentially eligible beneficiaries for conducting outreach. SSA officials said they anticipated continuing this project for several months before evaluating the process and deciding how to proceed. However, SSA officials said they have not provided similar information to VR agencies because (1) the demand for VR services is generally high and negates the need to conduct outreach and (2) they do not have the legal authority to refer individuals to VR. In addition, under the PROMISE initiative, SSA provided identifying information on groups of SSI recipients, such as contact information, to facilitate outreach and enrollment. According to SSA and Education officials, that data sharing was permitted because it was conducted for research purposes. Nevertheless, steps were taken to ensure privacy requirements were met, such as obtaining consent from SSI youth and their parents or guardians about participating, and using unique identification numbers in lieu of Social Security numbers.\nFinally, SSA and Education have a data sharing agreement in place; however the shared data are currently not used for VR outreach or program management purposes. The data sharing agreement establishes procedures and conditions for the merging of SSA and Education administrative data to support research and program evaluation. The data sharing agreement specifies that SSA will remove personally identifiable information, including Social Security numbers, before sharing merged files with Education. Under this agreement, SSA has access to data on the number and the characteristics of individuals exiting the VR program each fiscal year, which according to Education, only includes closed, not open, service records. As such, neither SSA nor Education know the extent to which youth on SSI are receiving VR services. Education officials said that beginning in July 2017, due to requirements in WIOA, Education will begin collecting data from VR programs on a quarterly basis for both current program participants and those who have exited the program. Education and SSA officials said these data on open service records, in combination with SSA’s recipient data, could also be used to determine in a more regular and timely manner the total population of youth on SSI receiving VR services. However, SSA officials said without knowing exactly what the data will include, they do not know whether it will prove useful and therefore do not yet have any plans to analyze these data. SSA officials told us that without more information on how WIOA amendments to the Rehabilitation Act of 1973 will change services to youth, they were unsure what additional outreach should be conducted, or whether additional initiatives or data will be necessary to connect youth on SSI to VR services.", "Many individuals with disabilities want to work for the financial and personal rewards that employment can provide, and it is in SSA’s interest to help SSI recipients find employment and ultimately reduce or end their dependence on SSI. Helping transition-age youth on SSI engage in work prior to age 18 is critical given that research finds SSI recipients often continue receiving benefits for decades, resulting in high costs to the federal government. Yet few transition-age youth on SSI are working, and many of those who do work are not benefiting from provisions under federal law to exclude some of their income and retain still-needed benefits.\nWhile SSA maintains data on the number of SSI recipients who work and use work incentives and employment supports, by not regularly analyzing these data, SSA cannot ensure transition-age youth are receiving work incentives for which they are eligible. SSA does not know, for example, why many transition-age youth with income are not receiving the SEIE, which is targeted specifically to this population. In addition, lacking procedures that ensure systematic, consistent communication with youth and families about work incentives and redetermination rules, SSA is forgoing opportunities to encourage employment and potentially allay fears that may create a barrier to employment.\nSSA also states that it is hindered in its ability to connect transition-age youth to VR services because it is no longer allowed to directly refer them and SSI recipients under 18 are not included in its program that assists adults with making this connection. SSA must rely primarily on schools to make this connection for students. However, SSA is well positioned to work with Education to determine the extent to which transition-age youth on SSI are not being connected to VR services for which they are eligible, and to assess options to better ensure they receive them, as appropriate. Without further efforts, the program risks unwarranted costs and the youth it serves may be less likely to obtain self-sufficiency.", "We recommend that the Acting Commissioner of the Social Security Administration take the following actions: 1. Analyze the SEIE data to determine why a large proportion of transition-age youth on SSI with reported earnings did not benefit from the SEIE and, if warranted, take actions to ensure that those eligible for the incentive benefit from it. 2. Analyze options to improve communication about SSA-administered work incentives and the implications of work on SSI benefits, with a goal of increasing understanding of SSI program rules and work incentives among transition-age youth and their families. This should include, but not necessarily be limited to, updating SSAs procedures for staff meeting with SSI applicants, recipients, and their families to regularly and consistently discuss – when applicable—how work incentives can prevent reductions in benefit levels and how work history is considered during eligibility redeterminations. 3. Work with the Secretary of Education to determine the extent to which youth on SSI are not receiving transition services through schools that can connect them to VR agencies and services. 4. Explore various options for increasing connections to VR agencies and services, including their potential costs and benefits. One option, among others, could be to expand the Ticket to Work program to include youth.", "We provided a draft of the report to SSA and Education for their review. In written comments, SSA agreed with two of our recommendations, partially agreed with one, and disagreed with one. We have reproduced SSA’s and Education’s comments in appendices II and III. We have incorporated them—as well as technical comments provided—in the report, as appropriate.\nIn its comments, SSA suggested GAO clarify SSI’s role as part of a broader social safety net, and explain that the SSI program does not have provisions for SSA to ensure recipients have access to a variety of services provided by federal and state agencies. We agree, and added additional information in the report suggested by SSA to help convey this. SSA also commented that the draft report did not accurately portray efforts to encourage work and explain work incentives to youth receiving SSI, citing efforts made to produce a new brochure targeting youth and directing WIPA projects to further target youth—both of which were results of the YTD project. We discussed SSA’s new brochure in our report, and stated that it will be helpful for some SSI beneficiaries. We also discussed SSA’s use of WIPA projects to provide benefits information and counseling, and noted that SSA has instructed WIPA projects to serve beneficiaries ages 14 and older and conduct outreach targeting transition-age youth.\nSSA agreed with our recommendation to analyze Student Earned Income Exclusion (SEIE) data to determine why a large portion of transition-age youth with reported income did not benefit from SEIE and take steps, if warranted, to ensure they do. SSA also agreed to explore various options for increasing connections to Vocational Rehabilitation (VR), stating that in addition to assessing options for referring youth to VR and/or changing the Ticket to Work program, the agency will continue to research other options for supporting transitioning youth.\nSSA partially agreed with our recommendation that SSA work with Education to determine the extent to which youth on SSI are not receiving transition services through schools that can connect them to VR. SSA noted its ongoing collaboration with Education and other agencies through the Promoting Readiness of Minors in SSI (PROMISE) project, stating the initiative is testing the provision of VR services to youth receiving SSI and will provide some evidence related to the role of schools and VR services for this population. SSA also stated it will continue to pursue research in this area. We agree that the PROMISE initiative has the potential to provide useful information on whether the services and supports provided improve education and employment outcomes for transition-age youth; however, a final PROMISE evaluation is not expected until winter 2022. In addition, the PROMISE initiative was not designed to determine the extent to which youth on SSI are receiving transition services through schools or are otherwise connected to VR services. SSA also noted that it works with Education and other agencies through the Federal Partners in Transition (FPT) Workgroup to improve the provision of transition services to students with disabilities, and that the FPT has issued a blueprint of agencies’ efforts. While the FPT can be a promising vehicle for helping connect youth on SSI to key transition services, as of September 2016, the FPT had not set timelines or milestones to achieve its broad goal to support positive outcomes for youth with disabilities, nor does it have a list or specific activities and tasks it will undertake. Therefore, we continue to believe additional collaboration by SSA with Education would be beneficial. SSA also noted several concerns related to complying with this recommendation, such as legal (privacy) concerns with data sharing, the capacity of state VR agencies to serve more individuals, and the receptivity of youth on SSI to receiving services. While we acknowledge that legal and privacy issues can present challenges to collaboration, we believe that SSA can take steps to explore actions it could take after considering such legal issues. We note that SSA has implemented approaches for sharing sensitive information under its Ticket to Work program, and prior surveys have yielded information to help understand how many youth on SSI have had an IEP at some point during school. Finally, while low state VR capacity or individual motivation can obstruct receipt of VR services, they should not prevent SSA from working with Education to determine the extent to which SSI youth are sufficiently informed of VR resources that are potentially available to them.\nSSA disagreed with our recommendation that it analyze options to improve communication about SSA-administered work incentives and the implications of work on SSI benefits. SSA stated that it already analyzed, and continuously monitors and solicits feedback on, options to improve communications. SSA also said it requires staff to meet with SSI recipients regularly and instructs staff to discuss relevant work incentives, and that there is no indication that staff are not providing youth with appropriate work incentive information. However, SSA did not explain how it knows or ensures that staff are providing this information. As noted in our report, staff in local SSA offices we visited told us that they do not regularly or consistently discuss work incentives with youth or families— when, for example, such information is not specifically requested, or if staff lack time. Further, SSA policies do not instruct staff to consistently convey information to youth and families on how work may or may not affect age 18 redetermination. SSA said that its new brochure provides information on age-18 redeterminations, as well as work incentives and other resources. While we acknowledged that the new brochure is a positive development, we noted that it could contain additional relevant information, for example, on Medicaid eligibility. We also noted that written information may not be sufficient for conveying complex information. We agree with SSA that WIPA projects play an important role providing work incentives counseling to SSI youth; however, as we noted in our report, WIPA projects have limited capacity for serving youth along with other SSI recipients and disability insurance beneficiaries. Therefore, we continue to believe that there are opportunities for SSA to improve its communication with transition-age youth and their families, including through in-person or telephone interactions.\nEducation agreed to cooperate with SSA efforts to determine the extent to which youth on SSI are being connected to VR agencies and services through schools and on options to increase connections to VR agencies and services. Education noted that privacy statutes might complicate or limit use of student data. While we acknowledge that privacy laws can present challenges in this area, we believe that Education can take steps to explore actions it could take after considering these laws.\nWe are sending copies of this report to appropriate congressional committees, the Secretary of Education, the Acting Commissioner of the Social Security Administration, 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 have any questions concerning 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.", "This report examines 1) how the Social Security Administration (SSA) encourages employment for transition-age youth on Supplemental Security Income (SSI) as they move toward adulthood, and the effectiveness of these efforts, and 2) the extent to which SSA helps ensure transition-age youth on SSI receive vocational rehabilitation services.\nWe focused our review on transition-age youth ages 14 to 17 because when SSI recipients turn 18, their eligibility for SSI is reassessed against adult criteria. Furthermore, our previous work has found that the transition from high school is an especially challenging time for individuals with disabilities because they are often no longer automatically entitled to transition services they received as students and must apply for and establish eligibility for services as adults, often from multiple agencies. In addition, research suggests that early interventions may improve later outcomes for youth with disabilities.\nTo address both our research objectives, we reviewed relevant federal laws, regulations, policies, documents, and publications; interviewed SSA officials and staff and Education officials, advocates, and researchers; and conducted site visits to two states. In particular:\nTo understand SSA’s approaches to encourage employment among transition-age youth, we reviewed SSA’s 2016 Annual Report of the Supplemental Security Income Program, most recent SSI Annual Statistical Reports, 2016 Red Book: A Summary Guide to Employment Supports for Persons with Disabilities Under the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) Programs, various policies outlined in SSA’s Program Operations Manual System (POMS), the agency’s Fiscal Years 2014- 2018 Agency Strategic Plan, SSA “Spotlights” (handouts related to applying for and receiving SSI), and information about SSA’s Youth Transition Demonstration (YTD) and the Promoting the Readiness of Minors in Supplemental Security Income (PROMISE) initiative.\nTo determine the extent to which youth benefit from SSA- administered work incentives or other employment supports, we reviewed or analyzed available data from SSA on the number of transition-age youth benefiting from various work incentives, as follows:\nFor the Student Earned Income Exclusion (SEIE), the Plan to Achieve Self-Support (PASS), Impairment-Related Work Expenses (IRWE), and Blind Work Expenses (BWE), we analyzed data provided by SSA from its Disability Analysis File (DAF) for SSI recipients ages 14 to 17 for calendar years 2012, 2013, 2014, and 2015. A new version of the DAF is created each year in March and the 2015 file is the most current available version. According to SSA officials, SSA continues to update data as it obtains new information from recipients, so data from more recent years, while complete as of the time the data were obtained by SSA, do not reflect possible future changes to recipient files. Therefore, while we report data from each year, we focus on data from 2012 and 2013 which, according to SSA, provide a more complete picture of recipients with earned income and who benefited from work incentives and supports.\nWe reviewed data from the Supplemental Security Record provided by SSA on the number of SSI recipients ages 18 and 19 who received continuing disability payments under Section 301 of the Social Security Disability Amendments of 1980.\nWe also reviewed annual Work Incentives Planning and Assistance (WIPA) project reports by the Work Incentives Planning and Assistance National Training and Data Center and data provided by the Center.\nTo assess the reliability of these data, we interviewed SSA officials, reviewed written answers to questions we provided to SSA, and reviewed available documentation. According to SSA officials, while producing the data we requested, the agency discovered a previously unknown error in its data transfer process. The error has resulted in a small proportion of cases in which earnings and work incentive data are not being correctly transferred from one data file to another. SSA officials estimated this issue affects approximately 0.1 percent of the overall population of transition-age youth ages 14 to 17, and approximately 5 percent of those with earnings. According to SSA, this suggests that the number of youth with earnings and the number benefiting from SSA-administered work incentives may be approximately 5 percent larger than reported. However, because SSA believes that the undercount is approximately the same for the number of transition-age youth with earnings and the number receiving SEIE, the percentage of these youth receiving SEIE would not change substantially. We do not believe this issue materially changes our findings—regarding low use of SEIE and low percentage of youth with earnings receiving SEIE—and we found the data to be sufficiently reliable for the purposes of our reporting objectives.\nWe also conducted a literature review designed to identify research published over the last 10 years related to participation in, and outcomes related to, SSA-administered work incentives and demonstration projects that pertain to transition-age youth. Our search used broad key terms including those related to relevant work incentives, YTD and PROMISE, and vocational rehabilitation for youth on SSI. The search identified 218 studies or articles. After reviewing abstracts of studies for key parameters we determined that some studies were duplicative, some were outside the 10 year timeframe, and some were not published articles. This information, combined with a review of abstracts for key terms (such as confirming the studies discussed youth on SSI) enabled us to narrow the list to 111 results. We then conducted a more thorough review of study abstracts to determine whether the studies were not relevant, were suitable for background purposes (such as 40 articles about vocational rehabilitation), or were focused on SSI work incentives and demonstration projects. Ultimately, we identified 19 studies that focused on SSI work incentives and demonstration projects. Of these, 12 focused on YTD and 7 focused on incentives. However, 5 discussed work incentives in broad terms, for example describing that work incentives could help improve employment opportunities without discussing a specific example. Only 2 of the studies discussed specific work incentives—including a study over 10 years old that we included because it was the only study that discussed PASS—and none addressed the specific effects of these incentives on encouraging work. After determining the studies were methodologically sound, we incorporated key findings as appropriate in our report.\nTo determine how youth on SSI and their families are informed about SSI program rules, work incentives, eligibility for VR, and other supports, we reviewed relevant procedures and information and notices provided by SSA to SSI recipients, their families, and their representative payees. We also interviewed staff in five SSA field offices in three states: two each in Florida and New York, and one in California. We selected the three states because they each served a large population of SSI recipients and youth on SSI and based on geographic variation. We further selected New York because it was participating in the ongoing PROMISE initiative. In each state, we interviewed a variety of SSA staff, including, for example, district managers, technical experts, claims representatives, Area Work Incentive Coordinators, and a Work Incentives Liaison, among others. At the California SSA field office we also observed an age 18 redetermination interview.\nIn Florida and New York, we also interviewed staff at VR offices, a combination of school and school district personnel in six school districts, and staff at a WIPA project in each selected state. In New York, we also interviewed state officials responsible for implementing PROMISE as well as several PROMISE service providers. We interviewed these individuals to gather information about the services they provide to transition-age youth on SSI and their opinions on SSA’s effectiveness in encouraging work among this population and SSA efforts to connect these youth to VR services. The results of our interviews with SSA field office staff, VR officials and staff, school and school district personnel, and service providers are not generalizable, but provide insight into a variety of issues, including, how SSA and its staff communicate with transition-age youth on work-related issues; transition services these youth receive; and barriers they face to employment.\nTo determine how SSA helps to ensure transition-age youth on SSI receive VR services available to SSI recipients, we reviewed SSA policies and interviewed SSA officials, state Disability Determination Service officials in the Florida and New York, and VR officials in five states— Florida, New Mexico, New York, Oklahoma, and Washington. Florida and New York were selected because these were the two states in which we conducted our site visits. New Mexico, Oklahoma, and Washington were selected based on variation in the size of the population of youth under 18 receiving SSI who are served by the VR agencies, the rate of successful employment outcomes for transition-age youth receiving VR services, and geography. The results of our interviews with state VR agency officials are not generalizable.\nWe also collected data from state VR agencies in the five states on the number of transition-age youth on SSI with open VR service records in calendar year 2015, to analyze the extent to which youth were receiving VR services. The VR agencies from which we collected data did not all define “open service records” in exactly the same way. One state included only service records for which an individual plan for employment had been developed; the other states classified open service records to include individuals in other statuses, such as any individual who was beyond referral status. To assess the reliability of these data, we provided written questions to state VR officials and reviewed relevant documentation where available. We found the data were sufficiently reliable for our purposes.\nWe compared the data provided by these state VR agencies to the number of transition-age youth in current pay status in 2015 according to data provided by SSA from the DAF. While SSA officials told us the number of recipients is unlikely to change significantly in its data, as noted previously, the DAF file is updated each year with new information obtained by SSA, and officials told us that the more recent years of the DAF are more likely to change than years further past. However, given the small number of transition-age youth with open VR service records in comparison to the number receiving SSI, any changes to the number of SSI recipients in the DAF would not significantly change the percentage of transition-age youth with open VR service records. When calculating the number of transition-age youth on SSI in the state, we counted any such youth who received SSI benefits for at least 1 month in the state. Some of these recipients did not live in the state for the entire year. In addition, we reviewed data provided by SSA on reimbursements the agency made to state VR agencies for successful work outcomes for transition-age youth on SSI for 2012 through 2014. We found SSA’s data to be sufficiently reliable for reporting on the extent to which transition-age youth benefited from SSA’s work incentives.\nWe conducted this performance audit from February 2016 to May 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 named above, Michele Grgich (Assistant Director), David Barish (Analyst-in-Charge), Divya Bali, Susan Chin, and MacKenzie Cooper made key contributions to this report. In addition, key support was provided by Susan Aschoff, James Bennett, Dan Concepcion, Alex Galuten, Gloria Proa, Monica Savoy, Almeta Spencer, Barbara Steel-Lowney, and Nicholas Weeks." ], "depth": [ 1, 2, 2, 2, 1, 2, 3, 3, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full", "", "", "", "h0_title", "h0_full", "h0_full", "", "h0_full", "h1_title", "h1_full", "h1_full", "h1_full", "h2_full", "h0_full h2_full", "h1_full", "", "", "", "", "" ] }

{ "question": [ "What is the SSA's primary approach for encouraging employment for transition-age youth with disabilities?", "Why is this approach ineffective?", "How does SSI plan to change their approach?", "What do SSA's incentives allow of its recipients?", "How has the SEIE failed?", "How have other programs also failed?", "How does SSA's communication of SSI policies fail to communicate this information to youth and their families?", "How does this hurt the SSA's effectiveness?", "What does the SSA lack for its SSI program regarding VR agencies?", "What did GAO find regarding youth participation in VR?", "Why was the Ticket to Work and Self-Sufficiency program created?", "How has the SSA limited the reach of VR?", "Why can't data be collected to make such determinations?", "Why does the lack of data collection harm SSA's implementation of VR?", "What are GAO's recommendations to improve SSA's programs for transition-age youth?", "How did SSA respond to these recommendations?", "What was GAO's response to SSA?" ], "summary": [ "The Social Security Administration's (SSA) primary approach for encouraging employment for transition-age youth (ages 14 to 17) with disabilities who receive Supplemental Security Income (SSI) is work incentives that allow them to keep at least some of their SSI benefits and Medicaid coverage while they work.", "But few transition-age youth benefit from these incentives.", "SSI is a means-tested program that provides cash benefits to eligible low-income aged, blind, and disabled individuals.", "SSA administers several work incentives that allow SSI recipients to exclude some income and expenses when calculating SSI benefits. The work incentive targeted specifically to younger SSI recipients is the Student Earned Income Exclusion (SEIE), which allows income to be excluded from benefits calculations if a recipient is a student under age 22.", "However, less than 1.5 percent of all transition-age youth—and generally less than half of those with earnings—benefited from SEIE in 2012 through 2015. SSA does not analyze these data, and thus cannot determine why the majority of youth with earnings are not benefiting from SEIE, when they may be eligible.", "SSA data also show that almost no youth benefited from other incentives that allow them to exclude earnings used for specific purposes, such as the Impairment-Related Work Expenses incentive. The effectiveness of SSA-administered work incentives may be further limited because, according to SSA and other officials, youth and their families are often unaware of or do not understand them, and may fear that work will negatively affect their benefits or eligibility.", "SSA policy requires staff to provide accurate and meaningful information about relevant SSI policies to claimants and recipients. However, GAO found that SSA does not have sufficient procedures in place to ensure that information on work incentives and how work affects benefits and eligibility is consistently communicated to youth and their families.", "As a result, SSA may miss opportunities to promote work incentives and other supports, allay fears, and potentially reduce dependence of transition-age youth on SSI benefits.", "SSA does not have a systematic way to connect transition-age youth on SSI to state Vocational Rehabilitation (VR) agencies that provide training and employment services under the VR State Grants program administered by the Department of Education (Education).", "Although youth receiving SSI are generally presumed to be eligible for VR services, GAO found that less than 1 percent had an open VR service record in 2015 in four of the five states from which GAO collected VR data.", "Legislation in 1999 created the Ticket to Work and Self-Sufficiency program, which expanded the number and types of employment service providers for individuals with disabilities.", "However, SSA limited eligibility to recipients age 18 and older. While transition-age youth receiving special education services can be connected to VR agencies through their schools, the extent to which this happens—and whether they are on SSI—is unknown because data to make such determinations are not systematically collected by SSA or schools.", "Federal standards for internal control call for agencies to use quality information to achieve their objectives.", "Without relevant data or additional options for connecting youth to VR services, SSA cannot ensure that transition-age youth on SSI are being connected to these services, which can help to prepare them for adulthood and the workforce.", "GAO recommends SSA 1) analyze why youth on SSI with earnings did not benefit from SEIE, 2) improve communication about work incentives and rules, 3) work with Education to determine how many youth on SSI are not connected to VR services, and 4) explore options to further connect them.", "SSA agreed in whole or in part with three recommendations. SSA disagreed that its communication on work incentives and rules needs to be improved, stating field staff provides information to youth, and it has created new written material.", "GAO maintains SSA's communication could be improved as presented in this report." ], "parent_pair_index": [ -1, 0, -1, -1, 3, 4, -1, 6, -1, 0, 0, 0, 3, 3, -1, 0, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "Recent Federal Support for R&D Related to Advanced Biofuels Has Been Through Direct Research and Grants, and the Focus Is Shifting toward Drop- In Fuels", "DOE Funds the Majority of Federal R&D Related to Advanced Biofuels and Has Shifted Its Focus Away from Cellulosic Ethanol", "USDA Is the Second Largest Funder of Federal R&D Related to Advanced Biofuels and Targets Drop- In Fuels", "DOE and USDA Obligated Funds to the Biomass Research and Development Initiative for R&D Projects", "NSF, DOD, and EPA Obligated Smaller Amounts for R&D Related to Advanced Biofuels", "Experts Agreed Several Advanced Biofuels Are Technologically Well Understood, but They Cited Several Factors That Make It Challenging to Significantly Increase Production", "Several Advanced Biofuels Are Technologically Well Understood, but They Are Not Being Produced at the Overall Volumes Called for in the RFS", "According to Experts, Several Factors That Affect the Speed and Volume of Production Will Make Significant Increases Challenging", "Agency Comments", "Appendix I: Objectives, Scope and Methodology", "Appendix II: Expert Meeting Participants", "Appendix III: Advanced Biofuels Producers Interviewed", "Appendix IV: Comments from the Environmental Protection Agency", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact:", "Staff Acknowledgments:" ], "paragraphs": [ "Advanced biofuels are produced through a variety of combinations of (1) a feedstock, which is the type of renewable biomass that is converted into a renewable fuel, and (2) a conversion technology, which is used to convert renewable biomass into fuel. The result is a final fuel product. Advanced biofuels may be made from an assortment of feedstocks, ranging from waste fats and oils to crops grown expressly for biofuels production, such as grasses like miscanthus and switchgrass. (See fig. 1.)\nThese feedstocks are converted into fuel using a variety of conversion technologies that generally rely on chemicals, catalysts, enzymes, heat, or pressure. Depending on the feedstock and conversion technology used, the fuel may fit into one or more of three advanced biofuels categories established in the RFS.\nAdvanced: renewable fuel, other than ethanol derived from corn starch, that has life-cycle greenhouse gas emissions at least 50 percent lower than traditional petroleum-based fuels. This is a catch- all category that may include a number of fuels, including fuels made from algae or ethanol made from sugar cane. This category includes the following subcategories:\nBiomass-based diesel: biodiesel or renewable diesel that has life-cycle greenhouse gas emissions at least 50 percent lower than traditional petroleum-based diesel fuels.\nCellulosic: renewable fuel derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass and has lifecycle greenhouse gas emissions at least 60 percent lower than traditional petroleum-based fuels. This category of fuel may include cellulosic ethanol, renewable gasoline, cellulosic diesel, and renewable natural gas from landfills that can be upgraded and used in vehicles designed to run on liquefied or compressed natural gas.\nSome advanced biofuels are compatible with existing engines and the fuel distribution infrastructure. Such fuels, known as “drop-in” fuels, include renewable diesel, renewable jet fuel, and renewable gasoline. Other advanced biofuels are not fully compatible. For example, cellulosic ethanol, like corn-starch ethanol, faces limits on the amount that can be blended into gasoline, in part because it is more corrosive. Drop-in fuels do not face this limitation because they are compatible with current infrastructure.\nEPA is responsible for implementing the RFS through several mechanisms. Specifically, EPA approves new combinations of feedstocks, conversion processes, and fuels that can be counted toward the statutory targets. EPA also has the authority to waive statutory targets and set annual volume requirements for categories of renewable fuels, including advanced biofuels. These volumes may deviate from the statutory targets because of inadequate domestic supply, among other reasons. For 2010 through 2013, EPA set annual volume requirements for the cellulosic biofuels category that were below statutory targets, but kept the overall volume for all advanced biofuels in line with the statute. For 2014 through 2017, in addition to setting lower annual volume requirements for the cellulosic biofuels category, EPA also set lower overall volume requirements for all advanced biofuels. For 2013 through 2017 EPA also set volume requirements for biomass-based diesel that were higher than the minimums set in the statute, which somewhat offset the lower requirements for cellulosic biofuels. (See fig. 2 for a comparison of statutory targets and volume requirements set by EPA.)\nIn addition to the RFS, there are federal tax incentives to promote the production and use of advanced biofuels. These include the Biodiesel Income Tax Credit, which provides a $1 per-gallon tax credit for producers of certain biodiesel or renewable diesel. Separately, the Second Generation Biofuel Producer Tax Credit provides advanced biofuel producers a tax credit of up to $1.01 per gallon of advanced biofuel produced and used domestically.\nR&D related to advanced biofuels includes both basic and applied research. In general, basic research focuses on gaining a fundamental understanding of a material or process. Applied research explores the potential of a material or process to satisfy a technology need. Components of an advanced biofuels applied research portfolio may include developing technologies to provide a reliable, affordable, and sustainable biomass supply. To reach commercial-scale production, advanced biofuels must go through a process of increasing the scale of production, beginning with a research and development phase that culminates in proving a given technology in a laboratory setting. Once a conversion technology has been proven at laboratory scale, it can be scaled up and tested in a pilot facility. Pilot-scale facilities are small-scale facilities that verify the integrated performance of a given suite of technologies from feedstock through final product. Once a technology has been proven at this scale, it can be scaled up to a demonstration facility, which verifies the performance of integrated technologies at a scale that can be used to determine design specifications for a still larger facility. Commercial-scale facilities, including both “first-of-its-kind” and subsequent facilities, aim to produce commercial volumes economically on a continuous basis, with a reliable feedstock supply and production distribution system. Figure 3 illustrates the stages in the advanced biofuels scale-up process.", "The federal government has supported R&D related to advanced biofuels through direct research and grants in recent years, with the focus of this R&D shifting away from cellulosic ethanol, an advanced biofuel that is not fully compatible with current vehicle engines and fuel distribution infrastructure, and toward drop-in biofuels, which are compatible with this infrastructure. Agency officials said that they are focusing on drop-in fuels in part because of this compatibility. As figure 4 shows, the federal government obligated about $1.1 billion for R&D related to advanced biofuels in fiscal years 2013 through 2015, of which DOE obligated over $890 million, or about 80 percent of the total. USDA obligated over $168 million for such R&D in this time frame, or about 15 percent of the total. Of these obligations, $3 million of DOE’s total and about $5.29 million of USDA’s total were obligated for projects through the Biomass Research and Development Initiative—an annual joint funding opportunity announcement focused on biofuels and bioproducts. NSF, DOD, and EPA spent relatively small amounts on R&D related to advanced biofuels in fiscal years 2013 through 2015, compared with DOE and USDA.", "In fiscal years 2013 through 2015, DOE obligated $890.4 million—the majority of all federal funding for R&D related to advanced biofuels— through four offices: the Office of Science, the Bioenergy Technologies Office, the Advanced Research Projects Agency-Energy (ARPA-E), and the Vehicle Technologies Office. (see fig. 5.)\nThe following DOE offices obligated funds for basic and applied R&D on all stages of advanced biofuel production, and overall have shifted away from R&D on cellulosic ethanol:\nOffice of Science. In fiscal years 2013 through 2015, DOE’s Office of Science obligated approximately $424.1 million for external R&D related to advanced biofuels. According to an agency official, the office supports basic R&D in this field primarily by funding three bioenergy research centers. The Office of Science also awards grants to fund projects at national laboratories and academic institutions. Research covers all areas of biofuels R&D, including sustainability, feedstock development and logistics, and conversion technologies. DOE officials told us that, although they continue to investigate cellulosic ethanol, drop-in fuels are more desirable because they are compatible with current engine designs and fueling infrastructure. According to an agency official, the office supports basic research and focuses efforts on demonstrating proof of concept—showing that laboratory results can be replicated in real- world conditions. For example, staff at one of the bioenergy research centers supported by the Office of Science recently transplanted poplar trees that had been cultivated for biofuel production under laboratory conditions to the field to observe their growth. Once proof of concept has been demonstrated in this way, research often transitions to other federal offices and/or industry to conduct additional applied research.\nBioenergy Technologies Office. In fiscal years 2013 through 2015, this office obligated approximately $397.5 million for in-house and external R&D related to advanced biofuels. The office conducts its own basic and applied R&D at federal laboratories including the National Renewable Energy Laboratory in Golden, Colorado, and partners with industry and universities. The office focuses on developing and transforming renewable biomass into commercially viable high-performance biofuels, bioproducts, and biopower. The office spent much of the past decade focusing R&D on cellulosic ethanol, but after meeting key goals to reduce production costs, the office shifted its focus to drop-in fuels in 2012. For example, the Bioenergy Technologies Office funded a project by the nonprofit Gas Technology Institute to develop a process for converting a broad range of feedstocks—residue from wood harvesting and manufacturing, algae, and corn stover—into drop-in fuels. According to DOE officials, the process resulted in fuels that meet technical specifications for gasoline and diesel while achieving a 90-percent reduction in greenhouse gas emissions relative to fossil fuels. Officials told us the technology was licensed in June 2015 to a company that plans to build a demonstration plant.\nARPA-E. In fiscal years 2013 through 2015, DOE’s Advanced Research Projects Agency-Energy obligated approximately $57.9 million for external R&D related to advanced biofuels. ARPA-E awards funds for applied research to outside organizations, such as private companies and academic institutions. The agency seeks to fund high-impact energy technologies that are too early for private- sector investment. More than 87 percent of ARPA-E’s advanced biofuel R&D projects are funded as part of the Plants Engineered to Replace Oil (PETRO) program and the Transportation Energy Resources from Renewable Agriculture (TERRA) program. Neither of these programs directly supported cellulosic ethanol research. During fiscal years 2013 through 2015, the agency obligated more than $18 million for advanced biofuels projects through the PETRO program, which seeks to fund technologies that optimize production and conversion of plants for use as advanced biofuels, aiming to significantly reduce production costs. In fiscal year 2015, the agency obligated more than $32 million through the TERRA program, which began that year and focuses on improving production of sorghum as an advanced biofuel feedstock.\nVehicle Technologies Office. In fiscal years 2013 through 2015, DOE’s Vehicle Technologies Office obligated approximately $10.9 million for in-house and external R&D related to advanced biofuels, focusing on end-user considerations. The Vehicle Technologies Office supports applied research to increase knowledge of the effects of conventional and advanced biofuels on engines and improve the efficiency of alternative fuel vehicles, among other things. It supports this research primarily through collaboration with national laboratories, universities, and industry. For example, the office is collaborating with Cummins engine company to develop a compression ignition engine capable of running on ethanol, which is usually a spark-ignition fuel, and diesel, which is a compression ignition fuel. An agency official told us that because compression ignition is more efficient than spark ignition, such an engine allows ethanol to be used more efficiently, thus decreasing petroleum consumption.", "In fiscal years 2013 through 2015, USDA obligated approximately $168.7 million for R&D related to advanced biofuels—making it the second largest funder of federal R&D related to advanced biofuels. It obligated these funds through two agencies: the Agricultural Research Service and the National Institute of Food and Agriculture. Each agency accounts for approximately half of USDA’s obligations related to R&D for advanced biofuels.\nSimilarly to DOE, these agencies funded basic and applied research on all stages of advanced biofuel production, focusing on drop-in biofuels, biodiesel, and coproducts.\nAgricultural Research Service. In fiscal years 2013 through 2015, USDA’s Agricultural Research Service obligated approximately $85.5 million for in-house R&D related to advanced biofuels. According to its officials, the Agricultural Research Service conducts both basic and applied advanced biofuels R&D in four national research centers. The Agricultural Research Service is USDA’s chief in-house research arm, and its biofuels research is aimed at the production of advanced biofuels, focusing on drop-in fuels, biodiesel, and bioproducts. For example, scientists in Peoria, Illinois, developed a novel process that increased production of butanol—a drop-in fuel—from corn stover and lowered estimated production costs from $4.39 per gallon to $3.42 per gallon. The key to this cost reduction is to recover the butanol continuously as it is generated, which is done using a special pretreatment and distillation process. Scientists at the same laboratory also developed a new method of converting plant oils into skin care and food ingredients with antioxidant properties that extend shelf life. Agency officials told us that such high-value bioproducts may pave the way for commercial production of advanced biofuels. Such products may help offset the up-front cost and minimize the risk of constructing large, commercial-scale biorefineries that produce advanced biofuels.\nNational Institute of Food and Agriculture. In fiscal years 2013 through 2015, USDA’s National Institute of Food and Agriculture obligated approximately $83 million for external R&D related to advanced biofuels. The agency funds basic and applied research through grants to academic institutions, non-governmental organizations, government laboratories, and industry. According to agency officials, the National Institute of Food and Agriculture’s current advanced biofuels research focuses on drop-in fuels. For example, the agency is investing in seven regional public/private consortia developing supply chains for biofuels and biobased products. One consortium, led by Washington State University, successfully developed a series of processes to take logging residues from Weyerhaeuser—a forest products company—and convert them to alternative jet fuel.", "DOE’s and USDA’s obligations to support advanced biofuels R&D included funds they contributed to the Biomass Research and Development Initiative, which funds R&D projects through funding opportunity announcements. Specifically, in fiscal years 2013 through 2015, USDA obligated $5.29 million to Biomass Research and Development Initiative projects through its National Institute of Food and Agriculture, and DOE obligated $3 million to these projects through its Bioenergy Technologies Office. The Initiative’s 2015 funding opportunity announcement called for applicants in the technical topic areas of feedstock development, including harvest and storage; biofuels and bioproducts development, including for chemicals that can potentially increase the economic viability of large-scale fuel production in a biorefinery; and biofuels and bioproducts development analysis, focusing on analytical tools to better evaluate bioproducts. One of the selected projects proposes to convert poplar trees to ethanol and polyurethane—a material that is used in a variety of applications, including insulation and foam cushioning.", "NSF, DOD, and EPA obligated less for R&D related to advanced biofuels than DOE and USDA; combined, these three agencies accounted for about 5 percent of the federal funds obligated for such R&D in fiscal years 2013 through 2015. In these years, NSF awarded approximately $45 million, mostly to academic research institutions, to fund external R&D related to advanced biofuels that could include cellulosic ethanol or drop- in fuels. These funds supported mostly basic and some applied research. One NSF-funded project at the University of Kentucky aims to develop an improved process for the conversion of vegetable oils and animal fats into a drop-in substitute for diesel. The process uses nickel, which is abundant and inexpensive, as a catalyst for conversion, as opposed to the expensive precious metals commonly used. DOD, through the Defense Advanced Research Projects Agency, funded one R&D project related to advanced biofuels during this period for a total of $9 million. This project sought to develop more efficient methods of growing and harvesting algae. According to EPA officials, the agency did not conduct any R&D on new ways to produce advanced biofuels; rather, in its role of administering the RFS program, it primarily conducted analyses to determine the life-cycle greenhouse gas emissions of combinations of feedstocks, conversion technologies, and the advanced biofuels produced to determine if they meet the requirements to be counted toward the statutory targets under the RFS.", "Experts said that several advanced biofuels are technologically well understood but noted that among those currently being produced there is limited potential for increased production in the near term. They further cited multiple factors that will make it challenging to significantly increase the speed and volume of production. In addition, current advanced biofuel production is far below overall RFS target volumes, and those volumes are increasing every year. Given expert views on the limited potential for increased production and current production volumes, it does not appear possible to meet the targets in the RFS for advanced biofuels under current market and regulatory conditions.", "Several advanced biofuels are technologically well understood, according to experts, and some are being commercially produced in significant quantities, but the overall volume being produced falls short of the volume target in the RFS. For example, in 2015, about 3.1 billion ethanol- equivalent gallons of advanced biofuels were produced, falling short of the statutory target of 5.5 billion gallons in the RFS for that year. By 2022, the advanced biofuels target increases to 21 billion gallons, so production would have to rapidly increase to meet this target.\nBiodiesel and renewable diesel—which typically fall under the category of biomass-based diesel in the RFS—are among the types of advanced biofuels that are technologically well understood, according to experts, and they are being produced in the largest volumes. Biomass-based diesel, which has its own minimum statutory volume target set in the RFS, is the exception among the categories in that it exceeded its minimum of at least 1 billion gallons for 2015. In 2015, about 1.5 billion gallons of biodiesel were produced, according to EPA. In addition, about 300 million gallons of renewable diesel were produced in 2015. Experts agreed that expansion potential for these fuels is limited by the availability of feedstocks (fats and oils), for which there are competing uses. For example, soybean oil is also used as a cooking oil.\nCellulosic biofuels—specifically cellulosic ethanol and renewable natural gas from landfills—are also technologically well understood, according to experts, but current production is far below the volume needed to meet the target for these fuels. Specifically, in 2015, about 142 million gallons of cellulosic biofuel overall—including about 2 million gallons of cellulosic ethanol and about 140 million gallons of renewable natural gas—were produced. This cellulosic biofuel volume was less than 5 percent of the statutory target of 3 billion gallons. According to experts, there is limited potential for expanded production of cellulosic ethanol in the next 5 years to meet the higher volumes called for in the statute. Experts said that the most economical way to quickly expand production of cellulosic ethanol is through “bolt-on” facilities, which use the cellulosic corn fiber remaining after corn-starch ethanol production as a feedstock; however, the experts said that such facilities would not boost overall cellulosic ethanol volumes by more than about 750 million gallons even if added to every existing corn-starch ethanol refinery. This is far short of the 2015 target of 3 billion gallons. Several corn-starch ethanol producers are already using such bolt-on facilities, and other corn-starch ethanol producers are expected to follow suit, according to experts and producers we interviewed, because these technologies require relatively low expenditures of capital and these costs can be recovered relatively quickly. Experts said that significant expansion of cellulosic ethanol production beyond current levels would require construction of large stand-alone facilities and that even though several such facilities have been built, attracting the investments necessary to build more is unlikely until conversion yields and operability improve and costs come down. Concerning renewable natural gas, which is produced mainly from landfills, an expert noted that to be usable as a transportation fuel, the gas must be purified and adjusted to specifications. A renewable natural gas producer we spoke with said the cost to upgrade landfill gas to meet such specifications is significant and that landfill gas can be used for other purposes, including making electricity, without this costly upgrading. The producer told us that despite the additional cost, the incremental revenue from credits under the RFS makes it worthwhile to upgrade landfill gas.\nAccording to the experts, some other technologies for producing advanced biofuels are also well understood, but these technologies have produced relatively small volumes of fuel because they cannot compete with petroleum-based fuels given current oil prices and despite federal biofuels tax credits and other incentives. These technologies include pyrolysis, which involves the thermal and chemical decomposition of a feedstock without the introduction of oxygen. About 44,000 gallons of cellulosic renewable gasoline blendstock and about 9,000 gallons of cellulosic diesel were produced in 2014 and none in 2015 or 2016 because the producer went out of business. Both of these fuels are considered drop-ins.\nExperts agreed that algal biofuels are technologically well understood and have significant future potential, but are still several years away from being economical to produce because of the high cost of growing algae. Experts estimated it may cost $1200 to $4000 per ton to produce algae currently, and costs need to fall to $400 to $500 per ton to make the process economical for fuel production. For example, one producer we interviewed can reliably produce biofuel from algae but is focusing on higher-value nutritional and pharmaceutical products.", "Experts identified several factors, many related to cost, that will affect the speed and volume of production of advanced biofuels and make it challenging to significantly increase production in the next 5 to 10 years. These factors include the following:\nLow price of fossil fuels relative to advanced biofuels. According to experts, low fossil fuel prices affect advanced biofuels in two ways. First, experts said getting consumers to accept higher blends of advanced biofuels at the pump will require those biofuels to be priced competitively with equivalent fossil fuels. While the average retail gasoline price was over $4 per gallon in May 2011, it dropped to under $2 per gallon in early 2016, making it harder to compete on price at the pump. Similarly, retail diesel prices were over $4 per gallon as recently as March 2014, but briefly fell below $2 in early 2016. Second, experts said low fossil fuel prices are a significant impediment to biofuels investment. One expert noted that investment in advanced biofuels technology has dropped since oil prices have dropped, making it difficult to fund the R&D needed to reduce the cost of biofuels. Experts agreed that one option to overcome this fossil fuels price advantage would be to put a price on greenhouse gas emissions—for example, through a carbon tax or similar mechanism.\nHigh cost of converting cellulosic feedstocks. Experts told us that conversion costs are a function of (1) the number of processing steps it takes to convert a raw feedstock to a fuel; (2) the difficulty of transporting and handling solid feedstocks as compared with liquid or gaseous feedstocks; (3) the difficulty of handling and disposing of waste products from the conversion process; and (4) infrastructure challenges associated with a plant’s location, such as access to a steady feedstock supply and rail lines to transport fuel. For example, one expert noted that handling solid feedstocks on the front end of conversion, as opposed to liquids or gases, is more time consuming and complex, resulting in additional costs. These feedstocks, such as corn stover or forest logging residues, may need to be ground or chipped to a uniform size so they will more easily flow through equipment, and debris such as rocks and dirt may need to be removed to prevent damage to equipment. In addition, experts noted that it can be costly to dispose of waste products from the conversion process. Ideally, producers will find ways to monetize waste products by creating coproducts, but more work is needed in this area to make that a reality. For example, lignin—a part of plant matter that is left over after conversion to cellulosic ethanol—can be burned to produce energy. One producer told us using lignin in carbon fiber may be a future possibility.\nTime and cost to bring a new technology to commercial-scale production. Experts told us that developing a biofuel technology and bringing it from laboratory scale to commercial scale may take 12 years if every step works out well, and could take considerably longer; one representative we interviewed from a company that produces biofuel said this process may take 15 to 25 years. (See fig. 6 for examples of laboratory-scale and commercial-scale advanced biofuels production.) Once a biofuel technology is technologically ready, the design, engineering, and construction of the first plant normally take 3 to 4 years, according to experts. Such first-of-their- kind facilities often face challenges because the companies are still optimizing the technology and may encounter problems that only occur when building at commercial scale. One producer told us they overbuilt their first commercial facility out of caution. Therefore these facilities take longer and are more expensive to construct than subsequent facilities. A representative of a company that produces advanced biofuel told us that, compared to the cost of its first plant, it has identified opportunities that could save about 25 percent on its next plant.\nTime and cost to secure fuel certification and acceptance.\nExperts told us that once a fuel can be produced several steps remain before it can be brought to market, including regulatory registration, certification by ASTM International, as well as oil company and vehicle acceptance. These steps can occur concurrently, but they have different time frames. In addition, these steps are costly for companies. For example, one expert said that passing the EPA registration for a new fuel costs millions of dollars, while another noted that ASTM certification of a new fuel is a longer and more expensive process. Oil companies and vehicle manufacturers must also approve a new fuel before they will be willing to blend it for use in transportation fuels. New advanced biofuels must also have their combination of a feedstock, a conversion process, and a final product approved by EPA in order to be counted toward the annual volume requirements under the RFS. A representative from one company we spoke to told us EPA’s reviews are taking longer than expected. One expert told us that two different advanced biofuels projects have been recently cancelled specifically because of the time it has taken for EPA to complete these approvals.\nUncertainty about government policy. Experts agreed that uncertainty about government policy is a major barrier for the commercialization of advanced biofuels because it sends mixed signals to the market, which can limit investment. The future of the RFS, the Biodiesel Income Tax Credit, and the Second Generation Biofuel Producer Tax Credit may all be sources of uncertainty. Regarding the RFS, there is uncertainty about whether it will remain in place, and uncertainty about where EPA will set annual volume requirements. As described in the sidebar on this page, the tax credits have been allowed to expire and then have been retroactively extended in the past. This uncertainty affects all stages of biofuel production. For example, one expert stated that producers of farm equipment will not invest in new harvesting technology to maximize biomass feedstock yields if they see too much uncertainty in the market for advanced biofuels over the next 10 years, while other experts noted the difficulty in obtaining capital to build commercial- scale plants. Every advanced biofuels producer we interviewed also cited uncertainty about government policy as a major barrier to commercial-scale production. One producer said policy uncertainty has increased since 2013 when EPA used its waiver authority to reduce the RFS statutory volumes, causing investors to lose confidence and interest in commercial-scale plants. Another producer we interviewed told us that producers cannot rely on the Second Generation Biofuel Producer Tax Credit in their investment decisions.\nUnderdeveloped feedstock supply chain. Experts agreed that the lack of logistics for the entire feedstock supply chain—from securing a contract to delivering and storing a feedstock—is an economic barrier to the production of advanced biofuels. One expert noted that it may take longer to set up contracts with farmers for feedstock delivery, such as corn stover, than it takes to build an advanced biofuels plant. Without a developed commodity market for advanced biofuel feedstocks, producers must negotiate contracts with individual farmers, which is costly and time consuming. One cellulosic biofuel producer told us it faced challenges with feedstock transport and storage in trying to minimize burdens on farmers. Specifically, the producer noted that it was working with farmers to offer two different contract models: to store bales of stover at the farm, or to store them at the plant. Experts also noted that large amounts of dry cellulosic feedstock in storage may be susceptible to fire, such as from lightning strikes—something that has happened at one cellulosic ethanol facility.", "We provided a draft of this report to EPA, USDA, NSF, DOE, and DOD for review and comment. In its written comments, reproduced in appendix IV, EPA generally agreed with the report and its findings. USDA and NSF provided technical comments, which we incorporated as appropriate. DOE and DOD did not have any comments on the draft.\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 Secretary of Agriculture, the Secretary of Defense, the Secretary of Energy, the Administrator of the Environmental Protection Agency, the Director of the National Science Foundation, 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 ruscof@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 provides information related to advanced biofuels research and development (R&D). Specifically, it describes (1) how the federal government has supported advanced biofuels R&D in recent years and where its efforts have been targeted and (2) expert views on the extent to which advanced biofuels are technologically understood and the factors that will affect the speed and volume of production.\nTo describe how the federal government has supported advanced biofuels R&D in recent years and where its efforts have been targeted, we reviewed documents and obligations data and interviewed officials from the following agencies: the Department of Agriculture’s (USDA) Agricultural Research Service and National Institute of Food and Agriculture; the Department of Defense’s (DOD) Defense Advanced Research Projects Agency; the Department of Energy’s (DOE) Advanced Research Projects Agency–Energy, Bioenergy Technologies Office, Office of Science, and Vehicle Technologies Office; the Environmental Protection Agency’s (EPA) Office of Transportation and Air Quality; and the National Science Foundation (NSF). We reviewed obligations data for advanced biofuels research and development for fiscal years 2013 through 2015. In some cases, agencies or offices estimated these obligations because they did not track obligations data for advanced biofuels R&D separately from other biofuels or bioenergy R&D. In addition, USDA’s Agricultural Research Service was not able to provide obligations data for advanced biofuels R&D, but provided allocations data instead. These data differ in that allocations are a delegation of authority to obligate funds, while obligations are legally binding agreements to outlay funds. According to officials from the Agricultural Research Service, it does not track funding for its research projects by obligations but rather by the allocation of funding by research project. Agency officials told us that they have reasonable certainty that the allocations they provided to us would align one-to-one with the obligations for agency research projects. To assess the reliability of the obligations data, we asked officials who maintain the relevant databases for information about steps they take to maintain the data. We determined that the data we used were sufficiently reliable for purposes of describing the scale of advanced biofuels R&D by the federal government. In addition, to further develop an understanding of the type of R&D done with federal funding, we visited the USDA Agricultural Research Service’s National Center for Agricultural Utilization Research in Peoria, Illinois and National Laboratory for Agriculture and the Environment in Ames, Iowa. We also visited a DOE Office of Science Bioenergy Research Center in Madison, Wisconsin.\nTo describe expert views on the extent to which advanced biofuels are technologically understood and on the factors that will affect the speed and volume of production, we contracted with the National Academy of Sciences to convene a group of 20 experts for a 2-day meeting in May 2016. One expert was unable to attend the meeting, and we interviewed him separately. (See app. II for a list of the experts who participated.) Participants, who were identified and recommended by the National Academy of Sciences and approved by us, included experts in advanced biofuels feedstocks, conversion technologies, and the use of biofuels from industry, academia, and research organizations.\nWe asked these experts to discuss the technological readiness of a variety of biofuels and the economic and other factors that may affect the speed and volume of their commercial-scale production. Specifically, we asked the experts to discuss the short-, medium-, and long-term technical potential of a variety of advanced biofuels and the conversion processes and feedstocks that can be used to make them, as well as any opportunities and challenges associated with these fuels, conversion processes, and feedstocks. We also asked them to discuss the most important economic and scale-up factors that will affect the speed and volume of commercial-scale production of advanced biofuels once they are technologically ready, and any particular areas on which the federal government should focus its R&D efforts to advance the technological readiness of advanced biofuels. We analyzed summary statements agreed upon by experts at the meeting as well as meeting transcripts to inform this report.\nTo better understand the extent to which advanced biofuels are technologically understood and the factors that will affect the speed and volume of production, we also interviewed representatives, either in person or over the phone, from 11 companies that produce, or aim to produce, advanced biofuels. We visited POET-DSM’s cellulosic ethanol plant in Emmetsburg, Iowa; Quad County Corn Processor’s’ cellulosic ethanol plant in Galva, Iowa; and Solazyme’s demonstration plant in Peoria, Illinois. Producers were selected on the basis of technology used and scale of production to ensure a variety of perspectives. Specifically, we selected companies that are using well-established technologies and producing at commercial scale, companies using first-of-their-kind technologies and producing at commercial scale, and companies using first-of-their-kind technologies and not yet producing at commercial scale. These selection criteria allowed us to obtain broader perspectives on the logistical challenges of scaling up a technology, the factors involved in processing different fuel types, and the factors involved in EPA registration. These producer interviews provided key insights on and real- world examples of the factors that influence the speed and scale of advanced biofuel production; however, the results of our interviews cannot be generalized to all producers. (See app. III for a list of producers interviewed.)\nWe conducted this performance audit from June 2015 to November 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.", "The experts who participated in our meeting on advanced biofuels research and development at the National Academy of Sciences on May 26 and 27, 2016, are listed below.\nJohn Benemann CEO, MicroBio Engineering, Inc.", "The companies listed below are advanced biofuels producers we interviewed between January and June of 2016 to inform this report.\nRenewable Energy Group (REG)\nWaste Management Renewable Energy (WMRE)", "", "", "", "In addition to the contact named above, Karla Springer (Assistant Director), Tim Bober, Philip Farah, Cindy Gilbert, Connor Kincaid, Jesse Lamarre-Vincent, Janice Latimer, Cynthia Norris, Madhav Panwar, Marietta Mayfield Revesz, Dan Royer, Angela Smith, and Barbara Timmerman made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h2_full", "h0_full h2_full", "h0_full", "h0_full", "", "", "h2_title h1_full", "h2_full h1_full", "h2_full h1_full", "", "h0_full h3_full", "", "", "", "", "", "" ] }

{ "question": [ "How has the government supported R&D related to advanced biofuels?", "To what extent has the federal government funded biofuels R&D?", "What portion of this funding was through the DOE?", "What portion of this funding was though the USDA?", "What other agencies provided funding?", "How do drop-in fuels differ from corn starch-based or cellulosic ethanol?", "Why are agencies shifting their focus to drop-in fuels?", "What did experts say regarding advanced biofuels?", "Why is there limited potential for increased production?", "Which biofuels are technologically well understood?", "What limits production of such fuels?", "What limits production of other fuels?", "Why are fossil fuels preferred in production?", "How does this disparity in costs affect production?", "What does the RFS mandate in regard to domestic transportation fuels?", "How is this environmentally beneficial?", "Where will further growth in renewable fuels come from?", "What inhibits such growth?", "What is the federal government doing to promote growth?", "What was GAO asked to review?", "What does this report examine?", "What did GAO do to review such issues?" ], "summary": [ "The federal government has supported research and development (R&D) related to advanced biofuels through direct research or grants, and the focus is shifting away from cellulosic ethanol and toward drop-in biofuels.", "In fiscal years 2013 through 2015, the federal government obligated more than $1.1 billion for advanced biofuels R&D.", "Of this amount, the Department of Energy (DOE) obligated over $890 million. For example, DOE's Office of Science funds three bioenergy research centers affiliated with universities and national labs that conduct basic research for all stages of biofuel production.", "The Department of Agriculture (USDA) obligated over $168 million in fiscal years 2013 through 2015 to support advanced biofuels. For example, USDA scientists developed a novel process to increase production of butanol, a drop-in fuel that lowered production costs by over 20 percent.", "The remaining federal obligations during these years were through the Environmental Protection Agency (EPA), the Department of Defense (DOD), and the National Science Foundation (NSF), which obligated relatively less for such R&D.", "Unlike corn starch-based or cellulosic ethanol, drop-in fuels such as renewable gasoline are fully compatible with existing infrastructure, such as vehicle engines and distribution pipelines.", "According to agency officials, agencies are shifting their focus to drop-in fuels in part because they are compatible with existing infrastructure. Officials from one federal funding agency said this compatibility makes drop-in fuels more desirable than cellulosic ethanol.", "Experts said that several advanced biofuels are technologically well understood and some are being commercially produced, but they noted there is limited potential for increased production in the near term and cited several factors that will make significant increases challenging.", "Given that current advanced biofuel production is far below Renewable Fuel Standard (RFS) targets and those targets are increasing every year, it does not appear possible to meet statutory target volumes for advanced biofuels in the RFS under current market and regulatory conditions.", "Biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and some drop-in fuels.", "A few of these fuels, such as biodiesel and renewable diesel, are being produced in significant volumes, but it is unlikely that production of these fuels can expand much in the next few years because of feedstock limitations. Current production of cellulosic biofuels is far below the statutory volumes and, according to experts, there is limited potential for expanded production to meet future higher targets, in part because production costs are currently too high.", "Experts told GAO that technologies for producing other fuels, such as some drop-in fuels, are technologically well understood but that these fuels are not being produced because production is too costly.", "Among the factors that will affect the speed and volume of production, experts cited the low price of fossil fuels relative to advanced biofuels.", "This disparity in costs is a disincentive for consumers to adopt greater use of biofuels and also a deterrent for private investors entering the advanced biofuels market.", "The RFS generally mandates that domestic transportation fuels be blended with increasing volumes of biofuels through 2022, with the goals of reducing greenhouse gas emissions and expanding the nation's renewable fuels sector while reducing reliance on imported oil.", "Blending of conventional renewable fuels, primarily ethanol derived from corn starch which is required to reduce greenhouse gas emissions by 20 percent compared with petroleum-based fuels, has nearly reached the maximum called for under the RFS.", "Further growth in renewable fuels is to come from advanced biofuels, which must reduce life-cycle greenhouse gas emissions by at least 50 percent compared with petroleum-based fuels to qualify under the RFS.", "However, production of advanced biofuels has not kept pace with statutory targets.", "To promote the development and commercialization of advanced biofuels, the federal government has supported R&D efforts for biofuels since the 1970s.", "GAO was asked to review issues related to advanced biofuels R&D.", "This report describes (1) how the federal government has supported advanced biofuels R&D in recent years and where its efforts have been targeted and (2) expert views on the extent to which advanced biofuels are technologically understood and the factors that will affect the speed and volume of production.", "GAO interviewed DOD, DOE, EPA, NSF, and USDA officials and worked with the National Academy of Sciences to convene a meeting of experts from industry, academia, and research organizations." ], "parent_pair_index": [ -1, 0, 1, 1, 1, -1, 5, -1, 0, -1, 2, 2, -1, 5, -1, 0, -1, 2, 2, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4, 0, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "National Security, Arms Control, and Nonproliferation", "The Arms Control Agenda", "Arms Control Between the United States and States of the Former Soviet Union", "The Early Years: SALT I and SALT II", "The Interim Agreement on Offensive Arms", "The Strategic Arms Limitation Treaty (SALT II)", "The ABM Treaty", "The Reagan and Bush Years: INF and START", "The Intermediate-Range Nuclear Forces (INF) Treaty", "The Strategic Arms Reduction Treaty (START)", "START After the Soviet Union", "START Provisions", "START Expiration", "START II", "START II Provisions", "START II Ratification", "The Clinton and Bush Years: Moving Past START and the ABM Treaty", "START III Framework for Strategic Offensive Forces", "Ballistic Missile Defenses and the ABM Treaty", "Missile Defense Plans and Programs", "ABM Treaty Issues and Negotiations", "Missile Defense After the ABM Treaty", "The Strategic Offensive Reductions Treaty", "Treaty Provisions", "Monitoring and Verification", "Nonstrategic Nuclear Weapons", "The Obama Administration: New START", "Pursuing an Agreement", "Treaty Provisions", "Limits on Warheads and Launchers", "Monitoring and Verification", "Relationship Between Offensive and Defensive Weapons", "Implementation", "Threat Reduction and Nonproliferation Assistance", "DOD's Cooperative Threat Reduction Program (CTR)", "CTR Program Areas", "Future of the CTR Program", "Department of Energy Nonproliferation Cooperation Programs", "Materials Protection, Control, and Accounting", "Global Threat Reduction Initiative", "Plutonium Disposition", "State Department Programs", "Multilateral Nuclear Nonproliferation Activities", "The International Nuclear Nonproliferation Regime", "The Nuclear Nonproliferation Treaty", "The International Atomic Energy Agency (IAEA)", "Nuclear-Weapon-Free Zones", "Nuclear Suppliers Group", "Convention on the Physical Protection of Nuclear Material", "International Convention for the Suppression of Acts of Nuclear Terrorism", "Comprehensive Test Ban Treaty12", "Fissile Material Production Cutoff Treaty (FMCT)", "United Nations Security Council Resolution 1540", "Treaty on the Prohibition of Nuclear Weapons", "Informal Cooperative Endeavors", "G-8 Global Partnership Against the Spread of Weapons and Materials of Mass Destruction", "Proliferation Security Initiative (PSI)", "Global Initiative to Combat Nuclear Terrorism", "Ad Hoc Sanctions and Incentives", "Non-Nuclear Multilateral Endeavors", "European Conventional Arms Control", "Conventional Armed Forces in Europe Treaty (CFE)", "Key Limits and Restrictions", "The Adaptation Agreement", "Compliance Concerns", "Russian CFE Suspension", "The U.S. Response", "Treaty on Open Skies34", "The Provisions of Open Skies", "Implementation", "The Missile Technology Control Regime", "Participants", "Substance of the MTCR", "Hague Code of Conduct Against Ballistic Missile Proliferation (HCOC)", "The Wassenaar Arrangement", "Membership", "Items Controlled", "Organization and Operations", "Weapons Control and Elimination Conventions", "Chemical Weapons Convention", "Limits and Restrictions", "Destruction Deadlines", "Libya", "Syria52", "Russia", "The United States", "Iraq", "Other Compliance Issues", "Biological Weapons Convention", "Verification and Enforcement", "The Arms Trade Treaty", "Controlling the Use of Antipersonnel Landmines", "U.S. Initiatives", "Cluster Munitions89", "Convention on Cluster Munitions (CCM)" ], "paragraphs": [ "", "", "For much of the past century, U.S. national security strategy focused on several core, interrelated objectives. These include enhancing U.S. security at home and abroad; promoting U.S. economic prosperity; and promoting free markets and democracy around the world. The United States has used both unilateral and multilateral mechanisms to achieve these objectives, with varying amounts of emphasis at different times. These mechanisms have included a range of military, diplomatic, and economic tools.\nOne of these core objectives—enhancing U.S. security—generally is interpreted as the effort to protect the nation's interests and includes, for instance, protecting the lives and safety of Americans; maintaining U.S. sovereignty over its values, territory, and institutions; and promoting the nation's well-being. The United States has wielded a deep and wide range of military, diplomatic, and economic tools to protect and advance its security interests. These include, for instance, the deployment of military forces to deter, dissuade, persuade, or compel others; the formation of alliances and coalitions to advance U.S. interests and counter aggression; and the use of U.S. economic power to advance its agenda or promote democratization, or to impose sanctions or withhold U.S. economic support to condemn or punish states hostile to U.S. interests.\nIn this context, arms control and nonproliferation efforts are two of the tools that have occasionally been used to implement the U.S. national security strategy. They generally are not pursued as ends in and of themselves, and many argue that they should not become more important than the strategy behind them. But many believe their effective employment can be critical to the success of that broader strategy. Many analysts see them as a complement to, rather than a substitute for, military or economic efforts.\nEffective arms control measures are thought to enhance U.S. national security in a number of ways. For example, many arms control and nonproliferation tools include monitoring mechanisms that can provide early warning of efforts to evade or ignore the obligations. These mechanisms also promote transparency in a way that might increase U.S. knowledge about and understanding of the size, makeup, and operations of an opposing military force. This might not only ease U.S. military planning, but it might also reduce an opponent's incentives for and opportunities to attack U.S. forces, or the forces of its friends and allies. Transparency measures can also build confidence among wary adversaries. Effective arms control measures can also be designed to complement U.S. force structure objectives by limiting or restraining U.S. and other nations' forces. During times of declining defense budget resources, arms control measures may also help ensure reciprocity in force reductions. Indeed, some analysts consider such arms control measures essential to the success of our national military objectives.\nSimilarly, U.S. officials from several Administrations have identified efforts to prevent the further spread of weapons of mass destruction and their means of delivery to be an essential element of U.S. national security. For one reason, proliferation can exacerbate regional tensions that might escalate to conflict and involve or threaten U.S. forces or those of its friends and allies. Proliferation might also introduce new and unexpected threats to U.S. allies or the U.S. homeland. Furthermore, proliferation can greatly complicate U.S. national military strategy, force structure design, and conduct of operations. And these weapons could pose a threat to the U.S. homeland if they were acquired by terrorists or subnational groups. Hence, the United States employs diplomatic, economic, and military tools to restrain these threats and enhance its national security.\nThis view is not universal, however, as critics of arms control and nonproliferation arrangements often argue that the United States should not limit its own forces or flexibility in exchange for the promise that others might do so as well. They often argue that, absent stringent enforcement mechanisms that force other nations to comply with their obligations, these agreements can become unbalanced, with the United States abiding by the terms while others fail to do so.\nDuring the Cold War, arms control played a key role in the relationship between the United States and Soviet Union. Although the agreements rarely forced either side to accept significant changes in i ts planned nuclear forces, the arms control process, and the formal negotiations, were often one of the few channels for communication between the United States and Soviet Union. Further, the United States participated in many multilateral regimes that sought to limit the spread of nuclear, chemical, and biological weapons and their means of delivery. Beginning in the early 1990s, it also extended assistance to Russia and other former Soviet states in an effort to reduce the threat that these weapons might fall into the hands of hostile states or nonstate actors. It has explored the possible use of similar tools to provide other nations with assistance in containing and controlling weapons and weapons-grade materials.\nDuring the George W. Bush Administration, the President and many in his Administration questioned the degree to which arms control negotiations and formal treaties could enhance U.S. security objectives. They argued that the United States did not need formal treaties to reduce or restrain its strategic nuclear forces. As a result, President Bush initially intended to reduce U.S. nuclear forces without signing a treaty that would require Russia to do the same. The Bush Administration only incorporated these reductions into a formal treaty after Russia insisted on such a document. Similarly, some in the Bush Administration argued that some formal, multilateral arms control regimes went too far in restraining U.S. options without limiting the forces of potential adversaries. Instead, the Administration preferred, when necessary, that the United States take unilateral military action or join in ad hoc coalitions to stem the proliferation of weapons of mass destruction.\nThe absence of confidence in arms control during the George W. Bush Administration extended to the State Department, where the Administration removed the phrase \"arms control\" from all bureaus that were responsible for this policy area. The focus remained on nonproliferation, but it was seen as a policy area that no longer required formal treaties to meet its objectives. This changed with the Obama Administration. The State Department restored the phrase \"arms control\" to some bureau titles, and \"arms control\" was again listed as a central issue on the State Department website.\nThe Obama Administration sought to enhance the role of arms control and nonproliferation agreements in U.S. national security policy. In a speech in Prague in April 2009, the President outlined an agenda that included the pursuit of a new strategic arms control treaty with Russia, efforts to secure the ratification and entry into force of the Comprehensive Test Ban Treaty, and the eventual negotiation of a Fissile Material Control Treaty. President Obama also convened an international nuclear security summit, in April 2010, in an effort to win global cooperation in efforts to contain and eliminate vulnerable nuclear materials. The United States has participated in three additional nuclear security summits, with the fourth and final summit occurring in early April 2016 in Washington. President Obama also pledged to take a number of steps to strengthen the Nuclear Nonproliferation Treaty in conjunction with its review conference in May 2010.\nPresident Obama's embrace of arms control and nonproliferation tools to address U.S. national security needs led many to expect wide-ranging agreements and activities in pursuit of these goals. However, efforts on this agenda produced limited results during President Obama's first term. The United States and Russia signed the 2010 New START Treaty, and have completed the implementation of its modest reductions, but there was little evidence of progress toward discussions on further reductions on nuclear weapons. President Obama also did not seek Senate advice and consent on the Comprehensive Test Ban Treaty, and the Fissile Material Control Treaty remained stalled in the U.N. Conference on Disarmament.\nProgress was also scant in President Obama's second term. Not only did the United States and Russia fail to negotiate further reductions in their offensive nuclear weapons, the United States highlighted concerns with Russia's compliance with past agreements. Specifically, the United States accused Russia of violating the 1987 Intermediate-range Nuclear Forces (INF) Treaty and the 1992 Open Skies Treaty. Some have argued that these actions, when combined with Russia's annexation of Crimea and invasion of Ukraine in early 2014, indicate that Russia may be rejecting the web of arms control and security agreements that have contributed to U.S., Russian, and European security for the past two decades. On the other hand, in 2015, the United States, Russia, and other nations reached an agreement with Iran that restricted Iran's nuclear program and introduced new, extensive international monitoring mechanisms to ensure that Iran does not acquire a nuclear weapon. The debate in Congress over its provisions and implications revealed broad disagreement about the role and value of arms control and nonproliferation agreements in supporting U.S. national security.\nThe Trump Administration, like the Bush Administration, has voiced skepticism about the role that arms control and nonproliferation agreements can play in strengthening U.S. national security. This view reflects growing concerns about Russian compliance with existing arms control agreements, but also derives from the view that arms control does too much to restrict U.S. flexibility and too little to limit the capabilities of others. Moreover, while some would argue that growing tensions between the United States and Russia strengthen the case for further negotiated limits on U.S. and Russian forces, the Trump Administration, and the Obama Administration in its later years, notes that Russia is not, at this time, willing to pursue such agreements. In response to these views, and after years of trying to convince Russia to return to compliance with the INF Treaty, the Trump Administration announced on February 1, 2019, that the United States was suspending its participation in INF and would withdraw on August 2, 2019, following the treaty-mandated six-month withdrawal period. Moreover, while President Trump's approach to diplomatic engagement with North Korea has raised hope for some resolution to the nuclear crisis with that country, the Trump Administration has withdrawn U.S. support for the agreement with Iran.", "The United States has participated in numerous arms control and nonproliferation efforts over the past 60 years. These efforts have produced formal treaties and agreements that impose restrictions on U.S. military forces and activities, informal arrangements and guidelines that the United States has agreed to observe, and unilateral restraints on military forces and activities that the United States has adopted either on its own, or in conjunction with reciprocal restraints on other nations' forces and activities. Because these arms control arrangements affect U.S. national security, military programs, force levels, and defense spending, Congress has shown a continuing interest in the implementation of existing agreements and the prospects for further negotiations.\nThe changing international environment in the 1990s led many analysts to believe that the United States and other nations could enter a new era of restraint in weapons deployments, weapons transfers, and military operations. These hopes were codified in several treaties signed between 1991 and 1996, such as the Strategic Arms Reduction Treaties (START I and START II), the Chemical Weapons Convention, and the Comprehensive Nuclear Test Ban Treaty. Yet, for many, hopes for a new era were clouded by the slow pace of ratification and implementation for many agreements. The 1991 START I Treaty did not enter into force until late 1994; the 1993 START II Treaty never entered into force and was replaced by a new, less detailed Strategic Offensive Reductions Treaty in 2002. The 1996 Comprehensive Test Ban Treaty (CTBT), in spite of widespread international support, failed to win approval from the U.S. Senate in October 1999. Furthermore, India, Pakistan, Iran, and North Korea raised new questions about the viability of the Nuclear Nonproliferation Treaty and its role in stemming nuclear proliferation.\nSome progress did occur in the latter years of the decade. In 1997, the United States and Russia, the two nations with the largest stockpiles of chemical weapons, both ratified the Chemical Weapons Convention. In December 1997, more than 120 nations signed an international agreement banning the use of antipersonnel land mines; however, a number of major nations, including the United States, have so far declined to sign. However, the U.S. Senate's rejection of the CTBT, the Bush Administration's withdrawal from the ABM Treaty in 2002, and the U.S. rejection of a verification protocol for the Biological Weapons Convention led many nations to question the U.S. commitment to the arms control process.\nDuring the Bush Administration, the United States outlined new initiatives in nonproliferation policy that took a far less formal approach, with voluntary guidelines and voluntary participation replacing treaties and multilateral conventions. The Bush Administration also signaled a change in the focus of U.S. nonproliferation policy. Instead of offering its support to international regimes that sought to establish nonproliferation norms that apply to all nations, the Bush Administration turned to arrangements that sought, instead, to prevent proliferation only to those nations and groups that the United States believed could threaten U.S. or international security. In essence, nonproliferation became a tool of antiterrorism policy.\nThe Obama Administration also viewed nonproliferation policy as a tool of antiterrorism policy, and highlighted the importance of keeping nuclear, chemical, and biological weapons away from nonstate actors who might threaten the United States or its allies. But it also viewed nonproliferation as a more general tool of U.S. national security policy. And, where the Bush Administration focused its efforts on denying these weapons to specific nations or groups who might threaten the United States, the Obama Administration adopted the more general goals of establishing and supporting international norms and regimes to control these weapons, regardless of which nations might seek them. For example, in a speech in Moscow in July 2009, President Obama noted that \"the notion that prestige comes from holding these weapons, or that we can protect ourselves by picking and choosing which nations can have these weapons, is an illusion.\" He went on to state that stopping the spread of nuclear weapons \"is not about singling out individual nations—it's about the responsibilities of all nations.\"\nThe Trump Administration has offered some support for existing arms control and nonproliferation tools; it noted, in the 2018 Nuclear Posture Review, that the United States continues to support the goals of the 1968 Nuclear Nonproliferation Treaty and that it would continue to abide by the terms of the 2010 New START Treaty, although it had not decided whether to extend it past 2021. At the same time, the Administration has noted that, in the current international security environment, the United States might be better served by bolstering its military capabilities than by negotiating additional limits or reductions.\nThis report provides an overview of many of the key arms control and nonproliferation agreements and endeavors of the past 40 years. It is divided into three sections. The first describes arms control efforts between the United States and the states of the former Soviet Union, covering both formal, bilateral treaties, and the cooperative threat reduction process. The second section describes multilateral nuclear nonproliferation efforts, covering both formal treaties and less formal accommodations that have been initiated in recent years. The final section reviews treaties and agreements that address chemical, biological, and conventional weapons.\nThe report concludes with several appendices. These provide a list of treaties and agreements that the United States is a party to, a description of the treaty ratification process, and a list of the bilateral and international organizations tasked with implementation of arms control efforts.", "", "The United States and Soviet Union signed their first formal agreements limiting nuclear offensive and defensive weapons in May 1972. The Strategic Arms Limitation Talks, known as SALT, produced two agreements—the Interim Agreement ... on Certain Measures with Respect to the Limitation of Strategic Offensive Arms and the Treaty ... on the Limitation of Anti-Ballistic Missile Systems. These were followed, in 1979, by the Strategic Arms Limitation Treaty, known as SALT II, which sought to codify equal limits on U.S. and Soviet strategic offensive nuclear forces.", "The Interim Agreement on Offensive Arms imposed a freeze on the number of launchers for intercontinental ballistic missiles (ICBMs) and submarine-launched ballistic missiles (SLBMs) that the United States and Soviet Union could deploy. The parties agreed that they would not begin construction of new ICBM launchers after July 1, 1972; at the time the United States had 1,054 ICBM launchers and the Soviet Union had 1,618 ICBM launchers. They also agreed to freeze their number of SLBM launchers and modern ballistic missile submarines, although they could add SLBM launchers if they retired old ICBM launchers. A protocol to the Treaty indicated that the United States could deploy up to 710 SLBM launchers on 44 submarines, and the Soviet Union could deploy up to 950 SLBM launchers on 62 submarines.\nThe inequality in these numbers raised serious concerns both in Congress and in the policy community in Washington. When approving the agreement, Congress adopted a provision, known as the Jackson amendment, that mandated that all future arms control agreements would have to contain equal limits for the United States and Soviet Union.\nThe Interim Agreement was to remain in force for five years, unless the parties replaced it with a more comprehensive agreement limiting strategic offensive weapons. In 1977, both nations agreed to observe the agreement until the completed the SALT II Treaty.", "The United States and Soviet Union completed the SALT II Treaty in June 1979, after seven years of negotiations. During these negotiations, the United States sought limits on quantitative and qualitative changes in Soviet forces. The U.S. negotiating position also reflected the congressional mandate for numerically equal limits on both nations' forces. As a result, the treaty limited each nation to a total of 2,400 ICBM launchers, SLBM launchers, and heavy bombers, with this number declining to 2,250 by January 1, 1981. Within this total, the Treaty contained sublimits for the numbers launchers that could be deployed for ICBMs with multiple independent reentry vehicles (MIRVed ICBMs); MIRVed ICBMs and MIRVed SLBMs; and MIRVed ICBMs, MIRVed SLBMs, MIRVed air-to-surface ballistic missiles (ASBMs), and heavy bombers. The Treaty would not have limited the total number of warheads that could be carried on these delivery vehicles, which was a growing concern with the deployment of large numbers of multiple-warhead missiles, but the nations did agree that they would not increase the numbers of warheads on existing types of missiles and would not test new types of ICBMs with more than 10 warheads and new types of SLBMs with more than 14 warheads. They also agreed to provisions that were designed to limit missile modernization programs, in an effort to restrain qualitative improvements in their strategic forces.\nAlthough it contained equal limits on U.S. and Soviet forces, the SALT II Treaty still proved to be highly controversial. Some analysts argued that the Treaty would fail to curb the arms race because the limits on forces were equal to the numbers already deployed by the United States and Soviet Union; they argued for lower limits and actual reductions. Other analysts argued that the Treaty would allow the Soviet Union to maintain strategic superiority over the United States because the Soviet force of large, land-based ballistic missiles would be able to carry far greater numbers of warheads, even within the equal limits on delivery vehicles, than U.S. ballistic missiles. Some argued that, with this advantage, the Soviet Union would be able to target all U.S. land-based ICBMs in a first strike, which created a \"window of vulnerability\" for the United States. The Treaty's supporters argued that the Soviet advantage in large MIRVed ICBMs was more than offset by the U.S. advantage in SLBM warheads, which could not be destroyed in a first strike and could retaliate against Soviet targets, and the U.S. advantage in heavy bombers.\nThe continuing Soviet build-up of strategic nuclear forces, along with the taking of U.S. hostages in Iran and other challenges to the U.S. international position in the late 1970s, combined with the perceived weaknesses to the Treaty to raise questions about whether the Senate would muster the votes needed to consent to the Treaty's ratification. Shortly after the Soviet Union invaded Afghanistan in December 1979, President Carter withdrew the Treaty from the Senate's consideration.", "The 1972 ABM Treaty permitted the United States and Soviet Union to deploy ABM interceptors at two sites, one centered on the nation's capital and one containing ICBM silo launchers. Each site could contain up to 100 ground-based launchers for ABM interceptor missiles, along with specified radars and sensors. The ABM Treaty also obligated each nation not to develop, test, or deploy ABM systems for the \"defense of the territory of its country\" and not to provide a base for such a defense. It forbade testing and deployment of space-based, sea-based, or air-based ABM systems or components and it imposed a number of qualitative limits on missile defense programs. The Treaty, however, imposed no restrictions on defenses against aircraft, cruise missiles, or theater ballistic missiles.\nIn a Protocol signed in 1974, each side agreed that it would deploy an ABM system at only one site, either around the nation's capital or around an ICBM deployment area. The Soviet Union deployed its site around Moscow; this system has been maintained and upgraded over the years, and remains operational today. The United States deployed its ABM system around ICBM silo launchers located near Grand Forks, ND; it operated this facility briefly in 1974 before closing it down when it proved to be not cost effective.\nThe ABM Treaty was the source of considerable controversy and debate for most of its history. Presidents Reagan, George H. W. Bush, and Clinton all wrestled with the conflicting goals of defending the United States against ballistic missile attack while living within the confines of the ABM Treaty. President George W. Bush resolved this conflict in 2002, when he announced that the United States would withdraw from the ABM Treaty so that it could deploy ballistic missile defenses. The substance of this debate during the Clinton and Bush years is described in more detail below.", "During the election campaign of 1980, and after taking office in January 1981, President Ronald Reagan pledged to restore U.S. military capabilities, in general, and nuclear capabilities, in particular. He planned to expand U.S. nuclear forces and capabilities in an effort to counter the perceived Soviet advantages in nuclear weapons. Initially, at least, he rejected the use of arms control agreements to contain the Soviet threat. However, in 1982, after Congress and many analysts pressed for more diplomatic initiatives, the Reagan Administration outlined negotiating positions to address intermediate-range missiles, long-range strategic weapons, and ballistic missile defenses. These negotiations began to bear fruit in the latter half of President Reagan's second term, with the signing of the Intermediate-Range Nuclear Forces Treaty in 1987. President George H. W. Bush continued to pursue the first Strategic Arms Reduction Treaty (START), with the United States and Soviet Union, signing this Treaty in July 1991. The collapse of the Soviet Union later that year led to calls for deeper reductions in strategic offensive arms. As a result, the United States and Russia signed START II in January 1993, weeks before the end of the Bush Administration.", "In December 1979, NATO decided upon a \"two track\" approach to intermediate-range nuclear forces (INF) in Europe: it would seek negotiations with the Soviets to limit such systems, and at the same time schedule deployments as a spur to such negotiations. Negotiating sessions began in the fall of 1980 and continued until November 1983, when the Soviets left the talks upon deployment of the first U.S. INF systems in Europe. The negotiations resumed in January 1985. At the negotiations, the Reagan Administration initially called for a \"double zero\" option, which would eliminate all short- as well as long-range INF systems, a position at the time viewed by most observers to be unattractive to the Soviets. The negotiations proceeded to discuss possible limits on the systems, with progress slowed by the Soviet refusal to consider limits on its systems in Asia. Nevertheless, significant progress began to occur during the Gorbachev regime. At the Reykjavik summit in October 1986, Gorbachev agreed to include reductions of Soviet INF systems in Asia. Then, in June 1987, the Soviets proposed a global ban on short- and long-range INF systems, which was similar to the U.S. proposal for a double zero. Gorbachev also accepted the U.S. proposal for an intrusive verification regime.\nThe United States and the Soviet Union signed the Treaty on Intermediate-Range Nuclear Forces (INF) on December 8, 1987. The INF Treaty was seen as a significant milestone in arms control because it established an intrusive verification regime and because it eliminated entire classes of weapons that both sides regarded as modern and effective. The United States and Soviet Union agreed to destroy all intermediate-range and shorter-range nuclear-armed ballistic missiles and ground-launched cruise missiles, which are those missiles with a range between 300 and 3,400 miles. The launchers associated with the controlled missiles were also to be destroyed. The signatories agreed that the warheads and guidance systems of the missiles need not be destroyed; they could be used or reconfigured for other systems not controlled by the Treaty.\nThe Soviets agreed to destroy approximately 1,750 missiles and the United States agreed to destroy 846 missiles, establishing a principle that asymmetrical reductions were acceptable in order to achieve a goal of greater stability. On the U.S. side, the principal systems destroyed were the Pershing II ballistic missile and the ground-launched cruise missile (GLCM), both single-warhead systems. On the Soviet side, the principal system was the SS-20 ballistic missile, which carried three warheads. These systems, on both sides, were highly mobile and able to strike such high-value targets as command-and-control centers, staging areas, airfields, depots, and ports. The Soviets also agreed to destroy a range of older nuclear missiles, as well as the mobile, short-range SS-23, a system developed and deployed in the early 1980s. The parties had eliminated all their weapons by May 1991.\nThe verification regime of the INF Treaty permitted on-site inspections of selected missile assembly facilities and all storage centers, deployment zones, and repair, test, and elimination facilities. Although it did not permit \"anywhere, anytime\" inspections, it did allow up to 20 short-notice inspections of sites designated in the Treaty. The two sides agreed to an extensive data exchange, intended to account for all systems covered by the agreement. The Treaty also established a continuous portal monitoring procedure at one assembly facility in each country. Inspections under the INF Treaty continued until May 2001, however, the United States continues to operate its site at Russia's Votkinsk Missile Assembly facility under the terms of the 1991 START Treaty.\nThe INF Treaty returned to the news in 2007. Russia, partly in response to U.S. plans to deploy a missile defense radar in the Czech Republic and interceptor missiles in Poland, stated that it might withdraw from the INF Treaty. Some Russian officials claimed this would allow Russia to deploy missiles with the range needed to threaten the missile defense system, in case it were capable of threatening Russia's strategic nuclear forces. Analysts outside Russia also noted that Russia might be responding to concerns about the growing capabilities of China's missiles, or of those in other countries surrounding Russia.\nDuring the Obama Administration, the United States grew concerned about Russia's testing and development of a new ground-launched cruise missile of INF range. Since 2014, the United States has expressed these concerns in the State Department's annual report on Adherence to and Compliance with Arms Control, Nonproliferation, and Disarmament Agreements and Commitments . This report has stated that the United States has determined that \"the Russian Federation is in violation of its obligations under the [1987 Intermediate-range Nuclear Forces] INF Treaty not to possess, produce, or flight-test a ground-launched cruise missile (GLCM) with a range capability of 500 km to 5,500 km, or to possess or produce launchers of such missiles.\" In the 2018 version of the report, it identified the missile's designation as the 9M729.\nThe United States addressed its concerns about this missile repeatedly with Russia in a number of diplomatic meetings, including in 2016 and 2017 meetings of the Treaty's Special Verification Commission (SVC). Russia first denied that any such cruise missile existed, and after the United States identified the specific missile, Russia denied that it had been tested to INF range. It responded with its own accusations of U.S. noncompliance, noting, particularly, that U.S. missile defense launchers located in Romania could be equipped with offensive ground-launched cruise missiles. The United States has denied this accusation.\nAccording to U.S. officials, Russia began to deploy the new cruise missile in late 2016. The Trump Administration conducted an extensive review of the INF Treaty during 2017 to assess the potential security implications of Russia's violation and to determine how the United States would respond going forward. On December 8, 2017—the 30 th anniversary of date when the Treaty was signed—the Administration announced that the United States would implement an integrated response that included diplomatic, military, and economic measures. This includes establishing a new program in the Pentagon that will fund research into a possible new ground-launched cruise missile. However, in October 2018, then-Secretary of Defense Mattis informed U.S. allies in NATO that the situation had become \"untenable\" because Russia refused to acknowledge and address its violation. On October 20, 2018, President Trump announced that the United States would withdraw from the Treaty, and Secretary of State Pompeo announced that the United States had submitted its formal notice of withdrawal to Russia on February 1, 2019. Russia followed suit by suspending its participation in the Treaty, leading to the near certainty that the Treaty will lapse on August 2, 2019.", "Like INF, START negotiations began in 1982, but stopped between 1983 and 1985 after a Soviet walk-out in response to the U.S. deployment of intermediate-range missiles in Europe. They resumed later in the Reagan Administration, and were concluded in the first Bush Administration. The United States and Soviet Union signed the first Strategic Arms Reduction Treaty (START) on July 31, 1991.", "The demise of the Soviet Union in December 1991 immediately raised questions about the future of the Treaty. At that time, about 70% of the strategic nuclear weapons covered by START were deployed at bases in Russia; the other 30% were deployed in Ukraine, Kazakhstan, and Belarus. Russia initially sought to be the sole successor to the Soviet Union for the Treaty, but the other three republics did not want to cede all responsibility for the Soviet Union's nuclear status and treaty obligations to Russia. In May 1992, the four republics and the United States signed a Protocol that made all four republics parties to the Treaty. At the same time, the leaders of Belarus, Ukraine, and Kazakhstan agreed to eliminate all of their nuclear weapons during the seven-year reduction period outlined in START. They also agreed to sign the Nuclear Non-Proliferation Treaty (NPT) as non-nuclear weapons states.\nThe U.S. Senate gave its consent to the ratification of START on October 1, 1992. The Russian parliament consented to the ratification of START on November 4, 1992, but it stated that Russia would not exchange the instruments of ratification for the Treaty until all three of the other republics adhered to the NPT as non-nuclear states. Kazakhstan completed the ratification process in June 1992 and joined the NPT as a non-nuclear weapon state on February 14, 1994. Belarus approved START and the NPT on February 4, 1993, and formally joined the NPT as a non-nuclear weapon state on July 22, 1993. Ukraine's parliament approved START in November 1993, but its approval was conditioned on Ukraine's retention of some of the weapons based on its territory and the provision of security guarantees by the other nuclear weapons states.\nIn early 1994, after the United States, Russia, and Ukraine agreed that Ukraine should receive compensation and security assurances in exchange for the weapons based on its soil, the parliament removed the conditions from its resolution of ratification. But it still did not approve Ukraine's accession to the NPT. The Ukrainian parliament took this final step on November 16, 1994, after insisting on and apparently receiving additional security assurances from the United States, Russia, and Great Britain. START officially entered into force with the exchange of the instruments of ratification on December 5, 1994.", "START limited long-range nuclear forces—land-based intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers—in the United States and the newly independent states of the former Soviet Union. Each side could deploy up to 6,000 attributed warheads on 1,600 ballistic missiles and bombers. (Some weapons carried on bombers do not count against the Treaty's limits, so each side could deploy 8,000 or 9,000 actual weapons.) Each side could deploy up to 4,900 warheads on ICBMs and SLBMs. Throughout the START negotiations, the United States placed a high priority on reductions in heavy ICBMs because they were thought to be able to threaten a first strike against U.S. ICBMs. Therefore, START also limits each side to 1,540 warheads on \"heavy\" ICBMs, a 50% reduction in the number of warheads deployed on the SS-18 ICBMs in the former Soviet republics.\nSTART did not require the elimination of most of the missiles removed from service. The nations had to eliminate launchers for missiles that exceeded the permitted totals, but, in most cases, missiles could be placed in storage and warheads could either be stored or reused on missiles remaining in the force.\nSTART contained a complex verification regime. Both sides collect most of the information needed to verify compliance with their own satellites and remote sensing equipment—the National Technical Means of Verification (NTM). But the parties also used data exchanges, notifications, and on-site inspections to gather information about forces and activities limited by the Treaty. Taken together, these measures are designed to provide each nation with the ability to deter and detect militarily significant violations. (No verification regime can ensure the detection of all violations. A determined cheater could probably find a way to conceal some types of violations.) Many also believe that the intrusiveness mandated by the START verification regime and the cooperation needed to implement many of these measures built confidence and encouraged openness among the signatories.\nThe United States and Russia completed the reductions in their forces by the designated date of December 5, 2001. All the warheads from 104 SS-18 ICBMs in Kazakhstan were removed and returned to Russia and all the launchers in that nation have been destroyed. Ukraine has destroyed all the SS-19 ICBM and SS-24 ICBM launchers on its territory and returned all the warheads from those missiles to Russia. Belarus had also returned to Russia all 81 SS-25 missiles and warheads based on its territory by late November 1996.", "The START Treaty expired in December 2009. According to the terms of the Treaty, the parties could allow START to lapse, extend it without modification for another five years, or seek to modify the Treaty before extending it for five-year intervals. The United States and Russia began, in 2006, to hold a series of discussions about the future of START, but, through the latter years of the Bush Administration, the two sides held sharply different views on what that future should be. Russian officials believed that the two nations should replace START with a new Treaty that would reduce the numbers of deployed warheads but contain many of the definitions, counting rules, and monitoring provisions of START. The Bush Administration rejected that approach; it noted that the new Moscow Treaty (described below) called for further reductions in offensive nuclear weapons and it argued that many of the detailed provisions in START were no longer needed because the United States and Russia were no longer enemies. The United States suggested that the two sides reaffirm their commitment to the Moscow Treaty, and add to it an informal monitoring regime that would extend some of the monitoring and verification provisions in START. Analysts outside government also suggested that the nations extend the monitoring provisions, at least through 2012, as the Moscow Treaty did not have its own verification regime. Some in the United States, however, objected to this approach because some of the monitoring provisions had begun to impinge on U.S. strategic weapons and missile defense programs.\nThe Obama Administration altered the U.S. approach and decided to negotiate a new Treaty that would replace START (this is discussed in more detail below). The United States and Russia began these discussions in April 2009, but were unable to complete them before START expired on December 5, 2009. As is noted, below, they did complete a New START Treaty in April 2010.", "The United States and Russia signed the second START Treaty, START II, on January 3, 1993, after less than a year of negotiations. The Treaty never entered into force. Its consideration was delayed for several years during the 1990s, but it eventually received approval from both the U.S. Senate and Russian parliament. Nevertheless, it was overcome by events in 2002.", "START II would have limited each side to between 3,000 and 3,500 warheads; reductions initially were to occur by the year 2003 and would have been extended until 2007 if the nations had approved a new Protocol. It would have banned all MIRVed ICBMs and would have limited each side to 1,750 warheads on SLBMs.\nTo comply with these limits the United States would have removed two warheads (a process known as \"downloading\") from each of its 500 3-warhead Minuteman III missiles and eliminated all launchers for its 50 10-warhead MX missiles. The United States also stated that it would reduce its SLBM warheads by eliminating 4 Trident submarines and deploying the missiles on the 14 remaining Trident submarines with 5, rather than 8, warheads. Russia would have eliminated all launchers for its 10-warhead SS-24 missiles and 10-warhead SS-18 missiles. It would also have downloaded to a single warhead 105 6-warhead SS-19 missiles, if it retained those missiles. It would also have eliminated a significant number of ballistic missile submarines, both for budget reasons and to reduce to START II limits. These changes would have brought Russian forces below the 3,500 limit because so many of Russia's warheads are deployed on MIRVed ICBMs. As a result, many Russian officials and Duma members insisted that the United States and Russia negotiate a START III Treaty, with lower warhead numbers, so that Russia would not have to produce hundreds of new missiles to maintain START II levels.\nSTART II implementation would have accomplished the long-standing U.S. objective of eliminating the Soviet SS-18 heavy ICBMs. The Soviet Union and Russia had resisted limits on these missiles in the past. Russia would have achieved its long-standing objective of limiting U.S. SLBM warheads, although the reductions would not have been as great as those for MIRVed ICBMs. The United States had long resisted limits on these missiles, but apparently believed a 50% reduction was a fair trade for the complete elimination of Russia's SS-18 heavy ICBMs.\nSTART II would have relied on the verification regime established by START, with a few new provisions. For example, U.S. inspectors would be allowed to watch Russia pour concrete into the SS-18 silos and to measure the depth of the concrete when Russia converted the silos to hold smaller missiles. In addition, Russian inspectors could have viewed the weapons carriage areas on U.S. heavy bombers to confirm that the number of weapons the bombers are equipped to carry did not exceed the number attributed to that type of bomber.", "Although START II was signed in early January 1993, its full consideration was delayed until START entered into force at the end of 1994. The U.S. Senate further delayed its consideration during a Senate dispute over the future of the Arms Control and Disarmament Agency. The Senate eventually approved ratification of START II, by a vote of 87-4, on January 26, 1996.\nThe Russian Duma also delayed its consideration of START II. Many members of the Duma disapproved of the way the Treaty would affect Russian strategic offensive forces and many objected to the economic costs Russia would bear when implementing the treaty. The United States sought to address the Duma's concerns during 1997, by negotiating a Protocol that would extend the elimination deadlines in START II, and, therefore, reduce the annual costs of implementation, and by agreeing to negotiate a START III Treaty after START II entered into force. But this did not break the deadlock; the Duma again delayed its debate after the United States and Great Britain launched air strikes against Iraq in December 1998. The Treaty's future clouded again after the United States announced its plans in January 1999 to negotiate amendments to the 1972 ABM Treaty, and after NATO forces began their air campaign in Yugoslavia in April 1999.\nPresident Putin offered his support to START II and pressed the Duma for action in early 2000. He succeeded in winning approval for the treaty on April 14 after promising, among other things, that Russia would withdraw from the Treaty if the United States withdrew from the 1972 ABM Treaty. However, the Federal Law on Ratification said the Treaty could not enter into force until the United States approved ratification of several 1997 agreements related to the 1972 ABM Treaty. President Clinton never submitted these to the Senate, for fear they would be defeated. The Bush Administration also never submitted these to the Senate, announcing, instead, in June 2002, that the United States would withdraw from the ABM Treaty. Russia responded by announcing that it had withdrawn from START II and would not implement the Treaty's reductions.", "The arms control process between the United States and Russia essentially stalled during the 1990s, as efforts to ratify and implement START II dragged on. In 1997, in an effort to move the agenda forward, Presidents Clinton and Yeltsin agreed to a framework for a START III Treaty. But these negotiations never produced a Treaty, as the U.S.-Russian arms control agenda came to be dominated by U.S. plans for ballistic missile defenses and issues related to the ABM Treaty. When President Bush took office in 2001, he had little interest in pursuing formal arms control agreements with Russia. He signed the Strategic Offensive Reductions Treaty (known as the Moscow Treaty) in 2002, even though he would have preferred that the United States and Russia each set their force levels without any formal limits.", "Many in Russia argued the United States and Russia should bypass START II and negotiate deeper reductions in nuclear warheads that were more consistent with the levels Russia was likely to retain by the end of the 1990s. The Clinton Administration did not want to set START II aside, in part because it wanted to be sure Russia eliminated its MIRVed ICBMS. However, many in the Administration eventually concluded that Russia would not ratify START II without some assurances that the warhead levels would decline further. So the United States agreed to proceed to START III, but only after START II entered into force; Presidents Clinton and Yeltsin agreed to this timeline in March 1997. The START III framework called for reductions to between 2,000 and 2,500 warheads for strategic offensive nuclear weapons on each side.\nThe United States and Russia held several rounds of discussions on START III, but they did not resolve their differences before the end of the Clinton Administration. President Bush did not pursue the negotiations after taking office in 2001. The demise of these discussions left many issues that had been central to the U.S.-Russian arms control process unresolved. For example, Presidents Clinton and Yeltsin had agreed to explore possible measures for limiting long-range, nuclear-armed, sea-launched cruise missiles and other tactical nuclear weapons in the START III framework. These weapons systems are not limited by existing treaties. Many in Congress have joined analysts outside the government in expressing concerns about the safety and security of Russia's stored nuclear weapons and about the numerical discrepancy between U.S. and Russian nonstrategic nuclear weapons.\nIn addition, when establishing the START III framework, the United States and Russia agreed that they would explore proposals to enhance transparency and promote the irreversibility of warhead reductions. Many analysts viewed this step as critical to lasting, predictable reductions in nuclear weapons. The Bush Administration, however, rejected this approach. Although it pledged to eliminate some warheads removed from deployment, and implemented deep reductions in the U.S. stockpile of stored nuclear weapons, it did not offer any measures promoting the transparency or irreversibility of this process. It wanted to retain U.S. flexibility and the ability to restore warheads to deployed forces. Many critics of the Bush Administration opposed this policy, in part, because they argued it would undermine U.S. efforts to encourage Russia to eliminate warheads that might be at risk of loss or theft.", "As was noted above, the 1972 Anti-Ballistic Missile (ABM) Treaty and 1974 Protocol allowed the United States and Soviet Union to deploy limited defenses against long-range ballistic missiles. The United States completed, then quickly abandoned a treaty-compliant ABM system near Grand Forks, ND, in 1974. The Soviet Union deployed, and Russia continues to operate, a treaty-compliant system around Moscow.", "During the 1980s and early 1990s, the United States conducted research on a variety of ballistic missile defense technologies. In 1983 President Reagan collected and expanded these programs in the Strategic Defense Initiative (SDI), which sought to develop and deploy comprehensive missile defenses that would defend the United States against a deliberate, massive attack from the Soviet Union. The first Bush Administration changed this focus, seeking instead to provide a defense against possible limited missile attacks that might arise from any number of countries throughout the world.\nAfter the Persian Gulf War in 1991, with Iraq's attacks with Scud missiles alerting many to the dangers of missile proliferation and the threats posed by short- and medium-range theater ballistic missiles, the United States began developing several advanced theater missile defense (TMD) systems. At the same time, the Clinton Administration pursued research and technology development for national missile defenses (NMD). The Department of Defense concluded that there was no military requirement for the deployment of such a system after intelligence estimates found that no additional nations (beyond China, Russia, France, and Great Britain) were likely to develop missiles that could threaten the continental United States for at least the next 10-15 years. However, after a congressionally mandated commission raised concerns about the proliferation of long-range missiles in July 1998 and North Korea tested a three-stage missile in August 1998, the Clinton Administration began to consider the deployment of an NMD, with a program structured to achieve that objective in 2005. On September 1, 2000, after disappointing test results, President Clinton announced that he would not authorize construction needed to begin deployment of an NMD.\nPresident George W. Bush altered U.S. policy on missile defenses. His Administration sought to develop a layered defense, with land-based, sea-based, and space-based components, that could protect the United States, its allies, and its forces overseas from short-, medium-, and long-range ballistic missiles. It deployed land-based missile interceptors for defense against long-range missiles in Alaska and California, and pursued the deployment of defenses against shorter-range missiles on naval ships. The Bush Administration declared the interceptors in Alaska to be operational in late 2004, but their status and capabilities remain uncertain.", "The missile defense systems advocated by the Reagan Administration and first Bush Administration would not have been permitted under the ABM Treaty. In 1985, the United States proposed, in negotiations with the Soviet Union, that the two sides replace the ABM Treaty with an agreement that would permit deployment of more extensive defenses. These negotiations failed, and, in 1993, the Clinton Administration altered their focus. It sought a demarcation agreement to clarify the difference between theater missile defenses and strategic missile defenses so the United States could proceed with theater missile defense (TMD) programs without raising questions about compliance with the Treaty.\nThe United States and Russia signed two joint statements on ABM/TMD Demarcation in September 1997. As amendments to the ABM Treaty, these agreements required the advice and consent of the Senate before they entered into force. But President Clinton never submitted them to the Senate, knowing that the required 67 votes would prove elusive as many of the Senators in the Republican majority believed the ABM Treaty, even if modified, would stand in the way of the deployment of robust missile defenses.\nIn February 1999, the United States and Russia began to discuss ABM Treaty modifications that would permit deployment of a U.S. national missile defense (NMD) system. The United States sought to reassure Russia that the planned NMD would not interfere with Russia's strategic nuclear forces and that the United States still viewed the ABM Treaty as central to the U.S.-Russian strategic balance. The Russians were reportedly unconvinced, noting that the United States could expand its system so that it could intercept a significant portion of Russia's forces. They also argued that the United States had overstated the threat from rogue nations. Furthermore, after Russia approved START II, President Putin noted that U.S. withdrawal from the ABM Treaty would lead not only to Russian withdrawal from START II, but also Russian withdrawal from a wider range of arms control agreements. Through the end of the Clinton Administration, Russia refused to consider U.S. proposals for modifications to the ABM Treaty. Some argued that Russia's position reflected its belief that the United States would not withdraw from the ABM Treaty and, therefore, if Russia refused to amend it, the United States would not deploy national missile defenses.\nOfficials in the George W. Bush Administration referred to the ABM Treaty as a relic of the Cold War and the President stated that the United States would need to move beyond the limits in the Treaty to deploy robust missile defenses. In discussions that began in the middle of 2001, the Bush Administration sought to convince Russia to accept a U.S. proposal for the nations to \"set aside\" the Treaty together. The Administration also offered Russia extensive briefings to demonstrate that its missile defense program would not threaten Russia but that the ABM Treaty would interfere with the program. Russia would not agree to set the Treaty aside, and, instead, suggested that the United States identify modifications to the Treaty that would allow it to pursue the more robust testing program contained in its proposals. But, according to some reports, Russia would have insisted on the right to determine whether proposed tests were consistent with the Treaty. The Bush Administration would not accept these conditions and President Bush announced, on December 13, 2001, that the United States would withdraw from the ABM Treaty. This withdrawal took effect on June 13, 2002. Russia's President Putin stated that this action was \"mistaken.\" Russia responded by withdrawing from the START II Treaty, but this action was largely symbolic as the Treaty seemed likely to never enter into force.", "In addition to deploying long-range missile defense interceptors in Alaska and California, the George W. Bush Administration proposed that the United States deploy a third missile defense site in Europe to defend against a potential Iranian missile threat. The system was to include 10 interceptors based in Poland and a radar in the Czech Republic. Russia's President Putin and his successor, Vladimir Medvedev, argued that the proposal would reignite the arms race and upset U.S.-Russian-European security relations. U.S. officials disputed Russia's objections, noting that the interceptors would not be able to intercept Russian missiles or undermine Russia's deterrent capabilities. In mid-2007, Russia offered to cooperate on missile defense, proposing the use of a Russian-leased radar in Azerbaijan, but urging that U.S. facilities not be built in Eastern Europe. President Bush welcomed the idea in principle, but insisted upon the need for the European sites. Despite ongoing discussions over the issue, sharp Russian criticism of the program continued. Medvedev said that Russia might deploy Iskander tactical missiles to Kaliningrad, but later stated that Moscow would not do so if the United States reversed its plan to emplace GMD facilities in Poland and the Czech Republic.\nCongress resisted the Bush Administration's request for funding for this system. It withheld much of the funding, pending at least two successful tests and the completion of agreements with the Polish and Czech governments. It also requested further reports on the need for and capabilities of the proposed system.\nThe Obama Administration reviewed and restructured U.S. plans for a missile defense site in Europe. On September 17, 2009, the Administration announced it would cancel the system proposed by the Bush Administration. Instead, Defense Secretary Gates announced U.S. plans to develop and deploy a regional BMD capability that could be deployed around the world on relatively short notice during crises or as the situation may demand. Gates argued this new capability, based primarily around current BMD sensors and interceptors, would be more responsive and adaptable to growing concern over the direction of Iranian short- and medium-range ballistic missile proliferation. This capability would continue to evolve and expand as the United States moved forward with the concept known as the \"Phased Adaptive Approach.\" As missile threats matured during the next decade, the missile defense system would include interceptors that could respond against more numerous and more sophisticated threats.\nThe United States and its NATO allies have moved forward with the deployment of components of this missile defense system; ships armed with the Aegis missile defense system are deployed at Rota, Spain, and patrol regularly in the Mediterranean. The United States has also deployed missile defense assets on land in Europe, in an effort known as Aegis Ashore. The United States completed deployment of the site in Romania on December 1, 2015, and plans to complete the deployment in Poland in the 2018-2019 time frame. While the United States insists that these systems do not have the range or capability to threaten Russian ballistic missiles, Russia continues to object to these deployments and to insist that it is unwilling to discuss further limits on offensive weapons until the United States agrees to limit the numbers and capabilities of its missile defense systems.\nThe Trump Administration is conducting a new Missile Defense Review that will chart a path forward for U.S. missile defense systems. While this review is likely to continue to support the deployment of missile defenses in Europe and Asia to address regional missile threats from nations such as North Korea and Iran, it may also outline plans to move toward the deployment of more robust sensors, and possibly interceptors, that could address threats from other nations.", "During a summit meeting with President Putin in November 2001, President George W. Bush announced that the United States would reduce its \"operationally deployed\" strategic nuclear warheads to a level between 1,700 and 2,200 warheads during the next decade. He stated that the United States would reduce its forces unilaterally, without signing a formal agreement. President Putin indicated that Russia wanted to use the formal arms control process, emphasizing that the two sides should focus on \"reaching a reliable and verifiable agreement.\" Russia sought a \"legally binding document\" that would provide \"predictability and transparency\" and ensure for the \"irreversibilty of the reduction of nuclear forces.\" The United States wanted to maintain the flexibility to size and structure its nuclear forces in response to its own needs. It preferred a less formal process, such as an exchange of letters and, possibly, new transparency measures that would allow each side to understand the force structure plans of the other side.\nWithin the Bush Administration, Secretary of State Powell supported the conclusion of a \"legally binding\" agreement because he believed it would help President Putin's standing with his domestic critics. He apparently prevailed over the objections of officials in the Pentagon. Although the eventual outcome did differ from the initial approach of the Bush Administration, most observers agree that it did not undermine the fundamental U.S. objectives in the negotiations because the Treaty's provisions would not impede the Bush Administration's plans for U.S. strategic nuclear forces.\nThe United States and Russia signed the Strategic Offensive Reductions Treaty on May 24, 2002. The U.S. Senate gave its advice and consent to the ratification of the Treaty on March 6, 2003. The Russian Duma approved the Federal Law on Ratification for the Treaty on May 14, 2003. The Treaty entered into force on June 1, 2003. The Treaty was due to remain in force until December 31, 2012, after which it could be extended or replaced by another agreement. It lapsed, however, on February 5, 2011, when the New START Treaty (see below) entered into force.", "Article I contained the only limit in the Treaty, stating that the United States and Russia will reduce their \"strategic nuclear warheads\" to between 1,700 and 2,200 warheads by December 31, 2012. The text did not define \"strategic nuclear warheads\" and, therefore, did not indicate whether the parties would count only those warheads that are \"operationally deployed,\" all warheads that would count under the START counting rules, or some other quantity of nuclear warheads. The text did refer to statements made by Presidents Bush and Putin in November and December 2001, when each outlined their own reduction plans. This reference may have indicated that the United States and Russia could each use their own definition when counting strategic nuclear warheads. The Treaty did not limit delivery vehicles or impose sublimits on specific types of weapons systems. Each party could determine its own \"composition and structure of its strategic offensive arms.\"", "The Strategic Offensive Reductions Treaty did not contain any monitoring or verification provisions. The Bush Administration noted that the United States and Russia already collected information about strategic nuclear forces under START I and during implementation of the Nunn-Lugar Cooperative Threat Reduction Program. Some in Congress questioned, however, whether this information would be sufficient for the duration of the Treaty, since START I was due to expire in 2009, three years before the end of implementation under the new Treaty.", "The Strategic Offensive Reductions Treaty also did not contain any limits or restrictions on nonstrategic nuclear weapons. Yet, as was noted above, many Members of Congress had argued that these weapons pose a greater threat to the United States and its allies than strategic nuclear weapons. During hearings before the Senate Foreign Relations Committee, Secretary of Defense Rumsfeld and Secretary of State Powell both agreed that the disposition of nonstrategic nuclear weapons should be on the agenda for future meetings between the United States and Russia, although neither supported a formal arms control regime to limit or contain these weapons. These discussions did not occur, and many analysts outside government have renewed their calls for reductions in nonstrategic nuclear weapons.", "The United States and Russia began to discuss their options for arms control after START in mid-2006. During the Bush Administration, they were unable to agree on a path forward. Neither side wanted to extend START in its original form, as some of the Treaty's provisions had begun to interfere with some military programs on both sides. Russia wanted to replace START with a new Treaty that would further reduce deployed forces while using many of the same definitions and counting rules in START. The United States initially did not want to negotiate a new treaty, but, under the Bush Administration, would have been willing to extend, informally, some of START's monitoring provisions. In 2008, the Bush Administration agreed to conclude a new Treaty, with monitoring provisions attached, but this Treaty would have resembled the far less formal Strategic Offensive Reductions Treaty. In December 2008, the two sides agreed that they wanted to replace START before it expired, but acknowledged that this task would have to be left to negotiations between Russia and the Obama Administration.", "The United States and Russia began to hold talks on a new treaty during the first few months of the Obama Administration. In early March 2009, Secretary of State Hillary Clinton and Russia's Foreign Minister Sergey Lavrov agreed that the two nations would seek to reach an agreement that would replace START by the end of 2009. In April, after their meeting in London prior to the G-20 summit, Presidents Obama and Medvedev endorsed these negotiations and their goal of reaching an agreement by the end of 2009. When Presidents Obama and Medvedev met in Moscow on July 6-7, 2009, they signed a Joint Understanding for the START follow-on Treaty. This statement contained a range for the numerical limits that would be in the Treaty—between 500 and 1,100 of strategic delivery vehicles and between 1,500 and 1,675 for their associated warheads. It also included a list of other issues—such as provisions for calculating the limits, provisions on definitions, and a provision on the relationship between strategic offensive and strategic defensive weapons—that would be addressed in the Treaty.\nSTART expired on December 5, 2009. At the time, the negotiating teams continued to meet in Geneva, but the negotiations concluded shortly before the end of 2009 without reaching a final agreement. The formal talks resumed in late January 2010, and the parties concluded the New START Treaty in early April 2010. Presidents Obama and Medvedev signed the Treaty in Prague on April 8, 2010; it entered into force on February 5, 2011. The two parties completed their required reductions by the treaty's seven-year deadline of February 5, 2018.", "", "The New START Treaty contains three central limits on U.S. and Russian strategic offensive nuclear forces. First, it limits each side to no more than 800 deployed and nondeployed ICBM and SLBM launchers and deployed and nondeployed heavy bombers equipped to carry nuclear armaments. Second, within that total, it limits each side to no more than 700 deployed ICBMs, deployed SLBMs, and deployed heavy bombers equipped to carry nuclear armaments. Third, the treaty limits each side to no more than 1,550 deployed warheads. Deployed warheads include the actual number of warheads carried by deployed ICBMs and SLBMs, and one warhead for each deployed heavy bomber equipped for nuclear armaments.\nAccording to New START's Protocol, a deployed ICBM launcher is \"an ICBM launcher that contains an ICBM and is not an ICBM test launcher, an ICBM training launcher, or an ICBM launcher located at a space launch facility.\" A deployed SLBM launcher is a launcher installed on an operational submarine that contains an SLBM and is not intended for testing or training. A deployed mobile launcher of ICBMs is one that contains an ICBM and is not a mobile test launcher or a mobile launcher of ICBMs located at a space launch facility. These deployed launchers can be based only at ICBM bases. A deployed ICBM or SLBM is one that is contained in a deployed launcher. A deployed heavy bomber is one that is equipped for nuclear armaments but is not a \"test heavy bomber or a heavy bomber located at a repair facility or at a production facility.\" Moreover, a heavy bomber is equipped for nuclear armaments if it is \"equipped for long-range nuclear ALCMs, nuclear air-to-surface missiles, or nuclear bombs.\" Nondeployed launchers are, therefore, those that are used for testing or training, those that are located at space launch facilities, or those that are located at deployment areas or on submarines but do not contain a deployed ICBM or SLBM.\nThe warhead limits in New START differ from those in the original START Treaty. First, the original START Treaty contained several sublimits on warheads attributed to different types of strategic weapons, in part because the United States wanted the treaty to impose specific limits on elements of the Soviet force that were deemed to be \"destabilizing.\" New START, in contrast, contains only a single limit on the aggregate number of deployed warheads. This provides each nation with the freedom to mix their forces as they see fit. This change reflects, in part, a lesser concern with Cold War models of strategic and crisis stability. It also derives from the U.S. desire to maintain flexibility in determining the structure of its own nuclear forces.\nSecond, under START, to calculate the number of warheads that counted against the treaty limits, the United States and Russia counted deployed launchers, assumed launcher contained an operational missile, and assumed each missile carried an \"attributed\" number of warheads. The number of warheads attributed to each missile or bomber was the same for all missiles and bombers of that type. The parties then multiplied these warhead numbers by the number of deployed ballistic missiles and heavy bombers to determine the number of warheads that counted under the treaty's limits. Under New START, the United States and Russia will also count the number of deployed launchers. But they will not calculate the number of deployed warheads by multiplying the number of launchers by a warhead attribution number. Instead, each side will simply declare the total number of warheads deployed across their force. This counting method will provide the United States with the flexibility to reduce its forces without eliminating launchers and to structure its deployed forces to meet evolving operational needs.", "The New START Treaty contains a monitoring and verification regime that resembles the regime in START, in that its text contains detailed definitions of items limited by the treaty; provisions governing the use of NTM to gather data on each side's forces and activities; an extensive database that identifies the numbers, types, and locations of items limited by the treaty; provisions requiring notifications about items limited by the treaty; and inspections allowing the parties to confirm information shared during data exchanges. At the same time, the verification regime has been streamlined to make it less costly and complex than the regime in START. It also has been adjusted to reflect the limits in New START and the current circumstances in the relationship between the United States in Russia. In particular, it focuses on maintaining transparency, cooperation, and openness, as well as on deterring and detecting potential violations.\nUnder New START, the United States and Russia continue to rely on their NTM to collect information about the numbers and locations of their strategic forces. They may also broadcast and exchange telemetry—the data generated during missile flight tests—up to five times each year. They do not need these data to monitor compliance with any particular limits in New START, but the telemetry exchange will provide some transparency into the capabilities of their systems. The parties will also exchange a vast amount of data about those forces, specifying not only their distinguishing characteristics, but also their precise locations and the number of warheads deployed on each deployed delivery vehicle. They will notify each other, and update the database, whenever they move forces between declared facilities. The treaty also requires the parties to display their forces, and allows each side to participate in exhibitions, to confirm information listed in the database.\nUnder New START, each party can conduct up to 18 short-notice, on-site inspections each year; both sides used this full quota of inspections during the three years of the treaty's implementation. The treaty divides these into Type One inspections and Type Two inspections. Each side can conduct up to 10 Type One inspections and up to 8 Type Two inspections. Moreover, during each Type One inspection, the parties will be able to perform two different types of inspection activities—these are essentially equivalent to the data update inspections and reentry vehicle inspections in the original START Treaty. As a result, the 18 short-notice inspections permitted under New START are essentially equivalent to the 28 short-notice inspections permitted under START.", "In the Joint Understanding signed at the Moscow summit in July 2009, the United States and Russia agreed that the new treaty would contain a \"provision on the interrelationship of strategic offensive arms and strategic defensive arms.\" This statement, which appears in the preamble to New START, states that the parties recognize \"the existence of the interrelationship between strategic offensive arms and strategic defensive arms, that this interrelationship will become more important as strategic nuclear arms are reduced, and that current strategic defensive arms do not undermine the viability and effectiveness of the strategic offensive arms of the parties.\" Russia and the United States each issued unilateral statements when they signed New START that clarified their positions on the relationship between New START and missile defenses. Russia indicated that it might exercise its right to withdraw from the treaty if the United States increased the capabilities of its missile defenses \"in such a way that threatens the potential of the strategic nuclear forces of the Russian Federation. \" The United States responded by noting that its \"missile defense systems are not intended to affect the strategic balance with Russia. The United States missile defense systems would be employed to defend the United States against limited missile launches, and to defend its deployed forces, allies and partners against regional threats.\"\nOfficials from the Obama Administration testified to the Senate and repeatedly emphasized that these statements did not impose any obligations on either the United States or Russia and would not result in any limits on U.S. missile defense programs. These statements also did not provide Russia with \"veto power\" over U.S. missile defense systems. Although Russia has said it may withdraw from the treaty if the U.S. missile defenses threaten \"the potential of the strategic nuclear forces of the Russian Federation,\" the United States has no obligation to consult with Russia to confirm that its planned defenses do not cross this threshold. It may develop and deploy whatever defenses it chooses; Russia can then determine, for itself, whether those defenses affect its strategic nuclear forces and whether it thinks the threat to those forces justifies withdrawal from the treaty.", "New START has been in force for eight years. According to the U.S. State Department, the United States and Russia have successfully cooperated in implementing the treaty, and both have completed their required reductions. Russia, however, has raised concerns about the method that the United States has used to eliminate some of its accountable weapons, and has, therefore, been unwilling to agree, unequivocally that the United States is in compliance with the Treaty. According to the latest data exchange, with data current as of September 1, 2018, the United States had met its New START levels with 1,398 warheads on 659 deployed launchers, within a total of 800 deployed and nondeployed launchers. On February 5, 2018, Russia reported that it had met the New START limits with 1,420 warheads on 517 deployed launchers, within a total of 775 deployed and nondeployed launchers. The two sides have shared more than 17,375 notifications, and each has conducted its full allotment of 18 onsite inspections each year.\nNew START is scheduled to expire on February 5, 2021. According to the terms of the Treaty, the parties can extend it for a period not to exceed five years, which would extend it through February 2026. Press reports indicate that President Putin proposed that the parties pursue this extension, but the United States has not yet announced its position on this issue. Administration officials have stated that the possible extension is under review in the interagency process. Some, including General John Hyten, the Chairman of U.S. Strategic Command (STRATCOM), have noted that the limits on Russian forces and the transparency afforded by the verification regime continue to serve U.S. national security interests. However, he and others have noted that Russia appears to be developing new kinds of long-range nuclear delivery systems that may not be captured by the Treaty limits. While some have argued that the United States and Russia should extend New START first, then discuss measures to bring these weapons into the Treaty framework, others have suggested that the United States withhold approval of an extension unless Russia first agrees to count these weapons under the Treaty limits.", "As the Soviet Union collapsed in late 1991, many Members of Congress grew concerned that deteriorating social and economic conditions in Russia would affect control over Soviet weapons of mass destruction. In December 1991, Congress authorized the transfer of $400 million from the FY1992 Department of Defense (DOD) budget to help the republics that inherited the Soviet nuclear and chemical weapons stockpile—Russia, Kazakhstan, Ukraine, and Belarus—transport and dismantle these weapons. This effort grew substantially, with Congress appropriating more than $1 billion each year for nonproliferation and threat reduction programs administered by the Department of Defense (DOD), the State Department, and the Department of Energy (DOE). Funding for programs in the former Soviet Union has declined sharply in recent years, while funding for programs in other nations around the world has increased.", "At its inception, DOD's CTR program sought to provide Russia, Ukraine, Belarus, and Kazakhstan with assistance in the safe and secure transportation, storage, and dismantlement of nuclear weapons. The initial Nunn-Lugar legislation, which established the program in 1991, was tightly focused on the transport, storage, and destruction of weapons of mass destruction. But the focus of CTR funding has changed as the program has evolved. As the work on strategic offensive arms reductions was completed, a growing proportion of the funding focused on securing and eliminating chemical and biological weapons. Over the past decade, the United States has also viewed the CTR program, and other U.S. nonproliferation assistance to the former Soviet states, as a part of its efforts to keep weapons of mass destruction away from terrorists. Moreover, an increasing proportion of CTR funding has been allocated to projects outside the former Soviet Union, as the United States seeks to engage a greater number of nations as partners in the effort to secure vulnerable nuclear materials and other weapons of mass destruction.", "The United States has provided Russia and the other former Soviet states with extensive assistance with projects designed to help with the elimination of nuclear, chemical, and other weapons and their delivery vehicles. These projects helped Russia, Ukraine, Belarus, and Kazakhstan remove warheads, deactivate missiles, and eliminate launch facilities for nuclear weapons covered by the START Treaty. Several projects were also designed to enhance the safety, security, and control over nuclear weapons and fissile materials. The CTR program also funded several projects at storage facilities for nuclear weapons and materials, to improve security and accounting systems and to provide storage space for plutonium removed from nuclear warheads when they are dismantled.\nThe United States and Russia also used CTR funds to construct a chemical weapons destruction facility at Shchuch'ye that was intended to help Russia comply with its obligations under the Chemical Weapons convention and to prevent the loss or theft of Soviet-era chemical weapons by ensuring their safe and secure destruction. The United States also helped install equipment at the destruction facility and to train the operating personnel. Operations at the facility began in March 2009, and it was officially dedicated in late May 2009. At the end of 2012, Russia had used it to eliminate over 3,321.5 metric tons of nerve agent.\nIn the late 1990s, Congress added funds to the CTR budget for biological weapons proliferation prevention; this effort has expanded substantially in recent years. The Soviet Union had reportedly developed the world's largest biological weapons program and reportedly continued to pursue research and development of biological agents in the 1990s, even as the security systems and supporting infrastructure at its facilities began to deteriorate. The United State began to provide Russia with CTR assistance to improve safety and security at its biological weapons sites and to help employ biological weapons scientists during the late 1990s. Much of the work in Russia and other states of the former Soviet Union focused on safe and secure storage and handling of biological pathogen collections.\nBiological proliferation prevention programs in Russia lapsed after the expiration of the memorandum of understanding in June 2013, but the United States has expanded its biological engagement programs beyond the former Soviet Union, and now works globally to secure pathogen collections, train scientists on security issues, and improve disease surveillance. The Obama Administration stated that the goal of the CBE program is to counter the \"threat of state and non-state actors acquiring biological materials and expertise that could be used to develop or deploy a biological weapon.\" In recent years, biological weapons engagement programs have accounted for more than 70% of the CTR budget.", "The United States and Russia initially signed the Memorandum of Understanding, known as the Umbrella Agreement, that governs implementation of CTR projects in 1992. This agreement had an initial seven-year duration and was renewed in 1999 and 2006. It expired in June 2013. The United States and Russia replaced it with a bilateral protocol under the Multilateral Nuclear Environmental Program in the Russian Federation Agreement (MNEPR). Russia's Ministry of Defense no longer participates in these cooperative programs. As a result, many of the CTR projects in Russia have ended, although the two countries will continue to cooperate on some areas of nuclear security. The United States will also continue to fund cooperative engagement programs in countries around the world.", "The Department of Energy has contributed to U.S. threat reduction and nonproliferation assistance to the former Soviet states from the start, when CTR included a small amount of funding for materials control and protection. Since then, the United States and Russia have cooperated, through several programs, to secure and eliminate many of the materials that could help terrorists or rogue nations acquire their own nuclear capabilities. In late 2014, however, Russia indicated that it would no longer cooperate in programs funded by DOE.", "When the United States began to provide Russia with assistance securing its nuclear weapons and materials in the mid-1990s, concerns about the safety and security of nuclear materials located at civilian research facilities were paramount. Through the Material Protection, Control and Accounting (MPC&A) program, the United States has provided upgrades to security at more than 50 facilities in the former Soviet Union to security to reduce the risk of a loss of materials. The United States also funded upgrades at nuclear weapons storage facilities and at research facilities that store nuclear materials. These upgrades include the installation of improved security systems that use modern technology and strict material control and accounting systems. The program has also provided security training for Russian nuclear specialists and helped Russia improve border security and monitoring to discourage and detect illicit efforts to transfer these materials.", "On May 26, 2004, Secretary of Energy Spencer Abraham announced the Global Threat Reduction Initiative (GTRI). Over the years, GTRI has worked to secure, protect, and, in some cases, remove vulnerable nuclear and radiological materials at civilian facilities worldwide, in an effort to mitigate the risk of terrorists obtaining nuclear material that could be used in a nuclear or radiological device. Specifically, GTRI repatriates U.S.- and Russian-origin highly enriched uranium (HEU) spent and fresh nuclear fuel from research reactors located in countries around the world. In some cases, the United States converts those reactors to operate with low-enriched uranium (LEU) fuel, which is not useful for a nuclear weapon. In addition, GTRI installs physical security upgrades at nuclear and radiological sites, and recovers disused and unwanted radioactive sources at home and abroad.\nIn its FY2016 budget request, the Department of Energy outlined a reorganization of its nonproliferation programs. It identified two new program areas—Material Management and Minimization, and Global Material Security—that would incorporate most of the nonproliferation programs described above.", "In the Plutonium Management and Disposition Agreement (PMDA), which was signed in 2000 and amended in 2010, the United States and Russia each agreed to dispose of 34 metric tons of weapons-grade plutonium, and to do so at roughly the same time. The parties agreed they could either convert the plutonium to mixed oxide fuel (MOX) for nuclear power reactors or immobilize it and dispose of it in a way that would preclude its use in nuclear weapons. Russia expressed little interest in the permanent disposal of plutonium, noting that the material could have great value for its civilian power program. The agreement was amended in 2010 to allow Russia to convert its plutonium to MOX fuel. The United States initially outlined a plan to convert almost all its surplus plutonium to MOX fuel. However, partially due to escalating costs of the U.S. MOX facility, both the Obama Administration and Trump Administration have sought to cancel the MOX program and instead pursue a dilute and dispose method. In October 2016, Russia announced that it was suspending its participation in the agreement due to what it called \"hostile actions\" by the United States. Nevertheless, both countries have said they were committed to keeping the 34 tons out of weapons and appear to be continuing their plans for surplus plutonium disposition.", "The United States, Japan, the European Union, and Russia established the International Science and Technology Center (ISTC) in Moscow. A similar center began operating in Kiev in 1993. In subsequent years, several other former Soviet states have joined and other nations have added their financial support. These centers responded to concerns that scientists from Russia's nuclear weapons complex might sell their knowledge to other nations seeking nuclear weapons. Most of these scientists spent fewer than 50 days per year on projects funded by the science centers and continued to work at their primary jobs. The Russian government announced in August 2010 that it would withdraw from the science centers, but other member states reaffirmed their commitment to their countries' participation.\nThe State Department's Export Control and Related Border Security Assistance (EXBS) program helps the former Soviet states and other nations improve their ability to interdict nuclear smuggling and their ability to stop the illicit trafficking of all materials for weapons of mass destruction, along with dual-use goods and technologies. The EXBS program currently has projects underway in more than 30 nations, and is expanding its reach around the globe.", "", "The United States is a leader of an international regime that attempts to limit the spread of nuclear weapons through treaties, export control coordination and enforcement, and U.N. Security Council resolutions. Much of the focus of U.S. nonproliferation policy in the past decade has focused on the cases of Iran and North Korea. Moreover, increased awareness of the need to keep sensitive materials and technologies out of terrorist hands has reinvigorated efforts to control not just nuclear weapons and weapons-usable materials, but also radioactive materials that could be used in radiological dispersal devices. Key issues in this area that the 116 th Congress might consider include preventing Iran from developing nuclear weapons in the long term; North Korea's nuclear weapons program; U.S. civilian nuclear cooperation agreements; and tensions between India and Pakistan as amplified by their nuclear weapons programs, among other issues. Congress may also consider how cooperation under the international nonproliferation regimes can be leveraged to prevent nuclear terrorism.", "The Nuclear Nonproliferation Treaty (NPT), which entered into force in 1970 and was extended indefinitely in 1995, is the centerpiece of the nuclear nonproliferation regime. The treaty currently has 191 states parties. It is complemented by International Atomic Energy Agency (IAEA) safeguards, national export control laws, coordinated export control policies under the Nuclear Suppliers Group, U.N. Security Council resolutions, and ad hoc initiatives. The NPT recognizes five nations (the United States, Russia, France, Britain, and China) as nuclear weapon states—a distinction that is carried over in other parts of the regime and in national laws. Three nations that have not signed the NPT—India, Israel, and Pakistan—possess significant nuclear weapon capabilities. North Korea, which had signed the NPT but withdrew in 2003, is now thought to possess a small number of nuclear weapons. Several countries, including Argentina, Brazil, and South Africa, suspended their nuclear weapons programs and joined the NPT in the 1990s. Others—Ukraine, Belarus, and Kazakhstan—gave up former Soviet weapons on their territories and joined the NPT as non-nuclear weapon states in the 1990s.\nThe Nuclear Nonproliferation Treaty is unique in its near universality—only India, Pakistan, Israel, and North Korea are now outside the treaty. In signing the NPT, non-nuclear weapon states (NNWS) pledge not to acquire nuclear weapons in exchange for a pledge by the nuclear weapon states (NWS) not to assist the development of nuclear weapons by any NNWS and to facilitate \"the fullest possible exchange of equipment, materials and scientific and technological information for the peaceful uses of nuclear energy\" (NPT, Article IV-2). The NWS, defined as any state that tested a nuclear explosive before 1967, also agree to \"pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date and to nuclear disarmament\" (NPT, Article VI). A P-5 Dialogue, led by the United States, meets to coordinate and advance transparency and disarmament steps by all five nuclear weapon states. Many NNWS have often expressed dissatisfaction with the apparent lack of progress toward disarmament.\nNuclear proliferation often has significant regional security repercussions, but there is also a growing realization that the current constellation of proliferation risks may require further improvements to the system itself. Concern has shifted from keeping technology from the states outside the NPT to stemming potential further proliferation, either from those states outside the regime or through black markets, such as the Pakistani A. Q. Khan network.", "The International Atomic Energy Agency was established in 1957 to assist nations in their peaceful nuclear programs (primarily research and nuclear power programs) and to safeguard nuclear materials from these peaceful programs to ensure that they are not diverted to nuclear weapons uses. As of February 2019, it has 171 member states. The IAEA safeguards system relies on data collection, review, and periodic inspections at declared facilities. The IAEA may also inspect other facilities if it suspects undeclared nuclear materials or weapons-related activities are present.\nNon-nuclear weapon NPT members are required to declare and submit all nuclear materials in their possession to regular IAEA inspections to ensure that sensitive nuclear materials and technologies are not diverted from civilian to military purposes. Some states who are not parties to the NPT (India, Israel, Pakistan) are members of the IAEA and allow inspections of some, but not all, of their nuclear activities. The IAEA also provides technical assistance for peaceful applications of nuclear technology for energy, medicine, agriculture, and research.\nAfter the 1991 Persian Gulf War, IAEA inspection teams working with the U.N. Special Commission on Iraq (UNSCOM) revealed an extensive covert nuclear weapons program that had been virtually undetected by annual inspections of Baghdad's declared facilities. This knowledge inspired efforts to strengthen the IAEA's authority to conduct more intrusive inspections of a wider variety of installations, to provide the agency with intelligence information about suspected covert nuclear activities, and to provide the agency with the resources and political support needed to increase confidence in its safeguards system. In 1998, the IAEA adopted an \"Additional Protocol\" that would give the agency greater authority and access to verify nuclear declarations. The protocol enters into force for individual NPT states upon ratification. For the United States, the Senate gave its advice and consent to the protocol on March 31, 2004 (Treaty Doc. 107-7, Senate Executive Report 108-12), and it entered into force on January 6, 2009. As of February 2019, 148 countries have signed an Additional Protocol and 134 have entered into force.\nThe IAEA has had an expanded mission in recent years, increasingly called upon to implement nuclear security-related activities. The IAEA also faces a potential worldwide expansion in the number of nuclear power plants it will need to monitor. Congress may consider U.S. support for the IAEA in light of these challenges. The Department of Energy's National Nuclear Security Administration is studying the future of international safeguards through its Next Generation Safeguards Initiative, which includes how to better share U.S. expertise and new safeguards technologies with the IAEA.", "Several regions of the world have treaties in force that ban the development, deployment, and use of nuclear weapons, known as nuclear-weapon-free zones, including Latin America (Treaty of Tlatelolco), Central Asia (Treaty on a Nuclear-Weapon-Free Zone in Central Asia), the South Pacific (Treaty of Rarotonga), Africa (Treaty of Pelindaba), and Southeast Asia (Treaty of Bangkok). Mongolia has declared itself a single-state Nuclear-Weapon-Free Zone. Also, the Treaty of Antarctica established that Antarctica will be used for peaceful uses only. Nuclear weapons are also banned on the seabed, in outer space, and on the moon by international treaties.\nThe nuclear-weapon-free zones (NWFZs) reinforce the undertakings of NPT non-nuclear-weapon state members and give confidence at a regional level that states are not seeking nuclear weapons. Each treaty has protocols for nuclear weapon states to ratify. These protocols are pledges that the nuclear weapon states will not base nuclear weapons in the zone, test nuclear weapons in the zone, or use or threaten to use nuclear weapons against the countries in the zone. The \"negative security assurance\" provided to members of the zone through the nuclear weapon state protocol is considered one of the key benefits of membership for non-nuclear weapon states.\nThe United States ratified the protocols to the Latin American NWFZ. The Obama Administration, as pledged at the 2010 NPT Review Conference, submitted the Protocols to the Treaties of Pelindaba (Africa) and Rarotonga (South Pacific) to the Senate for advice and consent for ratification on May 2, 2011. The United States signed the protocols at the time these treaties were open for signature (April 11, 1996, for the Treaty of Pelindaba and August 6, 1985, for the Treaty of Rarotonga). The other four nuclear weapon states besides the United States (China, France, Russia, United Kingdom) have ratified those protocols.\nThe Obama Administration has also said it would work with parties to the Southeast Asian Nuclear-Weapon-Free Zone and the Central Asian Nuclear-Weapon-Free Zone to resolve outstanding issues related to the protocols in order to \"sign the protocols to those treaties as soon as possible.\" In August 2011, the United States along with the other four NPT nuclear weapon states began consultations with the SEANWFZ countries regarding the NWS protocols to that agreement. Those consultations reportedly continue.\nThe five nuclear-weapon states announced their signature of the CANWFZ Protocol at the NPT Preparatory Committee meeting in May 2014. The Obama Administration submitted the CANFWZ Protocol to the Senate for its advice and consent to ratification on April 27, 2015. The presidential letter says that the protocol would require \"no changes in U.S. law, policy or practice.\"\nThe five nuclear weapon states recognized Mongolia as a single-state nuclear-weapon-free zone in September 2012 by signing parallel declarations formally acknowledging this status.\nTalks have been held to discuss the establishment of a Middle East WMD-free zone.", "The United States has been a leader in establishing export controls, a key component of the nuclear nonproliferation regime. The Atomic Energy Act of 1954 and Nuclear Nonproliferation Act of 1978 established controls on nuclear exports that gradually gained acceptance by other nuclear suppliers. The Export Administration Act of 1979 (EAA) authorized controls on dual-use technology that could contribute to foreign weapons. Export controls require exporters to get a license before selling sensitive technology to foreign buyers and, in some cases, ban certain exports to some countries.\nInternational nuclear controls are coordinated by an informal association of 48 nuclear exporters called the Nuclear Suppliers Group (NSG), founded in 1975. NSG members voluntarily agree to coordinate exports of civilian nuclear material and nuclear-related equipment and technology to non-nuclear weapon states. The Group agreed to guidelines for export that include lists of materials and equipment that are to be subject to export control. NSG guidelines require that the recipient country offer assurances that the importing items will not be used for a weapons program, will have proper physical security, and will not be transferred to a third party without the permission of the exporter. Recipient countries' nuclear programs must also have full-scope IAEA safeguards. In September 2008, the NSG agreed to exempt India from the full-scope safeguards requirement, although it retained a policy of restraint on the transfer of enrichment and reprocessing equipment. NSG members in June 2011 adopted additional guidelines that define eligibility criteria for the transfer of enrichment and reprocessing technologies to new states.\nThe NSG's effectiveness is limited by its voluntary nature. Countries such as Iraq and Pakistan, and individuals like A. Q. Khan and others, have exploited weaknesses in the national export control systems of many countries to acquire a wide range of nuclear items.", "The Convention on the Physical Protection of Nuclear Material (CPPNM), adopted in 1987, sets international standards for nuclear trade and commerce. The Convention established security requirements for the protection of nuclear materials against terrorism; parties to the treaty agree to report to the IAEA on the disposition of nuclear materials being transported and agree to provide appropriate security during such transport. As of June 2018, 157 countries are party to the CPPNM.\nThe United States had advocated strengthening the treaty by extending controls to domestic security. In July 2005, states parties convened to extend the convention's scope in an amendment that covers not only nuclear material in international transport, but also nuclear material in domestic use, storage, and transport, as well as the protection of nuclear material and facilities from sabotage. President George W. Bush submitted the amendment to the Senate in September 2007 (Treaty Doc. 110-6), and the Senate approved a resolution of advice and consent to ratification on September 25, 2008.\nThe new rules come into effect once two-thirds of the states parties of the convention have ratified the amendment. The United States submitted its instrument of ratification to the Amendment on July 31, 2015. As of July 2018, 118 states had deposited their instruments of ratification, acceptance, or approval of the amendment with the depositary. The amendment entered into force on May 8, 2016, following the deposit of the instrument of ratification by Nicaragua, the 102 nd state.\nCongress needed to also approve implementing legislation before the United States could deposit its instrument of ratification to the Amendment. In the 112 th Congress, the Obama Administration submitted draft implementing legislation to the Senate Judiciary Committee in April 2011. The House passed implementing legislation in the 112 th Congress, but the Senate did not take action. In the 113 th Congress, the House passed the Nuclear Terrorism Conventions Implementation and Safety of Maritime Navigation Act of 2013 ( H.R. 1073 ) in May 2013, which approved implementing legislation for the CPPNM Amendment and the Nuclear Terrorism Convention (as well as agreements on maritime security). The Senate did not take action.\nIn the 114 th Congress, implementing legislation for three nuclear terrorism-related conventions, called the Nuclear Terrorism Conventions Implementation and Safety of Maritime Navigation Act ( H.R. 1056 ), was incorporated into Title VIII of the USA Freedom Act of 2015 ( P.L. 114-23 ), which became law on June 2, 2015 ( H.R. 2048 ).", "The U.N. General Assembly adopted the International Convention for the Suppression of Acts of Nuclear Terrorism (also known as the Nuclear Terrorism Convention) in 2005 after eight years of debating a draft treaty proposed by Russia in 1997. Disputes over the definition of terrorism, omitted in the final version, and over the issue of nuclear weapons use by states, complicated the discussions for many years. After September 11, 2001, states revisited the draft treaty and the necessary compromises were made. The Convention entered into force in July 2007. There were 115 states parties and 115 signatories as of March 2019.\nThe United States has strongly supported the Convention, and President Bush was the second to sign it (after Russian President Putin) on September 14, 2005. The Senate recommended advice and consent on September 25, 2008 (Treaty Doc. 110-4).\nCongress needed to also approve implementing legislation before the United States could deposit its instrument of ratification to the Convention. In the 112 th Congress, the Obama Administration submitted draft legislation to the Senate Judiciary Committee in April 2011. The House passed implementing legislation in the 112 th Congress, but the Senate did not take action. In the 113 th Congress, the House passed the Nuclear Terrorism Conventions Implementation and Safety of Maritime Navigation Act of 2013 ( H.R. 1073 ) in May 2013, which approved implementing legislation for the CPPNM Amendment and the Nuclear Terrorism Convention (as well as agreements on maritime security). The Senate did not take action.\nIn the 114 th Congress, implementing legislation for three conventions— H.R. 1056 , called the Nuclear Terrorism Conventions Implementation and Safety of Maritime Navigation Act—was incorporated into Title VIII of the USA Freedom Act of 2015 ( P.L. 114-23 ), which became law on June 2, 2015. The United States deposited its instrument of ratification with the United Nations on September 30, 2015. The Convention defines offenses related to the unlawful possession and use of radioactive or nuclear material or devices, and the use of or damage to nuclear facilities. The Convention commits each party to adopt measures in its national law to criminalize these offenses and make them punishable. It covers acts by individuals, not states, and does not govern the actions of armed forces during an armed conflict. The Convention also does not address \"the issue of legality of the use or threat of use of nuclear weapons by States.\" It also commits states parties to exchange information and cooperate to \"detect, prevent, suppress and investigate\" those suspected of committing nuclear terrorism, including extraditions.", "The Comprehensive Test Ban Treaty (CTBT) would ban all nuclear explosions. It opened for signature in 1996 but has not yet entered into force. Previous treaties have restricted nuclear testing: the 1963 Limited Test Ban Treaty barred explosions in the atmosphere, in space, and under water, and the 1974 U.S.-U.S.S.R. Threshold Test Ban Treaty and the 1976 Peaceful Nuclear Explosions Treaty limited the explosive yield of underground nuclear explosions. In the debate on the indefinite extension of the NPT in 1995, many non-nuclear weapon states saw the early conclusion of the CTBT as a key step by the nuclear weapon states to comply with their obligations under Article VI of the NPT; critics argue that the United States has taken many steps in support of these obligations. President Clinton signed the CTBT when it opened for signature and submitted the treaty to the Senate for advice and consent in 1997. The Senate rejected the treaty by a vote of 48 for, 51 against, and 1 present, on October 13, 1999.\nParties to the treaty agree \"not to carry out any nuclear weapon test explosion or any other nuclear explosion.\" The treaty establishes a Comprehensive Nuclear-Test-Ban Treaty Organization (CTBTO) of all member states to implement the treaty. The CTBTO oversees a Conference of States Parties, an Executive Council, and a Provisional Technical Secretariat. The latter would operate an International Data Center to process and report on data from an International Monitoring System (IMS), a global network that, when completed, would consist of 321 monitoring stations and 16 laboratories. A Protocol details the monitoring system and inspection procedures. The CTBTO would come into effect if the treaty entered into force; until that time, the CTBTO Preparatory Commission conducts work to prepare for entry into force, such as building and operating the IMS.\nFor the treaty to enter into force, 44 specified states must ratify it. As of April 11, 2018, 184 states had signed the CTBT and 168 had ratified. Of the 44 required nations, 36 have ratified, 3 have not signed (India, North Korea, and Pakistan), and another 5 have not ratified (China, Egypt, Iran, Israel, and the United States). States that have ratified the treaty have held conferences every two years since 1999 to discuss how to accelerate entry into force.\nThe CTBT remains on the calendar of the Senate Foreign Relations Committee. The Bush Administration opposed U.S. ratification of the CTBT but continued a U.S. nuclear test moratorium in effect since October 1992. In contrast, President Obama stated his support for the CTBT. For example, he said, \"As president, I will reach out to the Senate to secure the ratification of the CTBT at the earliest practical date and will then launch a diplomatic effort to bring onboard other states whose ratifications are required for the treaty to enter into force.\" Senator Hillary Clinton, as nominee for Secretary of State, previewed the Administration's approach to securing the Senate's advice and consent: \"A lesson learned from [the treaty's defeat in] 1999 is that we need to ensure that the administration work intensively with Senators so they are fully briefed on key technical issues on which their CTBT votes will depend.... Substantial progress has been made in the last decade in our ability to verify a CTBT and ensure stockpile reliability.\" Critics responded that confidence in the nuclear stockpile requires nuclear testing, and that certain techniques would enable a determined cheater to avoid detection or attribution of its tests.\nThe Obama Administration decided not to submit the treaty to the Senate for its advice and consent before the end of its term. In a March 2016 speech, Ambassador Adam Scheinman said that \"we are realistic about prospects for U.S. ratification and have no set timeframe for pursuing the Senate's advice and consent. Instead, our aim is to re-introduce CTBT to the American public and generate discussion on the treaty and its merits.\"\nThe Trump Administration's February 2018 Nuclear Posture Review said that \"although the United States will not seek ratification of the Comprehensive Nuclear Test Ban treaty, it will continue to support the Comprehensive Nuclear Test Ban Treaty Organization Preparatory Committee as well as the International Monitoring System and International Data Center.\"", "The United States first proposed that the international community negotiate a ban on the production of fissile material (plutonium and enriched uranium) that could be used in nuclear weapons over 50 years ago. Negotiators of the NPT realized that fissile material usable for nuclear weapons could still be produced under the guise of peaceful nuclear activities within the Treaty. Consequently, a fissile material production ban, or FMCT, has remained on the long-term negotiating agenda at the Conference on Disarmament (CD) in Geneva. These negotiations have been largely stalled since 1993. In 1995, the CD agreed to the \"Shannon Mandate,\" which called for an \"non-discriminatory, multilateral and internationally and effectively verifiable treaty banning the production of fissile material for nuclear weapons or other nuclear explosive devices.\"\nThe Bush Administration undertook a comprehensive review of the U.S. position on the FMCT in 2004 and concluded that such a ban would be useful in creating \"an observed norm against the production of fissile material intended for weapons,\" but argued that such a ban is inherently unverifiable. The Bush Administration proposed a draft treaty in May 2006 that contained no verification measures. In contrast, the Obama Administration supported the negotiation of an FMCT with verification measures on the basis of the Shannon mandate. The Trump Administration \"will continue to support the commencement of negotiations on an FMCT,\" Assistant Secretary of State Christopher Ford stated on April 25, 2018.\nOne key issue is whether or not such a treaty would seek to include existing stocks of fissile material. The United States has strongly objected to such an approach, but it is supported by some non-nuclear weapon states. The Shannon Mandate states that it \"does not preclude any delegation\" from proposing the inclusion of existing stocks in the negotiations.\nMany observers believed that negotiations at the CD were preferable to other fora because they would establish a global norm and would not have the appearance of conferring nuclear weapons status upon India, Pakistan, and Israel. As of March 2019, such CD negotiations had not begun. Pakistan, which is widely regarded as the main opponent to the start of negotiations (the CD operates on the basis of consensus), argues that a treaty on fissile material should not only prohibit the production of new material, but should also require states with such material to reduce their stocks.\nA 2012 U.N. General Assembly resolution requested the U.N. Secretary-General to \"establish a group of governmental experts\" to make recommendations on \"possible aspects [of] ... a treaty banning the production of fissile material for nuclear weapons or other nuclear explosive devices.\" The group began its work in March 2014 and completed its work in 2015. The General Assembly resolution called upon the Secretary-General to transmit the group's report to the General Assembly and the CD. A 2016 U.N. General Assembly resolution requested the Secretary-General to establish a \"high-level fissile material cut-off treaty (FMCT) expert preparatory group,\" to \"examine\" the experts' group report, as well as \"consider and make recommendations on substantial elements of a future non-discriminatory, multilateral and internationally and effectively verifiable treaty banning the production of fissile material for nuclear weapons or other nuclear explosive devices, on the basis\" of the Shannon Mandate. The resolution required the group to meet for two-week sessions in both 2017 and 2018. The group presented its final report in June 2018.", "In April 2004, the U.N. Security Council adopted Resolution 1540, which requires all states to \"criminalize proliferation, enact strict export controls and secure all sensitive materials within their borders.\" UNSCR 1540 called on states to enforce effective domestic controls over WMD and WMD-related materials in production, use, storage, and transport; to maintain effective border controls; and to develop national export and trans-shipment controls over such items, all of which should help interdiction efforts. The resolution did not, however, provide any enforcement authority, nor did it specifically mention interdiction. About two-thirds of all states have reported to the U.N. on their efforts to strengthen defenses against WMD trafficking. U.N. Security Council Resolutions 1673 (2006), 1810 (2008), 1977 (2011) (which extended the duration of the 1540 Committee), 2055 (2012), and 2325 (2016) all modified the original resolution. The 2011 resolution extended the committee's mandate for 10 years and called for a review after 5 years and for another before the end of the mandate. The 2012 resolution increased the number of members of the Group of Experts from eight to nine and the 2016 resolution reasserts the importance of full implementation of resolution 1540. The committee is currently focused on identifying assistance projects for states in need and matching donors to improve these WMD controls. Congress may consider how the United States is contributing to this international effort.", "UNGA Resolution A/71/258 ( 2016) called on U.N. member states to negotiate in 2017 a legally binding Treaty on the Prohibition of Nuclear Weapons, also known as the nuclear \"ban treaty.\" Negotiations were held in New York, February 27-March 31, and June 15-July 7, 2017. At the end of the conference, 122 countries voted to approve the treaty. Singapore abstained, and the Netherlands voted against it, citing conflicts between the treaty and the Netherlands' commitments as a member of NATO. Article 1 says that adherents would never \"develop, produce, manufacture, otherwise acquire, possess or stockpile nuclear weapons or other nuclear explosive devices.\" This includes a prohibition on hosting nuclear weapons that are owned or controlled by another state. Nor would states parties transfer, receive control over, or assist others in developing nuclear weapons. They also would not use or threaten to use nuclear weapons or other nuclear explosive devices. Article 7 requires states to give assistance to individuals affected by the use or testing of nuclear weapons and provide for environmental remediation. As of March 2019, the treaty had 22 states parties and 70 signatories.\nTreaty supporters seek to establish an international norm against the possession and use of nuclear weapons, which they argue would strengthen nonproliferation norms and raise awareness of the humanitarian consequences of developing and using nuclear weapons. Some critics of the ban treaty are concerned that a new agreement would undermine the NPT and its verification system of International Atomic Energy Agency (IAEA) safeguards.\nThe Obama and Trump Administrations have opposed a ban treaty and, along with 40 other states, did not participate in negotiations. In response to the conclusion of the treaty, a joint press release from the United States, UK, and French Permanent Representatives said, \"A purported ban on nuclear weapons that does not address the security concerns that continue to make nuclear deterrence necessary cannot result in the elimination of a single nuclear weapon and will not enhance any country's security, nor international peace and security.\"", "", "At their June 2002 summit at Kananaskis, Canada, the Group of Eight (United States, Canada, UK, France, Germany, Italy, Japan [G-7] plus Russia [G-8]) formed the Global Partnership (GP) Against the Spread of Weapons and Materials of Mass Destruction. Under this partnership, the United States, other members of the G-7, and the European Union agreed to raise up to $20 billion over 10 years for projects related to disarmament, nonproliferation, counterterrorism, and nuclear safety. These projects were initially focused on programs in Russia. The Global Partnership spurred Russia to take on a greater portion of the financial burden for these projects, and increased donor funds from countries other than the United States. The United States promised an additional $10 billion in Global Partnership funds in the 2012-2022 time frame, subject to congressional appropriations.\nOver the past decade, the Global Partnership has expanded its donors and its recipients. The G8 Global Partnership Working Group provides a coordinating mechanism for nonproliferation assistance globally, and sub-working groups concentrate on specific nonproliferation areas. Recent priorities have included biological threat reduction and radiological security. Since the 2013 invasion of Crimea, Russia has not participated in the G-8 or the Global Partnership. Canada chaired the G-7 in 2018, and placed priority on the Global Partnership. In the April 2018 communique, the G-7 reaffirmed their \"strong commitment\" to the GP and recognized the importance of continuing this joint effort to reduce WMD threats. France holds the G-7 Presidency in 2019.", "President Bush announced the Proliferation Security Initiative (PSI) on May 31, 2003. This Initiative is primarily a diplomatic tool developed by the United States to gain support for interdicting shipments of weapons of mass destruction-related (WMD) equipment and materials. Through the PSI, the Bush Administration sought to \"create a web of counterproliferation partnerships through which proliferators will have difficulty carrying out their trade in WMD and missile-related technology.\" The states involved in PSI have agreed to review their national legal authorities for interdiction, provide consent for other states to board and search their own flag vessels, and conclude ship-boarding agreements. The Proliferation Security Initiative has no budget, no formal offices supporting it, no international secretariat, and no formal mechanism for measuring its effectiveness (like a database of cases). To many, these attributes are positive, allowing the United States to respond swiftly to changing developments. Others question whether the international community can sustain this effort over the longer term. Obama Administration officials have pledged to \"institutionalize\" PSI, although how they will carry this out is not yet clear.\nAs of April 2018, 105 countries have committed formally to PSI participation. Sixteen \"core\" nations have pledged their cooperation in interdicting shipments of WMD materials, agreeing in Paris in 2003 on a set of interdiction principles. The 9/11 Commission Act of 2007 recommended that PSI be expanded and coordination within the U.S. government improved. The United States has prioritized the conclusion of ship-boarding agreements with key states that have high volumes of international shipping. The United States has signed 11 agreements with Antigua and Barbuda, the Bahamas, Belize, Croatia, Cyprus, Liberia, Malta, the Marshall Islands, Mongolia, Panama, and Saint Vincent and the Grenadines.\nSince PSI is an activity rather than an organization, and has no budget or internal U.S. government organization, it may be difficult for Congress to track PSI's progress. Several intelligence resource issues may be of interest to Congress, including whether intelligence information is good enough for effective implementation and whether intelligence-sharing requirements have been established with non-NATO allies. Another issue may be how PSI is coordinated with other federal interdiction-related programs, like export control assistance. Reporting and coordination requirements now in public law may result in more information and better interagency coordination than in the past.", "In July 2006, Russia and the United States announced the creation of the Global Initiative to Combat Nuclear Terrorism before the G-8 Summit in St. Petersburg. Like PSI, this initiative is nonbinding, and requires agreement on a statement of principles. Thirteen nations—Australia, Canada, China, France, Germany, Italy, Japan, Kazakhstan, Morocco, Turkey, the United Kingdom, the United States, and Russia—endorsed a Statement of Principles at the initiative's first meeting in October 2006. The International Atomic Energy Agency (IAEA), European Union (EU), Interpol, U.N. Office on Drugs and Crime (UNODC), and the United Nations Interregional Crime and Justice Research Institute (UNICRI) have observer status. As of April 2018, 88 states have agreed to the statement of principles and are Global Initiative partner nations.\nU.S. officials have described the Initiative as a \"flexible framework\" to prevent, detect, and respond to the threat of nuclear terrorism. It is meant to enhance information sharing and build capacity worldwide. The Statement of Principles pledges to improve each nation's ability to secure radioactive and nuclear material, prevent illicit trafficking by improving detection of such material, respond to a terrorist attack, prevent safe haven to potential nuclear terrorists and financial resources, and ensure liability for acts of nuclear terrorism. Participating states share a common goal to improve national capabilities to combat nuclear terrorism by sharing best practices through multinational exercises and expert level meetings. Without dues or a secretariat, actions under the Initiative will take legal guidance from the International Convention on the Suppression of Acts of Nuclear Terrorism, the Convention on the Physical Protection of Nuclear Materials, and U.N. Security Council Resolutions 1540 and 1373.\nGlobal Initiative partner nations periodically hold exercises and workshops to improve coordination and exchange best practices. These are the primary activities held under the initiative. The Global Initiative does not have program funding of its own in the U.S. budget, and therefore Congress may consider whether its goals can be achieved within these constraints.", "Other efforts—such as economic, military, or security assistance—may also help slow the proliferation of nuclear weapons. These cooperative measures have been effective in some cases (South Korea, Taiwan, Belarus, Kazakhstan, Ukraine), but failed in others (Iraq, Israel, Pakistan). Some favor greater use of sanctions against countries that violate international nonproliferation standards, while others view sanctions as self-defeating. Most observers conclude that a mix of positive and negative incentives, including diplomacy to address underlying regional security problems, provides the best opportunity for controlling the spread of nuclear weapons. However, when diplomacy fails, some policymakers have argued that military measures may be necessary to attack nuclear and other weapons of mass destruction and related facilities in states hostile to the United States or its allies. For example, the Bush Administration claimed that the overthrow of the Saddam Hussein regime in Iraq was justified, in part, on the basis of claims that Iraq possessed chemical and biological weapons and might resume efforts to develop nuclear weapons. As developments revealed, however, accurate intelligence is a key component of both diplomatic and military approaches to nonproliferation.", "The international community has concluded a number of arms control agreements, conventions, and arrangements that affect non-nuclear weapons. Two of these, the Conventional Armed Forces in Europe Treaty (CFE) and the Open Skies Treaty, were a part of the late-Cold War effort to enhance stability and predictability in Europe. Others seek to control the spread of technologies that might contribute to developing conventional or unconventional weapons programs. Finally, several seek to ban whole classes of weapons through international conventions.", "", "In late 1990, 22 members of NATO and the Warsaw Pact signed the Conventional Armed Forces in Europe (CFE) Treaty, agreeing to limit NATO and Warsaw Pact non-nuclear forces in an area from the Atlantic Ocean to the Ural Mountains. The CFE treaty did not anticipate the dissolution of the Soviet Union and the Warsaw Pact. Consequently, the participants signed the so-called \"Tashkent Agreement\" in May 1992, allocating responsibility for the Soviet Union's Treaty-Limited items of Equipment (TLEs) among Azerbaijan, Armenia, Belarus, Kazakhstan, Moldova, Russia, Ukraine, and Georgia. It also established equipment ceilings for each nation and the implied responsibility for the destruction/transfer of equipment necessary to meet these national ceilings. In 1999, the CFE Adaptation Agreement was signed to further adjust to the dissolution of the Warsaw Pact and the expansion of NATO. As discussed below, this agreement has not entered into force pending its ratification by NATO members, and Russia has suspended its participation in the CFE Treaty.", "CFE placed alliance-wide, regional (zonal), and national ceilings on specific major items of military equipment. It sought to promote stability not only by reducing armaments, but also by reducing the possibility of surprise attack by preventing large concentrations of forces. The CFE treaty also provides for (1) very detailed data exchanges on equipment, force structure, and training maneuvers; (2) specific procedures for the destruction or redistribution of excess equipment; and (3) verification of compliance through on-site inspections. Its implementation has resulted in an unprecedented reduction of conventional arms in Europe, with over 50,000 (TLEs) removed or destroyed; almost all agree it has achieved most of its initial objectives.\nUnder the CFE treaty all equipment reductions needed to comply with overall, national, and zonal ceilings were to have been completed by November 1995. As this deadline approached, it was evident that Russia would not meet those requirements, particularly in the so-called \"flank zones,\" which include the Leningrad Military District in the north, and more importantly, the North Caucasus Military District in the south. The outbreak of armed ethnic conflicts in and around the Caucasus, most notably in Chechnya, led Russia to claim it needed to deploy equipment in excess of treaty limits in that zone. Russia placed this claim in the context of broader assertions that some CFE provisions reflected Cold War assumptions and did not fairly address its new national security concerns. Further, it argued that economic hardship was making the movement of forces unaffordable in some cases.\nTo address these concerns, the CFE parties negotiated a Flank Agreement, in early 1996. This agreement removed several Russian (and one Ukrainian) administrative districts from the old \"flank zone,\" thus permitting existing flank equipment ceilings to apply to a smaller area. To provide some counterbalance to these adjustments, reporting requirements were enhanced, inspection rights in the zone increased, and district ceilings were placed on armored combat vehicles to prevent their concentration.", "The 1996 CFE Review Conference opened negotiations to modify the treaty to account for the absence of the USSR and the Warsaw Pact, and the expansion of NATO into the Czech Republic, Poland, and Hungary. Most CFE signatories did not want to completely renegotiate the treaty. Russia, however, sought broader revisions, and, ironically, it sought to maintain the alliance-wide equipment ceilings. An alliance-wide cap on NATO would presumably force adjustments of national holdings as the NATO alliance expanded; such adjustments probably would not favor new member nations close to Russia's borders. The CFE parties did not adopt Russia's position and Russia ultimately agreed to a largely NATO-drafted document. This agreement called for, among other things, lower equipment levels throughout the \"Atlantic to the Urals\" area; enhanced verification procedures; and the replacement of NATO-Warsaw Pact \"bloc to bloc\" ceilings with national limits on all categories of TLEs. It also stated that the Flank Agreement was to remain in effect. The Adaptation Agreement reiterates that NATO has \"no plan, no intention, and no reason\" to deploy nuclear weapons on new members' territory; and seeks to improve new members' defensive capabilities through interoperability and capability for reinforcement, rather than by stationing additional combat forces on new members' territory. Russia's most serious focus has been, however, on NATO enlargement and how CFE could adapt to mitigate what many Russians see as an encroaching threat. Russia has called for the new members of NATO, particularly the Baltic states of Latvia, Lithuania, and Estonia, to become CFE state parties. These countries have indicated a willingness to join, however, they cannot do so until the Adaptation Agreement is ratified and the new CFE regime comes into force.\nAt the Istanbul Summit in 1999, where the Adaptation Agreement was concluded, Russia undertook the so-called Istanbul Commitments to remove its troops from both the Republic of Georgia and the \"breakaway\" province of Transdniestra in Moldova. Though not part of the CFE Adaptation Agreement document, NATO members considered Russian fulfillment of these commitments a prerequisite for the ratification of the Agreement. Consequently, of the CFE signatories only Russia, Belarus, Ukraine, and Kazakhstan ratified the adapted treaty.", "In past compliance reports, the State Department asserted that Russian equipment holdings \"continue to exceed most of the legally binding limits for both the original and revised flank zones.\" It also cited Russia for relatively minor reporting violations and for its failure to complete withdrawals of its troops from Georgia and Moldova. It also cited Armenia, Azerbaijan, Belarus, and Ukraine for noncompliance. Armenia and Azerbaijan, engaged in a conflict over the Nagorno-Karabakh territory, have not completed equipment reductions; nor provided complete equipment declarations; nor provided timely notification of new equipment acquisition. Belarus was also cited for questionable equipment declarations and its refusal to allow inspectors access to an equipment storage site. The State Department deems Ukraine to have substantially complied with CFE requirements, but notes that it retained several hundred equipment items in excess of treaty limits. The State Department has raised significant issues with Russia's compliance, particularly in the years since Russia suspended its participation in the treaty.", "On April 26, 2007, Russian President Putin announced a \"moratorium\" on Russian CFE compliance, pointing to, among other things, the NATO nations' not having ratified the treaty as adapted. Subsequently, in statements to the press and diplomatic conferences, Russian officials elucidated the Russian position and its concerns. Among the major points are the following:\nDuring its CFE \"moratorium\" Russia will not allow CFE inspections nor will it report on its military movements. The Istanbul Commitments regarding troop withdrawals in Georgia and Moldova are not an integral part of the CFE Adaptation Agreement document, and consequently not legally binding and should not stand in the way of NATO members' ratification of the Agreement. The Baltic States and Slovakia are not bound by the CFE and their NATO membership, coupled with the new U.S. basing agreements with Poland, Bulgaria, and Romania, constitute an unacceptable encroachment on Russian national security. If the NATO nations do not ratify the CFE Adaptation Agreement within a year, Russia will consider complete withdrawal from the treaty.\nRussian officials, military leaders, and political commentators increasingly referred to the CFE treaty as a \"Cold War agreement,\" which no longer reflected the realities of the European security environment. Russian military officials' consultations at NATO Headquarters on May 10 brought no softening of the Russian position. A Russian request to the Organization for Security and Cooperation in Europe for a special conference of CFE signatories in June was granted. The conference failed to resolve any of the outstanding issues, and the State Parties were unable to find sufficient common ground to issue a final joint statement.\nThe European and U.S. governments reacted with some surprise at the harshness of Russian statements, and urged Russia to address its concerns within the consultative framework of the treaty rather than pursue a withdrawal. However, then-Secretary of State Rice and Secretary of Defense Gates, in conversations with President Putin and Russian Foreign Minister Lavrov, and the Assistant Secretary of State for European and Eurasian Affairs, in testimony before the U.S. Commission on Security and Cooperation in Europe, reiterated the U.S. position that ratification of the CFE Adaptation Agreement still remained contingent upon Russia fulfilling its commitment to withdraw its military forces from Georgia and Moldova.\nOn November 30, 2007, President Putin signed legislation from the Duma that suspended Russian compliance with CFE, effective December 12, 2007. This action came during the Madrid OSCE summit meeting and evoked an expression of regret on the part of NATO officials, who noted that Russia's military posture would be under discussion at the NATO foreign ministers meeting in December. Under Secretary of State Nicholas Burns characterized the Russian action as a \"mistake\" and urged Russia to negotiate its concerns within the CFE framework.\nRussian officials emphasized that this action was not a withdrawal from the treaty, and that they were willing to participate in further discussions if they perceived a greater willingness on the part of the NATO allies to address their concerns. However, in recent years, it has become clear that Russia does not intend to return to the CFE Treaty; it would prefer the negotiation of a new agreement that reflected the new security environment in Europe. Moreover, in March 2015, Russia suspended its participation in the Joint Consultative Group of the CFE Treaty, leaving little room for continued dialogue or cooperation.\nRussian officials indicated, in 2007, that Russia did not plan to conduct any significant redeployment of forces outside the treaty limits. However, in August 2008, Russia sent military forces into Georgia without the consent of the Georgian government and recognized two provinces of Georgia, Abkhazia and South Ossetia, as independent states. U.S. officials have noted that these steps are inconsistent with Russia's obligation under the CFE Treaty \"to refrain ... from the threat or use of force against the territorial integrity or political independence of any State.\" In addition, because Russia has suspended its participation in the treaty, it has not allowed any on-site inspections and has not provided any data mandated by the treaty.\nSome observers, and Russian spokesmen, portrayed the Russian moves regarding CFE as an asymmetrical response to the Bush Administration's proposed deployment of a U.S. ground-based missile defense system in Poland and the Czech Republic. Others, including Chief of the Russian General Staff Baluyevsky, discounted a specific linkage, seeing the missile defense controversy as merely one element of a more broadly ranged dissatisfaction with changes in the European security environment, which, from the Russian perspective, have favored the NATO allies.", "In November 2011, the United States announced that it would stop implementing its data exchange obligations under the CFE Treaty with respect to Russia. The United States would continue to share data with other treaty partners, and would not exceed the numerical limits on conventional armaments and equipment established by the treaty. But it would withhold data from Russia because Russia has refused to accept inspections and ceased to provide information to other CFE Treaty parties since its 2007 decision.\nThe U.S. State Department, in its statement on the treaty, indicated that the United States remained committed to revitalizing conventional arms control in Europe. It also indicated that, in order to increase transparency and promote stability in the region, the United States would voluntarily inform Russia of any significant change in the U.S. force posture in Europe.", "Open Skies was originally proposed by President Eisenhower in 1955. In the years before satellites began to collect intelligence data, aerial overflights were seen as a way to gain information needed for both intelligence and confidence-building purposes. The Soviet Union rejected President Eisenhower's proposal because it considered the overflights equal to espionage.\nPresident George H. W. Bush revived the Open Skies proposal in May 1989. By this time, both the United States and Soviet Union employed satellites and remote sensors for intelligence collection, so aircraft overflights would add little for that objective. But, at the time when Europe was emerging from the East-West divide of the Cold War, the United States supported increased transparency throughout Europe as a way to reduce the chances of military confrontation and to build confidence among the participants.\nOn March 24, 1992, the United States, Canada, and 22 European nations signed the Treaty on Open Skies. The U.S. Senate gave its advice and consent to the ratification of the Open Skies Treaty in August 1993, but Russia and Belarus delayed their ratification until May 2001. The Treaty entered into force on January 1, 2002. It currently has 34 participating member states that have conducted more than 1,000 observation flights since the treaty entered into force.\nUnder the Open Skies Treaty, the parties agreed to permit unarmed aircraft to conduct observation flights over their territories. Although the flights often focus on military activities, the information they gather was not intended to be used to verify compliance with limits in other arms control agreements. Instead, Open Skies is designed as a confidence-building measure, to promote openness and enhance mutual understanding about military activities. It was designed to allow all nations, including those without access to satellites, to collect information on military forces and activities of other parties to the treaty and to gain an improved understanding of military activities in other nations. Overflights may provide early signs of efforts to build up military forces or, conversely, assurances that an adversary or neighbor is not preparing its military for a possible conflict. In addition, in recent years, it has helped nations in Europe observe and monitor Russian forces in areas near its border with Ukraine, where Russian forces are supporting an insurgency.", "The parties to the Open Skies Treaty have agreed to make all of their territory accessible to overflights by unarmed fixed wing observation aircraft. They can restrict flights over areas, such as nuclear power plants, where safety is a concern, but they cannot impede or prohibit flights over any area, including military installations that are considered secret or otherwise off-limits. In most cases, the nation conducting the observation flight will provide the aircraft and sensors for the flight. However, Russia insisted that the Treaty permit the observed country to provide the aircraft if it chose to do so. Nations can also team up to conduct overflights to share the costs of the effort or use aircraft and sensor suites provided by other nations. Each nation is assigned a quota of overflights that it can conduct and must be willing to receive each year. The quota is determined, generally, by the size of the nation's territory. For the United States, this quota is equal to 42 observation flights per year.\nThe treaty permits the nations to use several types of sensors—including photographic cameras, infrared cameras, and synthetic aperture radars—during their observation flights. The permitted equipment allows the nations to collect basic information on military forces and activities, but it is not intended to provide them with detailed technical intelligence. For example, the resolution on the sensors would allow the nations to identify vehicles and distinguish between tanks and trucks, but probably will not allow them to tell one type of tank from another. Each observation flight produces two sets of data—one for the observing nation and one for the observed nation. This allows the nation under observation to know what information was collected during the flight. Other parties to the treaty can purchase copies of the data, so all parties can share in the information collected during all flights. Each nation is responsible for its own analysis of the data.\nThe participants to the treaty have revisited the agreement's list of permitted sensors as technology has moved forward. For example, the permitted cameras use film that is no longer available, and parts that are no longer supported by most manufacturers, leading several countries to pursue a transition to digital cameras. Russia, in particular, has petitioned the Open Skies Consultative Commission to use digital cameras in flights over the United States. Russia has also asked the Open Skies Consultative Commission for permission to use high-powered digital cameras on flights over the United States. The capabilities of these cameras are within the scope permitted by the treaty and they use commercially available, unclassified technology. Russia already uses them on flights over Europe. However, some officials in the Pentagon and U.S. intelligence community have expressed concern about the quality of data that Russia may collect with these cameras, noting that the information could help Russia fill in gaps in its satellite surveillance capabilities.", "Although several of the participating nations conducted practice missions in the years before the Treaty entered into force, the first official overflight mission occurred in 2002. The parties conduct approximately 100 observation flights each year. In recent years, the United States has received 4-9 observation flights from Russia and has conducted 14-16 flights over Russia each year, although there were no flights in 2018. The United States also, occasionally, uses its open skies aircraft to monitor natural disasters, such as the recent earthquake in Haiti. It has also joined with Ukraine and other participants to conduct flights over Ukraine that can monitor Russian military forces across the border in Russia.\nIn recent years, the United States has raised concerns about Russia's compliance with the Open Skies Treaty. For example, according to the U.S. State Department's annual report on compliance with arms control agreements, Russia has refused access for Open Skies observation over Chechnya and nearby areas of southwestern Russia. It has also limited access to a region over Moscow, and along the border of Russia with the Georgian regions of South Ossetia and Abkhazia. Moreover, according to the State Department, Russia has failed to provide priority flight clearance for Open Skies flights on a few occasions. The United States has responded to limitations imposed by Russia by restricting Russian flights over the United States. In late 2017, it limited the length of flights over Hawaii and removed access to two U.S. air force bases the Russians used to overnight during their missions over the United States. In 2018, the United States also blocked approval of Russia's use of new cameras on its Open Skies Aircraft, although this decision was quickly reversed and flights have resumed in 2019.", "The United States, Canada, France, Germany, Italy, Japan, and the United Kingdom established the Missile Technology Control Regime (MTCR) on April 16, 1987. Designed to slow the proliferation of ballistic and cruise missiles, rockets, and unmanned air vehicles (UAV) capable of delivering weapons of mass destruction, the MTCR is an informal, voluntary arrangement in which participants agree to adhere to common export policy guidelines applied to an \"annex\" that lists controlled items. Partner-countries adopt the guidelines as national policy and are responsible for restraining their own missile-related transfers. In addition, partners regularly exchange information on relevant export licensing issues, including denials of technology transfers. The MTCR has neither an independent means to verify whether states are adhering to its guidelines nor a mechanism to penalize states if they violate them.\nThe MTCR is based on the premise that foreign acquisition or development of delivery systems can be delayed and made more difficult and expensive if major producers restrict exports. Analysts credit the MTCR with slowing missile development in Brazil and India, blocking a cooperative missile program of Argentina, Egypt, and Iraq, and eliminating missile programs in South Africa and Hungary. Moreover, partner countries have tightened their export control laws and procedures, and several have taken legal action against alleged missile-technology smugglers. On the other hand, some analysts note that the MTCR does not regulate countries' acquisition or production of missiles and cannot prevent nonpartners from exporting missiles and technology. It has also been difficult to restrain exports of ballistic and cruise missile technology from some partners—Russia has exported technology to Iran and Great Britain has done so to the United Arab Emirates. In addition, many analysts have argued that advances in missile-related technology will challenge the MTCR's future ability to check missile proliferation. Analysts and experts in the international community have also discussed the possibility that the \"supply side\" approach of the MTCR has outlived its usefulness and that a \"demand side\" approach to proliferation, on a regional or global basis, might prove more effective.", "Since 1987, the number of MTCR partners has grown from 7 to 35, with India joining the regime in 2016. Several nonpartners, including China, Israel, Romania, Slovakia, and India, have said they will restrict their transfers of missile equipment and technology according to the MTCR. Membership in the regime is decided by consensus. According to former MTCR Chairman Per Fischer, \"[p]otential members are reviewed on a case-by case basis, and decisions regarding applications are based on the effectiveness of a state's export controls … its potential contribution to the regime and its proliferation record.\" The United States supports new requests for membership to the regime only if the country in question agrees not to develop or acquire missiles (excluding space launch vehicles) that exceed MTCR guidelines.", "The MTCR guidelines call on each partner country to exercise restraint when considering transfers of equipment or technology, as well as \"intangible\" transfers, that would provide, or help a recipient country build, a missile capable of delivering a 500 kilogram (1,100 pound) warhead to a range of 300 kilometers (186 miles) or more. The 500 kilogram weight threshold was intended to limit transfers of missiles that could carry a relatively crude nuclear warhead. A 1993 addition to the guidelines calls for particular restraint in the export of any missiles or related technology if the nation controlling the export judges that the missiles are intended to be used for the delivery of weapons of mass destruction (nuclear, chemical, or biological). Thus some missiles with warheads weighing less than 500 kilograms also fall under MTCR guidelines. From time to time, regime partners update the MTCR guidelines and annex.\nThe MTCR annex contains two categories of controlled items. Category I items are the most sensitive. There is \"a strong presumption to deny such transfers,\" according to the MTCR guidelines. Regime partners have greater flexibility in exports of Category II items.\nCategory I items include complete rocket systems (including ballistic missiles, space launch vehicles, and sounding rockets), UAV systems (including cruise missiles systems, target and reconnaissance drones), production facilities for such systems, and major subsystems (including rocket stages, reentry vehicles, rocket engines, guidance systems, and warhead mechanisms). Transfers of Category I production facilities are not to be authorized. Category II items are other less sensitive and dual-use missile-related components that could be used to develop a Category I system, and complete missiles and major subsystems of missiles capable of delivering a payload of any size to a range of 300 km.", "The Hague Code of Conduct Against Ballistic Missile Proliferation (HCOC) was inaugurated on November 25, 2002. The HCOC is not a treaty but instead a set of \"fundamental behavioral norms and a framework for cooperation to address missile proliferation.\" It focuses on the possession of ballistic missiles, as a complement to the supply-side-oriented MTCR. Subscribing states have held regular conferences since the code came into effect.\nThe code intends to \"prevent and curb the proliferation of Ballistic Missile systems capable of delivering weapons of mass destruction.\" It calls on subscribing states \"to exercise maximum possible restraint in the development, testing and deployment of Ballistic Missiles capable of delivering weapons of mass destruction [WMD], including, where possible, to reduce national holdings of such missiles.\" Subscribing states also agree not to assist ballistic missile programs in countries suspected of developing WMD. The HCOC also calls for subscribing states to \"exercise the necessary vigilance\" in assisting other countries' space-launch programs, which could serve as covers for ballistic missile programs.\nAdditionally, subscribing states \"resolve to implement\" several transparency measures, such as producing annual declarations that provide outlines of their ballistic missile policies, as well as \"information on the number and generic class\" of such missiles launched during the preceding year. The code also calls on subscribing states to provide similar annual declarations regarding their \"expendable Space Launch Vehicle\" programs. Furthermore, the HCOC calls on states to \"exchange pre-launch notifications on their Ballistic Missile and Space Launch Vehicle launches and test flights.\" Signatories are required to provide such notifications to Austria, which serves as the Immediate Central Contact and Executive Secretariat for the HCOC. The United States and Russia each provide such notifications and the annual declarations described above.", "In July 1996, 33 nations approved the Wassenaar Arrangement (formally titled the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies) on export controls for conventional arms and dual-use goods and technologies. This agreement replaces the Coordinating Committee for Multilateral Export Controls (CoCom)—the Cold War organization that controlled sensitive exports of technologies to Communist nations.\nAccording to its Guidelines and Procedures, the Wassenaar Arrangement is not formally targeted at \"any state or group of states.\" But it is \"intended to enhance co-operation to prevent the acquisition of armaments and sensitive dual-use items for military end-uses, if the situation in a region or the behaviour of a state is, or becomes, a cause for serious concern.\"\nThe arrangement is designed \"to contribute to regional and international security and stability, by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilizing accumulations.\" Member decisions are made by consensus. This group has a broader membership but smaller lists of controlled goods than did CoCom. Its control regime is also less rigorous. Under Wassenaar, each national government regulates its own exports, whereas under CoCom, any member could disapprove any other members' export by of a controlled item to a proscribed destination. There is also no mechanism to punish a participating state for violating Wassenaar guidelines.", "The arrangement's guidelines specify that several factors must be considered when deciding on a potential new member's eligibility. These include whether the state has adopted the arrangement's control lists \"as a reference in its national export controls,\" the government's \"adherence to fully effective export controls,\" and whether the state adheres to several other multilateral agreements.", "Participating states agree to control exports and retransfers of items on a Munitions List and a List of Dual-Use Goods and Technologies. The decision to allow or deny transfer of an item is the sole responsibility of each participating state. The control lists are updated frequently.", "Twice a year participating states report all transfers or licenses issued for sensitive dual-use goods or technology and all deliveries of items on the Munitions List. The data exchange identifies the supplier, recipient, and items transferred.\nParticipating states also report denials of licenses to transfer items on the dual-use list to nonmember states. The arrangement does not prohibit a participating country from making an export that has been denied by another participant (this practice is called \"undercutting\"). But participants are required to report soon after they approve a license for an export of dual-use goods that are essentially identical to those that have been denied by another participant during the previous three years.\nDuring plenary and working group discussions, participating states voluntarily share information on potential threats to peace and stability and examine dangerous acquisition trends. The participants review the scope of reporting and coordinating national control policies and develop further guidelines and procedures. Twice a year, the group reviews the Munitions List with a view to extending information and notifications.", "", "The Chemical Weapons Convention (CWC) bans the development, production, transfer, stockpiling, and use of chemical and toxin weapons, mandates the destruction of all chemical weapons production facilities, and seeks to control the production and international transfer of the key chemical components of these weapons. Negotiations began in 1968, but made little progress for many years. Verification issues, in particular, stalled the talks until the Soviet Union accepted challenge inspections. In September 1992, the Conference on Disarmament's 40 member-nations agreed on the final draft for the Convention, and it opened for signature in January 1993. As of November 30, 2015, 192 nations were party to the treaty, which entered into force on April 29, 1997. Israel has signed but not ratified the Convention. Egypt, North Korea, and South Sudan have not signed the CWC. Under the convention, states-parties provide declarations, which detail chemical weapons-related activities or materials and relevant industrial activities, to the Organization for the Prohibition of Chemical Weapons (OPCW). The OPCW inspects and monitors states-parties' facilities and activities that are relevant to the convention.\nThe U.S. Senate held hearings and debated the CWC for more than four years before consenting to its ratification on April 24, 1997. Congress passed the CWC implementing legislation, as a part of the FY1999 Omnibus Appropriations Act ( P.L. 105-277 ), in late October 1998. This legislation provides the statutory authority for U.S. domestic compliance with the convention's provisions. The legislation also provides detailed procedures to be used for on-site inspections by the OPCW, including limitations on access and search warrant procedures, should they be required.", "Parties to the convention have agreed to cease all offensive chemical weapons research and production and close all relevant facilities. They agreed to declare all chemical weapons stockpiles, allow an inventory by international inspectors, and seal their stocks. They must also destroy their weapons within 10 years, unless the OPCW approves an extension. They must also destroy all chemical weapons production facilities within 10 years. In \"exceptional cases of compelling need,\" the OPCW may approve the conversion of these facilities to peaceful purposes.\nThe CWC contains a complex verification regime, with different obligations applying to different types of chemical facilities. The convention establishes three schedules of chemicals, grouped by relevance to chemical weapons production and extent of legitimate peaceful uses. Some facilities are subject to systematic on-site verification; others are subject to periodic verification inspections. Facilities for a third class of chemicals are subject to random or \"ad hoc\" inspections. Signatories may also request challenge inspections at facilities suspected to be in violation of the convention. The OPCW will carry out these inspections on short notice. Inspected nations will have the right to negotiate the extent of inspectors' access to any facility, but must make every reasonable effort to confirm compliance.", "According to the OPCW, all of the member-states' declared chemical weapons production facilities have been inactivated and, as of March 13, 2018, approximately 96% of declared chemical weapons agent stockpiles had been destroyed. This amount does not include the chemical stockpiles declared by Syria (see below).\nSix countries declared possession of chemical weapons, but none destroyed their stocks by the original April 29, 2007, deadline. In July 2007, Albania became the first country to have destroyed its declared chemical weapons. South Korea became the second on July 10, 2008. India became the third on March 16, 2009. Five other states—Iraq, Libya, Russia, Syria, and the United States—have declared possession of such weapons.", "Libya joined the CWC in January 2004. At that time, Libya declared nearly 25 metric tonnes of bulk sulfur mustard agent, several thousand unloaded aerial munitions designed for use with chemical warfare agents, and several chemical weapons production facilities. The declared aerial munitions were destroyed in March 2004. Production facilities were destroyed or converted under OPCW supervision.\nLibya had said that it would destroy its Category One weapons by December 31, 2010, and its Category Two weapons by December 31, 2011. However, Tripoli was given until May 15, 2011, to destroy all of its Category One weapons. As of October 31, 2010, Libya had destroyed approximately 4% of its Category One weapons and over 39% of its Category Two weapons. These weapons, which included some undeclared stocks of mustard gas, remained on Libyan territory after the 2011 revolution and fall of the Muammar al Qadhafi regime. Libya's Permanent Representative to the OPCW stated March 11, 2011, that the country's \"situation regarding the chemical weapons to be destroyed remains unchanged and under control.\" In January 2012, OPCW inspectors returned to Libya to verify the status of Libya's chemical weapons stockpiles.\nIn 2013, Libya completed the destruction of its stock of bulk mustard agent. Libya announced in January 2014 that it had completed destruction of the CW-filled munitions it had discovered and declared in 2011 and 2012. Libya was to have destroyed its stocks of Category 2 (precursor) chemicals by the end of 2016, but stated in a February 2016 letter to the OPCW Director-General that \"it is not realistic to expect that the destruction of these chemical weapons will be completed within the set time frame without an effective international assistance.\" Libya had informed the OPCW Executive Council in September 2015 that Tripoli lacked the appropriate technology for destroying its remaining stockpile. On February 24, 2016, the council requested the OPCW Director-General \"to identify and evaluate the technical, operational, security, financial, and legal factors relevant to all the options for addressing the destruction of the remaining Libyan chemical weapons, including the removal of some or all the chemicals from Libya and destruction outside Libya, and options for in-country destruction.\" The U.N. Security Council endorsed this in July (UNSC Resolution 2298 [2016]).\nIn August 2016, Denmark led a maritime operation that removed all 500 metric tons of precursor chemicals from Libya to a destruction facility in Germany. According to the OPCW, Canada, Denmark, Finland, France, Germany, Italy, Malta, Spain, United Kingdom, and the United States contributed financial and technical assistance. The OPCW confirmed the complete destruction of all of Libya's chemical weapons in January 2018.", "Syria acceded to the CWC as part of a diplomatic effort in the fall of 2013. The United States threatened military action against Syria in response to chemical weapons use against civilians in August 2013. The United States withdrew the threat, and Syria agreed to join the CWC and declare and destroy all of its chemical weapons stocks and production facilities. U.N. Security Council Resolution 2118 (2013) mandated that Syria give up all its chemical weapons under Chapter VII provisions of the U.N. Charter and created a mechanism for verifying this process, with a primary role for the OPCW Secretariat.\nAt the start of its civil war, Syria had more than 1,000 metric tons of chemical warfare agents and precursor chemicals, including several hundred metric tons of the nerve agent sarin, several hundred metric tons of mustard agent in ready-to-use form, and several metric tons of the nerve agent VX. A U.N. and OPCW Joint Mission oversaw the removal and destruction of these chemical weapons agents from Syria, and all Category 1 and 2 declared chemicals were destroyed as of June 2014. Destruction of chemical weapons facilities is still underway, and serious questions remain over whether Syria has declared all of its chemical weapons stocks. The OPCW's Declaration Assessment Team (DAT) continues to investigate these outstanding issues through interviews and lab analysis of samples from site visits.\nThe State Department's 2018 report assessing CWC compliance says that the United States cannot certify that Syria is in compliance with the CWC, that Syria has been using chemical weapons systematically for years, and that Syria has not declared \"all the elements of its chemical weapons program\" and has retained some chemical weapons.\nThe Syrian government continues to deny categorically that it has used chemical weapons or toxic chemicals, while accusing opposition forces of doing so. The U.N. representatives of the United States, France, and the United Kingdom continue to cite information they believe suggests Syrian government complicity in conducting ongoing chemical attacks, particularly with chlorine. Expert teams affiliated with the Joint U.N. Mission to Investigate Allegations of the Use of Chemical Weapons in the Syrian Arab Republic (JIM) and the OPCW Fact Finding Mission (FFM) in Syria have investigated some of these allegations and have found evidence that in some cases confirms and in others suggests that chemical weapons (such as sarin) and/or toxic chemicals have been used in attacks.", "The CWC Conference of States-Parties gave Russia until December 31, 2009, to destroy 45% of its Category One stockpiles and until April 29, 2012, to destroy the rest. Russia did not meet the 2012 deadline but stated that it planned to destroy its stockpiles by December 31, 2020. In September 2017, the OPCW confirmed that the Russian Federation had totally destroyed its declared chemical weapons stockpile. The OPCW had verified the destruction of 39,967 metric tons of Category One chemical weapons at seven facilities. Moscow had previously destroyed its Category Two and Category Three chemical weapons stockpiles. Under DOD's Cooperative Threat Reduction Program, the United States and other partner countries provided Russia with considerable financial assistance for chemical weapons destruction.\nIn congressionally mandated annual reports to Congress, the State Department has said it could not certify that the Russian Federation was in compliance with the CWC because its required declarations of stockpile and development and production facilities were incomplete. In addition, the 2018 report said that due to \"Russia's March 4, 2018, use of a military-grade nerve agent to attack two individuals in the United Kingdom, the United States certifies that the Russian Federation is in non-compliance with its obligations under the CWC.\"", "The United States has also encountered difficulties in destroying its Category One chemical weapons stockpile and did not meet its 2007 deadline for doing so. Washington has already destroyed its Category Three stockpile and has declared no Category Two weapons. In April 2006, the United States submitted its formal request to the OPCW Chairman and Director-General to extend the United States' final chemical weapons destruction deadline from April 2007 to April 29, 2012, the latest possible date allowed under the CWC. However, Ambassador Eric Javits, then-U.S. Permanent Representative to the OPCW, added that the United States did \"not expect to be able to meet that deadline\" because Washington had encountered \"delays and difficulties\" in destroying its stockpile. These delays have generally resulted from the need to meet state and federal environmental requirements and from both local and congressional concerns over the means of destruction.\nThe 2008 Defense Appropriations Act ( P.L. 110-116 ) required the Defense Department to \"complete work on the destruction\" of the U.S. chemical weapons stockpile by the 2012 deadline \"and in no circumstances later than December 31, 2017.\" The National Defense Authorization Act for Fiscal Year 2016 ( P.L. 114-92 ) changed this deadline to December 31, 2023. The OPCW reported in April 2018 that the organization had verified the destruction of about 90.5% of the U.S. Category One stockpile. The United States projects that the Colorado and Kentucky facilities will destroy the remaining chemical agents stockpiles. According to a 2017 Defense Department report, these stockpiles are to be destroyed by November 2019 and September 2023, respectively.", "Iraq used chemical weapons during its 1980-1988 war with Iran and against Iraqi Kurds in 1988. Following the 1991 Persian Gulf War, the U.N. Security Council adopted Resolution 687 on April 3, 1991. This resolution was the first in a series of resolutions that required Iraq to declare its programs for nuclear, chemical, and biological weapons, as well as missiles with ranges exceeding 150 kilometers, and to destroy the weapons and related materials under U.N. monitoring. Regarding chemical weapons, Resolution 687 required Iraq to \"unconditionally accept the destruction, removal, or rendering harmless, under international supervision of ... [a]ll chemical and biological weapons and all stocks of agents and all related subsystems and components and all research, development, support and manufacturing facilities.\" The resolutions also required Baghdad to accept an ongoing U.N. monitoring regime to prevent Iraqi reconstitution of its prohibited weapons programs. The U.N. Secretary-General subsequently formed the United Nations Special Commission (UNSCOM) to verify Iraq's compliance with the resolution.\nIraq's chemical weapons generally met one of four fates: they were used during the Iran-Iraq war; they were destroyed by Iraq under UNSCOM supervision; they were secretly destroyed by Iraq outside UNSCOM supervision; or they were destroyed by coalition forces during the 1991 Persian Gulf War. Although \"a number of issues relating to Iraq's chemical weapons programme remain unresolved,\" according to a 2006 U.N. report, the inspectors \"were able to identify the major parameters of this programme, its scope and the results achieved.\" Moreover, the \"vast majority\" of chemical agents and munitions which Iraq possessed in 1991 were \"declared by Iraq, identified by the inspectors and destroyed under international supervision,\" according to the report.\nIraq's legacy chemical weapons were \"contained in two sealed bunkers\" at an old Iraqi chemical weapons production facility, according to a July 31, 2012, British Ministry of Defense statement. These weapons were \"left over after being rendered unusable by the UN inspection teams,\" OPCW Director-General Ambassador Ahmet Üzümcü said in a June 6, 2013, speech. Iraq acceded to the CWC in 2009 and worked with the OCPW and several countries to devise an appropriate disposal method for these weapons.\nPermanent Representative of Iraq Mohamed Alhakim stated in a June 30, 2014, letter to U.N. Secretary–General Ban Ki-moon that Iraq is currently \"unable to fulfill its obligations to destroy chemical weapons\" and will resume these \"obligations as soon as the security situation has improved and control of the facility has been regained.\" Iraq reiterated its \"commitment to continue implementing the destruction plan for the remnants of the former regime's chemical programme, as early as possible,\" according to a March 17, 2015, statement. \"Due to the ongoing security situation, no further action has been taken,\" Üzümcü stated on November 30, 2015. However, Iraq began to destroy the weapons in 2017, \"once the on-going security situation had been addressed.\" The OPCW confirmed in November 2017 and February 2018 that the four former chemical weapons production facilities in Iraq were completely destroyed. Üzümcü stated in March 2018 that Iraq had completed destroying its \"chemical weapons remnants.\"\nOn June 11, 2014, the Islamic State of Iraq and the Levant (ISIL) invaded the al-Muthanna chemical weapons facility. The Iraqi government has stated that \"the relevant Iraqi authorities saw to it that all sensitive equipment and instruments\" at the site \"were transferred to safe locations.\" Iraqi armed forces regained control of the site on October 28, 2014. An Iraqi assessment \"confirmed the integrity\" of the bunkers' \"walls and entries.\" However, ISIL has apparently been using chemical weapons in Iraq. The group \"was likely responsible\" for some attacks in Iraq with mustard agent, State Department spokesperson Elizabeth Trudeau told reporters on April 1, 2016. Director-General Üzümcü stated on March 23, 2016, that the OPCW has helped Iraq confirm \"the use of sulfur mustard in an attack in the Kurdistan Region of Iraq.\" Experts and government officials have argued that ISIL probably did not obtain chemical agents from Iraqi stockpiles.", "A State Department report covering 2014 raised some additional compliance questions, but did not conclude that any other CWC state-party had a chemical weapons program in violation of the Convention.", "In 1969, the Nixon Administration unilaterally renounced U.S. biological weapons (BW). Offensive BW development and production ceased, and destruction of the U.S. BW stockpile began. Simultaneously, the United States pressed the Soviet Union to follow its example. After some delay, agreement was reached, and the Biological Weapons Convention (BWC) was signed in 1972. The United States, after lengthy Senate consultations, ratified the convention in 1975, the same year that the convention entered into force.\nThe BWC bans the development, production, stockpiling, and transfer of biological weapons, as well as biological agents and toxins. It also bans \"equipment or means of delivery designed to use such agents or toxins for hostile purposes or in armed conflict.\" In addition, the convention requires states-parties to destroy all relevant \"agents, toxins, weapons, equipment and means of delivery.\" The BWC permits only defensive biological warfare research (e.g., vaccines, protective equipment) and allows production and stockpiling of BW agents only in amounts justifiable for protective or peaceful purposes. Unlike the Chemical Weapons Convention (CWC), the BWC does not specify particular biological agents, but generically defines them as \"microbial or other biological agents or toxins whatever their origin or method of production, of types and in quantities that have no justification for prophylactic or peaceful purposes.\" The convention does not contain any independent verification or enforcement mechanisms.", "The Fifth Review Conference of the BWC, which took place in November 2001, ended in disarray, with the parties unable to agree upon a final declaration. The primary deadlock was the issue of an adaptive protocol to the convention, intended to enhance its enforcement. In July 2001, after almost seven years of negotiations, the United States declared the 200-page protocol unacceptable as basis for further negotiation. A Bush Administration review concluded that the draft protocol would not provide adequate security against covert violations, yet could endanger the security of U.S. biodefense programs and U.S. commercial proprietary information. Alone in its complete rejection of the draft protocol, the United States came under widespread international criticism, including from close allies, for \"jeopardizing\" the future of biological arms control. In response, the Administration put forward several proposals at the 2001 Review Conference, urging their adoption by BWC State Parties at the national level. These included the following:\nCriminalization of BWC violations and expedited extradition procedures for violators. United Nations investigation of suspicious disease outbreaks or alleged BW use. Procedures for addressing BWC compliance concerns. Improved international disease control. Improved security over research on pathogenic organisms.\nThe Review Conference was unable to reach a compromise final declaration on future activities satisfactory to all state parties, and adjourned until November 2002. The United States has continued to oppose further negotiations on verification. Confronted with the U.S. position, the chairman of the 2002 Review Conference presented a minimal program emphasizing only annual meetings to discuss strengthening national laws and ways to respond to BW attacks. These were endorsed by the United States and accepted by the conference.\nThe 6 th BWC Review Conference, held in December 2006, could not reach consensus on a comprehensive set of guidelines for national implementation of the convention owing to differences between the United States and the nonaligned nations group over technology transfer control issues. The assumption of U.S. opposition also precluded consideration of enhanced verification or enforcement provisions for the convention. The conference, however, did establish a new program of work for annual meetings, which took place before the 7 th Review Conference in December 2011. The meetings included discussion and information exchanges on a variety of issues, including domestic enforcement of BWC provisions, pathogen security, and oversight of potentially dual-use research. The United States required, however, that these sessions be prohibited from reaching binding decisions. Beginning in 2007, the BWC states-parties have met annually.\nThe Obama Administration chose not to support revival of the negotiations on a BWC verification protocol, Under Secretary for Arms Control and International Security Ellen Tauscher announced in a December 9, 2009, address to the BWC states-parties. The Administration has \"determined that a legally binding protocol would not achieve meaningful verification or greater security,\" she explained, adding\n[t]he ease with which a biological weapons program could be disguised within legitimate activities and the rapid advances in biological research make it very difficult to detect violations. We believe that a protocol would not be able to keep pace with the rapidly changing nature of the biological weapons threat.\nInstead, Tauscher stated, the United States believes that \"confidence in BWC compliance should be promoted by enhanced transparency about activities and pursuing compliance diplomacy to address concerns.\" Pointing out that part of the November 2009 U.S. National Strategy for Countering Biological Threats is to \"reinvigorate\" the BWC, Tauscher exhorted the convention's states-parties to join the United States in \"increasing transparency, improving confidence building measures and engaging in more robust bilateral compliance discussions.\" She proposed such measures as increasing participation in the convention's confidence-building measures, as well as bilateral and multilateral cooperation in such areas as pathogen security and disease surveillance and response.\nThe 7 th Review Conference took place from December 5 to 22, 2011. The conference participants decided to continue the intersessional process with some changes. The annual meetings will address three standing agenda items: cooperation and assistance, review of relevant scientific and technological developments, and strengthening national implementation. In addition, during the intersessional program, the states-parties were to discuss enabling fuller participation in BWC-related confidence-building measures and strengthening implementation of Article VII of the convention. After the most recent review conference, which took place from November 7 to 25, 2016, the conference participants decided that the states-parties are to meet annually. The first meeting was to \"seek to make progress on issues of substance and process for the period before the next Review Conference, with a view to reaching consensus on an intersessional process,\" according to the final conference document. During that meeting, w hich took place from December 4 to 8, 2017, the participants decided that a group of experts meeting would also take place annually. Groups of experts have met annually in the past as part of the intersessional process.", "The Arms Trade Treaty (ATT) is a multilateral treaty of unlimited duration. Its stated objectives are to \"[e]stablish the highest possible common international standards for regulating or improving the regulation of the international trade in conventional arms ...\" and to \"[p]revent and eradicate the illicit trade in conventional arms and prevent their diversion.\"\nThough various concepts similar to the ATT have been discussed in international circles for decades, a speech by the UK Foreign Secretary backing the concept in 2004 is widely credited as giving critical momentum to the movement by adding a major conventional arms exporter to it. Beginning in 2006, the treaty was negotiated in the U.N. General Assembly (UNGA) and specialized fora. A UNGA vote in early April 2013 approved the treaty in its negotiated form.\nThe ATT opened for signature on June 3, 2013, and entered into force on December 24, 2014. The United States participated in drafting the ATT and voted for it in the UNGA on April 2, 2013. The United States signed the ATT on September 25, 2013, but has not ratified it. Because the United States already has strong export control laws in place, the ATT would likely require no significant changes to policy, regulations, or law.\nThe ATT regulates trade in conventional weapons between and among countries. It does not affect sales or trade in weapons among private citizens within a country. The treaty obligates states parties engaged in the international arms trade to establish national control systems to review, authorize, and document the import, export, brokerage, transit, and transshipment of conventional weapons, their parts, and ammunition. The treaty also requires that states parties report on their treaty-specified transfers to other nations on an annual basis to the Secretariat. The scope of the weapons covered by the treaty includes the following, though states parties may voluntarily include other conventional weapons as well:\nbattle tanks, armored combat vehicles, large-caliber artillery systems, combat aircraft, attack helicopters, warships, missiles and missile launchers, and small arms and light weapons.\nThe ATT also binds states parties to certain preexport review processes that take into account various criteria related to possible destabilizing effects on international security, terrorism, transnational crime, human rights, and other factors in determining whether or not a transfer should be approved. A state party is specifically prohibited from approving a transfer to another nation that violates a United Nations Security Council Resolution adopted under Chapter VII of the United Nations Charter, especially an arms embargo. Also explicitly prohibited is any transfer where a state party \"has knowledge\" when reviewing the proposed transfer that the treaty-specified arms, parts, or ammunition would be used in the \"commission of genocide, crimes against humanity, grave breaches of the Geneva Conventions of 1949, attacks directed against civilian objects or civilians protected as such, or other war crimes as defined by international agreements to which it is a party.\" Parties to the treaty are obligated to take measures to prevent the illegal diversion of covered arms and ammunition, to mitigate risks of diversion occurring by cooperating with each other and exchanging information, and to \"take appropriate measures\" if a diversion is detected. States parties are also encouraged to exchange relevant information about effectively addressing illicit diversion. Finally, the ATT encourages cooperation between states parties in the development of implementing legislation, institutional capacity building, and other pertinent areas.\nAccording to the treaty text, the ATT's Secretariat will have a \"minimized structure\" and shall\nreceive, make available and distribute the reports as mandated by this Treaty; maintain and make available to States Parties the list of national points of contact; facilitate the matching of offers of and requests for assistance for Treaty implementation and promote international cooperation as requested; facilitate the work of the Conference of States Parties, including making arrangements and providing the necessary services for meetings under this Treaty; and perform other duties as decided by the Conferences of States Parties.", "Antipersonnel landmines (APL) are small, inexpensive weapons that kill or maim people upon contact. Abandoned, unmarked minefields can remain dangerous to both soldiers and civilians for an indefinite time. Mines were addressed in The Convention on Prohibitions or Restrictions on the Use of Certain Conventional Weapons Which May Be Deemed To Be Excessively Injurious or To Have Indiscriminate Effects , also known as the Convention on Conventional Weapons (CCW). Protocol II of this contains rules for marking, registering, and removing minefields. The CCW was concluded in 1980 and entered into force in 1993. The United States signed it in 1982 and the U.S. Senate gave its advice and consent to ratification on March 24, 1995.", "In 1992, Congress established a one year moratorium on U.S. exports of APL ( P.L. 102-484 ) and subsequently extended it for 15 more years (see P.L. 107-115 ). H.R. 948 , introduced in the first session, 107 th Congress, sought to make the ban permanent but was not brought to a vote. Many nations have followed the U.S. example and imposed their own moratoria. In the FY1996 Foreign Operations Appropriations Act ( P.L. 104-107 ), Congress established a one-year ban on the use of APL by U.S. personnel to begin in 1999, but the 105 th Congress repealed the moratorium in the FY1999 Defense Authorization Act ( P.L. 105-261 ).\nIn 1996, President Clinton announced a policy that immediately discontinued U.S. use of \"dumb\" APL (except in the DMZ of Korea); supported negotiation of a worldwide ban on APL in the United Nations; and supported development of alternative technologies to perform landmine functions without endangering civilians and expanded mine detection and clearing technology efforts and assistance to mine-plagued countries. This initiative temporarily retained the possible use of \"smart\" mines that render themselves harmless after a certain period of time, either through self-destruction, self-neutralization, or self-deactivation. Clinton subsequently set a goal of 2003 to replace even smart mines everywhere except Korea, and of 2006 in Korea.\nIn November 1996, the United States introduced a resolution to the U.N. General Assembly to pursue an international agreement that would ban use, stockpiling, production, and transfer of APL—there were 84 cosponsors. Some countries, such as Canada, already abided by the intent of the proposed agreement and pushed for an early deadline to reach agreement. Others, however, were concerned that verifying such an agreement would be difficult, or that AP landmines still have a useful and legitimate role in their security planning. Landmine control, specifically a ban on exports, was briefly on the agenda of the Conference on Disarmament (CD) in Geneva for 1999. During 2000, however, that body could not agree on its program of work and the landmine issue was not addressed again.\nDuring 1997, the government of Canada and a number of nongovernmental organizations, such as the International Campaign to Ban Landmines, sponsored conferences to craft a treaty outside the CD process. Over 100 nations signed the Ottawa Treaty, formally titled the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-personnel Mines and on Their Destruction, which entered into force for its parties on March 1, 1999. The Clinton Administration participated in the Ottawa Process, but declined to sign the treaty after failing to gain certain temporary exceptions to treaty language. Specifically, the United States wanted to continue to use APL in the defense of South Korea until 2006 if necessary, and the ability to include smart APL (or \"devices\") within antitank landmine munitions. President Clinton suggested that the United States would sign the Ottawa Treaty in 2006 if effective alternatives to APL were available.\nThe Ottawa Convention requires states parties to stop the production, use, and transfer of APL, as well as destroy all stockpiled APL, except for the \"minimum number absolutely necessary\" for training purposes, within four years. As of April 8, 2016, 162 countries had become states-parties to the treaty. Belarus, Greece, Turkey, and Ukraine all missed their stockpile destruction deadlines. Turkey completed destroying its APL in June 2011. Poland must also destroy APL stockpiles. States parties are also required to clear APL within 10 years of becoming party to the convention, but can request extensions of up to 10 years to complete this task. Thirty-one states-parties have not yet met their clearance obligations.\nThe Convention does not include a verification body, but states parties may submit allegations of noncompliance, as well as requests for \"clarification\" from relevant governments, to the U.N. Secretary-General. A State-Party may also request that a special meeting of other treaty members address the compliance matters. States parties can initiate fact-finding missions and also request relevant governments to address compliance issues.\nIn February 2004, the Bush Administration announced that, after 2010, the United States would not use any type of persistent landmines, whether antipersonnel or—a new policy—antivehicle. Self-destruct and self-deactivating landmines will be used and will meet or exceed specifications of the Amended Mines Protocol, CCW. It also indicated that alternatives to persistent landmines would be developed that incorporate enhanced technologies. This policy did not include a date to join the Ottawa Treaty. Richard Kidd, then-Director of the State Department's Office of Weapons Removal and Abatement, said in a November 21, 2007, speech that the United States would not sign the Ottawa Convention. If needed, U.S. forces will use nonpersistent mines. Various U.S. landmine systems were reportedly prepositioned in the Middle East in preparation for the 2003 war in Iraq, but were not used.\nThe Obama Administration conducted a review of U.S. policy regarding landmines. On June 27, 2014, during the Third Review Conference of the Ottawa Convention, the United States announced that it \"will not produce or otherwise acquire any anti-personnel landmines in the future,\" including for the purpose of replacing expiring stockpiles. Moreover, the United States is \"conducting a high fidelity modeling and simulation effort to ascertain how to mitigate the risks associated with the loss\" of such mines. On September 23, 2014, the Obama Administration stated that the United States is aligning its \"APL policy outside the Korean Peninsula with the key requirements of the Ottawa Convention.\" Specifically, the United States will \"not use APL outside the Korean Peninsula; not assist, encourage, or induce anyone outside the Korean Peninsula to engage in activity prohibited by the Ottawa Convention; and undertake to destroy APL stockpiles not required for the defense of the Republic of Korea.\" Puneet Talwar, Assistant Secretary of State for the Bureau of Political-Military Affairs, stated on December 9, 2014, that the United States is \"pursuing solutions that would be compliant with the convention and that would ultimately allow us to accede to the convention while ensuring that we are still able to meet our alliance commitments\" to South Korea. Tina Kaidanow, Principal Deputy Assistant Secretary of State for Political-Military Affairs, stated during a December 13, 2017, press conference that \"[t]here is no current review\" of U.S. policy regarding landmines, adding that \"in most places we have hewn to those standards [of the Ottawa Convention], with an exception, for an example, in the Korean Peninsula, where we cannot make that commitment.\"", "Cluster munitions are weapons that open in midair and dispense smaller submunitions—anywhere from a few dozen to hundreds—into an area. They can be delivered by aircraft or from ground systems such as artillery, rockets, and missiles. Cluster munitions are valued militarily because one munition can kill or destroy many targets within its impact area, and fewer weapons systems are needed to deliver fewer munitions to attack multiple targets. They also permit a smaller force to engage a larger adversary and are considered by some an \"economy of force\" weapon. On the other hand, critics note that cluster munitions disperse their large numbers of submunitions imprecisely over an extended area, that they frequently fail to detonate and are difficult to detect, and that the submunitions can remain explosive hazards for decades. They can also produce high civilian casualties if they are fired into areas where soldiers and civilians are intermixed or if inaccurate cluster munitions land in populated areas.", "A number of CCW members, led by Norway, initiated negotiations in 2007 outside of the CCW to ban cluster munitions. On May 30, 2008, they reached an agreement to ban cluster munitions. The United States, Russia, China, Israel, Egypt, India, and Pakistan did not participate in the talks or sign the agreement. During the Signing Conference in Oslo on December 3-4, 2008, 94 states signed the convention and 4 of the signatories ratified the convention at the same time. China, Russia, and the United States abstained, but France, Germany, and the United Kingdom were among the 18 NATO members to sign the convention. The convention entered into force on August 1, 2010. The Convention on Cluster Munitions (CCM), inter alia, bans the use of cluster munitions, as well as their development, production, acquisition, transfer, and stockpiling. The convention does not prohibit cluster munitions that can detect and engage a single target or explosive submunitions equipped with an electronic self-destruction or self-deactivating feature —an exemption that seemingly permits sensor-fuzed or \"smart\" cluster submunitions.\nAppendix A. List of Treaties and Agreements\nThis appendix lists a wide range of arms control treaties and agreements. The date listed in each entry indicates the year in which the negotiations were completed. In some cases, entry into force occurred in a subsequent year.\nThe Geneva Protocol, 1925: Bans the use of poison gas and bacteriological weapons in warfare.\nThe Antarctic Treaty, 1959: Demilitarizes the Antarctic continent and provides for scientific cooperation on Antarctica.\nMemorandum of Understanding ... Regarding the Establishment of a Direct Communications Link (The Hot Line Agreement), 1963: Provides for a secure, reliable communications link between Washington and Moscow. Modified in 1971, 1984, and 1988 to improve the method of communications.\nLimited Test Ban Treaty, 1963: Bans nuclear weapons tests or any nuclear explosions in the atmosphere, outer space, and under water.\nOuter Space Treaty, 1967: Bans the orbiting or stationing on celestial bodies (including the moon) of nuclear weapons or other weapons of mass destruction.\nTreaty for the Prohibition of Nuclear Weapons in Latin America (Treaty of Tlatelolco), 1967: Obligates nations in Latin America not to acquire, possess, or store nuclear weapons on their territory.\nTreaty on the Non-Proliferation of Nuclear Weapons, 1968: Non-nuclear signatories agree not to acquire nuclear weapons; nuclear signatories agree to cooperate with non-nuclear signatories in peaceful uses of nuclear energy.\nSeabed Arms Control Treaty, 1971: Bans emplacement of military installations, including those capable of launching weapons, on the seabed.\nAgreement on Measures to Reduce the Risk of Outbreak of Nuclear War (Accident Measures Agreement), 1971: Outlines measures designed to reduce the risk that technical malfunction, human failure, misinterpreted incident, or unauthorized action could start a nuclear exchange.\nBiological Weapons Convention, 1972: Bans the development, production, stockpile, or acquisition of biological agents or toxins for warfare.\nAgreement ... on the Prevention of Incidents On and Over the High Seas, 1972: Establishes \"rules of the road\" to reduce the risk that accident, miscalculation, or failure of communication could escalate into a conflict at sea.\nInterim Agreement ... on Certain Measures with Respect to the Limitation of Strategic Offensive Arms (SALT I Interim Agreement), 1972: Limits numbers of some types of U.S. and Soviet strategic offensive nuclear weapons.\nTreaty ... on the Limitation of Anti-Ballistic Missile Systems (ABM Treaty), 1972: Limits United States and Soviet Union to two ABM sites each; limits the number of interceptor missiles and radars at each site to preclude nationwide defense. Modified in 1974 to permit one ABM site in each nation. U.S. withdrew in June 2002.\nAgreement ... on the Prevention of Nuclear War, 1973: United States and Soviet Union agreed to adopt an \"attitude of international cooperation\" to prevent the development of situations that might lead to nuclear war.\nTreaty ... on the Limitation of Underground Nuclear Weapons Tests (Threshold Test Ban Treaty), 1974: Prohibits nuclear weapons tests with yields of more than 150 kilotons. Ratified and entered into force in 1990.\nTreaty ... on Underground Nuclear Explosions for Peaceful Purposes (Peaceful Nuclear Explosions Treaty), 1976: Extends the limit of 150 kilotons to nuclear explosions occurring outside weapons test sites. Ratified and entered into force in 1990.\nConcluding Document of the Conference on Security and Cooperation in Europe (Helsinki Final Act), 1975: Outlines notifications and confidence-building measures with respect to military activities in Europe.\nConvention on the Prohibition of Military or any other Hostile Use of Environmental Modification Techniques, 1978: Bans the hostile use of environmental modification techniques that have lasting or widespread effects.\nTreaty ... on the Limitation of Strategic Offensive Arms (SALT II), 1979: Places quantitative and qualitative limits on some types of U.S. and Soviet strategic offensive nuclear weapons. Never ratified.\nThe Convention on Prohibitions or Restrictions on the Use of Certain Conventional Weapons Which May Be Deemed To Be Excessively Injurious or To Have Indiscriminate Effects: This Convention, also known as the Convention on Conventional Weapons (CCW), was concluded in Geneva in 1980 and entered into force in 1993. Protocol II (Protocol on Prohibitions or Restrictions on the Use of Mines, Booby-traps and Other Devices) contains rules for marking, registering, and removing minefields, in an effort to reduce indiscriminate casualties caused by antipersonnel landmines. Protocol IV prohibits laser weapons designed to cause blindness.\nDocument of the Stockholm Conference on Confidence- and Security-Building Measures and Disarmament in Europe (Stockholm Document), 1986: Expands on the notifications and confidence-building measures in the Helsinki Final Act. Provides for ground and aerial inspection of military activities.\nTreaty of Rarotonga, 1986: Establishes a Nuclear Weapons Free Zone in the South Pacific. The United States signed the Protocols in 1996; the Senate has not yet provided its advice and consent to ratification.\nAgreement ... on the Establishment of Nuclear Risk Reduction Centers, 1987: Establishes communications centers in Washington and Moscow and improves communications links between the two.\nTreaty ... on the Elimination of their Intermediate-Range and Shorter-Range Missiles, 1987: Bans all U.S. and Soviet ground-launched ballistic and cruise missiles with ranges between 300 and 3,400 miles. U.S. announced withdrawal on February 1, 2019.\nAgreement ... on Notifications of Launches of Intercontinental Ballistic Missiles and Submarine Launched Ballistic Missiles, 1988: Obligates United States and Soviet Union to provide at least 24 hours' notice before the launch of an ICBM or SLBM.\nAgreement on the Prevention of Dangerous Military Activities, 1989: Outlines cooperative procedures that are designed to prevent and resolve peacetime incidents between the armed forces of the United States and Soviet Union.\nU.S.-U.S.S.R. Chemical Weapons Destruction Agreement, 1990: Mandates the destruction of the bulk of the U.S. and Soviet chemical weapons stockpiles.\nVienna Document of the Negotiations on Confidence- and Security-Building Measures, 1990: Expands on the measures in the 1986 Stockholm Document.\nTreaty on Conventional Armed Forces in Europe (CFE Treaty), 1990: Limits and reduces the numbers of certain types of conventional armaments deployed from the \"Atlantic to the Urals.\"\nTreaty ... on the Reduction and Limitation of Strategic Offensive Arms (START), 1991: Limits and reduces the numbers of strategic offensive nuclear weapons. Modified by the Lisbon Protocol of 1992 to provide for Belarus, Ukraine, Kazakhstan, and Russia to succeed to Soviet Union's obligations under the Treaty. Entered into force on December 5, 1994.\nVienna Document of the Negotiations on Confidence- and Security-Building Measures, 1992: Expands on the measures in the 1990 Vienna Document.\nTreaty on Open Skies, 1992: Provides for overflights by unarmed observation aircraft to build confidence and increase transparency of military activities.\nAgreement ... Concerning the Safe and Secure Transportation, Storage, and Destruction of Weapons and Prevention of Weapons Proliferation, 1992: Provides for U.S. assistance to Russia for the safe and secure transportation, storage, and destruction of nuclear, chemical, and other weapons.\nAgreement Between the United States and Republic of Belarus Concerning Emergency Response and the Prevention of Proliferation of Weapons of Mass Destruction, 1992: Provides for U.S. assistance to Belarus in eliminating nuclear weapons and responding to nuclear emergencies in Belarus.\nTreaty ... on the Further Reduction and Limitation of Strategic Offensive Arms (START II) 1993: Would have further reduced the number of U.S. and Russian strategic offensive nuclear weapons. Would have banned the deployment of all land-based multiple-warhead missiles (MIRVed ICBMs), including the Soviet SS-18 \"heavy\" ICBM. Signed on January 3, 1993; U.S. Senate consented to ratification in January 1996; Russian Duma approved ratification in April 2000. Treaty never entered into force.\nConvention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction: Bans chemical weapons and requires elimination of their production facilities. Opened for signature on January 13, 1993; entered into force in April 1997.\nAgreement ... Concerning the Disposition of Highly Enriched Uranium Resulting from the Dismantlement of Nuclear Weapons in Russia, 1993: Provides for U.S. purchase of highly enriched uranium removed from Russian nuclear weapons; uranium to be blended into low enriched uranium for fuel in commercial nuclear reactors. Signed and entered into force on February 18, 1993.\nAgreement Between the United States and Ukraine Concerning Assistance to Ukraine in the Elimination of Strategic Nuclear Arms, and the Prevention of Proliferation of Weapons of Mass Destruction: Provides for U.S. assistance to Ukraine to eliminate nuclear weapons and implement provisions of START I. Signed in late 1993, entered into force in 1994.\nAgreement Between the United States and Republic of Kazakhstan Concerning the Destruction of Silo Launchers of Intercontinental Ballistic Missiles, Emergency Response, and the Prevention of Proliferation of Weapons of Mass Destruction, 1993: Provides for U.S. assistance to Kazakhstan to eliminate nuclear weapons and implement provisions of START I.\nTrilateral Statement by the Presidents of the United States, Russia, and Ukraine, 1994: Statement in which Ukraine agreed to transfer all nuclear warheads on its territory to Russia in exchange for security assurances and financial compensation. Some compensation will be in the form of fuel for Ukraine's nuclear reactors. The United States will help finance the compensation by purchasing low enriched uranium derived from dismantled weapons from Russia.\nTreaty of Pelindaba, 1996: Establishes a nuclear weapons free zone in Africa. The United States has signed, but not yet ratified Protocols to the Treaty.\nComprehensive Nuclear Test Ban Treaty (CTBT), 1996: Bans all nuclear explosions, for any purpose. The United States and more than 130 other nations had signed the Treaty by late 1996. The U.S. Senate voted against ratification in October, 1999.\nOttawa Treaty, 1997: Convention for universal ban against the use of antipersonnel landmines, signed in 1997 and entered into force in 1999. The United States and other significant military powers are not signatories.\nStrategic Offensive Reductions Treaty (Moscow Treaty), 2002: Obligates the United States and Russia to reduce strategic nuclear forces to between 1,700 and 2,200 warheads. Does not define weapons to be reduced or provide monitoring and verification provisions. Reductions must be completed by December 31, 2012. Treaty lapsed upon entry into force of New START. Signed in May 2002, entered into force June 1, 2003.\nTreaty … On Measures for the Further Reduction and Limitation of Strategic Offensive Arms (New START), 2010: Obligates the United States and Russia to reduce strategic nuclear forces to 1,550 warheads on up to 700 deployed delivery vehicles, within a total of 800 deployed and nondeployed delivery vehicles. Reductions must occur within 7 years, treaty remains in force for 10 years. Signed on April 10, 2010, entered into force on February 5, 2011.\nTreaty On the Prohibition of Nuclear Weapons , 2017: Obligates the parties to never \"develop, produce, manufacture, otherwise acquire, possess or stockpile nuclear weapons or other nuclear explosive devices.\" Parties agree not to host nuclear weapons that are owned or controlled by another state or to transfer, receive control over, or assist others in developing nuclear weapons. The United States has not signed this treaty and does not support its entry into force.\nAppendix B. The U.S. Treaty Ratification Process\nArticle II, Section 2, Clause 2 of the U.S. Constitution establishes responsibilities for treaty ratification. It provides that the President \"shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.\" Contrary to common perceptions, the Senate does not ratify treaties; it provides its advice and consent to ratification by passing a resolution of ratification. The President then \"ratifies\" a treaty by signing the instrument of ratification and either exchanging it with the other parties to the treaty or depositing it at a central repository (such as the United Nations).\nIn Section 33 of the Arms Control and Disarmament Act (P.L. 87-297, as amended), Congress outlined the relationship between arms control agreements and the treaty ratification process. This law provides that \"no action shall be taken under this or any other law that will obligate the United States to disarm or to reduce or to limit the Armed Forces or armaments of the United States, except pursuant to the treaty-making power of the President under the Constitution or unless authorized by further affirmative legislation by the Congress of the United States.\"\nIn practice, most U.S. arms control agreements have been submitted as treaties, a word reserved in U.S. usage for international agreements submitted to the Senate for its approval in accordance with Article II, Section 2 of the Constitution. The Senate clearly expects future arms control obligations would be made only pursuant to treaty in one of its declarations in the resolution of ratification of the START Treaty. The declaration stated: \"The Senate declares its intention to consider for approval international agreements that would obligate the United States to reduce or limit the Armed Forces or armaments of the United States in a militarily significant manner only pursuant to the treaty power set forth in Article II, Section 2, Clause 2 of the Constitution.\"\nNonetheless, some arms control agreements have been made by other means. Several \"confidence building\" measures have been concluded as legally binding international agreements, called executive agreements in the United States, without approval by Congress. These include the Hot Line Agreement of June 20, 1963, the Agreement on Prevention of Nuclear War of June 22, 1973, and agreements concluded in the Standing Consultative Commission established by the Anti-ballistic Missile Treaty. In another category that might be called statutory or congressional-executive agreements, the SALT I Interim Agreement was approved by a joint resolution of Congress in 1972. In a third category, the executive branch has entered some arms control agreements that it did not submit to Congress on grounds that they were \"politically binding\" but not \"legally binding.\" Such agreements include several measures agreed to through the Conference on Security and Cooperation in Europe, such as the Stockholm Document on Confidence- and Security-Building Measures and Disarmament in Europe, signed September 19, 1986.\nSenate Consideration\nThe conclusion or signing of a treaty is only the first step toward making the agreement legally binding on the parties. First, the parties decide whether to ratify, that is, express their consent to be bound by, the treaty that the negotiators have signed. Each party follows its own constitutional process to approve the treaty.\nIn the United States, after a treaty has been signed, the President at a time of his choice submits to the Senate the treaty and any documents that are to be considered an integral part of the treaty and requests the Senate's advice and consent to ratification. The President's message is accompanied by a letter from the Secretary of State to the President which contains an analysis of the treaty. After submittal, the Senate may approve the agreement, approve it with various conditions, or not approve it.\nSenate consideration of a treaty is governed by Senate Rule XXX, which was amended in 1986 to simplify the procedure. The treaty is read a first time and the injunction of secrecy is removed by unanimous consent, although normally the text of a treaty has already been made public. The treaty is then referred to the Senate Committee on Foreign Relations under Senate Rule XXV on jurisdiction. After consideration, the committee reports the treaty to the Senate with a proposed resolution of ratification that may contain any of the conditions described below. If the committee objects to a treaty, or believes the treaty would not receive the necessary majority in the Senate, it usually simply does not report the treaty to the Senate and the treaty remains pending indefinitely on the committee calendar.\nAfter it is reported from the committee, a treaty is required to lie over for one calendar day before Senate consideration. The Senate considers the treaty after adoption of a nondebatable motion to go into executive session for that purpose. Rule XXX provides that the treaty then be read a second time, after which amendments to the treaty may be proposed. The majority leader typically asks unanimous consent that the treaty be considered to have passed through all the parliamentary stages up to and including the presentation of the resolution of ratification. After the resolution of ratification is presented, amendments to the treaty itself, which are rare, may not be proposed. The resolution of ratification is then \"open to amendment in the form of reservations, declarations, statements, or understandings.\" Decisions on amendments and conditions are made by a majority vote. Final approval of the resolution of ratification with any conditions that have been approved requires a two-thirds majority of those Senators present.\nAfter approving the treaty, the Senate returns it to the President with the resolution of ratification. If he accepts the conditions of the Senate, the President then ratifies the treaty by signing a document referred to as an instrument of ratification. Included in the instrument of ratification are any of the Senate conditions that State Department officials consider require tacit or explicit approval by the other party. The ratification is then complete at the national level and ready for exchange or deposit. The treaty enters into force in the case of a bilateral treaty upon exchange of instruments of ratification and in the case of a multilateral treaty with the deposit of the number of ratifications specified in the treaty. The President then signs a document called a proclamation which publicizes the treaty domestically as in force and the law of the land.\nIf the President objects to any of the Senate conditions, or if the other party to a treaty objects to any of the conditions and further negotiations occur, the President may resubmit the treaty to the Senate for further consideration or simply not ratify it.\nApproval with Conditions\nThe Senate may stipulate various conditions on its approval of a treaty. Major types of Senate conditions include amendments, reservations, understandings, and declarations or other statements or provisos. Sometimes the executive branch recommends the conditions, such as the December 16, 1974, reservation to the 1925 Geneva Protocol prohibiting the use of poison gas and the understandings on the protocols to the Treaty for the Prohibition of Nuclear Weapons in Latin America.\nAn amendment to a treaty proposes a change to the language of the treaty itself, and Senate adoption of amendments to the text of a treaty is infrequent. A formal amendment to a treaty after it has entered into force is made through an additional treaty often called a protocol. An example is the ABM (Anti-Ballistic Missile) Protocol, signed July 3, 1974, which limited the United States and the Soviet Union to one ABM site each instead of two as in the original 1972 ABM Treaty. While the Senate did not formally attach amendments to the 1974 Threshold Test Ban and 1976 Peaceful Nuclear Explosion treaties, it was not until Protocols relating to verification were concluded in 1990 that the Senate approved these two Treaties.\nA reservation is a limitation or qualification that changes the obligations of one or more of the parties. A reservation must be communicated to the other parties and, in a bilateral treaty, explicitly agreed to by the other party. President Nixon requested a reservation to the Geneva Protocol on the use of poison gases stating that the protocol would cease to be binding on the United States in regard to an enemy state if that state or any of its allies failed to respect the prohibition. One of the conditions attached to the INF treaty might be considered a reservation although it was not called that. On the floor the sponsors referred to it as a Category III condition. The condition was that the President obtain Soviet consent that a U.S.-Soviet agreement concluded on May 12, 1988, be of the same effect as the provisions of the treaty.\nAn understanding is an interpretation or elaboration ordinarily considered consistent with the treaty. In 1980, the Senate added five understandings to the agreement with the International Atomic Energy Agency (IAEA) for the Application of Safeguards in the United States. The understandings concerned implementation of the agreement within the United States. A condition added to the INF treaty resolution, requiring a presidential certification of a common understanding on ground-launched ballistic missiles, might be considered an understanding. The sponsor of the condition, Senator Robert Dole, said, \"this condition requires absolutely nothing more from the Soviets, but it does require something from our President.\"\nA declaration states policy or positions related to the treaty but not necessarily affecting its provisions. Frequently, like some of the understandings mentioned above, declarations and other statements concern internal procedures of the United States rather than international obligations and are intended to assure that Congress or the Senate participate in subsequent policy. The resolution of ratification of the Threshold Test Ban Treaty adopted in 1990 made approval subject to declarations (1) that to preserve a viable deterrent a series of specified safeguards should be an ingredient in decisions on national security programs and the allocation of resources, and (2) the United States shared a special responsibility with the Soviet Union to continue talks seeking a verifiable comprehensive test ban. In a somewhat different step, in 1963 the Senate attached a preamble to the resolution of ratification of the limited nuclear test ban treaty. The preamble contained three \"Whereas\" clauses of which the core one stated that amendments to treaties are subject to the constitutional process.\nThe important distinction among the various conditions concerns their content or effect. Whatever designation the Senate applies to a condition, if the President determines that it may alter an international obligation under the treaty, he transmits it to the other party or parties and further negotiations or abandonment of the treaty may result.\nDuring its consideration of the SALT II Treaty, the Senate Foreign Relations Committee grouped conditions into three categories to clarify their intended legal effect; (I) those that need not be formally communicated to or agreed to by the Soviet Union, (II) those that would be formally communicated to the Soviet Union, but not necessarily agreed to by them, and (III) those that would require the explicit agreement of the Soviet Union. In the resolution of ratification of the START Treaty, the Senate made explicit that some of the conditions were to be communicated to the other parties.\nThe Senate approves most treaties without formally attaching conditions. Ten arms control treaties were adopted without conditions: the Antarctic, Outer Space, Nuclear Non-Proliferation, Seabed, ABM, Environmental Modification, and Peaceful Nuclear Explosions Treaties, the Biological Weapons and the Nuclear Materials Conventions, and the ABM Protocol. In some of these cases, however, the Senate Foreign Relations Committee included significant understandings in its report.\nEven when it does not place formal conditions in the resolution of ratification, the Senate may make its views known or establish requirements on the executive branch in the report of the Foreign Relations Committee or through other vehicles. Such statements become part of the legislative history but are not formally transmitted to other parties. In considering the Limited Nuclear Test Ban Treaty in 1963, the Senate turned down a reservation that \"the treaty does not inhibit the use of nuclear weapons in armed conflict,\" but Senate leaders insisted upon a written assurance on this issue, among others, from President Kennedy. In reporting the Nuclear Non-Proliferation Treaty, the committee stated that its support of the Treaty was not to be construed as approving security assurances given to the non-nuclear-weapon parties by a U.N. Security Council resolution and declarations by the United States, the Soviet Union, and the United Kingdom. The security assurances resolution and declarations were, the committee reported, \"solely executive measures.\"\nAppendix C. Arms Control Organizations" ], "depth": [ 0, 1, 2, 2, 1, 2, 3, 3, 3, 2, 3, 3, 4, 4, 4, 3, 4, 4, 2, 3, 3, 4, 4, 4, 3, 4, 4, 4, 2, 3, 3, 4, 4, 4, 4, 2, 3, 4, 3, 3, 4, 4, 4, 3, 1, 2, 3, 3, 3, 3, 2, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 1, 2, 3, 4, 4, 4, 4, 4, 3, 4, 4, 3, 4, 4, 3, 3, 4, 4, 4, 2, 3, 4, 4, 4, 4, 4, 4, 4, 4, 3, 4, 3, 3, 4, 3, 4 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_title h1_title", "h0_full h1_full", "h0_full", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "", "h1_title", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "h2_full", "h2_full", "", "", "", "", "", "", "", "", "h2_title", "", "", "", "h2_full", "h3_full h1_title h0_title", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h1_title h3_title", "", "", "", "", "", "", "", "", "", "h3_full h1_title h0_title", "h0_full h1_full", "", "", "", "", "" ] }

{ "question": [ "What tools have been used to implement US national security strategy?", "What do analysts see these tools as?", "What results have these tools produced?", "How did the implementation of arms control agreements change under the Clinton and Bush Administrations?", "How did this change under the Obama Administration?", "How did this change during the Trump Administration?", "What did the US and Soviet Union start doing jointly in the 1970s?", "How were such agreements implemented?", "How did negotiations change in the late 1980s?", "How did negotiations change in the 1990s?", "What did the US and Soviet Union begin to cooperate on in the 1990s?", "What were the results of these negotiationss?", "What is the role of the US regarding nuclear weapons?", "What does this regime consist of?", "How is the NPT important to this regime?", "What does the International Atomic Energy Agency do?", "What other measures are in place to slow the spread of nuclear weapons?", "How has the international community addressed non-nuclear weapons?", "What were the goals of the CFE Treaty and Open Skies Treaty?", "What were the goals of the Chemical Weapons and Biological Weapons Conventions?", "What other arrangements are there?" ], "summary": [ "Arms control and nonproliferation efforts are two of the tools that have occasionally been used to implement U.S. national security strategy.", "Although some believe these tools do little to restrain the behavior of U.S. adversaries, while doing too much to restrain U.S. military forces and operations, many other analysts see them as an effective means to promote transparency, ease military planning, limit forces, and protect against uncertainty and surprise.", "Arms control and nonproliferation efforts have produced formal treaties and agreements, informal arrangements, and cooperative threat reduction and monitoring mechanisms.", "The pace of implementation for many of these agreements slowed during the Clinton Administration, and the Bush Administration usually preferred unilateral or ad hoc measures to formal treaties and agreements to address U.S. security concerns.", "The Obama Administration resumed bilateral negotiations with Russia and pledged its support for a number of multilateral arms control and nonproliferation efforts, but succeeded in negotiating only a few of its priority agreements.", "The Trump Administration has offered some support for existing agreements, but has announced the U.S. withdrawal from the INF Treaty, citing Russia's violation of that agreement, and has not yet determined whether it will support the extension of the 2010 New START Treaty through 2026. It shows little interest in pursuing further agreements.", "The United States and Soviet Union began to sign agreements limiting their strategic offensive nuclear weapons in the early 1970s.", "Progress in negotiating and implementing these agreements was often slow, and subject to the tenor of the broader U.S.-Soviet relationship.", "As the Cold War drew to a close in the late 1980s, the pace of negotiations quickened, with the two sides signing treaties limiting intermediate-range and long-range weapons.", "But progress again slowed in the 1990s, as U.S. missile defense plans and a range of other policy conflicts intervened in the U.S.-Russian relationship.", "At the same time, however, the two sides began to cooperate on securing and eliminating Soviet-era nuclear, chemical, and biological weapons.", "Through these efforts, the United States has allocated more than $1 billion each year to threat reduction programs in the former Soviet Union.", "The United States is also a prominent actor in an international regime that attempts to limit the spread of nuclear weapons.", "This regime, although suffering from some setbacks in recent years in Iran and North Korea, includes formal treaties, export control coordination and enforcement, U.N. resolutions, and organizational controls.", "The Nuclear Nonproliferation Treaty (NPT) serves as the cornerstone of this regime, with all but four nations participating in it.", "The International Atomic Energy Agency not only monitors nuclear programs to make sure they remain peaceful, but also helps nations develop and advance those programs.", "Other measures, such as sanctions, interdiction efforts, and informal cooperative endeavors, also seek to slow or stop the spread of nuclear materials and weapons.", "The international community has also adopted a number of agreements that address non-nuclear weapons.", "The CFE Treaty and Open Skies Treaty sought to stabilize the conventional balance in Europe in the waning years of the Cold War.", "The Chemical Weapons and Biological Weapons Conventions sought to eliminate both of these types of weapons completely.", "Other arrangements seek to slow the spread of technologies that nations could use to develop advanced conventional weapons." ], "parent_pair_index": [ -1, 0, 0, -1, 3, 3, -1, 0, 1, 1, 1, -1, -1, 0, 1, -1, -1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Background on Global Climate Change Negotiations", "What Is the Difference Between a \"Convention,\" a \"Protocol,\" and an \"Accord\"?", "What Makes Some International Agreements \"Legally Binding\" but Not Others?", "How Does the United States Become a Party to an International Agreement by Way of Treaty?", "What Effect Does an Agreement Have Domestically Once the United States Becomes a Party to It?", "The United Nations Framework Convention on Climate Change (UNFCCC)", "Is the United States Legally Bound by the UNFCCC?", "When Is an Agreement Formally Adopted Under the UNFCCC?", "The Kyoto Protocol", "Is the United States Legally Bound by the Kyoto Protocol?", "What Obligations Did the United States Incur by Signing the Kyoto Protocol and to What Extent Does It Remain Bound by Those Obligations?", "Can the Kyoto Protocol Be Treated as an Executive Agreement Rather Than as a Treaty?", "The Copenhagen Accord", "Is the United States Legally Bound by the Copenhagen Accord?", "Does the U.S. Constitution Require the President to Submit the Copenhagen Accord to the Senate for Its Advice and Consent?", "Can the Copenhagen Accord Be Used as a Basis for Regulations Imposing Emissions Restrictions on Industry?" ], "paragraphs": [ "", "Formal international negotiations to address human-driven climate change were launched in December 1990. These negotiations yielded the United Nations Framework Convention on Climate Change (UNFCCC) in 1992. The U.S. Senate gave its advice and consent to ratification of the agreement that same year. The UNFCCC entered into force on March 21, 1994. The UNFCCC provides a structure for international consideration of climate change. In particular, it divided countries into \"Annex I countries,\" which are the high income countries listed in Annex I of the UNFCCC, and \"non-Annex I parties,\" which are considered to be relatively low income countries as well as emerging markets. The UNFCCC does not set binding targets for greenhouse gas (\"GHG\") emissions.\nThe Kyoto Protocol to the UNFCCC (the Protocol) was negotiated as the first step towards implementing the UNFCCC. It establishes quantitative emission reduction targets for the high income countries listed in the Protocol's Annex B and market-based mechanisms, including emissions trading, for achieving those targets. The Protocol and decisions adopted under it also establish an elaborate compliance system. Prior to the conclusion of the Protocol on December 11, 1997, the Senate adopted a resolution expressing the view that the United States should not sign any agreement at Kyoto that would either commit developed, but not developing, nations to reduce or limit GHG emissions by a certain date or do \"serious harm\" to the U.S. economy. Nevertheless, the United States signed the Kyoto Protocol on November 12, 1998. Although, in 2001, President George W. Bush announced that the United States would not become a party to the Protocol, most other countries approved it, and it entered into force for its parties on February 16, 2005. The Protocol has not been submitted to the U.S. Senate for its advice and consent to ratification.\nRecognizing that the emissions reductions for the Kyoto Protocol were set for a period that would end in 2012, the 2007 UN Climate Change Conference in Bali adopted the \"Bali Road Map\" as a framework for negotiations over the post-2012 climate regime. In doing so, the parties established two tracks for negotiation: (1) a track by which Kyoto Protocol parties would pursue an amendment to the Protocol for a \"second round\" of emission targets for Annex I parties, and (2) a track by which UNFCCC parties would seek agreement on GHG mitigation targets or actions for all parties. This second \"track\" was called the Bali Action Plan, and the deadline for the conclusion of its negotiations was the December 2009 meeting in Copenhagen, Denmark.\nThe two-track structure of the negotiating process created uncertainty and disagreement over whether the goal at Copenhagen was to reach a single agreement under the UNFCCC that could replace the Kyoto Protocol, or, rather, two agreements, one under the Kyoto Protocol and the other under the UNFCCC. Perhaps because of this uncertainty, there were high expectations about what the outcome of the Copenhagen Conference might be, even though, in the months before the Conference, it became clear that a legally binding agreement was highly unlikely. At the Conference, the 193 delegations were unable to reach a consensus. Consequently, the Copenhagen Accord (the Accord) is the product of negotiations among a much smaller group of countries, including the United States, China, India, Brazil, and South Africa.\nThe Copenhagen Accord is the first U.N. document to explicitly set a goal for capping the rise of global temperatures. It establishes a process that allows each Annex I party to define its own GHG emissions target level. However, delivery of these reductions is subject to measurement, reporting, and verification in accordance with set guidelines. Non-Annex I parties wishing to associate with the Copenhagen Accord should identify and commit to undertaking \"nationally appropriate\" GHG \"mitigation actions\" (NAPAs). Those NAPAs for which international support is provided are subject to international measurement, reporting, and verification requirements.\nMost UNFCCC parties appeared willing to adopt the Accord, but adoption was blocked by Bolivia, Cuba, Sudan, and Venezuela. Consequently, the Conference of the Parties of the UNFCCC (COP) \"took note\" of the text but did not adopt it. Willing countries are invited to \"associate\" with the Copenhagen Accord, but the Accord is not subject to signature. To indicate their intent to associate with the Accord, countries need only submit a letter or a note verbale (an unsigned diplomatic communication prepared in the third person) to the UNFCCC Secretariat. The United States submitted its note verbale to the Executive Secretary of the UNFCCC on January 28, 2010 with a voluntary GHG emissions reduction target of 17% below 2005 levels by 2020. Seventy-six of the 193 countries represented at the Copenhagen Conference, including China, India, Brazil, Indonesia, and South Africa, have submitted GHG emissions targets or, as appropriate, NAPAs to the Executive Secretary of the UNFCCC. More countries are expected to follow suit despite missing the \"soft\" deadline for submissions of January 31, 2010.", "A variety of terms are used in the titles of international agreements, including treaty, convention, protocol, declaration, agreement, act, covenant, statute, concordat, and exchange of notes. Despite their air of formality, these terms are not dispositive of the agreement's legal status. Indeed, some writers suggest that names are assigned to treaties by chance or at the whim of their drafters. However, others have cataloged recurring titles of international agreements in an effort to identify patterns in their usage. These studies suggest that, while an agreement's title is not determinative of that agreement's substance or legal effect, it can help contextualize the agreement in light of historical practices.\nThese studies suggest, for example, that the word \"convention\" typically refers to an agreement that defines or expands upon an area of international relations that is not necessarily fundamental to inter-state relations. In general, the distinguishing characteristic of conventions is their narrow scope. A convention typically addresses a single clearly determined object, although it may also complement other existing rights and obligations. The bulk of major multi-state agreements coordinated by an international organization like the United Nations are called \"conventions.\" In addition framework conventions, like the UNFCCC, are generally understood in international environmental law as setting guidelines by which parties are expected to address an issue and the details for implementation which will be developed by subsequent, more specific, agreements.\nUnlike conventions, protocols are rarely foundational agreements in a field of inter-state relations. Instead, a protocol typically supplements, clarifies, interprets, or modifies the provisions of a primary instrument (most often a convention).\nRelative to \"convention\" and \"protocol,\" the word \"accord\" has been used infrequently in the titles of international agreements and, consequently, does relatively little to suggest what the agreement it describes might have in common with previous international agreements. Nevertheless, when it is used, the word \"accord\" appears to indicate that the agreement is reciprocal, restricted in subject matter, and less formal than other types of agreements.", "Binding and non-binding agreements go by many names, but an agreement is considered binding only if it (1) conveys the intention of its parties to create legally binding relationships under international law and (2) has gone into force. Frequently, the intention of the parties to create legally binding relationships is expressed by the use of mandatory, rather than hortatory, language and the inclusion of \"final clauses\" relating to ratification, entry into force, and other legal formalities. Moreover, statements by the parties that an agreement is not legally binding, or that it invokes only political obligations, are generally evidence that the instrument is not a legally binding agreement.\nWhile some might wish there was a provision or turn of phrase that positively identified an international agreement as \"binding,\" international law's emphasis on the parties' intent has roots in contract law, to which the law of treaties is sometimes compared. Accordingly, the Department of State adopts and expands upon this approach, deeming an agreement legally binding if it (1) is between parties that are states, state agencies, or intergovernmental organizations and who intend their undertaking to be both legally binding and governed by international law; (2) constitutes a significant undertaking or arrangement; (3) includes objective criteria for determining enforceability; and (4) necessarily entails two or more parties so that it is not unilateral in nature. Despite the apparent obliqueness of relying on the parties' intent at all, in most cases, the parties' intent, and therefore the legal nature of the agreement, is clear.\nAlthough legally binding agreements are often touted for being stronger than non-legal agreements, the latter have certain advantages. For example, agreements that are not legally binding can generally be negotiated, adopted, and changed more quickly (largely because they do not require ratification), and they enable states to test and perfect an approach to an international problem that they are unsure how to best address.", "In order for the United States to become bound by an international agreement, it must first complete the steps necessary to become a party. When the United States seeks to enter an agreement by way of treaty, a three-step process must occur before the agreement can become the \"Law of the Land.\" First, the United States must sign the treaty; second, the agreement must be submitted by the Executive to the U.S. Senate for its advice and consent to treaty ratification and two-thirds of the Senators present must give their approval (sometimes inaccurately referred to as \"ratification by the Senate\" ); and third, the President must ratify the agreement by following the terms of the agreement for ratification or accession. International agreements generally require parties to exchange or deposit instruments of ratification in order for them to enter into force.\nIn some instances, the United States may enter legally binding international agreements by means other than treaty. Historically, however, the United States has generally entered significant legally binding environmental agreements by way of treaty.\nSome agreements, however, take slightly different routes to becoming U.S. law. One such category of agreements, \"executive\" agreements, can become U.S. law without receiving the U.S. Senate's advice and consent. Another category, non-self-executing agreements, require Congress to enact implementing legislation to transform the provisions of the agreement, even if it is an executive agreement, into U.S. law.", "Once the United States binds itself to the terms of either an executive agreement or a treaty, the domestic legal effect of that agreement's provisions depends largely on whether the obligations imposed by those provisions are self-executing, i.e. whether they have the force of law without need for further congressional action. In cases where treaty provisions are \"non-self-executing,\" however, implementing legislation may be required to provide U.S. agencies with the domestic legal authority necessary to carry out duties and functions contemplated by the agreement or to make the agreement's obligations enforceable by private parties in U.S. court. While agreements, particularly those providing that certain acts shall not be done, are generally presumed to be self-executing, agreements have been found to be non-self-executing for at least three reasons: (1) the agreement manifests an intention that it shall not become effective as domestic law without the enactment of implementing legislation; (2) the Senate in giving consent to a treaty, or Congress by resolution, requires implementing legislation; or (3) implementing legislation is constitutionally required.\nSelf-executing provisions (i.e., provisions that can be carried out or implemented without subsequent congressional action) generally carry the same legal weight as a federal statute: they are superior to state laws but inferior to constitutional requirements. For their part, non-self-executing provisions are considered to have limited legal status domestically because it is the implementing legislation or regulations that transform these provisions into U.S. law.", "The UNFCCC was the first formal international agreement addressing human-driven climate change. The U.S. Senate provided its advice and consent to the UNFCCC's ratification in 1992, the same year that it was concluded. The UNFCCC entered into force for the United States in 1994. As a framework convention, the UNFCCC provides a structure for international consideration of climate change but does not contain detailed obligations for achieving particular climate-related objectives in each party's territory. It recognizes that climate change is a \"common concern to humankind,\" and, accordingly, requires parties to (1) gather and share information on GHG emissions, national policies, and best practices; (2) launch national strategies for addressing GHG emissions and adapting to expected impacts; and (3) cooperate in preparing for the impacts of climate change. The UNFCCC does not set binding targets for GHG emissions.", "The UNFCCC is a legally binding international agreement because its parties intended it as such and it has entered into force. It was signed by President George H. W. Bush and received the advice and consent of the U.S. Senate in 1992. On March 21, 1994, the ninetieth day following the date of deposit of the fiftieth instrument of ratification or acceptance, the UNFCCC entered force for the United States and the other fifty-one countries who ratified the treaty by that time. Since that date, the terms of the UNFCCC have been binding on the United States under both international and domestic law. The United States implemented the UNFCCC under existing statutes without passing new implementing legislation.\nAlthough the United States is legally bound by the UNFCCC, the UNFCCC does not provide the Executive with an independent source of authority for imposing quantitative emissions restrictions on industry. When a treaty is ratified, any self-executing provisions it contains are the \"Law of the Land.\" Accordingly, the Executive may promulgate regulations to implement these provisions' requirements just as it could in the case of an authorizing federal statute. However, neither the Senate nor the Executive appears to view the UNFCCC as an agreement that, once ratified, provides a legal basis for new regulations restricting GHG emissions by U.S. industries.\nEvidence from the ratification history of an agreement may illustrate the Senate's understanding of the agreement when it gave its approval. During the Senate Foreign Relations Committee hearing on UNFCCC ratification, the George H.W. Bush Administration stated that Article 4.2 of the UNFCCC, which commits the parties to, inter alia, adopt national policies and, accordingly, mitigate climate change by limiting GHG emissions did \"not require any new implementing legislation nor added regulatory programs .\" Perhaps most importantly, it stated that an amendment or future agreement under the UNFCCC to adopt targets and timetables for emissions reductions would be submitted to the Senate for its advice and consent. In the subsequent report, the Senate Committee on Foreign Relations wrote:\n... [A] decision by the Conference of the Parties to adopt targets and timetables would have to be submitted to the Senate for its advice and consent before the United States could deposit its instruments of ratification for such an agreement. The Committee notes further that a decision by the executive branch to reinterpret the Convention to apply legally binding targets and timetables for reducing emissions of greenhouse gases to the United States would alter the \"shared understanding\" of the Convention between the Senate and the executive branch and would therefore require the Senate's advice and consent.\nThe George H.W. Bush Administration's commitment to submit any agreed upon timetables or GHG targets to the Senate was later cited during the Senate debate on advice and consent to ratification as an important element of the Senate's consent. Accordingly, should an executive agency claim that the UNFCCC authorizes it to adopt and implement quantitative emissions restrictions, and, subsequently, face a legal challenge from an affected industry for the imposition of those restrictions, the court hearing the case would most likely deem the Executive's action an unconstitutional usurpation of congressional power because of the UNFCCC's ratification history.", "Articles 15, 16, and 17 of the United Nations Framework Convention on Climate Change govern the adoption of amendments, annexes, and protocols to the UNFCCC. Amendments, annexes and protocols are to be adopted at ordinary sessions of the Conference of the Parties. The text of an amendment, annex, or protocol must be communicated to the parties at least six months before the meeting at which it is proposed for adoption. The parties must make every effort to reach an agreement on a proposed amendment or annex, but, if all efforts at consensus are exhausted, the amendment or annex can be adopted by a three-fourths majority vote of the parties present and voting at the meeting. In the absence of adoption by at least a three-fourths majority vote, the amendment or annex is not considered legally binding under the UNFCCC. Some view these consensus procedures as blocking progress under the UNFCCC, a position which could draw support from the Conference of the Parties' failure to reach an agreement under the UNFCCC process at Copenhagen compared to the relatively quick progress made on initiatives launched outside of that process.\nUnlike the adoption of amendments and annexes, the UNFCCC does not provide a rule for the adoption of protocols. The parties have, moreover, failed to reach an agreement on a voting rule in this context despite years of trying. In the absence of an agreed upon rule for the number of votes necessary to adopt a protocol, protocols are adopted by consensus.\nThe UNFCCC provides that, once adopted, an amendment enters into force under international law for the parties that have accepted it. An adopted annex enters into force under international law for all parties to the Convention that have not notified the Depository of instruments of their non-acceptance. Protocols must define their own entry into force procedures. These rules regarding how agreements relating to the UNFCCC enter into force solely govern the process by which they enter into force for the purposes of establishing parties' obligations under international law. Depending on the circumstances, a party might need to modify its domestic statutes through, for example, implementing legislation, to provide its agencies with the necessary legal authority to regulate relevant matters or to make the agreement's obligations enforceable by private parties in a domestic court.", "The Kyoto Protocol was negotiated as a first step towards implementing the UNFCCC, largely by establishing quantitative emission reduction targets for the high income countries listed in its Annex B. The Protocol's goal is to reduce the overall emissions of those parties by at least 5% below 1990 levels by 2012. The Kyoto Protocol was concluded on December 11, 1997 and signed by the United States a year later (on November 12, 1998). The Kyoto Protocol entered into force for parties on February 16, 2005, four years after the detailed rules for its implementation, the \"Marrakesh Accords,\" were adopted.\nIn addition to emission reduction targets, the Kyoto Protocol establishes market-based mechanisms, including emissions trading among the parties, for achieving those targets. The Protocol and decisions adopted under it also create a compliance system that requires parties to gather GHG emissions data, communicate that information to the UNFCCC Secretariat, and then subject that information to international review by expert review teams. If a party does not meet its obligations under the Protocol, two penalties are available: (1) an increase in the country's emissions reduction target required during the period following the one in which the country failed to comply, and (2) exclusion of that country from the emission trading scheme.\nIn 2001, President George W. Bush announced that the United States would not become a party to the Protocol. Among the reasons given for U.S. non-participation in the Protocol were that it did not include GHG commitments by all large emitting countries and would cause serious harm to the U.S. economy. The Kyoto Protocol has not been submitted to the Senate for its approval.", "The United States is not legally bound by the Kyoto Protocol. While the Kyoto Protocol is a binding international agreement, the United States is not currently a party. The United States signed the Kyoto Protocol on November 12, 1998, but the Protocol has not been submitted to the Senate for its advice and consent. Ratification of the Protocol by the United States would be necessary before the United States may become legally bound by the agreement.", "As discussed, the United States generally is not bound by the terms of an international agreement simply on the basis of its signature unless the agreement constitutes an executive agreement that does not require subsequent congressional action. However, signing does create new obligations. First, it authenticates the text of an agreement, confirming that the text expresses the agreement reached by the negotiating states. Second, it represents a \"moral obligation\" by the United States to pursue accession to the Protocol, in this case, by seeking the Senate's advice and consent. Third, the signature ostensibly obligates the United States to \"refrain from acts which would defeat the object and purpose\" of the agreement. Article 18 of the Vienna Convention on the Law of Treaties states the matter more completely as follows:\nA State is obliged to refrain from acts which would defeat the object and purpose of a treaty when:\n(a) it has signed the treaty or has exchanged instruments constituting the treaty subject to ratification, acceptance or approval, until it shall have made its intention clear not to become a party to the treaty; or\n(b) it has expressed its consent to be bound by the treaty, pending the entry into force of the treaty and provided that such entry into force is not unduly delayed.\nInternational law does not provide a procedure by which a nation can remove its signature from a treaty. Nevertheless, a signatory state may eliminate the legal consequences of signature by making clear its intent not to ratify the treaty. The Vienna Convention on the Law of Treaties (VCLT) does not prescribe a method by which such an intention must be expressed. However, it is generally accepted that a letter from the Secretary of State to the treaty depositary (in this case, the United Nations) would suffice. For example, the George W. Bush Administration sent such a letter in 2002 to extinguish any legal obligations arising from its signature of the \"Rome Statute,\" which established the International Criminal Court. The United States has not sent a similar notice of its disavowal of the Kyoto Protocol to the Secretary-General of the United Nations. Instead, the Bush Administration merely stated, albeit on multiple occasions, that the United States would not participate in the Protocol. What, if any, legal effect these statements have is debatable, but the fact that the George W. Bush Administration followed the most formal procedure with the Rome Statute and a less formal procedure with the Kyoto Protocol could suggest that the United States saw a meaningful distinction between the results achieved by the two procedures and chose which process to follow in each instance accordingly. However, in the absence of an institutional mechanism for enforcing the obligations that arise from a nation's signature, it appears that it is largely up to the United States to determine (1) whether it is still a signatory to the Kyoto Protocol under customary international law and (2) what acts would be inconsistent with those obligations.", "Amendments and agreements entered into pursuant to an existing treaty can be a source of binding international obligations. In general, all contracting states to the original agreement must have an opportunity to (1) take part in the negotiations regarding an amendment; and (2) become parties to the agreement as amended. Under international law, an amendment to a multilateral agreement, like the UNFCCC, only has legal effect for those countries that become parties to the amending agreement.\nUnder U.S. law, amendments are subject to the same requirements as treaties and other binding international agreements. U.S. law, however, permits some kinds of legally binding international agreements, namely some forms of executive agreements, to avoid taking the form of a treaty. These agreements can, therefore, avoid the constitutional requirements imposed on the United States' participation in treaties.\nExecutive agreements, which may or may not be authorized by Congress, are binding agreements entered into by the executive branch that are not submitted to the Senate for its advice and consent. Generally, executive agreements arise in three situations: (1) when Congress has previously or retroactively authorized the international agreement, in which case the agreement is called a congressional-executive agreement; (2) when the agreement is authorized by a ratified treaty; and (3) when the President had independent constitutional authority to enter the agreement so that further congressional action is not necessary (in which case the agreement is called a sole executive agreement). Although not explicitly mentioned in the Constitution, the use of executive agreements has been validated by historical practice and judicial decision. Nevertheless, the full scope of the President's authority to conclude and implement executive agreements, particularly sole executive agreements, remains a subject of scholarly and political debate.\nWhen asked to give its advice and consent to the UNFCCC, the Senate expressed concern that, if ratified, the UNFCCC might be interpreted as authorizing the treatment of subsequent protocols and amendments as executive agreements. During the hearing on the Convention, the Senate Foreign Relations Committee propounded to the Administration the general question of whether protocols and amendments to the Convention and to the Convention's Annexes would be submitted to the Senate for its advice and consent. As discussed, the George H.W. Bush Administration responded as follows:\nAmendments to the convention will be submitted to the Senate for its advice and consent. Amendments to the convention's annex (i.e., changes in the lists of countries contained in annex I and annex II) would not be submitted to the Senate for its advice and consent. With respect to protocols, given that a protocol could be adopted on any number of subjects, treatment of any given protocol would depend on its subject matter. However, we would expect that any protocol would be submitted to the Senate for its advice and consent.\nThe committee also asked more specifically whether a protocol containing targets and timetables for emissions reductions would be submitted. The Administration responded in the affirmative:\nIf such a protocol were negotiated and adopted, and the United States wished to become a party, we would expect such a protocol to be submitted to the Senate.\nIn light of these statements, the Senate Committee on Foreign Relations stated in its report on the resolution that a decision by either the UNFCCC parties or the Executive to implement the UNFCCC by adopting targets and timetables would need to be treated as a new treaty and therefore submitted to the Senate for its advice and consent. In doing so, the Committee provided a clear statement of its view that any future agreement containing legally binding targets and timetables would have to be submitted to the Senate. These statements lack the strength of a formal condition to the Senate's resolution of ratification for the UNFCCC, but they carry both legal and political significance and, consequently, would be potentially dangerous for any administration to disregard.\nWhile it should be noted that no executive agreement appears to have been invalidated by a court on the grounds that it was not submitted to the Senate as a treaty, history also shows that the United States consistently enters multilateral agreements concerning significant environmental issues by way of treaty. Given the nature of the Protocol and the Senate's statements on the ratification of the UNFCCC, it is unlikely that an Administration would opt to deviate from the usual U.S. approach to environmental agreements by adopting the Kyoto Protocol without Senate approval. Moreover, the failure of the parties to reach an agreement on post-2012 emissions targets at Copenhagen may detract from the future significance of the Kyoto Protocol and give the Executive yet another reason not to desire the Protocol's adoption as an executive agreement.\nBecause the United States has not completed the legal prerequisites by which the Kyoto Protocol would become binding domestic law, the Kyoto Protocol cannot serve as independent legal authority for imposing quantitative emissions restrictions on U.S. industry. There have, however, been rare occasions when treaties have been given provisional application (temporary implementation) prior to their receipt of the Senate's advice and consent. Nevertheless, the Protocol appears to lack the legal authority to sustain its provisional application because, unlike other agreements that have received provisional application, neither the Protocol's text nor statements by its parties suggest that the Kyoto Protocol was negotiated with an expectation of its provisional application.\nIn general, the provisional application of a treaty requires that the President have independent constitutional authority, or, potentially, some form of approval from the legislative branch, to enter into a binding executive agreement that would undertake what provisional application of the treaty entails. However, the President presumably lacks the authority to enter into an executive agreement that would temporarily implement the Protocol. Finally, rather than expressly or implicitly authorizing the provisional application of the Protocol, in 1997 the Senate adopted a resolution on a vote of 95-0 expressing the view that the United States should not sign any agreement at Kyoto that would commit developed, but not developing, nations to reduce or limit GHG emissions by a certain date or that would do \"serious harm\" to the U.S. economy.", "The Copenhagen Accord is the first U.N. document to explicitly state the goal of limiting global temperature rise to 2 degrees Celsius (3.6 degrees Fahrenheit) compared to pre-industrial levels. It establishes a process that allows each Annex I party to define its own GHG emissions target level. However, delivery of these reductions is subject to measurement, reporting, and verification in accordance with set guidelines. It asks non-Annex I parties wishing to associate with the Copenhagen Accord to identify and commit to undertaking \"nationally appropriate\" GHG \"mitigation actions\" (\"NAPAs\"). All NAPAs, regardless of whether their receipt of international support, are subject to provisions for \"international consultations and analysis\" and domestic measurement, reporting, and verification. Those NAPAs for which international support is provided, however, are also subject to international measurement, reporting, and verification requirements. The Accord calls for $30 billion in funding between 2010-2012 to help poorer countries adapt to the impacts of climate change.\nThe Accord could not be adopted under the UNFCCC because it failed to garner sufficient support to meet the UNFCCC's consensus rules. Consequently, the Conference of the Parties only \"took note\" of the text. Willing countries are invited to join the Copenhagen Accord, but the Accord is not subject to signature.\nThe United States submitted a note verbale to the Executive Secretary of the UNFCCC on January 28, 2010, declaring U.S. intent to associate with the Copenhagen Accord. Pursuant to the terms of the Accord, the United States attached a voluntary GHG emissions reduction target of 17% below 2005 levels by 2020. Seventy-six of the 193 countries represented at the Copenhagen Conference, including China, India, Brazil, Indonesia, and South Africa, have submitted GHG emissions targets or, when appropriate, NAPAs to the Executive Secretary of the UNFCCC. More countries are expected to follow suit despite missing the \"soft\" deadline for submissions of January 31, 2010.", "The United States is not legally bound by the Copenhagen Accord. Statements of the parties to the Copenhagen Accord show that the parties understood the Accord as political agreement, rather than a legally binding one. This understanding has since been reflected in statements by both the UN Secretary General and the Executive Secretary of the UNFCCC. Consequently, the Accord is not a legally binding international agreement.\nIn light of the voluntary nature of the Accord, countries may \"associate with,\" rather than sign, the Copenhagen Accord. To communicate their intention to associate with the Accord, countries were asked to submit a note verbale, an unsigned diplomatic communication prepared in the third person, to the Executive Secretary of the UNFCCC. The United States has submitted a letter to the Executive Secretary indicating its intention to be associated with the Accord, however, because the agreement is not legally binding, this association does not necessarily require U.S. adherence with the Accord's provisions.\nThe Conference of the Parties' failure to formally adopt the Copenhagen Accord means that, in addition to being voluntary, the Accord lacks legal standing under the UNFCCC. As noted above, because a small group of countries objected to the Accord, the COP could not achieve the consensus required by the UNFCCC for formal adoption. Accordingly, the COP agreed only to \"take note of\" the Copenhagen Accord. The Executive Secretary of the UNFCCC explained that this decision means the provisions of the Accord \"do not have any legal standing with the UNFCCC process even if some Parties decide to associate themselves with it.\"", "The Constitution does not appear to require the President to submit the Copenhagen Accord to the Senate for its advice and consent. The Senate's advice and consent is only required if the executive branch is considering action to legally bind the United States to an international agreement. As is, the Copenhagen Accord is a voluntary agreement: no party has a legal responsibility to fulfill the commitments therein, but states might use political actions to discourage a party's noncooperation. From the international law perspective then, the Copenhagen Accord is not a treaty.\nFrom a constitutional perspective, the practice of the Executive adopting voluntary, or political, commitments has largely evaded a serious examination of its constitutional foundations. However, the Constitution explicitly affords treaties a unique domestic legal status as part of the \"supreme Law of the Land,\" a position that voluntary agreements, which go unmentioned in the Constitution, necessarily lack. This presence of constitutional language regarding treaties and its corresponding absence regarding voluntary agreements strongly suggests that the Copenhagen Accord, as a voluntary agreement, does not require the Senate's approval.\nNevertheless, some commentators have recently suggested that voluntary agreements and other international political commitments have evolved over time to become functionally akin to treaties, and, therefore, should require some level of Senate approval prior to their adoption. Regardless of the merits of this argument, the Senate will presumably influence the domestic effect of the Copenhagen Accord through its role in appropriations, oversight, and the enactment of domestic legislation. It may be difficult for the United States to achieve its voluntary commitment to reduce its overall greenhouse gas emissions by 17% below 2005 levels by 2020 without congressional support.", "The Copenhagen Accord cannot be used as an independent basis for agency regulations imposing emissions restrictions on industry. When a treaty is ratified, any self-executing provisions it contains are the \"Law of the Land.\" Accordingly, the Executive could promulgate regulations to implement these provisions' requirements just as it could to implement a federal statutory regime that authorizes agency rulemaking. As the Copenhagen Accord is neither the \"Law of the Land\" nor self-executing, the Copenhagen Accord is an unlikely basis for regulations imposing emissions restrictions on industry.\nAlthough the Executive branch may not rely on the Copenhagen Accord as a basis for regulations, it may be able to rely on authority under the Clean Air Act (42 U.S.C. § 7521 et. seq. ) to implement some GHG emission reducing measures. Domestic climate change legislation would not require Senate approval of the Accord or any other international climate change agreements. Congress may enact laws that support provisions of the Copenhagen Accord under one or more of its enumerated powers in Article I, § 8 of the Constitution." ], "depth": [ 0, 1, 1, 1, 1, 1, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h0_full h5_full h2_full h1_full", "", "h3_full", "h4_full h1_full", "", "h0_title h3_title", "h0_full", "h3_full", "h4_title h1_full", "h1_full", "h1_full", "h4_full", "h5_full", "", "h5_full", "" ] }

{ "question": [ "What policy opened for signature and was ratified by the US in 1992?", "What does this policy entail?", "What was the Kyoto Protocol intended as?", "How does it act as a first step?", "What is the Protocol's goal?", "What happened to the Protocol in 1998?", "How was this extended during the Bush Administration?", "How was this extended during the Obama Administration?", "What happened at the 2007 UN Climate Change Conference?", "What did this framework establish?", "How was this framework received at the 2009 Copenhagen Conference?", "What was the outcome of this conference?", "What is the Accord's policy for Annex I parties in regards to GHG emissions target level?", "What is the Accord's policy for \"Non-Annex I\" parties?", "What issues exist with the labels \"convention,\" \"protocol,\" and \"accord\"?", "Under international law, when is an agreement considered binding?", "How has this been disputed?", "Under U.S. law, what is a legally binding international agreement?", "What must the US do to enter a treaty?", "What are the circumstances for an executive agreement?", "Historically, how have such agreements been handled?", "Which of the agreements discussed are considered legally binding under international law?", "What is the US's intent towards the Copenhagen Accord?", "What does this entail?", "How does the Accord treat Congress?", "What implications does this have for the power of the Executive?" ], "summary": [ "The United Nations Framework Convention on Climate Change (UNFCCC) opened for signature in 1992 and soon thereafter was ratified by the United States.", "The UNFCCC does not set greenhouse gas (GHG) emissions reduction targets, and during ratification hearings, the George H.W. Bush Administration represented that any protocol or amendment to the UNFCCC creating binding GHG emissions targets would be submitted to the Senate for its advice and consent.", "The Kyoto Protocol (the Protocol) to the UNFCCC was intended as a first step towards implementing the UNFCCC.", "To that end, it sets quantitative emission reduction targets for the high income countries listed in its Annex B.", "The Protocol's goal is to reduce each parties' overall emissions by at least 5% below 1990 levels by 2012.", "Although the United States signed the Protocol in 1998, it did not submit the Protocol to the Senate.", "The George W. Bush Administration announced in 2001 that it would not pursue U.S. accession to the Protocol.", "The Obama Administration has followed this policy.", "In 2007, the UN Climate Change Conference in Bali adopted a framework for negotiations over the post-2012 climate regime.", "It established two tracks for negotiation: (1) a track by which Kyoto Protocol parties would pursue an amendment to the Protocol for a \"second round\" of emission targets for its Annex B parties, and (2) a track by which UNFCCC parties would set GHG mitigation targets or actions for all parties.", "However, consensus under either track proved difficult to achieve at the 2009 Copenhagen Conference of the Parties.", "The outcome, the Copenhagen Accord (the Accord), is consequently considered a non-binding political agreement.", "The Accord allows each high income party listed in Annex I of the UNFCCC to define its own GHG emissions target level.", "\"Non-Annex I\" parties wishing to associate with the Accord must identify and commit to undertaking \"nationally appropriate mitigation actions,\" which may receive international support subject to certain international reporting requirements.", "The labels \"convention,\" \"protocol,\" and \"accord\" are not clear indicators of whether these three climate change agreements are binding internationally and/or domestically.", "Under international law, an agreement is considered binding only if it conveys the intention of its parties to create legally binding relationships and has entered into force.", "However, some have suggested that enforceability, rather than intentions, should govern whether an agreement is \"legally binding.\"", "Under U.S. law, a legally binding international agreement may take the form of a treaty or an executive agreement.", "In order for the United States to enter a treaty, the agreement must be approved by a two-thirds majority of the Senate and subsequently be ratified by the President.", "An executive agreement does not require the Senate's advice and consent in order to be legally binding.", "Historically, executive agreements have arisen in a limited set of circumstances, and certain subjects, including significant global environmental issues, have traditionally been handled as treaties that require the Senate's approval.", "Of the three agreements discussed, only the UNFCCC and the Kyoto Protocol are considered legally binding agreements under international law, and the United States is bound only by the former.", "The United States has, however, indicated its intent to associate with the Copenhagen Accord.", "In doing so, it voluntarily committed to reduce U.S. emissions by 17% below 2005 levels by 2020.", "The Accord does not implicate the treaty power of Congress, which will likely shape the domestic effect of the Copenhagen Accord through appropriations and lawmaking. The Accord does not appear to empower the Executive to implement it solely by agency actions.", "The Accord does not appear to empower the Executive to implement it solely by agency actions." ], "parent_pair_index": [ -1, 0, -1, 0, 0, -1, 3, 3, -1, 0, 0, 2, -1, 4, -1, -1, 1, -1, 0, 0, 0, -1, -1, 1, -1, 3 ], "summary_paragraph_index": [ 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Patent Law Fundamentals", "The \"Patent Trolls\" Controversy", "Enforcement by PAEs", "PAEs vs. Other Non-Practicing Entities", "The Impact on Innovation", "Behind the Rise of PAEs", "Notice Failure", "Section 112 of the Patent Act", "The Patent Thicket", "Uneven Bargaining Power", "Legislation in the 113th Congress", "Other Legislative Options", "IT-Specific Reform", "Improving Notice", "Reducing Leverage, Hold-Up, and Settlement Pressure", "Escalating Costs or Diminishing Rights Over Time", "Consequences for Dormancy", "Patent Market" ], "paragraphs": [ "", "Congress has recently demonstrated significant ongoing interest in the issue of \"patent assertion entities\" (PAEs), which are popularly referred to as \"patent trolls.\" The Leahy-Smith America Invents Act of 2011 (AIA) included an order for further study of PAE litigation, and in March 2013, the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet held a hearing on \"abusive patent litigation\" and PAEs. Furthermore, in July 2012, both the House and the Senate held hearings regarding patent disputes at the International Trade Commission (ITC), which has seen a surge in patent complaints as federal courts have become less patent holder-friendly after passage of the AIA in 2011 and a landmark Supreme Court ruling in 2006. The much-publicized proliferation of PAEs was among the central factors that prompted the AIA, but at the end of the day, Congress passed a few provisions arguably addressing PAEs while leaving several other PAE-related issues unresolved, apparently in light of lively debate over what, if anything, should be done about them.\nThe PAE business model focuses not on developing or commercializing technologies but on buying and asserting patents against companies that have already begun using them, often after independently developing them without knowledge of the PAE's patent, according to a report by the Federal Trade Commission (FTC). PAEs emerged alongside the burgeoning tech industry around the turn of the 21 st century and gained notoriety with lawsuits claiming exclusive ownership of such ubiquitous technologies as wireless email, digital video streaming, and the interactive web. They have had the attention of Congress, the press, and the public since at least 2006, when a successful PAE suit almost caused the shutdown of BlackBerry wireless service.\nSuch victories in court are rare for PAEs. According to one empirical study, they lose 92% of merits judgments, but few cases make it that far. The vast majority end in settlements because litigation is risky, costly, and disruptive for defendants, and PAEs often offer to settle for amounts well below litigation costs to make the business decision to settle an obvious one.\nObservers expect that the AIA will reduce the volume of meritless lawsuits, but not dramatically. While the provisions for post-grant examination and transitional scrubbing of business method patents will help with assertions of invalid patents, they do not address the supposed use of valid patents to extract undue royalties from defendants that are either locked in to the patented technology or not infringing the patent at all. Additionally, post-grant examination is not available for patents granted prior to the AIA, and the AIA's restrictions on joinder do not apply in a case brought before the ITC (thus, PAEs could still name multiple parties as respondents in a single ITC complaint even if they have no relation to each other).\nReform advocates fear that PAEs impede innovation, undermine the patent system, and wreak havoc on businesses that play a vital role in the American economy. According to one study, PAE activity cost defendants and licensees $29 billion in 2011, a 400% increase over $7 billion in 2005, and the losses are mostly deadweight, with less than 25% flowing to innovation and at least that much going towards legal fees. Another recent study suggests that PAE activity could harm competition to the extent that operating companies use or \"sponsor\" PAEs as a means of imposing costs on rivals and achieving other anticompetitive ends.\nDefenders of PAEs argue that they actually promote invention by increasing the liquidity and managing the risk of investments in applied research and invention, as well as by compensating small inventors. PAEs' strongest allies include universities and other non-practicing entities that benefit from having PAEs as buyers for their patents and are not as vulnerable to lawsuits because they ordinarily do not make or sell anything that could be infringing. Other defenders of the status quo raise concerns about unintended consequences and collateral effects of changes to the law.\nThe Federal Trade Commission and numerous scholars suggest that PAE activity does indeed have beneficial effects but that, under current law, these benefits are significantly outweighed by the costs. What remains unclear is the extent of the imbalance between costs and benefits and whether Congress should attempt to rebalance any disparity. In Section 34 of the AIA, Congress instructed the Government Accountability Office to study the costs, benefits, and consequences of litigation by \"non-practicing entities\" and \"patent assertion entities\" and report back with findings and recommendations on how to \"minimize any negative impact\" of such litigation by September 2012; however, as of the date of this report, the study has not yet been released.\nThis report reviews the current debate and controversy surrounding PAEs, examines the reasons for the rise in PAE litigation, and explores the legislative options available to Congress if it decides that PAEs are an issue that should be addressed.", "Patent law finds its constitutional basis in Article I, Section 8, Clause 8, of the U.S. Constitution and its statutory basis in the Patent Act of 1952. Patents provide the right to exclude others from making, using, selling, or importing claimed inventions for a limited period of time, generally 20 years. Inventors may acquire patents by submitting an application to the U.S. Patent and Trademark Office (PTO), where officials will examine it to determine whether the statutory requirements are met. This process is commonly known as \"prosecution.\"\nApplications consist of \"claims\" establishing the metes and bounds of the patent property right, which is typically broader than the specific invention, and a \"specification\" that describes the claimed invention. The specification must be detailed and concrete enough to enable others to make and use the invention without undue experimentation. Claims must consist of a patentable subject matter—\"any new and useful process, machine, manufacture, or any composition of matter, or any new and useful improvement thereof\"—rather than abstract ideas or law of nature, and satisfy substantive requirements of novelty, nonobviousness, and utility.\nThe patent holder may enforce its rights by filing infringement suits in federal court against anyone who makes, uses, sells, or imports the patented technology, regardless of whether it was copied or developed independently. Courts presume that patents granted by the PTO are valid, but accused infringers may introduce evidence of invalidity or unenforceability. The patent holder bears the burden of establishing infringement by each alleged infringer. Patent litigation is very expensive; the average suit in which $1 million to $25 million is at stake costs $1.6 million through discovery and $2.8 million through trial.\nUpon a finding of infringement, a federal court may issue an injunction if doing so seems more equitable than simply awarding monetary damages. The statute also provides for the award of 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 U.S. Court of Appeals for the Federal Circuit has national jurisdiction over most patent appeals from the district courts.\nA patent holder can also enforce its rights by filing a complaint with the International Trade Commission (ITC), which may issue an exclusion order blocking importation of the infringing product into the United States. The ITC is not authorized to issue damages, however.", "Skyrocketing rates of patent litigation since the turn of the 21 st century have often been tied to the rise of \"patent assertion entities\" (PAEs), businesses modeled on \"purchasing and asserting patents against manufacturers who may be using the technology\" rather than developing or commercializing the technologies themselves. They are frequently accused of being classic arbitrageurs, taking advantage of the \"large gap between the cost of getting a patent and the value that can be captured with an infringement action\" in the information technology (IT) sector.\nPAEs are frequently referred to as \"patent trolls,\" after the villains of folklore known to lie in wait under bridges they did not build, then emerge from the smog to demand tolls from unsuspecting travelers. The term \"troll\" is controversial because it is both pejorative and ambiguous, often used imprecisely for any opportunistic or unpopular patent holder. But it is best understood as an epithet for PAEs, which object to the label and argue essentially that the fees they collect are legitimate and needed to fund investment in infrastructure—that if they did not take tolls, bridges would be fewer in number and lower in quality.", "PAEs seek to license their patents primarily ex post facto —often after defendants have independently invented and begun using a technology allegedly covered by their patents, and frequently only after it has become ubiquitous or standard-essential in an industry.\nIndeed, the average patent asserted by the most litigious PAEs is not litigated for the first time, or assigned to its final owner, until seven years into its term, according to a study by Professor Michael Risch. By contrast, product firms tend to assert their patents early in the patent term, and Professor Brian J. Love finds that the gap in litigation timing is such that \"the average product-company patent has been shelved by its owner before the average NPE patent has even been asserted.\"\nPAEs suggest that they simply enforce patent property rights against infringers, but much of the controversy surrounding their activities comes from the impression that they lack valid claims to the royalties they demand and receive. Studies suggest that PAEs rarely prevail on the merits. Their win rate in cases decided on the merits is just 8%, versus 40% for other entities, according to a study by Professors John R. Allison, Mark A. Lemley, and Joshua Walker. But they persist with litigation nonetheless, apparently supported by the licensing fees obtained by posing a credible threat of extended litigation.\nContrary to popular belief, however, PAEs do not lose more because their patents are weaker or more likely to be invalid, according to Villanova University Law Professor Michael Risch. In fact, he finds the patents asserted by the most litigious PAEs to be on par with other patents by objective measures of quality and value, and no studies supports the idea that they are especially prone to invalidation, relative to other patents. Rather, PAEs often fail to show infringement, perhaps because they seek and depend upon overly broad constructions of what their patent claims cover.", "PAEs describe themselves as critical intermediaries. Some claim to offer \"department stores\" for patents, providing one-stop shopping for licensing and purchase. Others suggest they serve key functions by enabling individual inventors, who generate about 12% of patents, to earn returns despite lacking the resources to enforce or commercialize their patents themselves.\nNo one doubts that an efficient patent system needs intermediaries who reduce transaction costs between those who invent things and those who develop and commercialize them. Many observers note, however, that PAEs \"do not seem to operate that way,\" and that other non-practicing entities (NPEs) serve these functions more efficiently and without \"trolling\" tactics. PAEs are alleged to be one-of-a-kind in that they are said to speculate on patents—they bet on how much more a patent will be worth in the future, when it is asserted, and focus on high-risk high-yield acquisitions.\nOther NPEs with licensing-based business models include technology development firms and licensing agents, but PAEs differ from these in that they generally offer licenses only after infringement and lock-in have begun. The FTC explained that while other NPEs transfer technologies that they or their clients invented and developed so that licensees can benefit from not having to develop them in-house, PAEs transfer nothing but a legal right not to be sued for using a technology that the licensee may have already invested in developing on its own, without help from the PAE or its patents. PAEs also diverge from other NPEs that enforce patents because they focus on acquiring patents outright and asserting them on their own behalf, as opposed to providing services and collecting fees or a slice of the litigation award.", "PAEs have frequently been accused of imposing a \"tax on innovation\" and undermining or impairing the incentives that patent law aims to create. Yet PAEs have also been defended on the grounds that they actually promote invention by adding liquidity, absorbing some of the risk otherwise borne by investors, and getting more royalties for small inventors. Without a doubt, PAEs both add to and subtract from the incentives of patent law, but the FTC and many experts in the field indicate that they currently do more harm than good to innovation and the patent system. The extent of this imbalance—and whether Congress could or should recalibrate it to \"support the beneficial effects, and lessen the detrimental ones\"—remains unclear, however.\nTo the extent that PAEs wait to seek licenses until defendants have sunk costs into a product or invested in developing a disputed technology on their own, the FTC suggests that they can deter innovation by raising costs and risks for the companies and investors that actually bring products to market. Investment decisions must factor in the likelihood that PAEs will later emerge and demand royalties or bring costly litigation, directly reducing returns on investment. Faced with lower profit margins and uncertain but potentially significant risk, manufacturers may find that some R&D projects, features, and product improvements are simply not worth doing, even if beneficial to consumers. Similarly, startups and small businesses may have a harder time getting funding from venture capitalists and other investors who anticipate future PAE demands.\nThere are also opportunity costs as productive entities divert funds from R&D to deal with PAEs. In addition to the obvious diversion to pay licensing fees and legal costs, there has also been a shift towards investing in PAEs instead of startups or other ventures. Some investors buy stakes in PAEs to hedge against the limitless risk of being sued by PAEs—strengthening them to deal with the damage they may experience elsewhere. One high-tech entrepreneur explained that \"[i]f patent laws continue to be as they are, this is the only way I can see that allows any level of protection.\" Other investors have simply realized that PAEs offer great returns on investment—better than many startups—and shifted funding in their direction.\nOn the other hand, PAEs argue they actually promote investment in invention. Nathan Myhrvold, CEO of PAE giant Intellectual Ventures, styles his company as pioneering a \"capital market for inventions akin to the venture capital market that supports start-ups and the private equity market that revitalizes inefficient companies.\" The most recognized benefit of PAE activity is increased liquidity and better risk management for investments in applied research and invention. By enlivening a secondary market for patents, PAEs provide an exit option and/or extra revenue stream for a variety of patentees. They absorb and manage the high risk by spreading it across large portfolios of patents and extracting value out of otherwise low-value or dormant patents.\nPatentees who do not or cannot commercialize in the \"primary\" market for technology might recoup their costs and perhaps see some returns by selling their patents to PAEs and retaining a cut of future royalties. PAEs suggest this function is especially essential for small inventors and NPEs that would otherwise have a hard time getting any value from their inventions.\nNPEs that routinely obtain and sell patents in the secondary market—universities in particular—benefit directly from, and in proportion to, PAE activity. The more licensing fees PAEs obtain, the more these inventors earn from their patents, and the greater their incentives to invent.\nThe FTC, however, warns that an increase in the volume of inventions attributable to PAEs should not be taken as a trump card: \"Paying inventors only to invent and patent may generate more i n vention and patents , but it may not generate more innovation . Invention is only the first step in a lengthy and expensive development process to bring an innovation to market.\"\nPAEs may create disincentives for firms to invest in the rest of the process to turn inventions into products and bring them to market. The more a firm invests in R&D, the more likely it is to be sued by a PAE. And each extra dollar PAEs pay out for patents in the secondary market may deduct from the profits of firms that actually commercialize and make use of patented technologies.\nJames Bessen and Michael J. Meurer have reported that of the $29 billion PAEs cost defendants in 2011, no more than 25% of it flowed back to innovation—the rest they categorize as deadweight loss. In other words, this report calculated that only a fraction of defendant losses go towards the benefits PAEs assert. Empirical research has also raised doubts about how much PAEs actually help small inventors and startups. Another Bessen-Meurer study indicated that less than 2% of losses in wealth caused by PAEs passed through to independent inventors, which according to other studies supply only 29% of PAE patents; 43% come from large firms. PAEs also impose costs upon small- and mid-sized businesses, which comprised 90% of defendants sued by PAEs in 2011 and bore 37% of the direct costs, according to Bessen and Meurer.", "Experts attribute the proliferation of PAEs over the past 10 to 15 years to the explosion of the information technology (IT) industry and patent law's struggle to adapt to the unique issues presented by this new frontier of innovation. They indicate that the PAE business model is not about licensing patents generally but high-tech patents in particular, including those on software and business methods or processes related to software, as well as computers and electronics.\nWhy do high-tech patents attract and enable PAEs? First, inadvertent infringement is said to be inevitable due to notice failure and the so-called \"patent thicket,\" among other things. Second, uneven bargaining power enables PAEs to negotiate excessive royalties from infringers and undue royalties from non-infringers. The high value that can be extracted from patents that have been plausibly or actually infringed, together with the relatively low cost of acquiring and warehousing them, invites arbitrage.", "There is virtually universal agreement that \"notice failure\" in the IT sector has contributed to the rise of PAEs, as well as the rise in patent litigation generally. In an optimal patent regime, patent property rights are clearly defined and easily determined so the world is on notice as to their existence, scope, and ownership. This \"notice function\" enables people to avoid infringement, negotiate permission to use others' IP, and maximize efficiency, such as by not keeping all inventions as trade secrets or doing R&D on inventions already claimed by someone else.\nThe relative success of the patent system for pharmaceuticals has been linked in part to a manageable volume of clearly defined claims. By contrast, the notice function has broken down in the IT sector. There are two aspects to notice failure: (1) claims have \"fuzzy boundaries\" that cannot be reliably determined, much less known in advance, without litigation; (2) it is economically infeasible or irrational for defendants to search through existing patents to avoid infringement.", "Several provisions of §112 are supposed to filter out abstract or ambiguous patents and ensure the world is on notice as to what each patent covers. The FTC and many observers indicate that these requirements have been less stringently applied and enforced in the IT industry than other sectors where notice failure is less of a problem.\nFirst, the \"definiteness\" requirement limits the ambiguity of the patent \"claim\" language, which establishes the metes and bounds of the patent property right. Claims must \"particularly point[] out and distinctly claim[] the subject matter which the applicant regards as his invention.\" Yet critics say the provision has had no teeth since 2001, when the Federal Circuit replaced a test requiring claims to be \"plain on their face\" with one under which claims are only invalid for indefiniteness if \"insolubly ambiguous\" and subject to \"no narrowing construction.\" The test, deemed a \"disaster\" by some, dramatically widened the \"zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims.\"\nSecond, the boundaries set by the patent claims are sharpened by looking at the accompanying disclosures, which according to the FTC should explain what the claims cover in a more detailed and concrete way so as to clarify ambiguities around the outer edges that may exist or arise later. It must include a specific \"written description\" of the claimed invention and enough explanatory details to \"enable\" others in the field to make and use it. Here, too, observers assert that IT patents undergo less stringent review than other types of patents, and some suggest that this permits more abstract patents and inventions that exist only on paper. If §112 rules are loosely enforced and ambiguity does not put patents at risk of later invalidation, patentees may have less incentive to write definite claims and concrete, detailed disclosures (because every detail added may cabin their patent property right later).", "According to commentators, several conditions in the IT sector make it economically and/or practically infeasible or irrational for manufacturers to find and clear all patents incorporated in a given product. They report that, as a result, in most cases, \"the first notice of the patent [is] the filing of the lawsuit,\" at which point it is too late to design around the technology or negotiate a reasonable royalty rate because the producer has become locked in. The leverage this gives to PAEs will be discussed further below. This section explains why it is often said that virtually all IT products inadvertently infringe some patent(s) and why the industry has apparently taken to ignoring patents altogether.\nCommentators indicate the IT sector is mired in what they call a \"patent thicket,\" meaning a \"dense web of overlapping [IP] rights that a company must hack its way through . . . to actually commercialize new technology.\" According to many observers, the set of potentially relevant patents for any IT product is overwhelming due to both the number of (overlapping and possibly invalid) patents granted in this area and the number of components incorporated in each product.\nEven for products with relatively few patents to review, commentators indicate that their \"fuzzy boundaries\" would still make it a futile endeavor, and under the doctrine of willful infringement, a risky one. That doctrine has been criticized for creating perverse disincentives by exposing defendants who looked at patents they are later found to infringe to enhanced damages, adding to the cost, risk, and duration of litigation. If those issues were addressed, a full search would still entail huge costs for marginal returns, insuring against neither infringement nor litigation.\nEven the most thorough search will leave some stones unturned—those pending at the PTO. Between the application and issuance dates, patent claims cannot be accessed or checked by other firms, which meanwhile might develop and market infringing products. Strategic use of continuation practice to keep patents pending and hidden longer at the PTO has become an increasingly common and criticized practice.\nFinally, clearing the patent thicket does nothing to prevent weak or baseless suits brought only to extract a settlement from the defendant. Recall that PAEs lose 92% of merits judgments and settle the vast majority of their assertions. These figures may be attributable to uneven bargaining power, which is the subject of the next section.", "PAEs occupy highly advantageous bargaining positions, and their leverage over defendants has been attributed to an asymmetry of costs and risk that breaks down into three factors: high litigation costs and no way to dispose of weak suits early; the risk of potentially debilitating liability for defendants; and the lack of any major risk or disincentive for PAE plaintiffs to litigate.\nFirst, patent litigation is expensive, and there is no quick or affordable way to get rid of a patent suit except to settle. Defendants frequently find settlement the most cost-effective option, even if they are certain that they are not infringing. The AIA provisions increasing the speed and availability of post-grant examination is expected to ameliorate this issue somewhat for invalid patents granted after 2011. Defendants will be able to challenge a patent's validity, but not its scope or the claim of infringement, at a much lower cost than they can in court, where they must overcome a presumption of validity by clear and convincing evidence to get a patent invalidated.\nSecond, where injunctive relief is available to PAEs, what commentators call the \"patent holdup\" problem arises as PAEs leverage the threat of an injunction in royalty negotiations to \"capture far more than the intrinsic value of their invention.\" Those wielding this power have described it as a \"Damocles sword.\" Patent holdup is said to be particularly acute in the IT sector because products incorporate dozens or even thousands of patented features or components, and the owner of any one of them can keep the entire product off the market.\nIn 2006, the Supreme Court took a step towards fixing the so-called holdup problem with its decision in eBay v. MercExchange , which enabled lower courts to deny injunctive relief to PAEs and issue only monetary damages for infringement. The case overturned a longstanding \"general rule\" of the Federal Circuit that injunctions issue automatically upon a finding of infringement. Courts now apply a four-factor balancing test that tends to weigh against PAEs. Indeed, few injunctions have been granted in patent infringement cases since eBay .\nScholars have raised concerns that PAEs have now shifted their holdup efforts to the International Trade Commission (ITC), a quasi-judicial federal agency that grants \"exclusion orders\" that stop the import of infringing products into the United States. The ITC has responded to the concerns with data showing that just 8% of post- eBay ITC investigations arose from complaints by PAEs, only one of which obtained an exclusion order. But both sides may be correct if, as the scholars suggest, each of the PAE complaints ensnares entire industries by asserting that industry standards, adopted and incorporated by all manufacturers, infringe their patents.\nThird, by contrast to their targets, PAEs have nothing to lose and much to gain by litigating aggressively. Unlike most other patentee-plaintiffs, PAEs pursuing infringement suits \"do not risk disruption to their core business\" because \"patent enforcement is their core business.\"\nBecause PAEs are NPEs that do not make or sell anything, they are not subject to counterclaims that they infringe on defendants' patents. By contrast, when a product firm sues another firm for infringement, the defendant can dig up or acquire a patent that the plaintiff's products might infringe and counterclaim. The resulting dynamic of mutual assured destruction makes bargain power more even, settlement more likely, and litigation far less appealing. Compounding that leverage, the PAE business model creates unusual incentives for PAEs to forge ahead with weak suits (rather than calling it a loss or accepting a lowball settlement) to reinforce their bargaining position with future targets. The ability to extract licensing fees depends upon posing a credible threat of costly litigation.\nPAEs also have less to lose than other plaintiffs if a patent is invalidated or narrowly construed. Although PAEs lose future revenue when a lucrative patent is invalidated, this cannot deter them from litigating because the whole value of a PAE's patents depends upon its demands being backed by a credible threat of litigation. Additionally, by the time a validity judgment comes down, the PAE will often have already extracted royalties from other defendants, and these licensing and settlement agreements are often one-time, non-refundable deals.\nThe joinder limitations included in the America Invents Act might reduce the leverage PAEs can exert. Section 19 of the AIA restricts the ability to sue multiple unrelated defendants for infringement in the same case or same trial \"based solely on allegations that they each have infringed the patent or patents in suit,\" which had become a common practice among PAEs. PAEs must now incur more costs per defendant they sue and face multiple assessments of validity, each with potential collateral estoppel effect. Commentators have predicted that Section 19 will have an impact but not a tremendously significant one, potentially reducing the number of defendants getting sued while increasing the number of suits filed. But if the threat of litigation that gives force to a PAE's licensing demands becomes less credible because it cannot follow through with suing all firms that refuse to buy a license, then its leverage is reduced.", "On February 27, 2013, Representatives Peter DeFazio and Jason Chaffetz introduced the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act of 2013 ( H.R. 845 ), which is intended to make PAEs responsible for paying alleged infringers' court costs and attorney's fees if they lose their infringement case in court. A previous version of the SHIELD Act had been introduced in the 112 th Congress but did not see action. The Patent Act currently provides a court with the power to award reasonable attorney's fees to the prevailing party \"in exceptional cases.\" The SHIELD Act of 2013 would amend the Patent Act by inserting a new Section 285A, which would require a court, in an action involving the validity or infringement of a patent, to award full litigation costs (including reasonable attorney's fees) to the prevailing party asserting that the patent is invalid or not infringed, if the court determines that the party alleging infringement does not meet one or more of the following three conditions:\n1. The party is the inventor, joint inventor, or the original assignee of the patent; 2. The party can provide evidence of substantial investment made by the party in the exploitation of the patent through production or sale of an item covered by the patent; or 3. The party is an institution of higher education or is a technology transfer organization whose primary purpose is to facilitate commercialization of technology developed by such institution.\nThus, the legislation attempts to specifically target PAE litigants by providing a \"negative definition\" of a PAE (though it never explicitly uses such term); a party that does not satisfy any one of the conditions listed above would be liable to the alleged infringer for full litigation costs, if the party loses the lawsuit. The SHIELD Act would require the party asserting invalidity or noninfringement to file a motion with the court requesting a judgment that the adverse party does not meet any one of the above conditions. Within 120 days of such motion, the court would need to make a determination as to whether the adverse party meets at least one of these conditions. If the adverse party fails to meet a condition, the party would be required to post a bond in an amount set by the court to cover the alleged infringer's litigation costs, should the court ultimately find that the adverse party's patent is invalid or not infringed.\nAs Representative Chaffetz explained in introducing the bill, \"Patent trolls contribute nothing to the economy. No industry is immune to these attacks. Instead of creating jobs and growing the economy, businesses are wasting resources to fight off frivolous lawsuits. This bipartisan legislation will curb future abuse by requiring trolls to bear the financial responsibility for failed claims.\"\nSome have criticized the SHIELD Act for not providing additional explanation about the phrase \"substantial investment ... in the exploitation of the patent\"; they have also pointed out that a PAE could try to meet that particular condition in order to avoid paying the litigation costs:\n[W]hat does \"substantial\" mean? Presumably it is intended to ensnare NPEs that decide to make things, but not make enough (or good enough) things. But why should a court get to decide what is enough? And what do we do about start-ups who have patents but have not yet commercialized their invention? Are they trolls, too?\nAnd what is to stop NPEs from becoming distributors? They could buy competing products wholesale (perhaps products where they have secured licenses) and sell them. This only makes sense; by being resellers, they can claim that the competition of the infringing product is harming their sales business.\nOther commentators have questioned how the SHIELD ACT's bond requirement would work in practice:\nHow would the \"full costs\" amount of the required bonds be determined at the beginning of each, separate suit, when different defendants will employ different defense strategies, and incur different \"full costs\"? Will the bond amount be the subject of legal opinions of counsel, or of expert opinions? What banks, sureties, or insurance companies would offer to provide SHIELD Act bonds to NPEs? Assuming that some financial institutions would, in fact, offer to provide SHIELD Act bonds, what amount and type of collateral would be required and, more importantly, how would typically asset-free, judgment-proof NPEs provide that collateral?", "Commentators have suggested a number of legislative avenues to address PAE activity.", "It bears emphasis that PAE activity has been concentrated in the realm of IT, primarily on patents related to software, the Internet, and electronics. Due to the component-driven and intangible nature of IT, as well as indications that patents are less essential to promoting innovation in IT than in other industries, such as pharmaceuticals, some observers urge Congress to undertake targeted reforms and leave the other realms of the patent system as they are. This could entail distinctions based on type of patent or the industry area, an approach already taken by the SHIELD Act.\nHowever, such precision may be precluded, or at least constrained, by an international agreement. Article 27.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (\"TRIPS\"), administered by the World Trade Organization (WTO), requires that patents \"be available and patent rights enjoyable without discrimination as to ... the field of technology.\" But some observers have argued that this provision \"does not strictly require a 'single level of IP protection for all technologies or industries.'\" In fact, a WTO panel \"rejected a strict interpretation of Article 27.1 prohibiting any differentiation between fields of technology,\" and the \"accepted view is that 'the pejorative concept of discrimination must be distinguished from differentiation for legitimate reasons .'\" Nevertheless, Congress may need to carefully examine whether any changes it desires to make to the patent system would be inconsistent with its international obligations.", "Improving notice where it currently fails is a relatively uncontroversial and high-priority goal of some patent reform advocates. The \"fuzzy boundaries\" of IT patents and the sheer number of them that are granted and incorporated in any given product make it difficult for firms to avoid infringement and, once faced with a PAE assertion, to know whether it is valid without going to court. There are also a number of disincentives and obstacles for product firms to find and clear patents ahead of time. Many scholars believe solving this notice failure would go far towards reducing the negative effects of PAEs while keeping the benefits and making the entire patent system work better.\nAmong the most popular ideas is more robust use of §112's definiteness and disclosure rules to deny (at the PTO) or invalidate (in court) abstract or ambiguous IT patents, which may entail legislatively overruling Federal Circuit standards that permit \"substantial ambiguity\" in IT patent claims. Of course it is also an option to let the Federal Circuit sort these matters out itself.\nFor definiteness, Congress might consider amendments that point the Federal Circuit to a test that \"weeds out claims reasonably susceptible to multiple interpretations,\" which the FTC says \"could reduce ambiguity and improve notice in a broad range of settings.\" Many observers want a test that weeds out more claims than the \"insolubly ambiguous\" standard adopted by the Federal Circuit in 2001. Others believe current doctrine is adequate but underenforced.\nSeveral reform proposals address the issue of patent applicants keeping claims hidden at the PTO by filing continuations. The most common among them involve reforms of continuation practice, which currently \"allows patent owners to hide the true nature of their invention until late in the process\" and extend the time during which other companies might unknowingly begin using the patented technology. There have also been many calls for the PTO to make pending applications more open to the outside world so that there are no surprises and more assurance for diligent companies that do search for existing patents.\nFinally, some scholars propose eliminating what they view as a disincentive for firms to search existing patents in advance. The \"willfulness doctrine\" is said to boost PAE bargaining power and has the \"perverse effect of causing people to try to avoid learning of patents.\" Congress might consider legislation that would delay the ability to even plead willfulness until there has been a finding of infringement. Proponents argue this would preserve the doctrine's deterrent and punitive functions while improving notice and removing a tool PAEs use to raise defendants' costs and risk, as well as their own bargaining power.", "The leverage PAEs can exert by threatening an injunction from a federal court has diminished since the Supreme Court decided eBay in 2006, but commentators now indicate that PAEs have replaced it with the \"Damocles sword\" derived from credibly threatening to get an ITC exclusion order on the import of defendants' products. Congress recently heard testimony urging it to prevent the ITC from issuing exclusion orders for PAEs and is currently considering action to that effect. As noted above, PAEs play a smaller role in the growth of ITC complaints than reformers seem to believe, but it is possible that PAEs have extracted royalties by threatening ITC import bans and rarely needed to actually file.\nOther procedural changes that shift more of the burdens and costs of litigation onto PAEs could also reduce their bargaining leverage over defendant product companies. Some scholars have called upon Congress to eliminate the presumption of validity, now given to patents out of deference to the PTO. Currently rebuttable only by \"clear and convincing evidence,\" the presumption increases costs for defendants and leverage for PAEs. It might also extend the use of an invalid patent and the number of defendants a PAE can assert it against.\nAnother common suggestion is to change royalty calculation rules, which often provide damages \"disproportionate\" to the contribution of the infringed patent as a portion or component of the overall product. Critics posit that in the IT sector, \"if every patented portion of an invention was licensed at the same rate as the infringed patent, the inventor would face a net loss.\" The 110 th and 111 th Congresses considered legislation to address this issue, but nothing was passed. Observers indicate that IT interests support such changes due to the many components in each of their products while pharmaceutical, biotechnology, and NPE or PAE interests have opposed it. Congress could consider IT-specific royalty reforms.", "Many changes proposed by scholars target the practice of sitting on a patent until infringement and/or lock-in to a plausibly infringing technology have occurred and only then notifying targets of the patent and offering them licenses. One idea that has been floated is to decrease the patent period for IT patents, which are quickly outdated yet litigated aggressively through the end of their 20-year terms. A forthcoming study by Brian J. Love shows that it may be that a shorter term would primarily harm PAEs:\nProduct companies predominately enforce their patents soon after they issue and complete their enforcement activities well before their patents expire. NPEs, on the other hand, begin asserting their patents relatively late in the patent term and frequently continue to litigate their patents to the verge of expiration. Indeed, I find that the average product-company patent has been shelved by its owner before the average NPE patent has even been asserted.\nNPEs account for the majority of suits brought in the final three years of the patent term, and the product firms that litigate late in the term are \"a unique group of companies that . . . blur the line between practicing entities and trolls.\" Love's study also finds that high-tech patents represent an outsized portion of patents litigated in the last three years of their terms, comprising 86% for NPEs and 72% for product firms, even though most 18- or 20-year-old software patents are likely outdated.\nAn alternative to shortening the patent term would involve changes to the maintenance fees that patent holders pay at certain points in the patent term to keep their rights in force. Fees could escalate over the life of the patent or increase with each renewal and apply across the board or just for inactive patents, entities with big portfolios, or IT-related patents. Another possibility is cost- and burden-shifting in the latter half of the patent term.", "Under other variations, patent owners could face repercussions if they neglect to engage in bona fide use, development, or licensing of their patents for a set number of years. The conditions triggering such effects might be modeled after that for trademark \"abandonment\" under the Lanham Act: non-use with the intent not to use in the reasonably foreseeable future.\nNot practicing a patent for a number of years could be prima facie evidence of abandonment that patent owners would have to rebut before any infringement suit could proceed. Evidence of efforts to develop, commercialize, or license the patent would rebut the prima facie assumption as long as they are both bona fide—not taken \"merely to reserve a right\"—and done in good faith. Ex post licensing would not qualify as a use, and availability through a designated clearinghouse of some kind might be required.\nAs for the effect triggered by the period of non-use, options range from cancellation to the shifting of costs and burdens onto PAEs, diminishing their leverage and increasing their costs. Other ideas include removing the presumption of validity, subjecting plaintiffs to heightened pleading and production requirements, or freezing the patent until the patent owner begins to use it.", "A leading scholar and a leading PAE have partnered to advocate consideration of another reform: requiring publication of patent assignment and license terms. Mark Lemley of Stanford Law School and Nathan Myhrvold of Intellectual Ventures point out that patents currently exist in an inefficient blind market. The publication requirement would not solve the uncertainty and notice issues, but:\n[I]t will permit the aggregate record of what companies pay for rights to signal what particular patents are worth and how strong they are, just as derivative financial instruments allow market to evaluate and price other forms of risk. It will help rationalize patent transactions, turning them from secret, one-off negotiations into a real, working market for patents. And by making it clear to courts and the world at large what the normal price is for patent rights, it will make it that much harder for a few unscrupulous patent owners to hold up legitimate innovators, and for established companies to systematically infringe the rights of others.\nLemley and Myhrvold anticipate concerns that patent holders would not license their patents if they had to disclose the licenses but suggest that this is a less a problem than people might think, concluding that \"[t]he only people who stand to lose from mandatory disclosure of licenses are those who are taking advantage of the current state of ignorance.\"" ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "", "h0_title", "", "h0_full", "", "h1_title", "", "", "", "h1_full", "h0_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What has Congress recently demonstrated interest in?", "What does the PAE business model focus on?", "What is classified as a PAE?", "What was the proliferation of PAEs a central factor in support of?", "Why does the AIA contain few provisions on PAEs?", "What did the 113th Congress introduce to combat this?", "How did PAEs gain notoriety at the turn of the 21st century?", "How did they catch the attention of Congress, the press, and the public?", "How is this PAE suit unusual?", "How do most PAE suits end?", "How is this profitable for PAEs?", "What are PAE generated cash flows distributed towards?", "What are PAEs criticized for?", "How do defenders of PAEs refute this?", "How does the FTC view such benefits?", "What imbalance remains unclear?" ], "summary": [ "Congress has recently demonstrated significant ongoing interest in litigation by \"patent assertion entities\" (PAEs), which are colloquially known as \"patent trolls\" and sometimes referred to as \"non-practicing entities\" (NPEs).", "The PAE business model focuses not on developing or commercializing patented inventions but on buying and asserting patents, often against firms that have already begun using the claimed technology after developing it independently, unaware of the PAE patent.", "PAEs include not only freestanding businesses but patent holding subsidiaries, affiliates, and shells of operating companies that want to participate in the PAE industry and/or a new means of countering competitors.", "The proliferation of PAEs was among the central factors raised in support of the most recent patent reform legislation, the Leahy-Smith America Invents Act of 2011 (AIA).", "However, the AIA contains relatively few provisions that arguably might impact PAEs, apparently because of lively debate over what, if anything, should be done about them.", "In the 113th Congress, the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act of 2013 (H.R. 845) has been introduced in an effort to affect the number of lawsuits filed by PAEs.", "PAEs emerged alongside the burgeoning tech industry around the turn of the 21st century and gained notoriety with lawsuits claiming exclusive ownership of such ubiquitous technologies as wireless email, digital video streaming, and the interactive web.", "They have had the attention of Congress, the press, and the public since at least 2006, when a successful PAE suit almost caused the shutdown of BlackBerry wireless service.", "Such victories in court are rare for PAEs; they lose 92% of merits judgments.", "The vast majority of defendants settle because patent litigation is risky, disruptive, and expensive, regardless of the merits; and many PAEs set royalty demands strategically well below litigation costs to make the business decision to settle an obvious one.", "For most PAEs, the costs of litigating and losing are more than offset by the licensing fees they can gain by demonstrating their tenacity to future defendants.", "According to one estimate, PAEs generated $29 billion in direct costs from defendants and licensees in 2011, a 400% increase over $7 billion in 2005, and some researchers suggest these costs are primarily deadweight, with less than 25% flowing to support innovation and at least that much going towards legal fees.", "Critics assert that PAEs undermine the purposes of patent law—promoting innovation by providing incentives to invest in development and commercialization of inventions—and injure companies that play a vital role in the American economy.", "However, defenders of PAEs argue that they actually promote invention by adding liquidity options, managing risk, and compensating small inventors.", "The Federal Trade Commission and several leading scholars suggest that these benefits exist but are significantly less than the costs they impose.", "What remains unclear is the extent of imbalance between costs and benefits and whether Congress could recalibrate it to advance the goals of patent law while avoiding unintended consequences." ], "parent_pair_index": [ -1, 0, 0, -1, 3, 4, -1, 0, 1, -1, 3, -1, -1, 1, 2, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Federal Communications Commission Activity", "The Information Services Designation and Title I", "The 2005 Internet Policy Statement", "The FCC August 2008 Comcast Decision", "Comcast v. FCC", "The FCC 2010 Open Internet Order", "The 2014 Open Internet Order Court Ruling and the FCC Response", "Verizon Communications Inc. v. Federal Communications Commission", "The Federal Communications Commission Response", "The FCC 2014 Open Internet Notice of Proposed Rulemaking", "The FCC 2015 Open Internet Order", "The FCC 2017 Open Internet Notice of Proposed Rulemaking", "WC Docket No. 17-108 (The FCC 2017 Order)", "The Declaratory Ruling", "The Report and Order", "The Order", "Implementation of the 2017 Order", "Network Management", "Prioritization", "Deep Packet Inspection", "Metered/Usage-Based Billing", "Zero Rating/Sponsored Data Plans", "Congressional Activity", "116th Congress", "115th Congress", "Privacy", "Transparency", "114th Congress", "113th Congress", "112th Congress", "111th Congress" ], "paragraphs": [ "", "As congressional policymakers continue to debate telecommunications reform, a major discussion point revolves around what approach should be taken to ensure unfettered access to the internet. The move to place restrictions on the owners of the networks that compose and provide access to the internet, to ensure equal access and nondiscriminatory treatment, is referred to as \"net neutrality.\" There is no single accepted definition of \"net neutrality.\" However, most agree that any such definition should include the general principles that owners of the networks that compose and provide access to the internet should not control how consumers lawfully use that network, and they should not be able to discriminate against content provider access to that network.\nA major focus in the debate is concern over whether the regulatory framework as delineated in the Federal Communications Commission's (FCC's) 2015 Open Internet Order is the appropriate approach to ensure access to the internet for content, services, and applications providers, as well as consumers, or whether a less regulatory approach contained in the 2017 Order is more suitable. The issue of regulation of and access to broadband networks is currently being addressed in three venues\nat the FCC, where the commissioners on December 14, 2017, adopted (3-2) an Order that went into effect on June 11, 2018, that revokes the 2015 regulatory framework in favor of one that reverses the 2015 classification of broadband internet access services as a telecommunications service under Title II of the Communications Act, provides for a less regulatory approach, and shifts much of the oversight from the FCC to the Federal Trade Commission (FTC) and the Department of Justice (DOJ); in the courts, where consolidated petitions for review of the 2017 Order are under consideration in the U.S. Court of Appeals, D.C. Circuit; and a suit filed in the U.S. District Court of the Eastern District of California by the DOJ and various trade groups, challenging the legality of a California internet regulation law, is pending; in the 116 th Congress, where debate over what the appropriate regulatory framework should be for broadband access continues.\nWhether Congress will take broader action to amend existing law to provide guidance and more stability to FCC authority over broadband access remains to be seen.", "", "In 2005 two major actions dramatically changed the regulatory landscape as it applied to broadband services, further fueling the net neutrality debate. In both cases these actions led to the classification of broadband internet access services as Title I information services, thereby subjecting them to a less rigorous regulatory framework than those services classified as telecommunications services. In the first action, the U.S. Supreme Court, in a June 2005 decision ( National Cable & Telecommunications Association v. Brand X Internet Services ), upheld the Federal Communications Commission's (FCC's) 2002 ruling that the provision of cable modem service (i.e., cable television broadband internet) is an interstate information service and is therefore subject to the less stringent regulatory regime under Title I of the Communications Act of 1934. In a second action, the FCC, in an August 5, 2005, decision, extended the same regulatory relief to telephone company internet access services (i.e., wireline broadband internet access, or DSL), thereby also defining such services as information services subject to Title I regulation. As a result, neither telephone companies nor cable companies, when providing broadband services, are required to adhere to the more stringent regulatory regime for telecommunications services found under Title II (common carrier) of the 1934 act. However, classification as an information service does not free the service from regulation. The FCC continues to have regulatory authority over information services under its Title I, ancillary jurisdiction. Similarly, classification under Title II does not mean that an entity will be subject to the full range of regulatory requirements, as the FCC is given the authority, under Section 10 of the Communications Act of 1934, to forbear from regulation.", "Simultaneous to the issuing of its August 2005 information services classification order, the FCC also adopted a policy statement (internet policy statement) outlining four principles to \"encourage broadband deployment and preserve and promote the open and interconnected nature of [the] public Internet.\" The four principles are (1) consumers are entitled to access the lawful internet content of their choice; (2) consumers are entitled to run applications and services of their choice (subject to the needs of law enforcement); (3) consumers are entitled to connect their choice of legal devices that do not harm the network; and (4) consumers are entitled to competition among network providers, application and service providers, and content providers. Then-FCC Chairman Martin did not call for their codification. However, he stated that they would be incorporated into the policymaking activities of the commission. For example, one of the agreed-upon conditions for the October 2005 approval of both the Verizon/MCI and the SBC/AT&T mergers was an agreement made by the involved parties to commit, for two years, \"to conduct business in a way that comports with the commission's (2005) Internet policy statement.\" In a further action, AT&T included in its concessions to gain FCC approval of its merger to BellSouth an agreement to adhere, for two years, to significant net neutrality requirements. Under terms of the merger agreement, which was approved on December 29, 2006, AT&T not only agreed to uphold, for 30 months, the FCC's internet policy statement principles, but also committed, for two years (expired December 2008), to stringent requirements to \"maintain a neutral network and neutral routing in its wireline broadband Internet access service.\"\nThen-FCC Chairman Genachowski announced, in a September 21, 2009, speech, a proposal to consider the expansion and codification of the 2005 internet policy statement and suggested that this be accomplished through a notice of proposed rulemaking (NPR) process. Shortly thereafter, an NPR on preserving the open internet and broadband industry practices was adopted by the FCC in its October 22, 2009, meeting. (See \" The FCC 2010 Open Internet Order ,\" below.)", "In perhaps one of its most significant actions relating to its internet policy statement to date, the FCC, on August 1, 2008, ruled that Comcast Corp., a provider of internet access over cable lines, violated the FCC's policy statement when it selectively blocked peer-to-peer connections in an attempt to manage its traffic. This practice, the FCC concluded, \"unduly interfered with Internet users' rights to access the lawful Internet content and to use the applications of their choice.\" Although no monetary penalties were imposed, Comcast was required to stop these practices by the end of 2008. Comcast complied with the order, and developed a new system to manage network congestion. Comcast no longer manages congestion by focusing on specific applications (such as peer-to-peer), nor by focusing on online activities, or protocols, but identifies individual users within congested neighborhoods that are using large amounts of bandwidth in real time and slows them down, by placing them in a lower priority category, for short periods. This new system complies with the FCC internet principles in that it is application agnostic; that is, it does not discriminate against or favor one application over another but manages congestion based on the amount of a user's real-time bandwidth usage. As a result of an April 6, 2010, court ruling, the FCC's order was vacated. Comcast, however, stated that it will continue to comply with the internet principles issued in the FCC's August 2005 internet policy statement. (See \" Comcast v. FCC ,\" below.)", "Despite compliance, however, Comcast filed an appeal in the U.S. Court of Appeals for the District of Columbia, claiming that the FCC did not have the authority to enforce its internet policy statement, therefore making the order invalid. The FCC argued that while it did not have express statutory authority over such practices, it derived such authority based on its ancillary authority contained in Title I of the 1934 Communications Act. The court, in an April 6, 2010, decision, ruled (3-0) that the FCC did not have the authority to regulate an internet service provider's (in this case Comcast's) network management practices and vacated the FCC's order. The court ruled that the exercise of ancillary authority must be linked to statutory authority and that the FCC did not in its arguments prove that connection; it cannot exercise ancillary authority based on policy alone. More specifically, the Court ruled that the FCC \"failed to tie its assertion of ancillary authority over Comcast's Internet service to any ['statutorily mandated responsibility'].\" Based on that conclusion the court granted the petition for review and vacated the order.\nThe impact of this decision on the FCC's ability to regulate broadband services and implement its broadband policy goals remains unclear. Regardless of the path that is taken, then-FCC Chairman Genachowski stated that the court decision \"does not change our broadband policy goals, or the ultimate authority of the FCC to act to achieve those goals.\" He further stated that \"[T]he court did not question the FCC's goals; it merely invalidated one, technical, legal mechanism for broadband policy chosen by prior Commissions.\" Consistent with this statement, the FCC in a December 21, 2010, action adopted the Open Internet Order to establish rules to maintain network neutrality. (See \" The FCC 2010 Open Internet Order ,\" below.)", "The FCC adopted, on December 21, 2010, an Open Internet Order establishing rules to govern the network management practices of broadband internet access providers. The order, which was passed by a 3-2 vote, intended to maintain network neutrality by establishing three rules covering transparency, no blocking, and no unreasonable discrimination. More specifically\nfixed and mobile broadband internet service providers were required to publicly disclose accurate information regarding network management practices, performance, and commercial terms to consumers as well as content, application, service, and device providers; fixed and mobile broadband internet service providers were both subject, to varying degrees, to no blocking requirements. Fixed providers were prohibited from blocking lawful content, applications, services, or nonharmful devices, subject to reasonable network management. Mobile providers were prohibited from blocking consumers from accessing lawful websites, subject to reasonable network management, nor were they allowed to block applications that compete with the provider's voice or video telephony services, subject to reasonable network management; and fixed broadband internet service providers were subject to a \"no unreasonable discrimination rule\" that states that they shall not unreasonably discriminate in transmitting lawful network traffic over a consumer's broadband internet access service. Reasonable network management shall not constitute unreasonable discrimination.\nAdditional provisions in the order included those which provided for ongoing monitoring of the mobile broadband sector and created an Open Internet Advisory Committee to track and evaluate the effects of the rules and provide recommendations to the FCC regarding open internet policies and practices; while not banning paid prioritization, stated that it was unlikely to satisfy the \"no unreasonable discrimination\" rule; raised concerns about specialized services and while not \"adopting policies specific to such services at this time,\" would closely monitor such services; called for review, and possible adjustment, of all rules in the order no later than two years from their effective date; and detailed a formal and informal complaint process. The order, however, did not prohibit tiered or usage-based pricing (see \" Metered/Usage-Based Billing ,\" below). According to the order, the framework \"does not prevent broadband providers from asking subscribers who use the network less to pay less, and subscribers who use the network more to pay more\" since prohibiting such practices \"would force lighter end users of the network to subsidize heavier end users\" and \"would also foreclose practices that may appropriately align incentives to encourage efficient use of networks.\"\nThe authority to adopt the order abandoned the \"third way approach\" previously endorsed by then-Chairman Genachowski and other Democratic commissioners, and treated broadband internet access service as an information service under Title I. The order relied on a number of provisions contained in the 1934 Communications Act, as amended, to support FCC authority. According to the order the authority to implement these rules lies in Section 706 of the 1996 Telecommunications Act, which directs the FCC to \"encourage the deployment on a reasonable and timely basis\" of \"advanced telecommunications capability\" to all Americans and to take action if it finds that such capability is not being deployed in a reasonable and timely fashion; Title II of the Communications Act and its role in protecting competition and consumers of telecommunications services; Title III, which gives the FCC the authority to license spectrum, subject to terms that serve the public interest, used to provide fixed and mobile wireless services; and Title VI, which gives the FCC the duty to protect competition in video services.\nThe Order went into effect November 20, 2011, which was 60 days after its publication in the Federal Register . Since the Order's publication multiple appeals were filed and subsequently consolidated for review in the U.S. Court of Appeals, D.C. Circuit. Verizon Communications was the remaining challenger seeking review claiming, among issues, that it was a violation of free speech and that the FCC had exceeded its authority in establishing the rules. The court issued its ruling on January 14, 2014, and remanded the decision to the FCC for consideration. (See \" The 2014 Open Internet Order Court Ruling and the FCC Response ,\" below.)", "", "On January 14, 2014, the U.S. Court of Appeals, D.C. Circuit, issued its ruling on the challenge to the FCC's Open Internet Order ( Verizon Communications Inc. v. Federal Communications Commission , D.C. Cir., No. 11-1355). The court upheld the FCC's authority to regulate broadband internet access providers, and upheld the disclosure requirements of the Open Internet Order, but struck down the specific antiblocking and nondiscrimination rules contained in the Order. (See \" The FCC 2010 Open Internet Order ,\" above.)\nCiting the decision by the FCC to classify broadband providers as information service providers (see \" The Information Services Designation and Title I \"), not common carriers, the court stated that the Communications Act expressly prohibits the FCC from regulating them as such. The court was of the opinion that the Order's nondiscrimination rules, applied to fixed broadband providers, and antiblocking rules, applied to both fixed and wireless broadband providers, were an impermissible common carrier regulation of an information service and could not be applied.\nHowever, the court upheld the disclosure rules, and more importantly upheld the FCC's general authority to use Section 706 (advanced communications incentives) of the Telecommunications Act of 1996 ( P.L. 104-104 ) to regulate broadband internet providers. Therefore the court concluded that the FCC does, within limitations, have statutory authority, under Section 706, to establish rules relating to broadband deployment and broadband providers' treatment of internet traffic. The court remanded the case to the FCC for further action.", "In response to the court remand, then FCC Chairman Wheeler issued, on February 19, 2014, a statement outlining the steps proposed \"to ensure that the Internet remains a platform for innovation, economic growth, and free expression.\" Chairman Wheeler proposed that the FCC establish new rules under its Section 706 authority that enforce and enhance the transparency rule that was upheld by the court; fulfill the \"no blocking\" goal; fulfill the goals of the nondiscrimination rule; leave open as an option the possible reclassification of internet access service as telecommunications service subject to Title II authority; forgo judicial review of the appeals court decision; solicit public comment; hold internet service providers to their commitment to honor the safeguards articulated in the 2010 Open Internet Order; and seek opportunities to enhance competition in the internet access market.\nIn conjunction with this statement the FCC established a new docket (GN Docket No. 14-28) to seek input on how to address the remand of the FCC's Open Internet rules. This docket was released February 19, 2014, to seek opinion on \"what actions the commission should make, consistent with our authority under section 706 and all other available sources of Commission authority, in light of the court's decision.\" However, it should be noted that FCC Commissioners O'Rielly and Pai issued separate statements expressing their disagreement with then-Chairman Wheeler's proposal to establish new rules to regulate the internet. Despite this opposition, the FCC, on a 3-2 vote, initiated a proceeding to establish rules to address the court's remand of its 2010 open internet order. (See \" The FCC 2014 Open Internet Notice of Proposed Rulemaking ,\" below.)", "On May 15, 2014, the FCC adopted, by a 3-2 party line vote, a Notice of Proposed Rulemaking (NPRM) seeking public comment on \"how best to protect and promote an open Internet.\" The NPRM (GN Docket No.14-28) solicited comment on a broad range of issues to help establish a policy framework to ensure that the internet remains an open platform and retains the concepts adopted by the FCC in its 2010 Open Internet Order, of transparency, no blocking, and nondiscrimination.\nFollowing the guidance of the January 2014 D.C. Circuit Appeals Court decision, the NPRM tentatively concluded that the FCC should rely on Section 706 of the 1996 Telecommunications Act for its legal authority. However, the NPRM noted that the FCC \"will seriously consider the use of Title II of the Communications Act as the basis for legal authority\" and recognizes that Section 706 and Title II are both \"viable solutions.\" The NPRM also recognized the use of Title III for mobile services and sought comment, in general, on other sources of authority the FCC may utilize. The degree to which the FCC should use forbearance was also discussed.\nThe NPRM retained the definition and scope contained in the 2010 Open Internet Order which address the actions of broadband internet access service providers, and as defined did not, for example, cover the exchange of traffic between networks (e.g., peering), enterprise services (i.e., services offered to large organizations through individually negotiated offerings), data storage services, or specialized services. However, the NPRM did seek comment on whether the scope of services as defined in the 2010 Open Internet Order should be modified. The question of whether broadband provider service to edge providers, that is, their function as edge providers' carriers, should be addressed was also raised. Furthermore, the NPRM sought comment on whether it should revisit its different standard applied to mobile services regarding its no-blocking rule and its exclusion from the unreasonable discrimination rule, and whether technological and marketplaces changes are such that the FCC should consider if rules should be applied to satellite broadband internet access services.\nThe FCC tentatively concluded that the nonblocking rule established in the 2010 Open Internet Order should be upheld, but that \"the revived no-blocking rule should be interpreted as requiring broadband providers to furnish edge providers with a minimum level of access to their end-user subscribers.\" However, the NPRM proposed that the conduct of broadband providers permissible under the no-blocking rule be subject to an additional independent screen which required them \"to adhere to an enforceable legal standard of commercially reasonable practices.\" Furthermore, the NPRM sought comment on whether certain practices, such as \"paid prioritization,\" should be barred altogether or permitted if they meet the \"commercial reasonableness\" legal standard.\nIn addition, the NPRM proposed to enhance the transparency rule, which was upheld by the court; to ensure that consumers and edge providers have the needed information to understand the services received and monitor practices; and to establish a multifaceted dispute resolution process including the creation of an ombudsperson to represent the interests of consumers, start-ups, and small businesses.\nPresident Obama, in a statement released on November 10, 2014, urged the FCC to establish rules that would reclassify consumer broadband service under Title II of the 1934 Communications Act with forbearance. More specifically, the statement called for regulations that prohibit blocking; prohibit throttling; ban paid prioritization; and increase transparency. It was also stated that these rules should also be fully applicable to mobile broadband and if necessary to interconnection points. Monitored exceptions for reasonable network management and specialized services and forbearance from Title II regulations \"that are not needed to implement the principles above\" were also included in the statement.\nWhile the FCC evaluates all comments, including those of sitting Presidents, as an independent regulatory agency it has the sole responsibility to adopt the final proposal. New rules addressing this issue were adopted by the FCC in February 2015. (See \" The FCC 2015 Open Internet Order ,\" below.)", "The FCC, in its February 26, 2015, open meeting, voted 3-2, along party lines, to adopt new open internet rules (Open Internet Order) and subsequently released these rules on March 12, 2015. The order applies to mobile as well as fixed broadband internet access service and relies on Title II of the Communications Act and Section 706 of the Telecommunications Act of 1996 and, for mobile broadband, Title III for its legal authority. The order includes among its provisions the following:\nreclassifies \"broadband Internet access service\" (that is the retail broadband service Americans buy from cable, phone, and wireless providers) as a telecommunications service under Title II; bans blocking, throttling, and paid prioritization; creates a general conduct standard that internet service providers cannot harm consumers or edge providers (e.g., Google, Netflix) and gives the FCC the authority to address questionable practices on a case-by-case basis (reasonable network management will not be considered a violation of this rule); enhances existing transparency rules for both end users and edge providers (a temporary exemption from the transparency enhancements is given for small fixed and mobile providers) and creates a \"safe harbor\" process for the format and nature of the required disclosure for consumers; permits an internet service provider to engage in \"reasonable network management\" (other than paid prioritization) and will take into account the specific network management needs of mobile networks and other technologies such as unlicensed Wi-Fi networks; does not apply the open internet rules to \"non-BIAS data services,\" (aka, specialized services) a category of services defined by the FCC as those that \"do not provide access to the Internet generally\" (e.g., heart monitors or energy consumption sensors); does not apply the open internet rules to interconnection but does gives the FCC authority to hear complaints and take enforcement action, if necessary, on a case-by-case basis, under Sections 201 and 202, regarding interconnection activities of internet service providers if deemed unjust and unreasonable; applies major provisions of Title II such as no unjust and unreasonable practices or discrimination, consumer privacy, disability access, consumer complaint and enforcement processes, and fair access to poles and conduits; and forbears, without any further proceedings, from various Title II provisions (e.g., cost accounting rules, tariffs, and last-mile unbundling) resulting in forbearance from 30 statutory provisions and over 700 codified rules.\nWith limited exceptions, the rules went into effect on June 12, 2015, which was 60 days after their publication in the Federal Register . Various trade groups and selected individual providers filed appeals to the courts challenging the 2015 Open Internet Order's legality; the appeals were consolidated in the U.S. Court of Appeals for the D.C. Circuit. A motion to stay the effective date of the Order was denied, allowing the rules to go into effect as scheduled on June 12, 2015.\nSubsequently, the U.S. Court of Appeals for the D.C. Circuit, in a June 14, 2016, ruling, voted (2-1) to uphold the legality of all aspects the 2015 FCC Order. A petition requesting en banc review of the decision was denied on May 1, 2017, by the majority of the judges. Various parties filed on September 28, 2017, petitions asking the U.S. Supreme Court for review; but the U.S. Supreme Court, on November 5, 2018, denied review.", "On May 18, 2017, the FCC adopted (2-1) a Notice of Proposed Rulemaking (NPR) to reexamine the regulatory framework established in the 2015 Open Internet Order and embrace a \"light-touch\" regulatory approach. The NPR returned internet broadband access service to a Title I classification and sought comment on the existing rules governing internet service providers. More specifically, the NPR proposed to\nreinstate the information service classification of broadband internet access service (both fixed and mobile), thereby removing the service from the Title II, common carrier classification imposed by the 2015 Open Internet Order and placing it under Title I; reinstate that mobile broadband internet access service is not a commercial mobile service; eliminate the general conduct standard; seek comment on the need to \"keep, modify, or eliminate\" the \"bright line\" (no blocking, no throttling, and no paid prioritization) and transparency rules; return authority to the Federal Trade Commission to oversee and enforce the privacy practices of internet service providers; reevaluate the FCC's enforcement regime with respect to the necessity for ex ante regulatory intervention; and conduct a cost-benefit analysis as part of the proceeding.\nThe NPR comment and reply comment periods closed, and a draft order, largely upholding the NPR and overturning the 2015 Order, was approved (3-2) by the FCC on December 14, 2017. [See \" WC Docket No. 17-108 (The FCC 2017 Order) ,\" below.]", "The FCC, in its December 14, 2017, open meeting, voted 3-2, along party lines, to adopt a new framework for the provision of broadband internet access services that largely reversed the 2015 regulatory framework and shifted much of the oversight from the FCC to the Federal Trade Commission (FTC) and the Department of Justice (DOJ). WC Docket No. 17-108 (The 2017 Order), among other things, removed broadband internet access services (BIAS) from the 2015 regulatory classification as telecommunications services subject to common carrier Title II classification; removed the \"bright line\" no blocking, no throttling, and no paid prioritization rules; and eliminated the general conduct standard; but expanded the public transparency rules.\nMore specifically, WC Docket No. 17-108 is divided into three parts: a Declaratory Ruling, a Report and Order, and an Order.", "The Declaratory Ruling includes provisions that restore the classification of BIAS as an information service; reinstate the private mobile service classification of mobile BIAS; and restore broadband consumer protection authority to the FTC.\nThe Declaratory Ruling also finds that \" ... Title II regulation reduced Internet service provider (ISP) investment in networks, as well as hampered innovation, particularly among small ISPs serving rural customers\"; and \"... public policy, in addition to legal analysis, supports the information service classification, because it is more likely to encourage broadband investment and innovation, thereby furthering the closing of the digital divide and benefitting the entire Internet ecosystem.\"", "The Report and Order includes provisions that enhance transparency requirements by requiring internet service providers to publicly disclose information about their practices including blocking, throttling, and paid prioritization; and eliminates the internet conduct standard.\nThe Report and Order also finds that \"... transparency, combined with market forces as well as antitrust and consumer protection laws, achieve benefits comparable to those of the 2015 'bright line' rules at lower cost.\"", "The Order finds that adding to the record in this proceeding is not in the public interest.\nReaction to the 2017 Order has been mixed. Some see the 2015 FCC rules as regulatory overreach and welcome a less regulatory approach, which they feel will stimulate broadband investment, deployment, and innovation. Others support the 2015 regulations and feel that their reversal will result in a concentration of power to the detriment of content, services, and applications providers, as well as consumers, and refute the claim that these regulations have had a negative impact on broadband investment, expansion, or innovation.\nThe 2017 Order, Restoring Internet Freedom, was released by the FCC on January 4, 2018, and published in the Federal Register on February 22, 2018. Publication in the Federal Register triggered timelines for both court challenges and Congressional Review Act consideration. Petitions challenging the legality of the 2017 Order have been consolidated in the U.S. Court of Appeals, D.C. Circuit with oral arguments held on February 1, 2019. CRA resolutions to overturn the 2017 Order were introduced in the 115 th Congress. The Senate measure ( S.J.Res. 52 ) passed (52-47) the Senate on May 16, 2018, but the House measure ( H.J.Res. 129 ) was not considered. (See \" Congressional Activity ,\" below.)", "The 2017 Order went into effect on June 11, 2018. As a result the 2015 Order has been revoked and replaced by the provisions contained in the 2017 Order. According to the FCC the 2017 Order framework has three parts\nThe FTC will assume the major role and will take action against internet service providers that undertake anticompetitive acts or unfair and deceptive practices; Internet service providers will be subject to enhanced transparency requirements and must publically disclose, via a publically available, easily accessible company website or through the FCC's website, information regarding their network management practices, performance, and commercial terms of service; and Broadband internet access services are reclassified as information services, and regulations imposed by the 2015 Order are vacated, including the classification of broadband internet access services as telecommunications services subject to common carrier Title II classification; the \"bright line\" no blocking, no throttling, and no paid prioritization rules; and the general conduct standard.", "As consumers expand their use of the internet and new multimedia and voice services become more commonplace, control over network quality and pricing is an issue. The ability of data bits to travel the network in a nondiscriminatory manner (subject to reasonable management practices), as well as the pricing structure established by broadband service providers for consumer access to that data, have become significant issues in the debate.", "In the past, internet traffic has been delivered on a \"best efforts\" basis. The quality of service needed for the delivery of the most popular uses, such as email or surfing the web, is not as dependent on guaranteed quality. However, as internet use expands to include video, online gaming, and voice service, the need for uninterrupted streams of data becomes important. As the demand for such services continues to expand, a debate over the need to prioritize network traffic to ensure the quality of these services has formed.\nThe need to establish prioritized networks, although embraced by some, has led others to express policy concerns. Concern has been expressed that the ability of network providers to prioritize traffic may give them too much power over the operation of, and access to, the internet. If a multitiered internet develops where content providers pay for different service levels, some have expressed concern that the potential to limit competition exists if smaller, less financially secure content providers are unable to afford to pay for a higher level of access. Also, they state, if network providers have control over who is given priority access, the ability to discriminate among who gets such access is also present. If such a scenario were to develop, they claim, any potential benefits to consumers of a prioritized network would be lessened by a decrease in consumer choice and/or increased costs, if the fees charged for premium access are passed on to the consumer.\nOthers state that prioritization will benefit consumers by ensuring faster delivery and quality of service and may be necessary to ensure the proper functioning of expanded service options. They claim that the marketplace for the provision of such services is expanding and any potential abuse is significantly decreased in a marketplace where multiple, competing broadband providers exist. Under such conditions, they claim that if a network broadband provider blocks access to content or charges unreasonable fees content providers and consumers could obtain their access from other network providers. As consumers and content providers migrate to these competitors, market share and profits of the offending network provider will decrease, they state, leading to corrective action or failure. Furthermore, any abuses that may occur, they state, can be addressed by existing enforcement agencies at the federal and state level .", "The use of one management tool, deep packet inspection (DPI), illustrates the complexity of the net neutrality debate. DPI refers to a network management technique that enables network operators to inspect, in real time, both the header and the data field of the packets. As a result, DPI not only can allow network operators to identify the origin and destination points of the data packet, but also enables the network operator to determine the application used and content of that packet. The information that DPI provides enables the network operator to differentiate, or discriminate, among the packets travelling over its network. The ability to discriminate among packets enables the network operator to treat packets differently. This ability itself is not necessarily viewed in a negative light. Network managers use DPI to assist them in performing various functions that are necessary for network management and that contribute to a positive user experience. For example, DPI technology is used in filters and firewalls to detect and prevent spam, viruses, worms, and malware. DPI is also used to gain information to help plan network capacity and diagnostics, as well as to respond to law enforcement requests. However, some claim that the ability to discriminate based on the information gained via DPI also has the potential to be misused. It is the potential negative impact that DPI use could have on consumers and suppliers that raises concern for some policymakers. For example, concern has been expressed that the information gained could be used to discriminate against a competing service, causing harm to both the competitor and consumer choice by, for example, routing a network operator's own, or other preferred content, along a faster priority path, or selectively slowing down competitors' traffic. DPI's potential to extract personal information about the data that it inspects has also generated concerns, by some, about consumer privacy.\nTherefore it is not the management tool itself that is under scrutiny, but the behavior that potentially may occur as a result of the information that DPI provides. How to develop a policy that permits some types of discrimination (i.e., \"good\" discrimination) that may be beneficial to network operation and improve the user experience while protecting against what would be considered \"harmful\" or anticompetitive discrimination becomes the crux of the policy debate.", "The move by some network broadband operators toward the use of metered or usage-based billing has caused considerable controversy. Under such a plan, users subscribe to a set monthly bandwidth cap, for an established fee, and are charged additional fees or could be denied service if that usage level is exceeded. The use of such billing practices, on both a trial and permanent basis, is becoming more commonplace.\nReaction to the imposition of usage-based billing has been mixed. Supporters of such billing models state that a small percentage of users consume a disproportionately high percentage of bandwidth and that some form of usage-based pricing may benefit the majority of subscribers, particularly those who are light users. Furthermore, they state that offering a range of service tiers at varying prices offers consumers more choice and control over their usage and subsequent costs. The major growth in bandwidth usage, they also claim, places financial pressure on existing networks for both maintenance and expansion, and establishing a pricing system which charges high bandwidth users is more equitable.\nOpponents of such billing plans claim that such practices will stifle innovation in high bandwidth applications and are likely to discourage the experimentation with and adoption of new applications and services. Some concerns have also been expressed that a move to metered/usage-based pricing will help to protect the market share for video services offered in packaged bundles by network broadband service providers, who compete with new applications, and that if such caps must exist, they should be applied to all online video sources. The move to usage-based pricing, they state, will unfairly disadvantage competing online video services and stifle a nascent market, since video applications are more bandwidth-intensive. Opponents have also questioned the accuracy of meters, and specific usage limits and overage fees established in specific trials, stating that the former seem to be \"arbitrarily low\" and the latter \"arbitrarily high.\" Furthermore, they state that since network congestion only occurs in specific locations and is temporary, monthly data caps are not a good measure of congestion causation. Citing the generally falling costs of network equipment and the stability of profit margins, they also question the claims of network broadband operators that increased revenue streams are needed to supply the necessary capital to invest in new infrastructure to meet the growing demand for high bandwidth applications.", "Zero rating plans refer to the practice by internet service providers of allowing their subscribers to consume specific content or services without incurring charges against the subscriber's usage limits. In the case of sponsored data a third party (e.g., an interested edge provider) pays the charges that the customer would otherwise incur. Many different variations of these services are being implemented in the marketplace by wireless carriers.\nSupporters of such plans claim that they can improve consumer choice and encourage consumers to try new and perhaps usage-heavy services and can improve competition among edge providers. Those critical of such plans state that they can be used for anticompetitive purposes to favor one edge provider over another, particularly those edge providers that are affiliated with the internet service provider, or those that are entrenched and well financed.\nWhether or not such activities should, or should not, be considered a violation of the terms of the FCC's 2015 Open Internet Order's general conduct rule remains controversial. The FCC, under former Chairman Wheeler, requested in a December 2015 letter that AT&T, T-Mobile, and Comcast individually meet with FCC staff to discuss their various plans to enable the FCC to \"have all the facts to understand how this service relates to the Commission's goal of maintaining a free and open Internet while incentivizing innovation and investment from all sources.\" A similar letter was sent, at a later date (January 2016), to Verizon inquiring about its FreeBee Data 360 offering. The FCC concluded in a January 11, 2017, Policy Review Report that the specific approaches taken by AT&T and Verizon may harm competition and put forward a draft framework for evaluating such data offering plans. Subsequently, however, the FCC, under current Chairman Pai, issued an Order on February 3, 2017, that retracted the report and closed the inquiries, further stating that the report \"will have no legal or other effect or meaning going forward.\"", "", "Debate over what the appropriate regulatory framework should be for broadband access has continued in the 116 th Congress. Six bills ( H.R. 1006 , H.R. 1096 , H.R. 1101 , H.R. 1644 , H.R. 1860 , S. 682 ) have been introduced to date. An amended version of H.R. 1644 passed (232-190) the House on April 10, 2019.\nH.R. 1644 (and its companion measure, S. 682 ) add a new title to the Communications Act that negates the 2017 Order and restores the 2015 Order and its subsequent regulations. H.R. 1644 , introduced on March 8, 2019, by Representative Doyle and S. 682 , introduced on March 6, 2019, by Senator Markey, add a new title to the Communications Act that repeals the 2017 Order, stating that the rule \"shall have no force or effect,\" and prohibits the FCC, in most circumstances, from reissuing the rule or enacting a new rule that is substantially the same. The bills also restore the 2015 Order and its subsequent regulations, thereby once again classifying both mobile and fixed broadband internet access service as a telecommunications service under Title II of the Communications Act and restoring regulations, including those that prohibit blocking, throttling, and paid prioritization and establish a general conduct standard.\nAn amended version of H.R. 1644 was passed (30-22) by the House Energy and Commerce Committee on April 3, 2019. A revised version of the subcommittee-passed H.R. 1644 , a manager's amendment in the nature of a substitute (AINS) offered by Representative Doyle, was considered by the Committee. The AINS contained a provision, in the definition section, to clarify the forbearance provisions in the subcommittee passed bill. One amendment to the AINS, containing a one-year exemption from the 2015 Order enhanced transparency requirements for small internet service providers (that is those with 100,000 or fewer subscribers), was also approved prior to Committee passage. An amended version of H.R. 1644 (containing 12 additional amendments considered on the floor) passed (232-190) the House on April 10, 2019.\nThree bills ( H.R. 1006 , H.R. 1096 , H.R. 1101 ) establish a regulatory framework by amending Title I of the Communications Act and H.R. 1006 , introduced on February 6, 2019, by Representative Latta, amends Title I of the Communications Act to address potential negative behaviors of BIAS providers. Provisions include those that prohibit blocking and unjust and discriminatory behavior, subject to reasonable network management; establish transparency requirements; establish FCC enforcement authority, including the authority to issue fines and forfeitures up to $2 million; in general, prohibit the FCC from imposing regulations on BIAS services under Title II; protect the needs of emergency communications, law enforcement, public safety or national security, copyright infringement or other unlawful activity; and preserve the authority of the Department of Justice and the Federal Trade Commission.\nH.R. 1096 , introduced on February 7, 2019, by Representative Rodgers, amends Title I of the Communications Act to require rules applicable to BIAS providers that establish transparency requirements; prohibit blocking and degrading (throttling) lawful traffic, subject to reasonable network management; prohibit paid prioritization; and contain a savings clause relating to emergency communications, law enforcement, public safety or national security, copyright infringement or other unlawful activity.\nH.R. 1101 , introduced on February 7, 2019, by Representative Walden, amends Title I of the Communications Act to establish obligations for BIAS providers. These include no blocking or throttling, subject to reasonable network management; no paid prioritization; and establishment of transparency rules. Additional provisions require the FCC to enforce these rules through adjudication of complaints and establish, no later than 60 days after enactment, formal complaint procedures to address alleged violations; protect the needs of emergency communications, law enforcement, public safety or national security, copyright infringement or other unlawful activity; protect the ability of BIAS providers to offer specialized services and the right of consumers to choice of service plans or control over their chosen BIAS; and establish that BIAS or any other mass-market retail service providing advanced telecommunications capability shall be considered an information service and that Section 706 may not be relied upon as a grant of authority.\nA more narrowly focused measure, H.R. 1860 , introduced on March 25, 2019, by Representative Kinzinger, prohibits the FCC from regulating the rates charged for BIAS.", "Congressional activity in the 115 th Congress sought to address a wide range of issues directly related to the debate over the appropriate framework for the provision of and access to broadband networks. Legislation included Congressional Review Act (CRA) resolutions to overturn the 2017 Order ( H.J.Res. 129 and S.J.Res. 52 ); a measure ( S. 993 ) to nullify the 2015 Order; comprehensive legislation ( H.R. 4682 , H.R. 6393 , S. 2510 , and S. 2853 ) to provide a regulatory framework to outline FCC authority over broadband internet access services; and measures to address the privacy and transparency regulations of the 2015 Order.\nPublication of the 2017 Order in the Federal Register on February 22, 2018, triggered timelines for CRA consideration. CRA resolutions to overturn the 2017 Order were introduced on February 27, 2018, in both the House ( H.J.Res. 129 ) by Representative Doyle, and the Senate ( S.J.Res. 52 ) by Senator Markey. Both measures stated that Congress disapproves \"the rule\" (in this case the FCC 2017 Order) and that the rule \"shall have no force or effect.\" If the CRA joint resolution is enacted the rule \"shall be treated as though such rule had never taken effect.\" Additionally, the agency, in this case the FCC, may not, in most circumstances, promulgate the same rule again. S.J.Res. 52 passed (52-47) the Senate on May 16, 2018, and was sent to the House and held at the desk. On May 17, 2018, Representative Doyle filed a discharge petition to bring a House floor vote on H.J.Res. 129 but the House measure did not come up for consideration.\nOn the other hand, legislation ( S. 993 ) to nullify the FCC's 2015 Open Internet Order was introduced on May 1, 2017, by Senator Lee. S. 993 nullified the FCC's 2015 Order, prohibited the FCC from reclassifying broadband internet access service as a telecommunications service, and prohibited the FCC from issuing a substantially similar rule absent congressional authorization. No further action was taken on the measure.\nThe FCC's adoption (3-2) of the 2017 Order that largely reversed the 2015 regulatory framework (see \" WC Docket No. 17-108 (The FCC 2017 Order) \" above) reopened debate over whether Congress should take broader action to amend existing law to provide guidance and more stability to FCC authority. Four measures ( H.R. 4682 , H.R. 6393 , S. 2510 , and S. 2853 ) to provide a regulatory framework to outline FCC authority over broadband internet access services were introduced.\nH.R. 4682 , introduced on December 19, 2017, by Representative Blackburn, and S. 2510 , introduced by Senator Kennedy on March 7, 2018, amended the Communications Act of 1934 to address a broad range of issues. More specifically, provisions contained in both measures included those which prohibited broadband internet access service (BIAS) providers from blocking lawful content or degrading (throttling) lawful internet traffic, subject to reasonable network management; granted FCC enforcement authority and required the FCC to establish formal complaint procedures to address alleged violations; preserved the ability of BIAS providers to offer, with a prohibition on certain practices, specialized services; established BIAS as an information service; and preempted state and local authority over \"internet openness obligations\" for the provision of BIAS with exceptions for emergency communications or law enforcement, public safety, or national security obligations. Provisions in H.R. 4682 also established eligibility of BIAS services for Federal Universal Service Fund program support. H.R. 4682 and S. 2510 were referred to the House Committee on Energy and Commerce and the Senate Committee on Commerce, Science, and Transportation, respectively, but no further action was taken. S. 2853 , introduced on May 16, 2018, by Senator Thune, also amended the Communications Act of 1934 to establish a framework to address broadband internet access services. S. 2853 is similar to H.R. 4682 and S. 2510 in that it classified broadband as an information service, prohibited both blocking and throttling subject to reasonable network management, permitted with limitations the ability to provide specialized services, and provided for a similar role for the FCC. However, unlike the two previous measures, S. 2853 contained provisions that prohibit paid prioritization and contain transparency obligations; did not contain specific provisions to preempt state and local authority; and clarified that Section 706 of the Telecommunications Act of 1996 may not be used as a grant of regulatory authority. S. 2853 was referred to the Senate Committee on Commerce, Science, and Transportation but no further action was taken. H.R. 6393 , introduced on July 17, 2018, by Representative Coffman, established a new title, Title VIII, in the 1934 Communications Act to provide a regulatory framework for broadband internet access providers. Provisions included those that banned blocking, throttling, and \"paid preferential treatment\" subject to reasonable network management, and established a general conduct standard. Included among the additional provisions were those that established transparency requirements, granted the FCC oversight over interconnection, permitted specialized services, stated that internet service providers are eligible to receive funds from, and may be required to contribute to, the Universal Service Fund, ensured disability access to broadband equipment and services, and exempted Title VIII provisions from FCC forebearance authority. H.R. 6393 was referred to the House Committee on Energy and Commerce but no further action was taken.\nCongressional action in the 115 th Congress also focused on two specific aspects of the 2015 Open Internet Order rules: privacy ( S.J.Res. 34 , S. 878 , S. 964 , H.J.Res. 86 , H.Res. 230 , H.R. 1754 , H.R. 1868 , H.R. 2520 , H.R. 3175 ) and transparency ( S. 228 , H.R. 288 ).", "Congress successfully used the Congressional Review Act (CRA; 5 U.S.C. paras. 801-808) to revoke the customer privacy rules adopted by the FCC under the 2015 Open Internet Order. Legislation ( S.J.Res. 34 , H.J.Res. 86 ), in the form of a joint resolution, was introduced by Senator Flake and Representative Blackburn, respectively, to overturn the FCC's customer privacy rules. The identical joint resolutions stated \"that Congress disapproves the rule submitted by the Federal Communications Commission relating to 'Protecting the Privacy of Customers of Broadband and Other Telecommunications Services' (81 Federal Register 87274 (December 2, 2016) and such rule will have no force or effect.\" S.J.Res. 34 passed the Senate (50-48) on March 23, 2017, and the House (215-205) on March 28, 2017, and was signed by the President on April 3, 2017 ( P.L. 115-22 ). This action prevents any new rule subject to the joint resolution from taking effect and invalidates any rules that have already been in effect. Additionally, it prevents the agency (in this case the FCC) from reissuing the rule in \"substantially the same form\" or issuing a \"new rule that is substantially the same\" as the disapproved rule unless specifically authorized by a law enacted after the approved resolution (CRA. 5 U.S.C. para 801(b)(2)).\nAdditional measures ( H.R. 1754 , H.R. 1868 , H.R. 2520 , H.R. 3175 , S. 878 , and S. 964 ) addressing other aspects of the privacy issue, as it relates to protection of broadband user data privacy, were introduced but received no further action.", "Legislation ( H.R. 288 , S. 228 ) addressing the transparency requirements contained in the 2015 Open Internet Order was under consideration. Transparency requirements refer to the disclosures that internet service providers are required to provide to their end users and edge providers and include, among other things, network management practices, performance, and commercial terms. These requirements were expanded upon or \"enhanced\" in the 2015 Open Internet Order, and small internet service providers (i.e., those with 100,000 or fewer subscribers) were given a temporary exemption from these enhanced requirements. H.R. 288 , introduced on January 4, 2017, by Representative Walden, addresses the transparency requirements contained in the 2015 Order. H.R. 288 expanded the exemption to include internet service providers with 250,000 or fewer subscribers and sunset the transparency exemption five years from the bill's enactment. The bill also required the FCC to report to Congress 180 days after the bill's enactment on whether the exemption should be made permanent and whether the definition of \"small\" for exemption purposes should be modified. H.R. 288 passed the House, by voice vote, on January 10, 2017, but received no further action.\nS. 228 , introduced on January 24, 2017, by Senator Daines, also addressed the transparency exemption and was largely identical to H.R. 288 . S. 228 provided for an exemption of the enhanced transparency rule contained in the 2015 Open Internet Order for small businesses. The term \"small business\" was defined for purposes of the exemption as any provider of broadband internet access service that has not more than 250,000 subscribers. The bill also required the FCC to report to Congress 180 days after the bill's enactment, on whether the exemption should be made permanent and whether the definition of \"small business\" for exemption purposes should be modified. The exemption was to last for five years after enactment or until the FCC completed the above report and a rulemaking to implement those recommendations. S. 228 was referred to the Senate Commerce, Science, and Transportation Committee, but no further action was taken.", "Ten measures ( S. 40 , S. 2283 , S. 2602 , S.J.Res. 14 , H.R. 196 , H.R. 279 , H.R. 1212 , H.R. 2666 , H.R. 4596 , and H.J.Res. 42 ) addressing broadband regulation were introduced in the 114 th Congress. Amended versions of H.R. 4596 , dealing with transparency, and H.R. 2666 , dealing with rate regulation, passed the House on March 16, 2016, and April 15, 2016, respectively. Draft legislation, offered by the House Energy and Commerce Committee and the Senate Committee on Commerce, Science, and Transportation, had also been a focal point of hearings. However, no final action was taken on any of these measures.\nS. 40 , the Online Competition and Consumer Choice Act of 2015, and its companion measure H.R. 196 , introduced on January 7, 2015, by Senator Leahy and Representative Matsui, respectively, addressed the relationship between a broadband internet access provider and a content provider. Both bills directed the FCC to establish/adopt regulations, within 90 days of enactment, to prohibit broadband internet access providers from entering into agreements with content providers, for pay, to give preferential treatment or priority to their content (often termed \"paid prioritization\"), and prohibited broadband providers from giving preferential treatment to their own or affiliated content. These rules applied to the traffic/content that travels between the access provider and the end user, often termed \"the last mile.\" Exceptions were given to address the needs of emergency communications or law enforcement, public safety, or national security authorities.\nH.R. 279 , introduced on January 12, 2015, by Representative Latta, prohibited the FCC from regulating the provision of broadband internet access as a telecommunications service. More specifically, the bill included provisions that classified broadband internet access service as an \"information service,\" not a telecommunications service, and clarified that a provider of broadband internet access service may not be treated as a telecommunications carrier when engaged in the provision of an information service. This measure prevented the FCC from regulating providers of broadband internet access services under Title II of the Communications Act. Representative Blackburn, in direct response to the FCC's February 26, 2015, adoption of the Open Internet Order, introduced H.R. 1212 , the \"Internet Freedom Act,\" on March 3, 2015. H.R. 1212 blocked the implementation of the FCC's adopted Open Internet Order (GN Docket No. 14-28) by stating that it \"shall have no force or effect.\" Furthermore, it prohibited the FCC from reissuing a rule in substantially the same form or issuing a new rule that is substantially the same, unless the reissued or new rule is specifically authorized by a law enacted after the date of the enactment of this act. Exceptions were granted to protect national security or public safety, or to assist or facilitate actions taken by federal or state law enforcement agencies. Similarly S. 2602 , the \"Restoring Internet Freedom Act,\" introduced by Senator Lee, on February 25, 2016, also negated the FCC's 2015 Open Internet Order. S. 2602 was identical to H.R. 1212 but did not contain the provisions relating to exceptions.\nA more targeted measure, H.R. 2666 , the No Rate Regulation of Broadband Internet Access Act, introduced by Representative Kinzinger, on June 4, 2015, prohibited the FCC from regulating the rates charged for broadband internet access as defined by the Open Internet Order. H.R. 2666 was approved (15-11) by the House Communications Subcommittee by a party line vote on February 11, 2016. An amended version of H.R. 2666 was approved (29-19) by the House Energy and Commerce Committee on March 15, 2016. Prior to full committee passage of H.R. 2666 , an amendment stating that the bill would not affect the FCC's authority over data roaming, interconnection, truth-in-billing, paid prioritization, and rates charged for services that receive universal service support was approved. H.R. 2666 passed the House (241-173) without further amendment, on April 15, 2016.\nAnother approach, using the Congressional Review Act (CRA; 5 U.S.C. paras. 801-808) to overturn the 2015 Order, was also under consideration. H.J.Res. 42 , introduced on April 13, 2015, by Representative Doug Collins, contained a resolution stating that \"Congress disapproves the rule submitted by the Federal Communications Commission relating to the matter of protecting and promoting the open Internet ... adopted by the Commission on February 26, 2015 … and such rule shall have no force or effect.\" A similar measure, S.J.Res. 14 , introduced on April 28, 2015, by Senator Rand Paul stated that \"Congress disapproves the rule submitted by the Federal Communications Commission relating to regulating broadband Internet access ..., and such rule will have no force and effect.\" The CRA empowers Congress to review, under an expedited legislative process, new federal regulations and, if a joint resolution is passed and signed into law, to invalidate such regulations.\nAttempts were also made, through the appropriations process, to add language that would have delayed the FCC from using its funds to implement the Open Internet Order until the courts address its legality and/or regulate rates. Language attached to the House Financial Services FY2017 appropriation measure ( H.R. 5485 ) contained among its provisions those that prevented the FCC from using any funds \"... to implement, administer or enforce\" the Open Internet Order until the legal challenges to the Order have been resolved (Title VI §632). The bill also contained a provision that prohibited the FCC from using FY2017 funds to directly or indirectly regulate the prices, fees, or data caps and allowances charged or imposed by providers of broadband internet access services (Title VI §631). The funding bill was passed (30-17) by the House Appropriations Committee on June 9, 2016, and passed the House (239-185) on July 7, 2016.\nSeparately, legislation ( H.R. 4596 , S. 2283 ) addressing the transparency requirements contained in the 2015 Open Internet Order was also under consideration. Transparency requirements refer to the disclosures that internet service providers are required to provide to their end users and edge providers and includes, among other things, network management practices, performance, and commercial terms. These requirements were expanded upon or \"enhanced\" in the 2015 Open Internet Order, and small internet service providers were given a temporary exemption from these enhanced requirements. H.R. 4596 , introduced on February 24, 2016, by Representative Walden, addressed the transparency requirements contained in the 2015 Order. This measure was amended and passed, by voice vote, by the House Energy and Commerce Committee on February 25, 2016, and subsequently passed (411-0) the House on March 16, 2016. H.R. 4596 , as passed by the House, sunset the transparency exemption five years from the bill's enactment and defined small internet service providers as those who have 250,000 subscribers or less. The bill also required the FCC to report to Congress 180 days after the bill's enactment on whether the exemption should be made permanent and whether the definition of \"small\" for exemption purposes should be modified. S. 2283 , introduced on November 16, 2015, by Senator Daines, also addressed the transparency exemption. An amended version of S. 2283 passed the Senate Commerce Committee, by voice vote, on June 15, 2016. The bill, as amended, provided for an exemption of the enhanced transparency rule contained in the 2015 Open Internet Order for small businesses. The term \"small business\" was defined for purposes of the exemption as any provider of broadband internet access service that has not more than 250,000 subscribers. The bill also required the FCC to report to Congress 180 days after the bill's enactment on whether the exemption should be made permanent and whether the definition of \"small\" for exemption purposes should be modified. The exemption would have lasted for three years after enactment or until the FCC completed the above report and a rulemaking to implement those recommendations.\nTo some degree the debate in the 114 th Congress over broadband regulation became more nuanced. Some looked to the FCC to address this issue using current provisions in the 1934 Communications Act to protect the marketplace from potential abuses that could threaten the net neutrality concept. Others felt that existing laws are outdated and limited, cannot be used to establish regulations to address current issues, and would not stand up to court review. They advocated that the FCC should look to Congress for guidance to amend current law to update FCC authority before action is taken. Senator Thune released a list of 11 principles that he felt should be used as a guide to develop legislation. These principles are as follows: prohibit blocking; prohibit throttling; prohibit paid prioritization; require transparency; apply rules to both wireline and wireless; allow for reasonable network management; allow for specialized services; protect consumer choice; classify broadband internet access as an information service under the Communications Act; clarify that Section 706 of the Telecommunications Act may not be used as a grant of regulatory authority; and direct the FCC to enforce and abide by these principles.\nDraft legislation, guided by these principles, was offered by the House Energy and Commerce Committee and the Senate Committee on Commerce, Science, and Transportation. The draft amended the Communications Act of 1934 to prohibit blocking lawful content and nonharmful devices (subject to reasonable network management), throttling data (subject to reasonable network management), and paid prioritization; and required transparency of network management practices. The FCC was directed to enforce these provisions through the establishment of a formal complaint procedure. The draft permitted, within certain guidelines, the offering of specialized services. The provision of broadband internet access service (as well as other mass market retail services providing advanced telecommunications capability) was classified as an information service. The draft also prohibited the FCC, or any state commission, from using Section 706 of the Telecommunications Act of 1996 as a grant of authority. This draft legislation was the focus of hearings, held on January 21, 2015, in the Senate Commerce Committee and the House Subcommittee on Communications and Technology.\nAdditional hearings focusing on a wide range of issues related to the net neutrality/broadband regulation debate were held by the Senate Commerce Committee, the House Judiciary Committee, the House Subcommittee on Communications and Technology, the House Committee on Oversight and Government Reform, and the House Financial Services Subcommittee.", "Seven measures ( H.R. 3982 , H.R. 4070 , H.R. 4752 , H.R. 4880 , H.R. 5429 , S. 1981 , and S. 2476 ) were introduced in direct response to the January 2014 decision issued by the U.S. Court of Appeals, D.C. Circuit, which struck down the antiblocking and nondiscrimination rules adopted by the FCC in its Open Internet Order ( Verizon Communications Inc. v. Federal Communications Commission , D.C. Cir., No.11-1355). H.R. 3982 , the Open Internet Preservation Act of 2014, and its companion measure S. 1981 , introduced on February 3, 2014, restored the antiblocking and nondiscrimination rules struck down by the court until the FCC takes final action, based on Section 706 authority, upheld by the court, to establish new rules in its current Open Internet proceeding. The FCC was also given the authority to adjudicate cases under those rules that occurred during that period. H.R. 4880 , the \"Online Competition and Consumer Choice Act of 2014,\" and its companion measure S. 2476 , introduced on June 17, 2014, directed the FCC to establish regulations that prohibit paid prioritization agreements between internet service providers and content providers on the internet connection between the internet service provider and the consumer and prohibit broadband providers from prioritizing or giving preferential treatment to their own traffic, or the traffic of their affiliates, over the traffic of others. H.R. 5429 , the \"Open Internet Act of 2014,\" introduced on September 9, 2014, restored the authority of the FCC to adopt the rules vacated by the U.S. D.C. Court of Appeals in Verizon v. Federal Communications Commission (the FCC's 2010 Open Internet Order).\nOn the other hand, H.R. 4070 , the Internet Freedom Act, introduced on February 21, 2014, stated that the FCC's 2010 Open Internet rules shall have \"no force or effect\" and prohibited the FCC from reissuing regulations in the same or substantially the same form unless they were specifically authorized by a law enacted after the date of the enactment of the act. Exceptions were made for regulations determined by the FCC to be necessary to prevent damage to U.S. national security; ensure the public safety; or assist or facilitate actions taken by a federal or state law enforcement agency. H.R. 4752 , introduced on May 28, 2014, amended the Communications Act of 1934 to prohibit the FCC from reclassifying broadband networks under Title II of the Communications Act. The bill included, among other provisions, that the term \"information service\" is not a telecommunications service but includes broadband internet access service and that a provider of an information service may not be treated as a telecommunications carrier when engaged in the provision of an information service.\nThe House Judiciary Committee, Subcommittee on Regulatory Reform, held a hearing on June 20, 2014, examining the role of antitrust law and regulation as it related to the broadband access debate. The Senate Judiciary Committee held a field hearing in Vermont on July 1, 2014, and a hearing on September 17, 2014, to address issues related to an open internet.", "A consensus on the net neutrality issue remained elusive and support for the FCC's Open Internet Order was mixed. (See \" The FCC 2010 Open Internet Order ,\" above.) While some Members of Congress supported the action and in some cases would have supported an even stronger approach, others felt that the FCC had overstepped its authority and that the regulation of the internet is not only unnecessary, but harmful. Internet regulation and the FCC's authority to implement such regulations was a topic of legislation ( H.R. 96 , H.R. 166 , S. 74 , H.R. 2434 , H.R. 1 , H.R. 3630 , H.J.Res. 37 , S.J.Res. 6 ) and hearings (Senate Commerce Committee, House Communications Subcommittee, and House Intellectual Property, Competition, and the Internet Subcommittee) in the 112 th Congress.\nLegislation to limit FCC regulation was introduced. H.R. 96 , the Internet Freedom Act, introduced, on January 5, 2011, by Representative Blackburn and 59 additional original cosponsors, prohibited, with exceptions, the FCC from proposing, promulgating, or issuing any regulations regarding the internet or IP-enabled services, effective the date of the bill's enactment. Exceptions were made for regulations that the FCC determined were necessary to prevent damage to national security, to ensure the public safety, or to assist or facilitate actions taken by a federal or state law enforcement agency. The bill also contained a finding that the internet and IP-enabled services are services affecting interstate commerce and are not subject to state or municipality jurisdiction. Another measure, H.R. 166 , the \"Internet Investment, Innovation, and Competition Preservation Act,\" introduced on January 5, 2011, by Representative Stearns, required the FCC to prove the existence of a \"market failure\" before regulating information services or internet access services. The FCC must also conclude that the \"market failure\" is causing \"specific, identified harm to consumers\" and that regulations are necessary to ameliorate that harm. The bill also contained provisions that required any FCC regulation to be the \"least restrictive,\" determine that the benefits exceed the cost, permit network management, not prohibit managed services, be reviewed every two years, and be subject to sunset. Any such regulation was required to be enforced on a nondiscriminatory basis between and among broadband network, service, application, and content providers. A more narrowly focused limitation was contained within H.R. 3630 , the \"Middle Class Tax Relief and Job Creation Act of 2011,\" as passed (234-193) by the House on December 13, 2011. Section 4105 of Title IV (spectrum provisions) of the bill prohibited the FCC from imposing network access/management requirements on licensees. More specifically, the provision prohibited the promulgation of auction service rules that restrict a licensee's ability to manage network traffic or prioritize the traffic on its network, or that would require providing network access on a wholesale basis. However, the provision was removed from the bill prior to final passage ( P.L. 112-96 ).\nLegislation to strengthen the FCC's ability to regulate open access by amending Title II of the 1934 Communications Act was also introduced. S. 74 , the Internet Freedom, Broadband Promotion, and Consumer Protection Act of 2011, introduced January 25, 2011, by Senator Cantwell, provided for strengthened open access protections. More specifically, the bill contained among its provisions those that codify the four FCC principles issued in 2005 as well as those to require internet service providers to be nondiscriminatory regarding access and transparent in their network management practices. The bill also required internet service providers to provide service to end users upon \"reasonable request\" and offer stand-alone broadband access at \"reasonable rates, terms, and conditions\" and prohibited internet service providers from requiring paid prioritization. The bill's requirements applied to both wireline and wireless platforms; however, the FCC was allowed to take into consideration differences in network technologies when applying requirements. The FCC was tasked with establishing the necessary rules, and injured parties could be awarded damages by the FCC or a federal district court.\nOther measures, which proved unsuccessful, were considered to prevent, or at least delay, implementation of the FCC's Open Internet Order. Attempts were made, through the appropriations process, to add language that would prevent the FCC from using its funds to implement the Open Internet Order. Language attached to the FY2011 appropriation measure, H.R. 1 , to prevent the use of FCC FY2011 funds for implementation of the order was passed by the House. The Continuing Appropriations Act, 2011 ( H.R. 1 ), passed (235-189) by the House on February 19, 2011, contained an amendment, introduced by Representative Walden and passed by the House (244-181), to prohibit the FCC from using any funds made available by the act to implement the FCC's Open Internet Order adopted on December 21, 2010. No such provision, however, was included in the final FY2011 appropriations bill, H.R. 1473 , passed by Congress and signed by the President ( P.L. 112-10 ). Similarly, language included in the FY2012 Financial Services and General Government Appropriations bill ( H.R. 2434 ), which includes funding for the FCC, contained a provision that barred the FCC from using any funds to implement its Open Internet Order adopted December 21, 2010. This measure passed the House Appropriations Committee on June 23, 2011 ( H.Rept. 112-136 ), but no such provision was included in the final FY2012 consolidated appropriations bill, H.R. 2055 , which was signed by President Obama ( P.L. 112-74 ) on December 23, 2011.\nAnother approach, using the Congressional Review Act to overturn the order, was also considered. Identical resolutions of disapproval were introduced, on February 16, 2011, in both the House ( H.J.Res. 37 ) and Senate ( S.J.Res. 6 ). These measures stated that Congress disapproves of the rule submitted by the FCC's report and order relating to the matter of preserving the open internet and broadband industry practices adopted by the FCC on December 21, 2010, and further stated that \"such rule would have no force or effect.\" A hearing on H.J.Res. 37 was held by the House Energy and Commerce Communications and Technology Subcommittee on March 9, 2011, and the subcommittee passed the measure (15-8) on a party-line vote immediately following the hearing. On March 25, 2011, the House Energy and Commerce Committee passed (30-23) H.J.Res. 37 . On April 8, 2011, the full House considered and passed (240-179) H.J.Res. 37 . However, an identical resolution of disapproval ( S.J.Res. 6 ) failed to pass the Senate on November 10, 2011, by a 52-46 vote.\nLegislation addressing the issue of data usage caps was also introduced. The Data Cap Integrity Act of 2012 ( S. 3703 ), introduced on December 20, 2012, by Senator Wyden, addressed the usage of data caps by internet service providers (ISPs) and their implementation. Included among the bill's provisions were those that required that an ISP that imposes data caps must be certified by the FCC as to accuracy of data cap measurement; that the cap \"functions to reasonably limit network congestion without unnecessarily restricting Internet use\"; and that the cap does not discriminate (that is, for purposes of measuring does not provide \"preferential treatment of data that is based on the source or content of the data\"). The bill also required ISPs that apply data caps to provide data tools, or identify commercially available data measurement tools, to consumers for monitoring and management. Civil penalties for violations were to be used to reimburse those violated, and unobligated funds in excess of $5 million (annually) were to be transferred from the newly created \"Data Cap Integrity Fund\" to the U.S. Department of the Treasury for deficit reduction.", "Although the 111 th Congress saw considerable activity addressing the net neutrality debate, no final action was taken. One stand-alone measure ( H.R. 3458 ) that comprehensively addressed the net neutrality debate was introduced in the 111 th Congress. H.R. 3458 , the Internet Freedom Preservation Act of 2009, introduced by Representative Edward Markey, and also supported by then-House Energy and Commerce Committee Chairman Waxman, sought to establish a national policy of nondiscrimination and openness with respect to internet access offered to the public. The bill also required the offering of unbundled, or stand-alone, internet access service as well as transparency for the consuming public with respect to speed, nature, and limitations on service offerings and the public disclosure of network management practices. The FCC was tasked with promulgating the rules relating to the enforcement and implementation of the legislation. Then-House Communications, Technology, and the Internet Subcommittee Chairman Boucher stated that he continued to work with broadband providers and content providers to seek common ground on network management practices, and chose to pursue that approach. Furthermore, the Senate Commerce and House Energy and Commerce Committees and Communications Subcommittees held a series of staff-led sessions with industry stakeholders to discuss a range of communications policies including broadband regulation and FCC authority.\nTwo bills ( S. 1836 , H.R. 3924 ) were introduced in response to the adoption by the FCC of a NPR on preserving the open internet. S. 1836 , introduced on October 22, 2009, by Senator McCain, prohibited, with some exceptions, the FCC from proposing, promulgating, or issuing any further regulations regarding the internet or IP-enabled services. Exceptions included those relating to national security, public safety, federal or state law enforcement, and Universal Service Fund solvency. Additional provisions reaffirmed that existing regulations, including those relating to CALEA, remain in force and stated as a general principle that the internet and all IP-enabled services are services affecting interstate commerce and are not subject to state or municipal locality jurisdiction. H.R. 3924 , introduced by Representative Blackburn on October 26, 2009, was identical to S. 1836 , except for title and the omission of the reference to the Universal Service Fund. H.Con.Res. 311 , introduced by Representative Gene Green and 49 other House Members on July 30, 2010, affirmed that it is the responsibility of Congress to determine the regulatory authority of the FCC with respect to broadband internet services and called upon the FCC to suspend any further action on its proceedings until such time as Congress delegates such authority to the FCC.\nAnother measure ( H.R. 5257 ), introduced by Representative Stearns, addressed the possible reclassification of broadband service and would have required, among other provisions, that the FCC prove the existence of a \"market failure\" before regulating information services or internet access services. Furthermore, the bill required, among other provisions, that the FCC conclude that the market failure is causing \"specific, identified harm to consumers\" and if devising regulations must adopt those that are the \"least restrictive,\" permit network management, and are subject to sunset. Still another measure ( S. 3624 ), introduced by Senator DeMint, contained provisions that required the FCC to prove consumers are being substantially harmed by a lack of marketplace choice before imposing new regulations and to weigh the potential cost of action against any benefits to consumers or competition. The FCC was given the authority to hear complaints for violations and award damages to injured parties. The bill also required that any rules the FCC adopted would sunset in five years unless it could make the same finding again.\nThe net neutrality issue was also narrowly addressed within the context of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). The ARRA contains provisions that require the National Telecommunications and Information Administration (NTIA), in consultation with the FCC, to establish \"nondiscrimination and network interconnection obligations\" as a requirement for grant participants in the Broadband Technology Opportunities Program (BTOP). The law further directs that the FCC's four broadband policy principles, issued in August 2005, are the minimum obligations to be imposed. These obligations were issued July 1, 2009, in conjunction with the release of the notice of funds availability (NOFA) soliciting applications for the program. The FCC's National Broadband Plan (NBP), which was required to be written in compliance with provisions contained in the ARRA, while making no recommendations, did contain discussions regarding the open internet and the classification of information services.\nConcern over the move by some broadband network providers to expand their implementation of metered or consumption-based billing prompted the introduction of legislation ( H.R. 2902 ) to provide for oversight of volume usage service plans. H.R. 2902 , the Broadband Internet Fairness Act, introduced by former Representative Massa, required, among its provisions, that any broadband internet service provider serving 2 million or more subscribers submit any volume usage based service plan that the provider is proposing or offering to the Federal Trade Commission (FTC) for approval. The FTC, in consultation with the FCC, was required to review such plans \"to ensure that such plans are fairly based on cost.\" Such plans were subject to agency review and public hearings. Plans determined by the FTC to impose \"rates, terms, and conditions that are unjust, unreasonable, or unreasonably discriminatory\" were to be declared unlawful. Violators were subject to injunctive relief requiring the suspension, termination, or revision of such plans and were subject to a fine of not more than $1 million." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 2, 2, 2, 2, 3, 3, 3, 3, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h1_full", "h0_title h1_title", "", "", "", "", "", "", "", "", "", "h0_full h1_full", "", "h1_title", "", "", "h1_full", "h1_full", "", "", "", "", "", "h2_title h1_title", "h2_full", "h1_full", "", "", "", "", "h1_full", "" ] }

{ "question": [ "What did the FCC vote for in 2015?", "Why were the adopted rules controversial?", "How did various parties react to the FCC's vote?", "How did courts react to the challenges?", "What did the FCC adopt in 2017?", "What have been the results of this adoption?", "Why do people support the 2017 Order?", "Why do people oppose the 2017 order?", "What resolutions and bills have been introduced in Congress regarding the 2017 Order?", "What debate is occurring in Congress?", "What are the roles of two bills regarding broadband access?", "How have these bills fared in the House?", "What other actions has Congress taken to address the net neutrality debate?" ], "summary": [ "The Federal Communications Commission (FCC) in its February 26, 2015, open meeting voted 3-2, along party lines, to adopt open internet rules and released these rules on March 12, 2015.", "One of the most controversial aspects of the rules was the decision to reclassify broadband internet access service (BIAS) as telecommunications service under Title II, thereby subjecting internet service providers to a more stringent regulatory framework.", "Various parties challenged the legality of the FCC's 2015 Open Internet Order, but the U.S. Court of Appeals for the D.C. Circuit, in a June 14, 2016, ruling, voted (2-1) to uphold the legality of all aspects of the 2015 FCC Order.", "A petition for full U.S. Appeals Court review was denied and a subsequent petition for U.S. Supreme Court review was declined.", "The FCC on December 14, 2017, adopted (3-2) an Order that largely reverses the 2015 regulatory framework. The 2017 Order, among other things, reverses the 2015 classification of BIAS as a telecommunications service under Title II of the Communications Act, shifts much of the oversight from the FCC to the Federal Trade Commission and the Department of Justice, and provides for a less regulatory approach.", "This action has once again opened up the debate over what the appropriate framework is to ensure an open internet. Reaction to the 2017 Order has been mixed.", "Some see the 2015 FCC rules as regulatory overreach and welcome a more \"light-touch\" approach, which they feel will stimulate broadband investment, deployment, and innovation.", "Others support the 2015 regulations and feel that their reversal will result in a concentration of power to the detriment of content, services, and applications providers, as well as consumers, and refute the claim that these regulations have had a negative impact on broadband investment, expansion, or innovation.", "Petitions for review have been consolidated in the U.S. Court of Appeals, D.C. Circuit. CRA resolutions (S.J.Res. 52, H.J.Res. 129) to overturn the 2017 Order were introduced in the 115th Congress. S.J.Res. 52 passed (52-47) the Senate, but H.J.Res. 129 was not considered in the House. Additional bills to provide a regulatory framework to outline FCC authority over broadband internet access services were introduced, but not acted on, in the 115th Congress.", "Debate over what the appropriate regulatory framework should be for broadband access has continued in the 116th Congress.", "Two bills (H.R. 1644, S. 682) add a new title to the Communications Act that overturns the 2017 Order and restores the 2015 Order.", "An amended version of H.R. 1644 passed (232-190) the House on April 10, 2019.", "Additional bills (H.R. 1006, H.R. 1096, H.R. 1101, and H.R. 1860) that address the net neutrality debate have also been introduced." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 1, 1, 0, -1, -1, 1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Progress Reported in Some Implementation Areas, but Significant Work Remains", "Over Half of Commuter Railroads May Be at Risk of Not Meeting the 2018 Deadline or Criteria for RSD-based Extension, Though Numerous Factors Create Uncertainty", "Over Half of Commuter Railroads May Be at Risk", "Many Factors May Affect Commuter Railroads’ Ability to Meet the Deadline or Qualify for an Extension", "Limited Industry Expertise and Resources", "Interoperability and Host and Tenant Coordination", "Schedule Changes", "FRA’s Resources and Capacity", "Lessons Learned", "FRA Monitors Railroads’ Progress but Has Not Systematically Communicated with Them or Prioritized Efforts", "FRA Monitors Railroads’ Implementation Progress, Reviews Documents, and Shares PTC Information", "FRA Has Not Systematically Communicated Information to Help Railroads Prepare for the 2018 Deadline or to Qualify for Extensions", "FRA Has Made Limited Use of Implementation Progress to Prioritize Efforts and Mitigate Risks", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "GAO Contact and Staff Acknowledgments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Agency Comments" ], "paragraphs": [ "Under the Rail Safety Improvement Act of 2008, a PTC system must be designed to prevent train-to-train collisions, derailments due to excessive speed, incursions into work zone limits, and the movement of a train through a switch left in the wrong position. Railroads may implement any PTC system that meets these requirements, and the majority of the 29 commuter railroads are implementing one of three primary types of systems: the Interoperable Electronic Train Management System (I- ETMS), the Advanced Civil Speed Enforcement System, or Enhanced Automated Train Control (E-ATC). PTC’s intended safety benefits can only be achieved when all required hardware has been installed and tested, and a train is able to communicate continually and in real time with the software and equipment of its own railroad and also with that of other railroads operating on the same tracks. Real-time communication is needed to account for changing track conditions, which may, for example, include temporary speed restrictions where railroad employees are conducting track maintenance. Figure 1 illustrates how one system is intended to operate.\nPTC’s multi-step implementation process can be grouped into three primary phases (see fig.2). Each phase involves key activities for railroads to complete—such as installing PTC equipment—as well as the submission of key documents for FRA review and approval—such as test plans. Based on railroad data reported to FRA, most commuter railroads are currently in the second phase, which involves system design, installation, and testing. According to a recent FRA presentation, completing key activities within this phase is the near-term focus for many commuter railroads.\nAccording to FRA officials, railroads must complete certain implementation steps sequentially, while other activities can be worked on simultaneously; for example, railroads may work to finish installing locomotive and wayside equipment while also beginning testing on an initial track segment. Furthermore, based on railroads’ PTC implementation plans, the scale of implementation activities can vary by railroad, based on the size of the railroad and the number of components to be installed. For example, one relatively large commuter railroad must install computer hardware on 528 locomotives and 789 wayside units along 218 route miles, while one relatively small commuter railroad’s installation is limited to 17 locomotives and 35 wayside units along 32 route miles.\nAccording to FRA, full implementation of PTC is achieved when a railroad’s system is FRA-certified and interoperable, and all hardware, software, and other components have been fully installed and in operation on all route miles required to use PTC. The PTC system is required to be interoperable, meaning the locomotives of any host railroad and tenant railroad operating on the same track segment will communicate with and respond to the PTC system, including uninterrupted movements over property boundaries.\nIn early 2016, railroads required to install PTC had to submit revised implementation plans to FRA that included a schedule and milestones for specific activities, such as installing locomotive and wayside hardware, acquiring radio spectrum (if necessary), and training employees who will have to use and operate PTC systems. Railroads are required to report annually to FRA certain information on their implementation progress. As part of overseeing railroads’ PTC implementation, FRA established a PTC Task Force in May 2015 to track and monitor individual railroads’ progress. Railroads are also required to report quarterly to FRA on the status of PTC implementation in several areas such as: locomotives equipped, employees trained, territories where revenue service demonstration (RSD) has been initiated, and route miles in PTC operation.\nFRA’s oversight tools include assessing civil penalties if a railroad fails to comply with legal requirements, including a railroad’s failure to comply with its implementation plan. FRA has a national PTC director, designated PTC specialists in the 8 FRA regions, and a few additional engineers and test monitors responsible for overseeing technical and engineering aspects of implementation and reviewing railroad submissions of documents and test requests. FRA officials told us they conduct various types of PTC-related work simultaneously, such as providing technical assistance to railroads, addressing questions, and reviewing documentation submitted by railroads. As railroads progress with testing and before completing implementation, FRA must review and approve a safety plan for each railroad and certify the PTC system.\nCommuter railroads that will not be able to implement a PTC system by December 31, 2018, may receive a maximum 2-year extension if they meet six criteria set forth in statute. Specifically, commuter railroads must demonstrate, to the satisfaction of the Secretary of Transportation, that they have: (1) installed all PTC system hardware; (2) acquired all necessary spectrum; (3) completed required employee training; (4) included in a revised implementation plan an alternative schedule and sequence for implementing their PTC system as soon as practicable; (5) certified to FRA that they will be in full compliance with PTC requirements by the date provided in the alternative schedule and sequence; and (6) either initiated RSD on at least one territory required to have operations governed by a PTC system or “met any other criteria established by the Secretary.”", "Most of the 29 commuter railroads have reported progress in some of the key areas of PTC implementation that FRA monitors, such as locomotive and wayside equipment installation, but the amount of progress reported varies across individual railroads (see fig. 3 below).\nOver half of the commuter railroads reported that they have made substantial progress in some initial implementation activities, while other railroads reported that they have made much more limited progress or have yet to begin equipment installation or employee training. For example, as of the end of September 2017:\nLocomotive Equipment Installation: 18 commuter railroads reported 50 percent or more of their locomotive PTC equipment was installed, and of these, 13 had completed installation. In contrast, 6 railroads reported that they had not started installation of locomotive equipment.\nWayside Equipment Installation: 16 commuter railroads reported 50 percent or more of their wayside PTC equipment was installed, and half of them reported that they had completed installation. In contrast, 7 reported that less than 20 percent of this equipment was installed.\nEmployee Training: 11 commuter railroads reported completing PTC training for 50 percent or more of their employees requiring training. Of these, four reported that they had completed employee training. Thirteen commuter railroads had completed 10 percent or less of their employee training, and of these, 11 reported that they had not started training their employees. However, some commuter railroad representatives we spoke with stated that they are waiting to conduct training until their PTC system is closer to deployment. For example, representatives from one railroad told us they are waiting to conduct training so employees will be recently trained and familiar with PTC as the system is rolled out.\nNotably, commuter railroads reported that they have made the most progress in obtaining spectrum, which allows PTC components to transmit information about a train’s movements and location. Specifically, 15 of the 17 railroads that require spectrum reported that they have obtained it. The two other railroads reported that they are in discussions to obtain leased spectrum.\nBeyond the initial implementation activities, much work remains for the majority of commuter railroads to complete other key PTC activities that will enable them to complete implementation. PTC implementation requires many additional steps to integrate equipment and software systems that go beyond installing equipment and training employees, and the majority of commuter railroads reported that they continue to work to complete these steps, which are technically complex and time consuming. For example, as of the end of September 2017:\nLocomotives Fully Equipped and PTC-Operable: Fifteen commuter railroads reported that half or more of their locomotives were fully equipped and PTC-operable, meaning that all necessary onboard hardware and software is installed and commissioned, and is capable of operating over a PTC-equipped territory. Eight commuter railroads reported that none of their locomotives were fully equipped and operable.\nField Testing: Thirteen railroads reported that they had begun field testing—a key implementation milestone that precedes RSD and allows railroads to assess how PTC components and software function together. FRA officials said that the testing phase can be a long and difficult process, as data obtained during field testing must prove the functionality of the system and be included as part of a railroad’s application to enter RSD.\nRSD: Following successful field testing, FRA may grant a railroad approval to enter the next level of testing, RSD. In RSD, testing is performed on trains operating PTC as part of regular operations.\nAccording to FRA, RSD is the final phase of testing that a railroad completes in order to validate and verify its PTC system, and the results from RSD, along with earlier testing, are to be included in the safety plan a railroad submits to FRA. While six commuter railroads reported that they have begun RSD, most had not yet reached this key milestone—including some of the largest commuter railroads.\nConditional Certification: Once FRA approves a railroad’s safety plan, the railroad receives a PTC system certification. According to FRA officials, as of September 30, 2017, only two commuter railroads were conditionally certified—meaning FRA has reviewed their safety plans and granted conditional approval for PTC operations, and the railroads are providing regular service in PTC operations—and two additional commuter railroads had submitted a safety plan for FRA review.\nGiven the variation in commuter railroads’ progress, especially related to completing later-stage PTC activities such as testing and developing safety plans, 13 of 29 commuter railroads told us they planned to seek a deadline extension, and the remaining 16 told us they do not intend to seek an extension. However, the number of commuter railroads planning to seek an extension is subject to change before the end of 2018.", "Based on our analysis of the PTC schedules of the 29 commuter railroads, over half may not have sufficient time to complete activities needed to implement PTC by the end of 2018 or to qualify for an extension of that deadline by meeting criteria based on initiating RSD— for the purposes of this statement, referred to as an RSD-based extension. In particular, our analysis focused on the time likely needed for railroads to conduct RSD activities, because RSD is both the final step of field testing required by the 2018 deadline as well as one of the statutory options railroads have in seeking a deadline extension. For our analysis, we compared the amount of time railroads plan for completing two key milestones—installing the back office server and conducting field testing—to the amount of time FRA officials estimate is required for each milestone and to the experiences of railroads that have already completed RSD. However, it is important to recognize that numerous factors could affect railroads’ planned and future progress. For example, commuter railroads could face delays due to unexpected issues with PTC components or FRA reviews of documents submitted by the railroads.", "In May 2017, FRA sent letters to 14 commuter railroads and their respective state departments of transportation and governors informing the recipients that they had not installed at least 50 percent of their required locomotive and wayside equipment. In these letters FRA raised concerns that these railroads were at risk of not meeting the 2018 deadline and not completing requirements for a deadline extension. Subsequently, in January 2018, FRA applied a more stringent benchmark—whether a railroad had installed at least 65 percent of all equipment—and determined that 13 commuter railroads remained at risk. Using this more stringent criterion, only one railroad had made enough progress installing equipment to no longer be classified as at risk by FRA.\nIn addition to FRA’s benchmarks for equipment installation, for our analysis we evaluated more broadly railroads’ progress in completing other implementation activities that follow equipment installation and that FRA and stakeholders said are more difficult to achieve. Specifically, we analyzed commuter railroads’ planned schedules for two key milestones to determine whether these railroads appear to have built sufficient time into their implementation plans to complete these and other activities by the 2018 deadline or to qualify for an RSD-based extension. The two key milestones we examined, both of which need to be completed before a railroad enters RSD, were: installing the back office server (BOS) and associated software necessary to connect and interface with wayside, locomotive, and dispatch equipment (the BOS transmits and receives data among this equipment that enables PTC to work); and conducting field testing, in particular testing of installed infrastructure and initial assessments of the PTC system’s overall functionality on trains that are not transporting passengers or operating during regular passenger service.\nOur analysis found that at least one quarter, and potentially up to approximately two thirds, of commuter railroads may not have sufficient time to enter RSD and, thus, may not meet the 2018 PTC implementation deadline or qualify for an RSD-based extension. These railroads vary by size and type of PTC system and by whether they plan to apply for a deadline extension. Specifically, our analysis found the following:\nProjection based on BOS status: Between 9 and 19 commuter railroads appear to be at potential risk of not meeting the 2018 deadline or qualifying for an RSD-based extension based on our analysis. Our analysis found that the 6 commuter railroads already in RSD took an average of 10 months from installing the BOS to starting RSD. However, the schedules of 9 railroads indicate that they plan to install a BOS less than 10 months before the 2018 deadline. We believe that given past experience of other railroads, this places these 9 railroads at potential risk. Moreover, FRA officials estimate that it can take 2 to 3 years for a railroad to install and prepare the BOS and associated software to support testing and RSD. Using FRA’s 2-year installation estimate (which would require BOS installation before January 1, 2017) further exacerbates the potential risk of not meeting the deadline or of not qualifying for any RSD-based extension for up to 19 railroads.\nProjection based on time allowed to conduct field testing: Based on our review of the planned schedules, between 7 and 14 railroads may not have built sufficient time into their plans either to complete field testing ahead of the 2018 deadline or to qualify for an RSD-based extension. Commuter railroads and FRA officials told us that field testing is challenging and can take a substantial amount of time due to, for example, unanticipated issues and limited available track for testing given regular passenger operations. On average, our analysis found that the 6 commuter railroads already in RSD took 7 months to move from starting field testing to starting RSD. However, 7 commuter railroads plan to start their field testing less than 7 months before the 2018 deadline. This situation raises concerns about their ability to conduct field testing before the 2018 deadline. Moreover, FRA officials told us that moving from the start of field testing to the start of RSD can take between 1 and 3 years, averaging about 2 years, and that most railroads under-estimate the amount of time needed for testing. When we applied the lower end of FRA’s estimate, we found that it further increases the potential risk for 14 railroads that plan to start field testing less than a year prior to the 2018 deadline. As a result, they could be at risk of not meeting the 2018 deadline or qualifying for an RSD-based extension.\nWe used RSD as a benchmark for our analysis of key milestones based on the importance of this benchmark in implementing PTC and on the three RSD-based alternative criteria that FRA has approved to date.\nWhile the three approved alternative criteria all include RSD, FRA has broad authority to approve “any other” alternative criteria even if not based on RSD, as noted above. One FRA official told us the agency approved these three alternative criteria requests because they were all based on specific, quantifiable measures, rather than because they included RSD in particular. FRA officials stated that they have not issued guidance on uniform alternative criteria because they will strive for railroads to meet the criteria for a deadline extension that are listed in statute and want the discretion to make determinations on a case-by-case basis. In addition, FRA officials said they want to ensure that each railroad’s criteria are consistent with the statutory requirements for final implementation by December 31, 2020. Because it is unknown what alternative criteria FRA may establish in the coming months, which may not include RSD, it is difficult to determine at this time whether the railroads we found to be potentially at risk of not qualifying for an RSD- based extension might be more or less likely to qualify for an extension based on other, non-RSD criteria.", "Much uncertainty exists regarding railroads’ ultimate implementation progress and their ability to meet the 2018 deadline or qualify for an extension. This uncertainty is due, in part, to the fact that PTC is a new way of operating and involves technologies that are more complex to implement than many other railroad capital projects. Furthermore, a number of factors can affect commuter railroads’ planned and future progress, including unexpected setbacks installing PTC components and resources and capacity issues. Below we highlight some of the factors that that could affect implementation progress.", "Three out of five PTC contractors and suppliers and about half of the commuter railroads we spoke with acknowledged that industrywide, there are a limited number of individuals with PTC technical expertise available to successfully implement the technology. This can affect the ability of railroads and contractors to meet planned schedules. For example, one large commuter railroad said it took a year and a half to hire an internal expert to continue work on its PTC project. In addition, five commuter railroads told us that they faced other issues with their prime contractors missing their milestones; such issues, going forward, could impact railroads’ progress during the coming year. Also, though most railroads we spoke to are relying on contractors, some commuter railroads may lack the in-house resources and expertise to plan and oversee a project as large and complex as PTC. Representatives from three commuter railroads we interviewed noted that PTC is not a traditional capital or construction project for a railroad; therefore, it requires additional expertise. FRA officials also stated that small commuter railroads may not have technical capacity or expertise with large contracts for such complex projects, especially given limited industry resources.\nIn addition to limited expertise and resources, some commuter railroads told us they faced unexpected delays in obtaining PTC equipment, such as radios, from the supplier. Some PTC equipment is only available from a single provider, which can lead to delays executing contracts and obtaining equipment. Three commuter railroads we spoke with said they encountered issues executing contracts for PTC radios, in particular negotiating unique liability requirements sought by the only supplier of this equipment, which resulted in delays or higher overall costs to the railroads. One railroad noted that executing sole-source contracts for such circumstances is particularly problematic for state and public agencies.", "As noted above, PTC is being implemented by different types of railroads using different systems, and achieving interoperability among PTC systems can complicate implementation. For example, Northeast Corridor railroads that are implementing versions of the Advanced Civil Speed Enforcement System need interoperability with freight railroads using I- ETMS. Even railroads that are installing the same PTC system have to take significant steps to ensure that systems will communicate and interoperate properly. In one case, a railroad told us that it is equipping its locomotives with equipment for multiple PTC systems to ensure that it can operate on various host railroads’ tracks.\nSome commuter railroads that only operate as tenants on other railroads’ tracks may be able to complete some PTC implementation work more quickly, as these railroads may benefit from work the host railroads already completed as they coordinate to implement PTC. For example, representatives from one commuter railroad we spoke with said they have to acquire and install PTC equipment on their locomotives but rely on the host railroads to install the remainder of the necessary PTC infrastructure. These tenant-only commuter railroads, however, have to coordinate field testing and RSD with the host railroads.", "Unexpected issues with components or technology can also require additional time to complete certain activities, causing schedules to slip. Such issues could affect railroads currently on schedule as well as railroads pursuing aggressive schedules in an effort to overcome late starts or early setbacks. For example, representatives from 10 railroads we spoke with said that installing the BOS and associated software, and ensuring it functions properly, can pose a challenge. One contractor told us that once the BOS is delivered to a railroad, a lot of testing work remains, and unexpected issues inevitably arise during testing, even if the BOS works according to all specifications. Representatives from one railroad said that despite strong organizational commitment to implementation and setting internal targets for progress, their PTC project schedule slipped many times over the course of implementation due to a variety of issues, including on-going software updates that caused delays while also straining the budget and burdening staff. Representatives from that commuter railroad also noted that equipping vehicles with PTC components took three times longer than originally expected (3 years instead of 1 year). However, some railroads are looking for ways to accelerate implementation. For example, representatives from one railroad said they made the difficult decision to cut some weekend passenger service to accelerate wayside equipment installation. Therefore, as representatives from one railroad articulated, given the schedule slippage experienced by railroads further along in implementation, railroads with aggressive schedules would have a limited ability to accommodate any additional delays.", "As the 2018 deadline approaches and railroads progress with implementation activities, the amount of documentation railroads will submit to FRA for review and approval is likely to increase significantly. For example, FRA reported in summer 2017 that it had taken between 10 and 100 days to review each of the test requests it received from railroads. As the 2018 deadline approaches, FRA will have to review a considerable amount of additional test plans and procedures as well as applications to begin RSD. In addition, FRA will have to concurrently review any safety plans that are submitted by railroads reaching the certification phase. At the American Public Transportation Association’s (APTA) Commuter Railroad Summit in June 2017, FRA officials said that they expect each safety plan review—which involves all the regional specialists and some contract personnel—to take between 6 and 12 months to review. These plans are about 5,000 pages in length. FRA officials told us that reviewing all of the safety plans in a timely manner will be a challenge given staff resources. FRA has 12 technical staff dedicated to the review of railroads’ PTC documentation and monitoring of PTC testing. Representatives from 10 out of 19 commuter railroads we interviewed said they are concerned about FRA’s ability to review submitted documentation in a timely manner.", "As railroads continue to progress with their projects and the industry becomes more experienced with PTC, railroads could benefit from lessons learned. For example, representatives from one railroad that is implementing I-ETMS, the system all large Class I freight railroads are implementing, told us that they anticipate being able to capitalize on lessons learned from freight railroads that have operated in RSD. By leveraging the freight railroads’ experiences, one commuter railroad hopes to address issues before testing, rather than during, and therefore move more quickly through the testing process. If commuter railroads are able to apply lessons learned from other railroads’ testing processes, then they may be able to accelerate their implementation efforts. Railroads may also accelerate implementation schedules as they become more adept at the overall testing process, which involves submitting test documents to FRA and scheduling multiple tests. This could potentially shorten the average time it takes a railroad to complete one or more of the key milestones analyzed. The two commuter railroads that have been conditionally certified told us they have met with other commuter railroads informally and have shared their project experiences as a way to facilitate information sharing.", "", "Since 2015, FRA has assumed additional roles and responsibilities— primarily through the PTC Task Force and regional PTC specialists—to monitor railroads’ implementation progress, review required documentation, and share information about implementation steps and activities.\nMonitoring and Document Review: In response to a recommendation in our September 2015 report, FRA began to identify and collect additional information from the railroads to enable it to effectively track and monitor railroads’ PTC progress. For example, in 2016, the PTC Task Force began collecting quarterly progress data and monitoring railroads’ annual reports to track progress in meeting the PTC implementation milestones set out in railroads’ implementation plans, such as locomotive equipment installed at the end of the year. As previously noted, the Task Force used this implementation progress data in May 2017 to identify 14 commuter railroads at risk of not meeting the 2018 deadline or requirements for an extension. FRA also monitors railroads’ PTC implementation through meetings with railroad and industry associations, visits to individual railroads, and reviewing and commenting on PTC documentation submissions, such as requests to begin field testing and RSD. FRA officials told us that they monitor railroads’ progress to determine how much commuter railroads understand about the implementation process and to trigger discussions between FRA and the railroads. Regional PTC specialists are responsible for reviewing and approving requests submitted by railroads preparing to test system functionality as well as individual testing procedures describing the specific equipment and movements involved in each test. In addition, FRA officials told us that assessing civil penalties and sending commuter railroads letters of concern are the primary enforcement mechanisms they have available to oversee PTC.\nInformation Sharing: FRA officials said that they have primarily used informal assistance and participation in group meetings to convey information related to the implementation process and specific milestones necessary to meet the 2018 deadline or qualify for an extension. FRA officials acknowledged that they do not have the capacity to provide frequent one-on-one assistance to all railroads given their growing PTC workload and limited agency resources. As such, FRA officials explained that in order to reach a wide audience given the approaching deadline, their current focus is on presentations at industry group meetings (e.g., APTA’s Commuter Rail Summit) and specific PTC systems user-group meetings. FRA’s regional PTC specialists told us they also provide direction on technical aspects of PTC implementation and testing, primarily by discussing issues at individual and railroad-industry meetings and providing informal feedback on commuter railroads’ PTC documentation, such as testing requests.", "While the majority of the railroad representatives we met with said FRA officials were consistently available to discuss issues that arise during day-to-day PTC implementation activities, the information conveyed by these officials has sometimes been inconsistent. In particular, FRA’s heavy reliance on informal assistance and participation in group meetings to convey information to commuter railroads has led, at least on some occasions, to different or inconsistent information being communicated in different meetings. For example, representatives from one PTC equipment supplier said that FRA has not consistently commented on different railroads’ test plans, and as a result, they have not been able to carry lessons learned on to other railroads’ plans. In addition, while FRA’s officials said their position has been consistent with the regulations stating that the host railroad must submit a safety plan to FRA, representatives from one railroad we met with said they had heard conflicting information from FRA. For example, these railroad representatives told us that FRA officials originally said commuter railroads that are only tenants on other railroads needed to submit their own safety plans but later stated at an industry association meeting that tenant railroads could be included in the host railroads’ plans.\nIn addition, commuter railroads have expressed a need for additional clarification about the criteria for applying for an extension. FRA officials also told us that they have received a lot of questions from commuter railroads about the criteria for an extension related to RSD or other alternative criteria. As noted above, to date, FRA has approved alternative extension criteria for three railroads, and in each case, the criteria involved RSD testing on a shorter track segment. However, representatives from one contractor working with several commuter railroads said it is unclear what “alternative criteria” FRA will approve to receive an extension. In addition, representatives from one commuter railroad stated that any opportunity to clearly outline FRA’s interpretation of the PTC requirements, specifically the alternative extension criteria that could, for example, allow for a shorter test segment, would enable railroads to better position themselves to apply for an extension.\nRepresentatives from some commuter railroads we met with were likewise unclear about the agency’s approach to reviewing and granting extension requests. Representatives from three commuter railroads said clarification of FRA’s planned approach would be helpful as the deadline approaches. According to FRA officials, the statute does not set a deadline by which railroads have to apply for an extension, and FRA has not set a deadline or indicated the latest date by which a railroad should apply. Nonetheless, for railroads that do not comply with PTC deadlines, FRA officials said they could impose civil penalties for each day a railroad fails to implement a PTC system by the applicable statutory deadline, but the agency has yet to determine how it will handle railroads that do not meet the deadline or receive an extension. With less than a year remaining before the 2018 deadline, FRA officials stated that they anticipate their workload is likely to increase as railroads submit additional documentation to review and continue to progress with testing. More systematic communication that delineates FRA’s planned approach for the upcoming deadline and extension process may be critical for the agency to efficiently use its limited resources and convey consistent information to all the railroads.\nStandards for internal control in the federal government state that management should externally communicate the quality information necessary to achieve the entity’s objectives. These standards also note that management should select the appropriate form and method of communication, so that information is communicated widely and on a timely basis. As we have previously found, the particular form of the agency’s communication—for example, by oral presentation, written guidance, or formal regulation—will depend on multiple factors including the purpose and content of the specific communication and applicable legal requirements. Moreover, internal control standards indicate agencies should have standard processes in place to determine which form of communication is appropriate in each case. FRA officials told us that the agency could issue written guidance explaining how it has decided to apply its deadline extension authority and what type of information railroads will then need to submit to get an extension. However, FRA officials stated this written guidance would require time- consuming approval by the Office of Management and Budget under the Paperwork Reduction Act, and would make timely issuance of such guidance difficult. As noted, however, FRA may have the option to use less formal, less time-consuming methods of communicating key information about the extension process, such as webinars or conference calls, to communicate information more systematically. FRA officials acknowledged they are working to identify mechanisms such as these, but they have yet to do so. Absent systematic communication articulating the agency’s planned approach for the extension process, railroads may not have the information they need to effectively prepare for the deadline or seek an extension.", "While FRA has taken steps to more closely monitor railroads’ implementation progress, the agency has not prioritized its efforts, including its allocation of resources, based on an assessment of risk. In its 2015 Railroad Accountability Plan, FRA stated that its PTC data collection and monitoring efforts would allow the agency to inform, among other things, its resource allocation and risk mitigation. While FRA has used its data to identify at-risk railroads, it has not used this information to prioritize how to allocate its resources or address risks. For example, as discussed earlier after reviewing railroads’ data on their progress in installing PTC equipment, FRA notified 14 commuter railroads of their at- risk status in May 2017. However, while FRA officials said that they hold regular meetings with many—but not all—of the at-risk railroads, 9 of these 14 commuter railroads said that the formal letter they received did not ultimately trigger any change in the type of interaction they have with FRA. More recently, in December 2017, the Secretary of Transportation notified all railroads required to implement PTC by letter of the expectation that all possible measures be taken to ensure implementation requirements are met by the 2018 deadline. However, these letters made no distinction between railroads—that is, the same letter was sent to railroads with conditionally certified PTC systems and to railroads that reported completing no training or installing no locomotive equipment to date—nor did the letters describe how FRA’s approach to working with the railroads would respond to their particular circumstances and risks.\nAs noted above, FRA officials have stated that the agency does not have the resources to meet more frequently with or provide additional assistance to railroads. While the PTC Task Force helps monitor railroads’ progress, FRA still employs fewer than 12 individuals with the requisite PTC expertise and experience to review technical documents and help railroads implement PTC systems. In an environment with limited agency resources, targeting agency efforts to areas of the greatest risk or highest priority areas is one way to leverage existing resources. According to standards for internal control in the federal government, management should identify, analyze, and respond to risks. In addition, FRA’s Strategic Human Capital Plan states that developments including the rapid introduction of new technologies, such as PTC, demand that FRA continuously evaluate its programs and resources to adapt to changing demands.\nHowever, FRA has not fully leveraged the implementation progress data that railroads’ submit to the agency to identify and develop a risk-based approach to prioritize agency actions. At present, it is unclear whether the agency’s priorities are, for example, to help the largest commuter railroads meet the deadline or extension requirements, push those railroads that are very close to full implementation, or assist railroads that are in the earliest stages of their PTC project. For example, one regional PTC specialist we met with said that if he did not need to be reviewing documentation or observing railroads’ field testing, he could spend more time with at-risk railroads. By not effectively targeting actions to help mitigate risks posed by railroads most at risk of not meeting the PTC deadline or qualifying for an extension, FRA misses the opportunity to leverage its limited resources by providing direct assistance in the areas of greatest need.", "Much progress has been made in implementing PTC by commuter railroads. Nevertheless, about half of commuter railroads plan to apply for an extension, and many of the railroads’ planned schedules raise questions about their ability to complete key implementation milestones and qualify for RSD-based extensions prior to the 2018 deadline. As the 2018 deadline rapidly approaches, the need for clear information that is systematically communicated to all railroads implementing PTC becomes even more critical. FRA cannot expect to provide information and guidance to railroads individually, and therefore, adopting a risk-based communication strategy could help it more efficiently share information in the coming year. Moreover, the information FRA collects on railroads’ progress has not been used to inform the agency’s resource allocation decisions. Using this information to better allocate resources could help position FRA to better meet its responsibility to monitor and oversee PTC implementation in the future.", "We are making the following two recommendations to FRA:\nThe Administrator of FRA should identify and adopt a method for systematically communicating information to railroads regarding the deadline extension criteria and process. (Recommendation 1)\nThe Administrator of FRA should develop an approach to use the information gathered to prioritize the allocation of resources to address the greatest risk. (Recommendation 2)", "We provided a draft of this statement to DOT for review and comment. In its comments, reproduced in appendix II, the agency concurred with our recommendations. DOT also provided technical comments, which we incorporated as appropriate.\nChairman Thune, Ranking Member Nelson, and Members of the Committee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.", "If you or your staff have any questions about this testimony, please contact Susan Fleming, Director, Physical Infrastructure team 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 statement. GAO staff who made key contributions to this testimony are Susan Zimmerman (Assistant Director), Sarah Arnett, Jim Geibel, Delwen Jones, Joanie Lofgren, SaraAnn Moessbauer, Malika Rice, Amy Suntoke, Maria Wallace, Eric Warren, and Crystal Wesco.", "This statement examines commuter railroads’ implementation of positive train control (PTC). Specifically, this report addresses: commuter railroads’ progress in implementing PTC; how many, if any, commuter railroads may be at risk of not meeting the mandated PTC deadline or certain extension criteria, and what factors may be affecting implementation progress; and the extent to which FRA’s management and oversight approach has helped ensure that commuter railroads either meet the deadline or qualify for an extension.\nTo address these objectives, we reviewed the Rail Safety Improvement Act of 2008, the Positive Train Control Enforcement and Implementation Act of 2015, and applicable Federal Railroad Administration (FRA) regulations, reports, and guidance. Our review focused on the 29 railroads FRA officials identified as commuter railroads required to implement PTC. We also reviewed previous GAO work on PTC and applied Standards for Internal Control in the Federal Government to FRA’s role overseeing PTC implementation, including the principles that management should externally communicate the necessary quality information to achieve the entity’s objectives and that management should identify, analyze, and respond to risks. In addition, we interviewed representatives from 19 commuter railroads to further understand their implementation progress, factors that may be affecting progress, and the interviewees’ perspectives on FRA’s management and oversight of PTC implementation. We selected the 19 railroads to include the 14 railroads that according to FRA were identified in May 2017 as at risk of both not meeting the 2018 implementation deadline and not completing statutory requirements necessary to receive a deadline extension, as well as 5 other railroads that were further ahead with implementation and that varied in geographic location and size of rail system, among other factors.\nWe met with relevant FRA officials involved in PTC monitoring, enforcement, and technical assistance including the PTC Staff Director, regional PTC specialists working in each of the FRA regions where commuter railroads selected for interviews operate, and members of the headquarters-based PTC Task Force. In addition, we met with FRA Office of Railroad Safety specialists and engineers, among others. We also interviewed representatives from all 7 of the Class I freight railroads (which are also required to implement PTC), 5 major PTC equipment suppliers and contractors identified by FRA, and representatives from 2 railroad industry associations—the Association of American Railroads and the American Public Transportation Association—to obtain their perspectives on commuter railroads’ implementation of PTC, factors affecting implementation progress, and FRA’s PTC management and oversight.\nTo identify commuter railroads’ progress in implementing PTC, we reviewed railroads’ third quarter progress reports submitted to FRA for the period ending September 30, 2017. We reviewed the most recently available quarterly data outlining the 29 commuter railroads’ installation and implementation progress in selected areas as of September 30, 2017, including: locomotive equipment installed, wayside equipment installed, employee training, locomotives fully equipped and PTC- operable, spectrum obtained, the status of field testing, and revenue service initiated. As necessary, we also reviewed the narrative fields in the quarterly reports for additional context related to a given railroad’s implementation activities and the extent of progress made in specific implementation areas. We assessed the data in these reports by reviewing it for anomalies, outliers, or missing information, and reviewing supporting narratives to ensure they aligned with the reported data, among other things. Based on these steps, we determined that these data were sufficiently reliable for our purpose of describing railroads’ progress implementing PTC. We also reviewed other sources of information, such as PTC Implementation Plans, railroads’ 2016 annual progress reports, and interviews with railroad representatives.\nTo assess progress on locomotive equipment installation and wayside equipment installation, we compared the quantities installed to the total quantities required for PTC implementation. Similarly, to assess progress on employee training, we compared the number of employees trained to the number of employees required to be trained for PTC implementation. To assess progress in fully equipping locomotives to be PTC-operable, we compared the quantity of locomotives that are fully equipped and PTC-operable to the quantity required for PTC implementation. To assess progress on obtaining spectrum, we reviewed the quarterly update on spectrum. We concluded that a railroad had obtained spectrum if, for one or more area or location, it reported that spectrum was either (1) acquired but not available for use or (2) acquired and available for use. We also reviewed the narrative, as appropriate. For some railroads, we concluded that spectrum was not applicable because they use a PTC system that does not require spectrum, or because their host railroad is responsible for obtaining spectrum. To assess progress on field testing, we reviewed the third quarter status on installation and track-segment progress. We concluded that a railroad initiated field testing if one or more of its segments were reported as (1) testing or (2) operational/complete. To determine which railroads initiated revenue service demonstration (RSD), we reviewed the cumulative territories where RSD had been initiated. If the railroad reported that one or more territories had initiated RSD, we concluded that RSD had been initiated.\nFinally, to determine which railroads anticipate completing implementation before the December 31, 2018 deadline and which plan to seek any RSD- based extension, we obtained information from all 29 commuter railroads to identify which railroads plan to implement PTC by the 2018 deadline and which plan to submit an alternative schedule (that is, a request for an extension) to implement PTC after the December 31, 2018 deadline.\nTo identify commuter railroads at risk of meeting neither the PTC deadline nor any RSD-based extension criteria, we first reviewed data on railroads’ progress installing PTC locomotive and wayside equipment. We did this because FRA used such installation progress to identify 14 commuter railroads as being at risk and notified them via formal letter in May 2017. To confirm FRA’s identification of commuter railroads that would be at risk based on an updated benchmark for the third quarter of 2017—railroads with less than 65 percent of total hardware installed—we analyzed railroads’ reported locomotive and wayside equipment installation status as of September 30, 2017 to determine the percentage of total hardware installed for each commuter railroad.\nTo build on this analysis, we collected information from all 29 commuter railroads on their actual and planned schedules for key implementation milestones. For the 19 commuter railroads we met with, we collected this information as part of our interviews, and for the remaining 10 commuter railroads, we collected this information by email using a standard data collection instrument. The key implementation milestones covered procuring a prime contractor for PTC implementation; applying for and entering field testing and RSD, which is the final phase of field testing; installing the back office server (BOS) and associated software; and completing PTC implementation. This schedule information was collected between September 2017 and January 2018.\nWe compared the amount of time commuter railroads’ planned for completing two key milestones to the amount of time that FRA officials estimate is required for each milestone and to the experiences of railroads that already initiated RSD. The two milestones are as follows: Install the BOS and associated software necessary to connect and interface with wayside, locomotive, and dispatch equipment.\nConduct field testing of installed infrastructure, which is an initial assessment of the PTC system’s overall functionality on trains that are not transporting passengers or operating during regular passenger service.\nWe selected these two milestones because (1) each milestone follows equipment installation (which FRA had previously analyzed to assess commuter railroads PTC implementation progress); (2) a railroad must complete both to enter RSD; and (3) several interviewees, including PTC contractors and suppliers and FRA officials, said these activities are important project milestones that are complex and time consuming. We calculated the amount of time a commuter railroad planned for each milestone (with initiating RSD as the endpoint for each milestone), and compared that amount of time to two benchmarks: first, the anticipated length of time FRA officials said that the milestones have taken or may take, and second, the average amount of time (in months) that each milestone took the six commuter railroads that had started RSD as of September 2017. Since we used two benchmarks, we present a range of railroads that may not have sufficient time to complete these milestones and thus may be at risk of not meeting the 2018 deadline or qualifying for an RSD-based extension.", "Appendix II: Agency Comments This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 1, 2, 2, 3, 3, 3, 3, 3, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1 ], "alignment": [ "h0_full", "", "h0_title h2_title h1_full", "h0_full h1_full", "h2_title", "", "", "", "h2_full", "", "h2_title h1_title", "h2_full", "h2_full h1_full", "h2_full", "h2_full h1_full", "", "", "", "h0_full h2_full", "" ] }

{ "question": [ "What is the FRA responsible for?", "What is positive train control?", "How can positive train control be used?", "What has GAO analysis of commuter railroads' PTC scheduled milestones found?", "What evidence is there that commuter railroads have not planned enough time for the scheduled milestones?", "How can FRA address the poor planning?", "How will the number of commuter railroads at risk change in the coming year?", "What is FRA's role in PTC management and oversight?", "How has FRA shared information with commuter railroads?", "What tasks has FRC not yet completed?", "How can FRC fulfill its responsibilities and complete these tasks?" ], "summary": [ "The Federal Railroad Administration (FRA) is responsible for overseeing railroads' (including commuter railroads') implementation of positive train control (PTC) by December 31, 2018.", "PTC is a communications-based train control system designed to prevent certain types of accidents and involves the installation, integration, and testing of hardware and software components.", "For example, railroads must install equipment on locomotives and along the track, and complete field testing, including revenue service demonstration (RSD)—an advanced form of testing that occurs while trains operate in regular service.", "GAO's analysis of commuter railroads' PTC scheduled milestones for two key activities necessary to meet the 2018 deadline or qualify for an RSD-based extension (one of the statutory options) found that as many as two-thirds of the 29 commuter railroads may not have allocated sufficient time to complete these milestones. Specifically, in comparing the commuter railroads' schedules to FRA's estimates of the time required to complete these milestones and the experiences of railroads that have already completed them, GAO's analysis found that from 7 to 19 commuter railroads may not complete the milestones before the 2018 implementation deadline or qualify for an RSD-based extension.", "For example, FRA estimates that field testing (one of the milestones) takes at least one year, but GAO found that 14 commuter railroads plan to start this testing less than a year before the 2018 deadline, increasing the potential risk that this milestone will not be completed.", "However, FRA has the authority to establish alternative criteria for an extension not based on RSD, and several other factors can affect commuter railroads' planned and future progress.", "As a result, the number of commuter railroads at risk of not meeting the deadline or qualifying for an extension could increase or decrease in the coming year.", "FRA's PTC management and oversight includes monitoring commuter railroads' progress, reviewing documentation, and sharing information with them, but the agency has not systematically communicated information or used a risk-based approach to help these railroads prepare for the 2018 deadline or qualify for an extension.", "GAO found that FRA has primarily used informal assistance, meetings with individual railroads, and participation in industry-convened groups to share information with commuter railroads, and in some cases the information conveyed has been inconsistent according to industry representatives.", "While FRA officials have said they are working to identify additional ways to convey extension-related information, they have not yet done so. Moreover, although FRA receives information from commuter railroads on their progress in implementing PTC, it has not used this information to prioritize resources using a risk-based approach.", "With the year-end 2018 deadline approaching, and an anticipated significant increase in FRA's workload, targeting resources to the greatest risk can help better ensure that FRA effectively fulfills its oversight responsibilities and provides commuter railroads the information they need to prepare for the 2018 deadline or seek an extension." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 1, 1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 5 ] }

{ "title": [ "Background", "DOD’s Process for Monitoring Flying Hours Provides Information That Could Help It Determine When to Shift Eligible Missions to CRAF Participants", "DOD Exceeded Its Required Military Training Hours for Fiscal Years 2002 through 2010, but Has Reduced the Percentage of Excess Hours in Recent Years", "DOD Restricts Partial Plane Loads on Channel Routes to Promote Efficiency, Meet Training Requirements, and Fulfill Peacetime Business Obligations to CRAF", "Adequacy of CRAF to Meet Future Mission Needs is Unclear until DOD Completes Several Assessments", "DOD’s Mission Needs for CRAF Have Changed Since its Last Assessment of Future Requirements", "DOD Is Updating Its Future Airlift Requirements to Reflect Strategy Changes and Reassess the Incentives for CRAF Participants", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Scope and Methodology", "Appendix II: U.S. Transportation Command Restricted Route Policy", "Appendix III: List of Civil Reserve Air Fleet Participants (As of April 2013)", "Appendix IV: Comments from the Department of Defense", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The Civil Reserve Air Fleet (CRAF) is a voluntary, contract-based agreement between DOD and U.S. commercial air carriers that augments DOD’s military airlift capability during times of war and national emergency. It was created in 1951 to augment DOD airlift capability during a national defense-related crisis. The National Airlift Policy, signed by President Reagan in 1987 and still in effect, establishes policy that the military will rely on the commercial air carrier industry to provide the airlift capability required beyond that available in the military airlift fleet. The policy includes guidelines for meeting airlift requirements in both peacetime and wartime. These guidelines direct, among other things, that policies be designed to increase participation in CRAF and enhance the mobilization base of the U.S. commercial air carrier industry. In exchange for this participation, the government provides commercial carriers the opportunity to fly DOD peacetime missions moving passengers and cargo and also sets aside business for CRAF participants in the General Services Administration City Pairs passenger program and TRANSCOM’s Worldwide Express cargo program. CRAF is divided into three progressive stages that TRANSCOM can activate during times of crisis, in part or in whole, with the approval of the Secretary of Defense.\nStage I covers a minor regional contingency or other situations where AMC cannot simultaneously meet both deployment and other airlift requirements.\nStage II is tailored for a major theater war or a defense airlift emergency short of a full national emergency.\nStage III would be required if the military had to fight more than one major theater war at the same time or operate in a larger crisis, including a national emergency declared by the President or Congress. A stage III CRAF activation has never occurred.\nDOD has activated CRAF only twice in the history of the program. Stage I and part of stage II were activated in support of Operations Desert Shield and Desert Storm in August 1990 and January 1991, respectively, through May 1991. The CRAF stage I passenger segment was activated in support of Operation Iraqi Freedom in February through June 2003.\nTo enter the CRAF program, an air carrier must (1) be a U.S. flagged, Federal Aviation Administration approved Part 121 air carrier, (2) be approved by the Commercial Airlift Review Board, (3) have one year prior equivalent uninterrupted service to the commercial sector, (4) meet a minimum fleet participation level (for international carriers), (5) meet a specified utilization rate (for international and aeromedical evacuation fleet participants), and (6) be able to meet manning and crew requirements. Once approved to participate, carriers commit the number of aircraft they will make available for each of the three stages of the CRAF program. AMC then decides the number of aircraft that will be accepted into the CRAF program, based on DOD’s wartime requirements. As of April 2013, a total of 64 aircraft were committed to stage I, 308 to stage II, and 554 to stage III.\nTwo segments of the commercial airlift industry—scheduled service carriers and charter carriers—comprise the CRAF wartime capability. The scheduled service carriers—which include large passenger airlines such as American Airlines and Delta Air Lines and cargo carriers such as FedEx and UPS—pledge the majority of the aircraft accepted into the CRAF program. DOD will use most of the pledged aircraft only during a CRAF activation. In peacetime, scheduled service carriers operate commercial flights on regular routes and cannot afford unplanned disruptions to their airline networks. Because many DOD missions are not routine in their locations or timing, charter carriers—which have the flexibility to provide airlift based on their customers’ schedules—transport the majority of DOD’s peacetime, contingency, and stage I business. For some of the charter carriers, this peacetime business accounts for a significant portion of their total business revenue. However, because scheduled service carriers have large fleets, they are also a critical component of CRAF, and they provide the bulk of the CRAF strategic reserve in the event of a CRAF activation.\nThe primary incentive for commercial carriers to participate in the CRAF program is the opportunity to obtain DOD peacetime business. DOD distributes peacetime business to CRAF participants using an entitlement process. CRAF carriers are awarded points based on the number of aircraft they commit to the program, the stage to which these aircraft are assigned, and other considerations as applicable to the individual airline. The amount of peacetime business CRAF participants are entitled to is determined in advance of any missions awarded. DOD makes this business available to the CRAF carriers to fulfill its peacetime business obligation to them, and it does so by offering the carriers the opportunity to fly various missions (for a list of all CRAF carriers, see appendix III).\nTRANSCOM and AMC share responsibility with respect to CRAF policy. TRANSCOM validates the requirements for the movement of personnel and cargo, determines which transportation mode will be used for these movements, and distributes the work to the appropriate component command. Once TRANSCOM determines that a movement will go by air, the mission requirement is handled by AMC. Within AMC, the Tanker Airlift Control Center (TACC) normally handles mission planning, assignment of airlift assets, mission control, and tracking. Mission planning includes determining whether military or commercial aircraft will fly a mission. CRAF carriers generally have priority over non-CRAF carriers for movements of passengers and cargo.\nThe Fly CRAF Act generally requires DOD to use CRAF carriers when contracting for airlift services, whenever the carriers are available. If no CRAF participant is available to supply the airlift, DOD may use a non- CRAF carrier (either U.S. or foreign flagged) to fly the mission. For airlift services between two locations outside the United States, CRAF carriers must be used as long as they are “reasonably available.” Only foreign carriers operate larger aircraft, such as the AN-124 and IL-76, which are designed to carry outsized and oversized cargo that U.S. commercial carriers normally cannot accommodate. However, according to TRANSCOM officials, DOD uses foreign carriers through subcontracts with CRAF participants, and only rarely contracts directly with foreign carriers. DOD interprets the Fly CRAF Act as applying only to contracts that are specifically for airlift services, and not to contracts for services or supplies that may involve airlift or other transportation services. For example, according to TRANSCOM, DOD does not require “The Fly CRAF preference” to be applied to service or supply contracts such as the Logistics Civil Augmentation Program or the Defense Logistics Agency Prime Vendor Program. According to DOD officials, the current law and related contracting provisions provide the department with the flexibility to acquire the best value for products and services when executing service or supply contracts.", "DOD has exceeded the flying hours needed to meet military training requirements for fiscal years 2002 through 2010 due to increased operational requirements associated with Afghanistan and Iraq; however it does not know whether it used CRAF participants to the maximum extent practicable during this period. In fiscal years 2010 through 2012, DOD’s flying hours have more closely matched its training plan. In keeping with its policy to both provide training within the military airlift system and use commercial sources of transportation to conduct eligible airlift missions, DOD has taken steps to provide CRAF participants with peacetime business. However, DOD does not use information from its process for monitoring flying hours to determine when it will use more hours than it has planned to meet training requirements and shift eligible airlift missions to CRAF participants to ensure that commercial sources are used to the maximum extent practicable, as required by DOD guidance. Unless DOD uses its information on flying hours to determine when it can shift eligible airlift missions to CRAF participants, it may be flying its military fleet unnecessarily. DOD officials say that using the military fleet to fly missions that are eligible to be shifted to CRAF participants is more expensive than using the CRAF carriers and could reduce these carriers’ level of participation in the CRAF program.", "The National Airlift Policy states that the “Department of Defense shall establish appropriate levels for peacetime cargo airlift augmentation in order to promote the effectiveness of the Civil Reserve Air Fleet and provide training within the military airlift system.” Consistent with that policy, DOD Instruction 4500.57 requires that DOD operate its fleet to meet its training requirements and also requires that it use commercial sources of transportation to the “maximum extent practicable.” DOD officials stated that they have been using military airlift beyond what was planned, because the operations in Afghanistan and Iraq created additional airlift requirements, many of which could not be met using U.S. commercial sources. For example, some kinds of cargo—such as the mine resistant ambush protected vehicles—are too large to fit inside the aircraft operated by CRAF participants. Military aircraft, along with some foreign aircraft such as the AN-124 and the IL-76, are able to accommodate these kinds of cargo. Additionally, missions in Afghanistan and Iraq often could not be flown by CRAF participants because of airspace restrictions on U.S. carriers operating in those countries. Finally, some missions have additional requirements that call for the use of military airlift, such as requirements that cargo be escorted by military personnel or that an aircraft land on an unpaved runway.\nEvery year, DOD develops requirements for its military aircrews that serve as the basis for its flying hour program. The flying hour program provides training and experience for the aircrews. These requirements consist mainly of two types of flying hours—”currency hours” and “experiencing hours.” Training flights conducted to log currency hours generally do not carry cargo or passengers and therefore do not compete with commercially-operated missions. On the other hand, experiencing, or “time in the air,” flights typically carry cargo or passengers and compete with commercially-operated missions. Officials told us that currency hour flights account for roughly 20 percent of the flying hour requirement and are funded through operations and maintenance funds, while experiencing hour flights account for approximately 80 percent of the requirement. We excluded currency hours from our analysis, since flights that provide these training hours generally do not compete for cargo or passengers with commercially-operated missions. However, flights that provide experiencing hour training are funded through the Transportation Working Capital Fund, because these flights carry cargo or passengers. As a revolving fund account, the Transportation Working Capital Fund relies on customer reimbursements in exchange for transportation services provided. The customer that requests airlift reimburses the fund for the mission performed, although some costs associated with mobilization capability and readiness may be funded by the Air Force. For the purposes of this report, “military airlift training requirements” refers to experiencing hours, because those hours are the ones that DOD must decide how to allocate to meet military airlift training requirements while also using CRAF participants to the maximum extent practicable.\nFigure 1 shows the percentage by which AMC has exceeded the flying hours that it planned for experiencing requirements in fiscal years 2001 through 2012. DOD said that during these years it exceeded its flying hours for training because of the need to fly missions to support operations in Iraq and Afghanistan. To develop this chart, we compared AMC’s requirements for experiencing flying hours to the actual hours AMC flew with the primary airlift platforms—the C-5, C-17, and C-130— and expressed them as percentages of the planned flying hours. We excluded the tanker aircraft from this analysis, since there are no commercial aircraft in the CRAF program that are comparable to the KC- 10 or KC-135.\nRecognizing the importance of the commercial carriers for meeting its future airlift requirements, DOD has taken steps to increase the amount of peacetime business it gives to CRAF participants. According to TRANSCOM’s Fiscal Year 2012 Annual Report, CRAF carriers remain essential in supplying transportation services and provide a critical part of DOD’s warfighting deployment capability. Further, TRANSCOM and AMC are using CRAF carriers to more directly support the forces in Afghanistan. CRAF participants have provided the majority of passenger movements and about a quarter or more of all cargo movements since fiscal year 2004. Figures 2, 3, and 4 show the extent to which DOD has relied on CRAF participants to provide airlift services.\nOver the last few years, both the number of CRAF participants and the number of aircraft pledged to the CRAF program have fluctuated, and it is not clear what level of support CRAF participants will provide in the future. For example, as we noted in our 2009 report on CRAF, the number of charter aircraft enrolled in the CRAF program had declined from more than 60 aircraft in 2003 to as few as 19 in April 2008, before stabilizing at 29 charter aircraft in May 2008. Our analysis shows that CRAF participation as of fiscal year 2012 was still sufficient to allow DOD to meet its wartime requirements. However, according to some current CRAF participants, changes to the business environment, such as the ongoing economic down-turn, have resulted in five of the participating carriers filing for bankruptcy over the last three years. Two of these carriers have already completely ceased providing airlift services. Table 1 shows the level of airlift support provided by CRAF participants and military aircraft during the last three years.\nTo support increasing the amount of business provided to CRAF participants, TRANSCOM has created a new organization called the Enterprise Readiness Center. According to an official with the Enterprise Readiness Center, one of the goals of the center is to explore ways to encourage DOD organizations, like the Defense Logistics Agency, to direct more air cargo business into the DOD-managed Defense Transportation System. Further, the center will also seek to preserve DOD’s airlift readiness capability, given the reduction in airlift volume, and to help DOD maintain efficiencies by ensuring that the Defense Transportation System is the primary source used by DOD entities to arrange transportation. To achieve this, the Enterprise Readiness Center proposes to improve the usage process of the Defense Transportation System, create flexible rates, minimize overhead as a way to reduce rates, develop customer-based transportation solutions, and create an active dialogue with CRAF participants. As a way to further strengthen communications and the strategic relationship between DOD, the Department of Transportation, and CRAF participants, TRANSCOM and AMC also established an Executive Working Group in 2010. The Executive Working Group is a discussion forum used to address general issues related to the CRAF program. The working group’s meetings are a forum for providing updates regarding efforts related to the CRAF program, such as updates on various studies, the status of efforts related to CRAF, and carrier concerns.\nDOD officials also told us that they have taken additional steps over the last few years to improve the distribution of business within the CRAF program. TRANSCOM has revised its process for awarding points over the last few years to award more bonus points to carriers that fly additional peacetime missions, assume a greater risk of activation, and operate more modern, fuel-efficient aircraft. TRANSCOM has also revised the practice of awarding commissions. Larger carriers allow the smaller carriers on their teams the benefit of using their points to obtain DOD business, in exchange for commissions consisting of a percentage of the revenue the smaller carriers earn from this business. These commissions are one of the ways in which larger carriers earn revenue from the CRAF program, since they do not conduct many of the actual airlift missions in peacetime. However, according to an official at one carrier, these commissions had risen to as high as 9 percent of the revenue earned from the mission. TRANSCOM officials told us that they have capped the value of these commissions at 5 percent of mission revenue, in an attempt to ensure that smaller carriers earn enough profit from performing peacetime airlift missions.\nDOD intended for these efforts to strengthen the viability of the CRAF program. The opinions of CRAF participants varied on the extent to which these changes made the program more equitable, mostly depending on whether the carrier directly benefited from the changes. All of the carriers we spoke with indicated that they were planning to stay in the CRAF program for the immediate future. However, some added that if the revenue they were receiving decreased too much, they would reassess their participation and would consider not participating in future years. More than half of the CRAF participants we interviewed suggested that DOD could do more to increase the peacetime business it provides to them. Some of these carriers suggested that DOD’s use of foreign air carriers should be curtailed. According to DOD officials, foreign carriers primarily operate as sub-contractors to CRAF participants to move cargo that is too large for standard U.S. commercial aircraft, and only in rare cases would DOD contract directly with a foreign carrier. Furthermore, our analysis indicates that the use of foreign carriers has declined since its high point in fiscal year 2008. As shown in figure 5, payments made to foreign carriers have declined by more than 55 percent since fiscal year 2008.\nDOD does not use its process for monitoring flying hours to determine when it will exceed its planned training hours, and it does not use the information from this process to allocate eligible airlift missions to CRAF participants. As previously noted, DOD guidance requires TRANSCOM to meet its training needs while also using commercial sources of transportation to the “maximum extent practicable.” DOD officials told us that, consistent with this policy, meeting training needs was their priority. However, they also told us that flights provided by CRAF participants are less expensive than military flights, in part because commercial aircraft are designed to be more fuel-efficient, while military aircraft are designed to carry heavy cargo and land in austere locations. In addition, according to AMC data, once training requirements have been met, using commercial carriers for airlift missions can be less costly than using military aircraft. For example, according to an April 2013 analysis provided by AMC officials, the cost per pound to transport cargo using commercial carriers such as the 747 and MD-11 can be between 22 and 35 percent lower than the cost of transporting the same cargo using military aircraft such as the C-5 and C-17. Currently, airlift requests are handled by different sections within the Tanker Airlift Command Center (TACC), depending on the type of airlift requested. Each of these sections has a different process for choosing whether to use commercial or military airlift to meet the request. Some airlift missions are conducted primarily by military airlift, while others are conducted by commercial sources.\nHowever, while TRANSCOM performs periodic monitoring of the distribution of missions between military and commercial sources, officials acknowledged that this monitoring does not consider the extent to which training requirements have already been met or will be met with planned missions. According to DOD officials, airlift missions that are not conducted to satisfy training requirements should be performed by CRAF participants, except when there is some other feature of the mission that requires military airlift. Knowing when more flying hours are going to be used than are needed to meet training requirements—and using this information to shift eligible airlift missions to CRAF participants—would allow DOD to use commercial sources of transportation to the maximum extent practicable.\nDOD officials told us that operations in Iraq and Afghanistan had ensured that there were enough airlift missions available both to support training requirements and to provide adequate peacetime business for CRAF participants. Further, they noted that there are a number of reasons that DOD might exceed its flying hours, such as the need to transport particularly large cargo, special conditions that require military aircraft (such as unpaved runways), and restrictions on U.S. carriers operating in Iraq and most of Afghanistan. Given such requirements, officials questioned the utility of developing a process to monitor the balance between satisfying flying hour training requirements and providing CRAF participants with additional peacetime business; they said that they were uncertain how many additional missions would be eligible to be flown by commercial carriers. However, TRANSCOM and AMC officials have acknowledged that they have not collected data that would allow them to determine how many of these missions could be shifted to CRAF participants. Furthermore, while we acknowledge that there may be a number of legitimate reasons why military aircraft would have to be used for missions even after training requirements have already been met, it is not clear that such reasons are always present when military airlift is used. For example, AMC completed a study in December that was intended, in part, to address short-term concerns regarding the CRAF program and its participants. This study noted that some missions were flown on military aircraft only because the necessary load plans for commercial aircraft had not been developed in a timely manner—not because of any requirement that the cargo be flown on military aircraft. The study recommended that DOD airlift customers develop commercial load plans to facilitate scheduling of commercial aircraft in these situations. This study acknowledges that some missions currently flown by military airlift could instead be flown by CRAF participants without negatively affecting training hours.\nAfter the drawdown in Afghanistan concludes, the need for airlift is expected to decline, which will reduce both training opportunities and the business available for CRAF participants. In addition, as airlift needs decrease, DOD may need to fly a higher percentage of its channel missions in order to provide its crews with sufficient training opportunities, which could further decrease its use of CRAF participants. DOD officials told us that they expect peacetime business to fall significantly after fiscal year 2015. This decrease has already begun; peacetime revenues of CRAF participants have already dropped by nearly one third, from their high point of approximately $3 billion in fiscal year 2010 to about $2 billion in fiscal year 2012, as shown in figure 5. Commercial carriers are projected to be used even less in fiscal year 2013 and beyond, until revenues return to pre-September 11, 2001 levels of $700 million or less. This represents a potential 66 percent decline in DOD business available to CRAF participants, which may further exacerbate the economic pressures under which CRAF participants are operating.\nBy not using the information it has on flying hours to help determine when it can allocate eligible airlift missions to CRAF participants, DOD loses the ability to determine whether it is using commercial sources—such as CRAF participants—to the maximum extent practicable, as required by DOD guidance. As a result, DOD may be using its military fleet more than necessary thereby risking reduced participation of commercial carriers in the CRAF program.", "DOD provided several reasons for restricting commercial carriers from transporting partial plane loads of cargo over certain routes, based on its need to promote efficiency, meet its military airlift training requirements, and fulfill peacetime business obligations to CRAF participants. According to TRANSCOM officials, in 2001, DOD began restricting commercial air carriers from transporting partial plane loads of cargo over certain overseas channel routes in order to improve the efficiency and effectiveness of the cargo missions flown over these routes and keep cargo flights in the channel route system that DOD relies on to satisfy its training requirements and business obligations to CRAF participants. In May 2012, TRANSCOM issued a memorandum reiterating its policy of restricting commercial aircraft—including CRAF participants—from transporting partial plane loads of cargo over these routes. According to TRANSCOM officials responsible for coordinating airlift for DOD, this policy—which has been in place for over a decade—is a tool to help DOD increase the efficiency of its cargo shipments airlifted over channel routes and minimize costs to DOD. DOD officials reported that in the late 1990’s and early 2000’s commercial air carriers began transporting an increasingly larger share of DOD cargo shipments, leaving a relatively small amount of cargo for military aircraft to transport over channel routes. DOD officials said that before the policy was implemented, military aircraft would often conduct channel route missions with partial loads of cargo, instead of completely filling the aircraft with cargo, which is more cost effective. In addition, in the late 1990’s and early 2000’s, DOD was experiencing a shortage of flying hours for training. During this same period, commercial carriers were flying a large number of airlift missions, which exacerbated DOD’s flying hour shortage, because many of the airlift missions that military aircrews could have conducted for training purposes were being lost to commercial air carriers. Lastly, according to TRANSCOM officials, because many of the partial planeload missions performed by commercial carriers were negotiated under tender contracting arrangements— which are not included in the annual amount of peacetime business DOD guarantees to the CRAF program—DOD’s ability to fulfill its peacetime business obligations to CRAF was being challenged.\nThe National Airlift Policy states that military and commercial resources are equally important— and interdependent—in fulfilling the national defense airlift objective. The policy also provides that the goal of the U.S. government is to maintain in peacetime military airlift resources that are manned, equipped, trained, and operated to ensure the capability to meet wartime requirements. DOD guidance also notes that TRANSCOM may be required to maintain a readiness posture that includes operating military airlift internationally during peacetime, and that it must conduct such operations at the level necessary to meet operational and training requirements. According to DOD officials who are responsible for managing DOD’s strategic airlift requirements, TRANSCOM takes steps to meet DOD’s flying hour training requirements while also providing commercial carriers with peacetime business; however the flying hour training requirement takes precedence. DOD performs a variety of types of airlift missions that allow military aircrews to meet their flying hour training requirements while also delivering the cargo needed to sustain military operations to military units located overseas. These mission types include:\nChannel airlift missions: regularly scheduled airlift for movement of sustainment cargo and/or personnel between designated aerial port of embarkation and aerial port of debarkation over validated contingency or distribution channel routes.\nSpecial assignment airlift missions: airlift missions requiring special pickup/delivery at locations other than those established within the approved channel structure or requiring special consideration because of the number of passengers, weight or size of the cargo, urgency or sensitivity of movement, or other special factors.\nContingency missions: airlift for movement of cargo and/or personnel in support of military operations directed by appropriate authority to protect U.S. interests.\nExercise missions: airlift for movement of cargo and/or personnel in support of a military maneuver or simulated wartime operation involving planning, preparation, and execution that are carried out for the purpose of training and evaluation.\nTheater direct delivery: a theater-based distribution system wherein delivery to destinations forward of major aerial ports of debarkation can be performed by any available aircraft, including those normally used for intertheater requirements.\nChannel route missions are conducted by both military and CRAF participants and account for a large portion of DOD’s overall airlift activity. During the last three fiscal years, at least 30 percent of DOD’s total cargo movement was over channel routes. See figure 6 below.\nTRANSCOM officials stated that to maximize efficiency, DOD requires aircraft conducting channel route missions—whether they are military or commercial—to be completely full of cargo before takeoff. According to TRANSCOM officials, the policy restricting commercial carriers from transporting partial loads over channel routes provides DOD with a tool to maximize the amount of cargo transported in a single mission over a channel route. Cargo previously transported by commercial carriers in partial loads is now consolidated at aerial ports of embarkation. TRANSCOM officials reported that historically, commercial carriers transporting partial loads had been conducting a large portion of DOD’s airlift business. These commercial airlift missions involved transporting cargo to and from locations that were also being serviced by military aircraft conducting channel missions. DOD was not maximizing the efficiency of its channel route missions and minimizing costs, because aircraft were not filled to capacity. To reduce the redundancy of transporting cargo using both modes of delivery, DOD began restricting commercial carriers from conducting partial plane load missions over channel routes, and it now generally requires commercial aircraft conducting channel missions to be full of cargo before takeoff. According to TRANSCOM officials, the policy ultimately played a role in increasing the efficiency of DOD’s air cargo movements over channel routes. According to a RAND report issued in 2003 that analyzed the costs associated with transporting cargo over channel routes using commercial airlift versus military airlift, DOD would decrease airlift cost if it reduced the amount of cargo transported by commercial carriers conducing partial plane load missions, and shifted that cargo to be transported in a full plane load aircraft. Taking this step would be less expensive than allowing military aircraft to conduct partial plane load missions over channel routes.\nIn addition, DOD’s policy allows it to offer more training opportunities for its aircrews during periods of low demand for airlift. Rather than relying on other types of missions—such as contingency missions— to accomplish training, AMC prefers to schedule flying hours for training on channel route missions, which are regularly scheduled, planned in advance, consistent, and predictable. Channel route missions are used to maintain and upgrade pilots’ flying skills and, as part of the training, can include transporting cargo from specific military locations within the United States—such as McGuire Air Force Base in New Jersey—to overseas military bases located in countries like Germany or Kuwait. These missions are conducted on a regularly scheduled basis and include DOD cargo, so they provide commanders with reassurance that they will receive planned amounts of sustainment cargo within a designated time frame.\nTRANSCOM officials told us that in the late 1990’s and early 2000’s commercial aircraft had been conducting a large portion of DOD’s airlift business, but the overall demand for DOD airlift was relatively low; as a result the military began experiencing a shortage of flying hours to use for training. Many of the airlift missions flown by commercial carriers involved transporting cargo that could have been transported by military aircraft. DOD’s policy of restricting commercial carriers from transporting partial loads over channel routes has allowed DOD to shift cargo into the channel route system, increase the number of channel route missions available for aircrews to satisfy flying hour training requirements, and address DOD’s flying hour shortage. In 2003, the RAND Corporation conducted a study of the peacetime tempo of DOD’s air mobility operations and asserted that DOD needed to take steps to address its shortage of flying hours. The report found that, during fiscal year 2000 and 2001, aircrew personnel encountered a flying hour shortage because international military activity was relatively calm and there were fewer U.S. missions that required airlift support. The report also pointed out that because commercial carriers had begun conducting a large portion of DOD’s airlift business, decreasing the amount of airlift business given to commercial carriers would help reverse this trend and help alleviate DOD’s flying hour shortage. The report’s conclusions supported measures taken by DOD to implement a policy to decrease peacetime business provided to commercial carriers when necessary, to support training requirements. With DOD’s policy in place, more cargo was being funneled into the channel route system, and DOD was able to increase the number of channel route missions offered to military aircrews, thereby helping to alleviate the shortage of flying hours.\nFurther, TRANSCOM officials said that DOD’s policy of restricting commercial carriers from transporting partial planeloads of cargo over certain channel routes was also implemented in part to help DOD fulfill its peacetime business obligations to CRAF. Through the CRAF peacetime airlift contract, DOD provides a certain level of airlift business to CRAF participants; DOD negotiates a designated amount of business that it is committed to provide to CRAF participants—as an incentive for commercial carriers to participate in the CRAF program—and distributes this business among the CRAF participants currently enrolled in the program. This business consists, in part, of missions flown across channel routes. TRANSCOM officials reported that many airlift missions conducted by commercial carriers carrying partial loads across channel routes were being arranged through tender-based contractual agreements. Tender-based agreements for airlift services are offers by an air carrier to provide transportation services at a specified rate. According to TRANSCOM officials, business associated with tender- based contracts falls outside of the CRAF peacetime business entitlement obligation. TRANSCOM officials said that this practice was diminishing the pool of peacetime business that DOD could provide to CRAF participants under the CRAF peacetime business entitlement process.\nAccording to TRANSCOM officials, the policy limiting the amount of tender-related airlift business provided to commercial carriers increases the efficiency of channel route missions, alleviates the shortage of flying hours for training, and allows DOD to provide CRAF participants with peacetime business to fulfill its CRAF peacetime business obligations. In addition, TRANSCOM officials said that in periods of high demand for airlift, such as the last several years, DOD can provide CRAF participants with more channel route business, because military aircrews can satisfy their training requirements for flying hours by conducting other airlift missions, such as contingency and special assignment airlift missions.\nSome CRAF participants expressed concerns to us that the original rationale for DOD’s policy no longer exists and that the policy may prevent DOD from using the less costly commercial airlift option to transport partial loads of cargo over channel routes. First, according to TRANSCOM officials, the original rationale for the policy was to ensure that DOD could provide sufficient flying hours to train its aircrews. Two of the CRAF participants we interviewed stated that this policy was no longer necessary because DOD no longer faces flying hour shortages as it did in the late 1990’s and early 2000’s. DOD officials stated that it is important to retain this policy as a management tool, especially since DOD’s need for airlift is projected to return to pre-September 2001 levels by 2015. According to DOD officials, data from fiscal year 2000 illustrate this point; in 2000, DOD needed to reserve about 57 percent of its channel route missions for training and provided about 28 percent of the channel route missions to CRAF participants. In contrast, during a period of high demand for airlift, such as fiscal year 2012, DOD reserved about 31 percent of its channel route missions for training and was able to provide more than 60 percent of its channel route missions to CRAF participants. See figure 7 below.\nSecond, a CRAF participant we met with emphasized that using commercial aircraft to transport partial loads is less costly than using military aircraft to transport partial loads, because when using commercial airlift, DOD pays by the pound and only for the cargo airlifted, rather than incurring the entire cost of using a military aircraft to carry a partial load. DOD officials acknowledge that using commercial carriers to transport partial plane loads of cargo is less expensive than using military aircraft for this purpose and note that the policy restricting commercial carriers from transporting partial plane loads of cargo over certain overseas channel routes has a provision to allow commercial carriers to conduct such missions on a case-by-case basis, when needed to meet DOD’s requirements. For example, if a customer requires a critical, time- sensitive item and cannot wait for it to be transported by a regularly scheduled channel mission, commanders still may have the option to use a commercial carrier to transport a partial load to a designated location using a channel route. In addition, commercial carriers can transport cargo outside the channel route system under a variety of other DOD airlift transportation contracts. For example, TRANSCOM’s World-Wide Express program, an airlift transportation program available only to CRAF participants, is used to provide international commercial express package transportation service for shipments up to and including 300 pounds. This program provides DOD with the ability to ensure that commanders can receive unique, time-sensitive cargo items when no channel mission is available within a specified time frame. Over the last five years, this program has consistently generated over $100 million dollars worth of airlift business annually for CRAF participants.\nAccording to TRANSCOM and AMC analysis, as the drawdown efforts in Afghanistan proceed over the next few years, airlift demand is expected to decline to pre-September 11, 2001 levels. It will therefore be important for DOD to plan and ensure that military aircrews are provided with ample opportunity to fulfill training requirements and avoid a shortage of flying hours. In preparation for this decline in the demand for airlift, TRANSCOM officials emphasized that DOD’s policy to restrict commercial carriers from transporting partial loads over channel routes may continue to serve as an important management tool and allow DOD to balance the goals of operating its channel route system as efficiently as possible, providing enough training opportunities to military aircrews, and fulfilling its CRAF peacetime business obligations.", "DOD is conducting several interrelated studies to determine its future airlift requirements; however it is unclear whether the planned size of CRAF will be adequate to meet future airlift requirements. The National Defense Authorization Act for Fiscal Year 2013 requires DOD to conduct a study that assesses its mobility needs—referred to as the Mobility Requirements and Capabilities Study 2018, which DOD had not begun at the time of our review. In addition, in response to the changing business environment, AMC is also conducting a two-phase study to assess the readiness of CRAF participants to augment DOD’s airlift capacity and the viability of the CRAF program. The CRAF Phase 1 study was completed in December 2012, and according to officials the Phase 2 is scheduled to be completed in the fall of 2013. Meanwhile, DOD has been taking steps to continue to encourage commercial carriers to participate in the program. Until DOD finalizes these assessments, it will be unclear whether the planned size of CRAF will be adequate to meet future airlift requirements.", "DOD reports that there are more aircraft committed to the CRAF program than are needed to fulfill the wartime requirements established by the Mobility Capability Requirements Study 2016 (MCRS–16), which was issued in 2010. However, it is not clear whether the current level of CRAF participation will provide the right number and mix of aircraft to meet future requirements, since DOD has issued new strategic guidance that may affect DOD’s airlift requirements.\nWhile the number of aircraft pledged to the program has fluctuated, DOD’s past analysis showed that the projected size and mix of the CRAF fleet was more than adequate to satisfy all war planning scenarios established by the MCRS–16. According to DOD data, as of March 2012, CRAF participants had enrolled 15 percent more aircraft in the program than would be needed to meet established airlift requirements. The MCRS–16 assessed components of the mobility capabilities that DOD would need for possible future strategic environments and was intended to help DOD make investment decisions regarding mobility systems, such as how much to invest in strategic airlift to meet wartime needs. Among other things, the study examined how changes in the mobility system affect the outcomes of major operations and assessed the associated risks. The MCRS–16 determined that, with few exceptions, the mobility capabilities projected for 2016 would be sufficient to support the most demanding projected requirements. The study assessed the major mobility systems required to move personnel and supplies from their point of origin to their destination: sealift, surface transportation, and airlift components, to include strategic airlift, aerial refueling, and CRAF passenger and cargo. To support decisions regarding future mobility force structure, the MCRS–16 developed three demanding cases consisting of conflicts and natural disasters with multiple scenarios occurring over a 7- year period and requiring the use of mobility capabilities. The MCRS–16 used approved DOD planning scenarios to develop the three cases. For example, in one case, U.S. forces might be required to conduct a large land campaign and a long-term irregular warfare campaign while also responding to homeland defense missions. In another case, U.S. forces might be conducting two nearly simultaneous large-scale campaigns, while also responding to three nearly simultaneous domestic events and conducting other operations.\nSince its last assessment of its airlift requirements in 2010, DOD has issued new strategic guidance. Specifically, DOD’s strategic guidance issued in January 2012 calls for, among other things, an increased focus on the Asia-Pacific region and resizing U.S. forces, both of which may affect airlift needs. For example, an increased focus on the Asia-Pacific region could affect operational plans in that theater and require changes to the number and type of forces assigned to the region, as well as the associated airlift requirements. In addition, the resizing of DOD forces to achieve security objectives could have implications for the choice of commercial and military aircraft used to support future military operations. In March 2013, the Secretary of Defense tasked DOD senior leadership to examine the department’s strategic assumptions, following up on the January 2012 Defense Strategic Guidance which, among other things, called for rebalancing military forces toward the Asia-Pacific region. This review examines the choices underlying the department’s strategy, force posture, investments, and institutional management, as well as past and future assumptions, systems, and practices. The results of the review will frame the secretary’s guidance for the fiscal 2015 budget and will be the foundation for the Quadrennial Defense Review expected to be issued in February 2014.", "The National Defense Authorization Act (NDAA) for Fiscal Year 2013 requires DOD to conduct a new mobility capabilities requirements study— referred to as the Mobility Requirements and Capabilities Study 2018 (MRCS–18)—based in part on the new defense strategy mentioned above. This new assessment may provide decision makers with the analytical data needed to determine DOD’s airlift capability requirements and the number and type of aircraft CRAF participants would need to pledge to the program in order to support these requirements. Among other things, the NDAA requires DOD to describe and analyze the assumptions made by the Commander of the U.S. Transportation Command with respect to aircraft usage rates, aircraft mission availability rates, aircraft mission capability rates, aircrew ratios, aircrew production, and aircrew readiness rates; assess the requirements and capabilities for major combat operations, lesser contingency operations as specified in the Baseline Security Posture of the Department of Defense, homeland defense, defense support to civilian authorities, other strategic missions related to national missions, global strike, the strategic nuclear mission, and direct support and time-sensitive airlift missions of the military departments; and identify mobility capability gaps, shortfalls, overlaps, or excesses and assess the risks associated with the ability to conduct operations and recommended mitigation strategies where possible.\nUntil DOD completes the MRCS–18, decision makers in DOD and Congress may not have all of the relevant information they need to ensure that DOD’s mobility capabilities and requirements are sized most effectively and efficiently to support the U.S. defense strategy. DOD acknowledges the requirements set forth in the National Defense Authorization Act for Fiscal Year 2013 and fully intends to cooperate and work to complete the assessment, but according to AMC and TRANSCOM officials, no time frame has been established for when this study will be completed.\nFurther, AMC has begun conducting additional studies to assess its airlift requirements and how the CRAF program will support near-term and long-term requirements. AMC’s CRAF study is being conducted in two phases and will help AMC to ensure that the commercial airlift forces associated with the CRAF program are prepared to support the drawdown of forces in Afghanistan by the end of calendar year 2014. Phase 1 of the CRAF study, completed in December 2012, focused on the international long-range segment of CRAF, which will be most affected by the decreasing demand for airlift resulting from the drawdown of forces in Afghanistan. It identifies a series of issues facing CRAF during the withdrawal and for the short term following the drawdown. A number of observations are directly related to the drawdown period and the period immediately following. These require near-term actions to ensure that commercial airlift support will be available when it is needed to support national interests. For example, the Phase 1 study noted that a future study should assess the risk and reward factors that may affect further CRAF participation due in part to the state of flux in the current charter air industry resulting from economic pressures brought on by a decline in commercial passenger charter opportunities.\nIn addition to discussing certain recommendations from the Phase 1 study, Phase 2 of the CRAF study will focus on maintaining the future viability of the CRAF program and its readiness to augment military airlift capability and support surge requirements. This follow-on study will undertake an in-depth analysis of issues identified in Phase 1 that could affect the long-term viability and reliability of the CRAF program. The findings from the Phase 2 study will propose courses of action and mitigation strategies to ensure CRAF readiness now and in the future, balancing government interests and mandates with the dynamics of the changing industry. Furthermore, the CRAF Phase 2 study will evaluate the market, the carriers and their business base, and the existing business models within industry and government in order to provide insights and recommend actions to ensure that the CRAF program can continue to meet wartime requirements in the future. AMC and TRANSCOM expect this study to be completed by the fall of 2013.\nAccording to AMC officials, one of the issues that will be addressed in the Phase 2 study is the recommendation from the Phase 1 study that DOD continue the suspension of the 60/40 rule through fiscal year 2014. The 60/40 rule was created as a safeguard for DOD. Under the 60/40 rule, DOD business cannot provide more than 40 percent of a carrier’s revenue and the remaining 60 percent of the carrier’s revenue must be earned through sources other than DOD, generally referred to as commercial sources or commercial air transportation. Carriers that earn more than 40 percent of their revenue from DOD may be penalized by reductions in their entitlement to DOD business. Prior to fiscal year 2010, the rule was based on an air carrier’s revenue. However, in 2010 the rule was modified so that it calculated the percentage of business in block hours rather than amount of revenue. As of May 2010, the rule has been suspended. One of the original goals of the 60/40 rule was to ensure that CRAF carriers maintained a strong commercial business base, efficient operations, and modern fleets to help prevent them from going out of business when DOD demands were low. Limiting the proportion of DOD business carriers could have would also provide DOD with a surge capability to draw on if demand grew suddenly. According to TRANSCOM and AMC officials, the 60/40 rule was suspended so that commercial carriers would not be penalized for supporting increased DOD airlift demands. If carriers continued to increase support while still being required to observe the 60/40 rule, the rule would prove to be counterproductive. DOD would be asking for increased support while potentially issuing penalties to those carriers providing the increased support. Some of the carriers we spoke with stated that the 60/40 rule had not been strictly enforced and that the suspension of the rule had no effect on the amount of business they received as a result of participating in the CRAF program. However, according to DOD officials, five carriers have gone bankrupt in the last three years and two of them have stopped offering airlift services even though this rule has been suspended.\nBased on data included in the MCRS–16, DOD counts on the CRAF program to provide most of the passenger airlift services as well as a significant amount of the cargo services to support wartime requirements. Therefore, CRAF must maintain the ability to respond in order to meet combatant commander requirements. DOD must develop accurate requirements if CRAF is to maintain the ability to respond to these requirements. For that reason, until DOD completes the MRCS–18 and the CRAF Phase 2 study, it will be unable to determine the correct size and mix of the CRAF fleet to meet future airlift requirements.", "The nature of U.S. military operations in today’s global environment requires DOD to be able to rapidly deploy personnel and cargo around the world and sustain forward deployed forces. DOD has taken a number of steps to strengthen the CRAF program while also ensuring that military aircrews receive required training. However, over the last few years, DOD has flown more hours than required to train its aircrews, thereby possibly reducing the level of peacetime business available to CRAF participants. The anticipated decline in DOD’s peacetime business over the next few years, combined with continuing business pressures in a highly competitive industry, highlight the need for a process to ensure that DOD maximizes the use of its commercial partners. However, DOD does not use the process it has for monitoring training hours to determine when it can allocate eligible airlift missions to CRAF participants. If DOD does not use the information provided by its existing process, it will be unable to determine whether it is using commercial carriers to the maximum extent practicable, as required by DOD guidance. Further, DOD may be using its military fleet—which officials say is more expensive to operate than commercial alternatives—more than necessary, while risking the CRAF participation needed to ensure wartime readiness.", "To balance the use of military and civilian aircraft and ensure that commercial carriers participating in the CRAF program are used to the maximum extent practicable, we recommend that the Secretary of Defense direct the Secretary of the Air Force and the Commander, U.S. Transportation Command—in conjunction with the Commander, Air Mobility Command—to use the Air Mobility Command’s existing process for monitoring training hours to determine when it can shift eligible peacetime airlift workload from military to commercial sources.", "We provided a draft of this report to DOD for comment. In its written comments, reproduced in appendix IV, DOD concurred with our recommendation and stated that it believes implementing the recommendation will further improve the Civil Reserve Air Fleet program.\nWe are sending copies of this report to appropriate congressional committees, the Secretary of Defense, the Secretary of the Air Force, the Under Secretary of Defense (Acquisition, Technology and Logistics), and the Commander, Air Mobility Command. In addition, this report will be available at no charge on the GAO Web site at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-5257 or merrittz@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 whether DOD has been meeting its training requirements we reviewed Air Force guidance on the development of flying hour requirements, as well as DOD guidance on flying hours for training. We also spoke with officials from U.S. Transportation Command (TRANSCOM) and Air Mobility Command (AMC) about how the training requirements are developed. We then analyzed flying hour data from the Reliability and Maintainability Information System (REMIS) to determine the extent to which the airlift fleet—C-5, C-17, and C-130—was being flown in excess of training requirements. We assessed the reliability of these data by interviewing officials from the REMIS program office at the Air Force Life Cycle Management Center to understand the steps that have been taken to ensure the reliability of the database. In addition, we reviewed documentation relating to the system and compared the data with alternate sources. We concluded that the data from REMIS were reliable for the purposes of this engagement. We then compared the flying hour data from REMIS to the flying hour requirements developed by AMC. To determine whether DOD was providing Civil Reserve Air Fleet (CRAF) participants with peacetime business, we interviewed officials with TRANSCOM and AMC on the management of the CRAF program, recent changes that had been made to the program, and concerns about the future of the program. In addition, we conducted interviews with representatives from 21 of the 30 CRAF participants who responded to our request for an interview in October and November 2012, to obtain information on the CRAF program, their perspective on what elements of the program worked and which did not, and their willingness to participate in the program in the near future. Since that time, 2 CRAF participants— one of which we interviewed—have gone out of business and are no longer members of the CRAF program. As of April 2013, there were 28 CRAF participants included in the CRAF program. We also analyzed program-related documents from TRANSCOM, AMC, and CRAF participants, as well as guidance on the use of CRAF and commercial transportation. Furthermore, we analyzed data from fiscal years 2001 through 2012 from two systems—the Commercial Operations Integrated System and an internal database managed by the Tanker Airlift Command Center (TACC) within AMC—to understand the extent to which CRAF participants are used compared with military airlift and foreign carriers. We assessed the reliability of these sources by reviewing documentation on to the systems, comparing these data with data from alternate sources and conducting interviews with knowledgeable officials. We concluded that the data from these systems were reliable for the purposes of this engagement.\nTo assess the extent to which DOD has justified restricting commercial carriers from transporting partial plane loads of cargo over channel routes, we reviewed DOD’s policy for restricting commercial carriers from flying over channel routes. The policy we reviewed helped us identify which channel routes were designated as restricted. We then conducted interviews with TRANSCOM and AMC officials to obtain information on the rationale for creating the policy and what operational and strategic benefits the policy provides for DOD. In addition, we reviewed fiscal year 2000 and fiscal year 2012 channel route airlift transportation data to determine the extent to which DOD was using military aircraft rather than CRAF participants to conduct channel route missions, and we discussed the circumstances surrounding those decisions with TRANSCOM officials. We also conducted interviews and obtained written responses from CRAF participants to obtain additional perspectives on how the policy is affecting the CRAF program. We also reviewed previously written reports and studies conducted by the RAND Corporation and the Council for Logistics Research Inc. that addressed DOD’s use of channel routes, the impact of utilizing commercial carriers in lieu of military aircraft on DOD’s aircrew training program, and the impacts the policy has had on overall cargo management. Reviewing this historical information provided us with additional insight into DOD’s justification for implementing the policy.\nTo assess whether DOD has established future requirements for the CRAF program and how the planned size of CRAF compares with those requirements, we obtained and reviewed various studies conducted by DOD to assess its strategic airlift capabilities, such as DOD’s Mobility Requirements and Capabilities Study – 2016, and the AMC 2012 CRAF study. We also collected fiscal year 2011 through 2013 data documenting DOD’s current inventory of CRAF aircraft and compared these data with DOD’s current airlift requirements. In addition, we conducted interviews with TRANSCOM and AMC officials to determine what steps are being taken to establish future requirements and to gain their perspective on the challenges they expect to face as they continue to manage the CRAF program. We also reviewed a provision in the National Defense Authorization Act for Fiscal Year 2013 that requires DOD to conduct a new study of mobility capabilities and requirements. We discussed the status of the requirement with TRANSCOM and AMC officials to determine what time frames and milestones have been established to begin and complete this study. We also reviewed DOD’s defense strategic guidance issued in January 2012 to assess factors that may affect DOD’s future airlift needs.\nTo gather information for these objectives, we reviewed documentation and interviewed officials from the following organizations:\nThe Office of the Under Secretary of Defense for Acquisition,\nOffice of the Deputy Assistant Secretary of Defense (Transportation Policy)\nStrategy, Policy, and Logistics (TCJ5/4)\nAcquisition (TCAQ)\nOffice of the Staff Judge Advocate (TCJA)\nEnterprise Readiness Center (ERC)\nJ-3 Operations and Plans, Sustainment Division (TCJ3-G)\n618th Air and Space Operations Center (TACC)\nCommercial Airlift Division (A3B)\nSee appendix III for the CRAF participants we interviewed\nNational Air Cargo Association (NACA)\nWe conducted this performance audit from August 2012 to June 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 and data obtained was sufficiently reliable for our purposes, and provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "Appendix III: List of Civil Reserve Air Fleet Participants (As of April 2013)\nCRAF Carrier 1. ABX Air, Inc. 2. Air Transport International LLC 3. Alaska Airlines, Inc. 4. Allegiant Air LLC 5. American Airlines, Inc. 6. Atlas Air, Inc. 7. Delta Air Lines, Inc. 8. Evergreen International Airlines, Inc. 9. Federal Express Corp. 10. Hawaiian Airlines, Inc. 11. Jet Blue Airways Corp. 12. Kalitta Air LLC 13. Lynden Air Cargo LLC 14. Miami Air International, Inc. 15. MN Airlines LLC (DBA Sun Country Airlines) 16. National Air Cargo Group, Inc.(DBA Murray DBA National Airlines) 17. North American Airlines, Inc. 18. Northern Air Cargo 19. Omni Air International, Inc. 20. Polar Air Cargo Worldwide, Inc. 21. Ryan International Airlines, Inc* 22. Sky Lease 1, Inc. (DBA Trade Winds Airlines) 23. Southern Air, Inc. 24. Southwest Airlines Company 25. Tatonduk Outfitters, Ltd. (DBA Everts Air Cargo) 26. United Airlines, Inc. 27. United Parcel Service Company 28. US Airways, Inc. 29. World Airways, Inc.", "", "", "", "In addition to the contact named above, Suzanne Wren, Assistant Director; Jim Ashley; Namita Bhatia-Sabharwal; Jason Jackson; James Lackey; Joanne Landesman; Tamiya Lunsford; Michael Shanahan; Mike Shaughnessy; and Amie Steele made key contributions to this report." ], "depth": [ 1, 1, 2, 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full", "h0_full h3_title", "h0_full h3_full", "h3_full h1_full", "h3_full h2_full", "h2_full", "h2_full", "", "", "h3_full", "h2_full", "", "", "", "", "", "" ] }

{ "question": [ "Why did DOD exceed flying hours between FY2002 and FY2010?", "How does DOD's flight time compare to its training needs?", "Why will the need for airlift decline?", "Why may DOD be using its military fleet more than necessary?", "Why has DOD restricted commercial carriers from transporting partial plane loads?", "What will this policy allow?", "What is the importance of consolidating cargo into full loads?", "Why are channel route missions important?", "Why is it unclear whether the planned size of CRAF will be adequate?", "Why does the 2010 study not reflect current needs?", "What is DOD required to do?", "How will the study help DOD?", "How does DOD move passengers and cargo?", "What do participating carriers do?", "What did GAO assess with regards to the CRAF program?", "How did GAO assess these matters?" ], "summary": [ "DOD exceeded the flying hours needed to meet military training requirements for fiscal years 2002 through 2010 because of increased operational requirements associated with Afghanistan and Iraq; however it does not know whether it used Civil Reserve Air Fleet (CRAF) participants to the maximum extent practicable.", "During fiscal years 2002 through 2010, DOD flew its fleet more than needed to train its crews, although its flying has more closely matched its training needs in recent years.", "However, with the drawdown in Afghanistan, DOD officials expect the need for airlift to decline by at least 66 percent--to pre-September 2001 levels--reducing both training hours available for DOD and business opportunities for CRAF. DOD does not use its process for monitoring flying hours to determine when it will exceed required training hours and allocate eligible airlift missions to CRAF participants.", "DOD does not use its process for monitoring flying hours to determine when it will exceed required training hours and allocate eligible airlift missions to CRAF participants. Therefore, it cannot determine whether it is using CRAF to the maximum extent practicable. As a result, DOD may be using its military fleet more than necessary--which officials say is less economical--while risking reduced CRAF participation.", "DOD provided several reasons for restricting commercial carriers from transporting partial plane loads of cargo over channel routes, including the need to promote efficiency, meet its military airlift training requirements, and fulfill peacetime business obligations to CRAF participants.", "The policy restricting carriers from flying partial loads over channel routes allows DOD to consolidate cargo previously flown by commercial carriers in less than full plane loads and redirect that cargo into the channel route system, where it will be transported by either commercial or military aircraft as part of a full plane load mission.", "According to DOD, consolidating cargo into full loads flown over the channel route system has increased both the efficiency of these missions and the availability of missions that DOD uses to train its crews and fulfill its business obligations to CRAF.", "Channel route missions are regularly scheduled airlift missions used to transport cargo and provide aircrew training time. These missions also help DOD provide business to CRAF participants.", "It is unclear whether the planned size of CRAF will be adequate to meet future airlift requirements. DOD last established its future requirements based on the wartime scenarios in the Mobility Capability Requirements Study 2016, issued in 2010.", "However, due to changing military strategy and priorities, the 2010 study does not reflect current mission needs.", "The National Defense Authorization Act for Fiscal Year 2013 requires DOD to conduct a new mobility capabilities and requirements study.", "Once they are finalized, these studies should allow DOD to better understand future requirements for CRAF and whether the CRAF program will meet future airlift requirements.", "To move passengers and cargo, DOD supplements its military aircraft with cargo and passenger aircraft from volunteer commercial carriers participating in the CRAF program.", "Participating carriers commit their aircraft to support a range of military operations in exchange for peacetime business. A House Armed Services Committee mandated GAO to report on matters related to the CRAF program.", "GAO assessed whether DOD (1) met its military airlift training requirements while also using CRAF participants to the maximum extent practicable, (2) provided justification for restricting commercial carriers from transporting partial plane loads of cargo over certain routes, and (3) has established future requirements for CRAF and how the planned size of CRAF compares to those requirements.", "GAO reviewed guidance and policies pertaining to the program, flying hour data, and DOD-sponsored CRAF study reports. GAO also interviewed DOD and industry officials." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, -1, 0, -1, 2, -1, 0, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "Background", "The Bureau Revised Rules Governing Data Sources and Procedures for the Challenge Program to Improve Accuracy of Population Estimates", "The Bureau Changed the Challenge Program to Standardize Evidentiary Requirements and Limit the Scope", "Other Changes to Procedures are Intended to Improve Accuracy of Population Estimates", "The Bureau Reviews Quality of Calculations and Requires Local Governments to Certify that Data Are Accurate", "The Bureau has Limited Plans for Using Local Records to Supplement National Records for 2020", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Commerce", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Administrative records are a growing source of information about individuals and households. Administrative records include records from government agencies, such as tax data and Medicare records, as well as commercial sources from major national data vendors. National administrative records refer to data compiled and maintained nationwide, including files compiled for the purpose of administering federal programs. In comparison, data compiled and maintained by municipalities are referred to as local administrative records, such as building permits and local tax records.\nAccording to Bureau officials, for the 2020 Census, the Bureau is researching how to determine the quality and usefulness of administrative records for obtaining addresses or information about individuals. Administrative records could reduce the cost of the census if they can help the Bureau reduce the workload for several operations, including address list building; quality assurance; and nonresponse follow-up, which, at $1.6 billion in 2010 and lasting several weeks, was the largest and most costly census field operation.testing program has nine research and testing projects that are exploring the expanded use of administrative records for these purposes.\nThe Bureau’s 2020 research and The Bureau already uses administrative records to produce annual population estimates for the nation, states, counties, cities, towns, and townships as part of its program to estimate changes in population size and distribution since the previous census. The Bureau produces estimates at the state and county-level based on births, deaths, migration, and changes in the number of people who live in group quarters, such as college dormitories and nursing homes. Estimates of the population of subcounty communities—which consist of both incorporated places, such as cities, boroughs, and villages, and minor civil divisions, such as towns and townships—are primarily based on data on housing units, occupancy rates, and persons per household plus an estimate of the population in group quarters.\nLocal governments may challenge these population estimates through a process established by the Bureau’s Population Estimates Challenge Program. Local data sources for challenges have included building permits, non-permitted construction, demolition permits, non-permitted demolitions, certificates of occupancy, utility connection data, and real and personal property tax information on residential units.\nThe Bureau permitted localities to submit challenges for population estimates from 2001 to 2008. Counties and subcounties could challenge the Bureau’s estimate based on evidence that the number of housing units in their locality differed from the Bureau’s estimate of housing units. From 2001 to 2008, the Bureau reports revising population estimates from 287 challenges. These challenges were from 211 governments in 36 states and the District of Columbia. There were as few as 3 challenges in 2001 and as many as 61 each in 2006 and 2007. In 2010, the Bureau temporarily halted the challenge program beginning for estimates from 2009 to accommodate the 2010 decennial census. The Bureau is resuming the challenge program in 2013.\nAccording to the Bureau, communities that challenged their population estimate saw their estimate revised upward by an average of about 9.4 percent over the 8-year period. These challenges ranged from an estimated increase of over 186 percent for Bluffton, South Carolina, in 2008, to a decrease of almost 18 percent for Winthrop, Massachusetts, during the same year. In total, four communities submitted challenges containing evidence that resulted in a decrease in population.\nThe effect of the program on smaller communities that participated was much larger, on average in percentage terms, than it was for larger communities that participated. According to Bureau data summarizing the program, communities with populations of less than 100,000 averaged an almost 13 percent upward revision in their population estimate—including the results of the challenge—compared to an average revision of less than 2 percent for communities with a population of more than 1 million (see table 1).", "", "Previously, the Bureau provided communities that chose to challenge their population estimate with examples of the types of records they could use to support their calculations, including permits for new residential construction, public utility connection data, real and personal property tax information on residential units, and records of annexations and other types of legal boundary changes. In practice, according to agency officials, the Bureau generally accepted all challenges, largely without regard to the data sources provided so long as they supported calculations of population change and covered the reporting periods required by the challenge program. The rule changes are intended to improve the quality of data that communities use to challenge the Bureau’s population estimates and will affect the scope of what county and state governments can challenge. According to Bureau officials, these changes are based on research that shows that estimates based on some methods and records (e.g., births, deaths, and migration) are substantially more accurate than estimates based on others. The rules vary for different levels of government—subcounty, county or equivalent, and state.\nSubcounty. Under the new rules, subcounty governments should use building, demolition, and mobile home permits, and group quarter counts to challenge population estimates. The Bureau plans to reject challenges that rely solely on other types of data, except in cases where the data provide overwhelming evidence that the Bureau’s estimate of population growth is in error.research shows that public utility records can vary widely in their reliability to indicate population growth, as well as in their availability to the public. Therefore, utility records will be treated as corroborating, or secondary, evidence to support other preferred data expected to be provided in support of challenges. Utility records were ordinarily accepted as a basis for successful challenges in the past.\nFor example, according to a senior Bureau official, County and equivalent. Under the changes, county governments and their equivalents should use birth and death records, immigration data, and group quarters counts to challenge population estimates—a significant reduction in the types of records from what the Bureau has historically accepted. According to Bureau officials, research conducted over the past several years has demonstrated that county-level estimation methods based on other data sources do not produce, on average, as accurate estimates of population. Consequently, the Bureau plans to reject county-level challenges relying on other data sources. Under the changes, the Bureau will only accept county-level challenges to either the accuracy of the data the Bureau itself used when producing estimates or to whether the Bureau carried out its estimation procedures properly, such as in handling data files properly or carrying out calculations. Bureau officials acknowledged that local governments might see this reduction in the scope of permissible county-level challenges as being too restrictive, as evidenced by some public comments submitted in response to the proposed changes. Bureau officials stated that they will continue their dialogue with representatives of the Federal-State Cooperative for Population Estimates—a partnership between the Bureau and state governments—and other researchers about improving methods of estimating population, and may revisit the structure of the challenge program if future research demonstrates that an alternative method of estimating county population consistently outperforms that used by the Bureau. Figure 1 shows changes in the types of administrative records accepted by the challenge program.\nState. The Bureau will generally no longer permit state governments to submit their own challenges. Bureau officials stated that counties and cities are the most appropriate entities to submit a population challenge for their community because they have greater knowledge of their population. Bureau officials also said that they want to avoid situations where a state may challenge estimates for communities where respective local governments disagree with such challenges. The Bureau will allow states to submit challenges for counties or equivalents where there is no seat of government, such as in certain New England states and in parts of Alaska, but will otherwise require all communities affected by a challenge to have their government communicate directly with the Bureau.", "The changes to procedures are intended to improve the accuracy of revisions to population estimates stemming from challenges. The Bureau modified procedures so that challenges by subcounty governments to the Bureau’s estimates of people living in traditional housing—not living in group quarters arrangements—will no longer affect county-level population estimates. Previously, successful subcounty challenges were added to respective county-level populations. The Bureau justifies the change with its research demonstrating that its method for estimating the county population that lives in housing is generally better than the method typically used to challenge subcounty estimates. According to Bureau officials, the method used to challenge subcounty estimates introduced an upward bias for communities that were experiencing population decline or a slowing of population growth. According to the change, any challenge that results in an increase to the estimate of a subcounty community’s population living in traditional housing will be offset by a downward revision to the estimate for all other communities in the same county, in effect reallocating the estimated population within the county. Bureau officials emphasized that under the new procedures, as before, if a government successfully challenges the Bureau’s estimate of the population living in group quarters arrangements within its community, the revision will be added to the county population as well, and will not be offset by changes to populations in other communities in the county.\nThe Bureau also changed procedures so that it routinely reviews subcounty population challenges in light of each community’s population growth trend, requiring corroborating information when a government claims population growth that is inconsistent with the trend. For example, one local government in the Midwest successfully challenged the Bureau’s 2006 population estimate and received an increased population estimate of about 5.5 percent, even though evidence it submitted showed the number of housing units in the community was about 3.5 percent lower than the Bureau’s original calculation for that year. Another local government successfully challenged the Bureau’s 2007 population estimate and received an increased population estimate of about 7.4 percent, even though its evidence showed an increase in housing units of only about 0.8 percent. According to 2010 Census counts in both of these cases, the average actual annual population growth over the decade was far below the challenge result, and the trend in population was declining. A senior Bureau official with whom we spoke said that, in addition, this and other changes in procedures will reduce the incentive that some communities have had to file a challenge in order to provide a community only a temporary reprieve from an otherwise declining trend in their population.", "Challenge program officials told us that the program focuses its quality assurance on (1) reviewing the calculations presented in the documentation submitted by local governments as part of challenge submissions and (2) checking documents and calculations for internal consistency. Specifically, different worksheets local governments could choose to complete under the program have different data and calculations required to support a challenge, which Bureau staff review for accuracy and consistency. For example, Bureau staff would identify when local governments provided data on local building permits with a significant lag time, and then revise the submitted calculations accordingly since some of the buildings would thus have been constructed outside the time frame for which the population change was being estimated.\nBureau officials told us that the Bureau assures quality of locally- submitted records by requiring a community’s highest elected official— such as a mayor or county commission chair—to certify the validity of data used in any challenge to a population estimate that its government submits. The Bureau takes such certification at “face value” and does not examine the quality of these records, which Bureau officials said would be prohibitively time consuming to investigate or verify. Bureau officials said that no change to that approach is planned for the future of the program. However, the Bureau is considering how to describe a quality threshold that local records should satisfy, or steps that local governments can take to check the quality of their records.\nAdditionally, the Bureau distributes a review guide containing standardized procedures to local governments that are interested in participating in the challenge program. The guide includes instructions on filling out standardized worksheets and descriptions of the types of administrative records that can be relied on as sources of data for the challenge. According to Bureau officials, this helps to ensure consistency across challenges and potential revisions to population estimates.\nMoving forward, according to officials, the Bureau is preparing a quality assurance plan for Bureau staff who review challenges to better ensure proper handling and processing of challenges, as well as the review of calculations. The Bureau intends to develop the plan over the coming months, after the program has resumed. The Bureau is also undertaking an agency-wide effort to update its record keeping policies, which would include revising rules for retaining documentation submitted as part of the challenge program. Changes to record keeping policies would help the Bureau maintain challenge program documentation—including calculations of revised estimates—in the event the Bureau needs to perform any follow-up reviews.\nIn our review of the 287 challenges submitted to the Bureau resulting in revised population estimates from 2001 to 2008, we identified a number of cases where documentation of challenges appeared either incomplete or inconsistent. For example, in some cases, documentation of corrections to local government’s calculations was missing, as was certification from a community’s highest elected official that data submitted with a challenge were valid. Also missing were notices to local governments from the Bureau on whether challenges were accepted. A lack of documentation could make it difficult for an independent verification of the integrity of the program. We discussed these documentation issues with Bureau officials. In response, they explained the steps they were taking to address them, such as documenting a record keeping policy for the program that includes descriptions of what documentation to create for each challenge and checklists of specific items to be retained in files. Bureau officials agreed to provide us with copies of the revised record keeping policy when the challenge program is resumed later in 2013. Because of these planned actions, we are not making a recommendation to the Bureau at this time.", "The Bureau is exploring the use of local records for the 2020 Census, but this effort will be of a lower priority than research on the use of national administrative records, in part because national records show greater promise than local records for controlling costs. The Bureau’s research on the use of national administrative records for the 2020 Census is focused on their possible use for such purposes as (1) building the address list, (2) counting people, and (3) quality assurance and evaluation processes. In contrast, Bureau officials believe that the use of local administrative records is most likely to support the development of the 2020 address list. The Bureau has used local census records in this regard in prior decennials.\nIn previous enumerations, the Bureau developed its address list in part by going door-to-door and canvassing every block in the country to verify street addresses. However, the process of going door-to-door is labor intensive. As a result, for 2020, the Bureau is exploring how to reduce much of the costly, national canvassing done in the past by combining both local and national administrative data with the United States Postal Service data it already uses, allowing the Bureau to continuously update its master address file throughout the decade. In particular, the Bureau is considering how it can more seamlessly integrate regular input from local government address lists and related geographic information systems into its existing address list and map development processes. The Bureau would like to update this information continuously rather than wait to receive the input as part of a one-time decennial update. In addition, the Bureau will research the quality of these updates to determine the extent to which it can rely on them without necessarily having to verify them door-to-door.\nBureau officials stated that if time and resources permit, the Bureau will consider other ways that local records can be used to supplement the use of national records. The officials stated that while it is important to continue research on local records, because they may be helpful in targeting decennial operations to hard-to-count groups or those in certain geographic areas, the results of 2010 Census research and testing on national records has led Bureau officials to conclude that continuing research on national records, such as those listed in figure 2, should be a higher priority. Bureau officials believe that research on the more broadly available national records could yield cost savings more quickly than research on locally available records, and that given resource constraints, they should attempt to “lock in” at least some of the more likely cost savings before pursuing more uncertain ones. Moreover, legislation may be needed to allow the Bureau to expand its use of national records for decennial purposes. Figure 2 shows the national and local records the Bureau is considering and the operations these records could support.\nBeyond helping to develop the address list, local administrative records that have been used in the challenge program, such as school enrollment data, could supplement national records to either improve or evaluate the counting of targeted populations. Some Bureau stakeholders have suggested to the Bureau that these records, in some locations, may be more comprehensive and accurate than those records on which the Bureau already relies. For example, the Bureau is researching how statewide data, such as Supplemental Nutrition Assistance Program data from Illinois, Maryland, New York, and Texas, could enhance person and housing unit coverage—access to similar records is under negotiation with several other states. By matching records in these files with the 2010 Census and other administrative records, the Bureau is determining their suitability for use to identify addresses or people and their characteristics, as well as their accuracy. Additionally, the Bureau is considering research on other state-level files, such as those maintained by Bureau partners in Florida and Montana, which maintain records on utility use and residential construction, respectively.\nHowever, the Bureau would face some challenges using these records for decennial purposes. Bureau officials said local records are generally more difficult to systematically access or to apply broadly to census operations. In some cases, laws restrict the use of these records to certain purposes, so the Bureau may need to negotiate their use with various parties or work towards legislative change. For example, going beyond school system enrollment data and obtaining access to student and school lunch data that might help target hard-to-reach populations is restricted to use for educational purposes by the Family Educational Additionally, some of these records are not Rights and Privacy Act.aggregated nationally, which could make it difficult for the Bureau to obtain them. According to the Bureau, in other cases such as the Supplemental Nutrition Assistance Program, not all states maintain records equally well. If the Bureau ultimately has the time and resources to supplement national data with local data, officials stated that they will work to address these issues.", "We provided a draft of this report to the Department of Commerce. In response, we received written comments from the department, which are reprinted in appendix II. In its comments, the department stated that it appreciates the time and effort that we put into the draft report and thanked us for responding to technical comments provided earlier by Bureau staff.\nAs arranged with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days after the date of this report. At that time, we will send copies of this report to the Acting Secretary of Commerce, the Under Secretary of Economic Affairs, the Acting Director of the U.S. Census Bureau, and interested congressional committees. The report also is available at no charge on GAO’s website at http://www.gao.gov.\nIf you have any questions about this report please contact me at (202) 512-2757 or goldenkoffr@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. The GAO staff that made major contributions to this report are listed in appendix III.", "To describe the U.S. Census Bureau’s (Bureau) changes to how local administrative records will be used in the challenge program, we reviewed the August 10, 2012, Federal Register outlining proposed changes; the final rule, which was issued in the January 3, 2013, Federal Register; Bureau reports and presentations, which served as the basis for the changes; and comments received from state and local data experts solicited by the Federal Register on the proposed changes prior to the Bureau’s issuance of the final rule. We also interviewed current and retired officials from the Bureau’s Population Division responsible for implementing the challenge program.\nTo describe the changes to how the Bureau will assure the quality of population estimates updated by the challenge program, we reviewed the Federal Register notice outlined earlier, and we interviewed Bureau officials to identify additional quality assurance steps the Bureau intends to implement. To better understand the current procedures and implications of these changes, we reviewed documentation the Bureau provided to local governments on submitting accurate documentation to challenge population estimates, including worksheets used to calculate revised population estimates. We conducted a case file review to identify specific quality assurance steps the Bureau has previously taken to review the quality of submissions from local governments. During our case file review, we observed a number of instances where case files and other documentation of challenges appeared to be incomplete or inconsistent. We reviewed each of the documentation weaknesses, and we shared our observations with ranking Bureau executive and program managers.\nTo examine the Bureau’s plans to use the types of local administrative records currently used by the challenge program to improve the cost or quality of the 2020 Decennial Census, we reviewed Bureau documentation on research and testing of administrative records for the 2020 Census, as well as our prior reports on the Bureau’s research and testing efforts. Additionally, we interviewed the Bureau officials responsible for the research and testing efforts related to administrative records to understand which local records and processes from the challenge program the Bureau is considering for the 2020 Census.", "", "", "", "Other key contributors to this report include Ty Mitchell, Assistant Director; David Bobruff; Benjamin Crawford; Sara Daleski; Robert Gebhart; Will Holloway; Andrea Levine; Mark Ryan; and Timothy Wexler." ], "depth": [ 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_title", "h0_full", "h0_full", "", "h2_full h1_full", "", "h2_full", "", "", "", "" ] }

{ "question": [ "Why has the Census Bureau issued significant changes?", "What did the Bureau do prior to changes?", "What changes has the Bureau made?", "What does the Bureau plan to do?", "Why is the Bureau's 2020 research and testing program lower priority?", "Why are local records important?", "Why is it important that research is continued on local records?", "Why is conducting research on national records higher priority?", "What opportunity does the Bureau's Population Estimates Challenge Program provide?", "What do the challenges rely on?", "How can local administrative records and national administrative records save the Bureau money?", "What was GAO asked to do?" ], "summary": [ "According to Bureau officials, these changes are based on research that shows that estimates based on some methods and records (e.g., births, deaths, and migration) are substantially more accurate than estimates based on others.", "Previously, the Bureau routinely accepted all challenges, largely without regard to the data sources cited or provided so long as they supported the calculations and covered the appropriate reporting periods.", "Among other changes, the Bureau modified procedures so that challenges by subcounty governments to the Bureau's estimates of people living in housing units will no longer affect countylevel population estimates. Moving forward, any such challenge resulting in an increase in the estimate of a subcounty population will be offset by a downward revision to the population estimate of all other communities in the same county.", "Also, the Bureau plans to routinely review population challenges in light of each community's population growth trend.Corroborating data will be required for challenges inconsistent with the trend.", "The Bureau's 2020 research and testing program is exploring the use of local administrative records for the 2020 Census, such as those used in the challenge program, but this effort is a lower priority than research on the use of national records, in part because national administrative records show greater promise than local records for controlling costs.", "Bureau officials said local records show the most promise for supporting the development of the 2020 address list. Specifically, the Bureau is exploring how it can use local records to more seamlessly and continually update address lists and maps, rather than waiting to receive such information as part of a one-time decennial update.", "Bureau officials stated that it is important to continue research on local records because they may be helpful in targeting decennial operations to hard-to-count groups or those in certain geographic areas.", "However, the results of 2010 Census research and testing on national records have led Bureau officials to conclude that continuing research on national records should be a higher priority.", "The Bureau's Population Estimates Challenge Program gives local governments the opportunity to challenge the Bureau's annual estimates of their population counts during the years between decennial censuses.", "Challenges rely on local administrative records, such as building and demolition permits.", "In addition to their role in the challenge program, these and national administrative records, such as tax data and Medicare records, could save the Bureau money if they are used to help build the Bureau's master address list, and reduce the need for certain costly and labor-intensive door-to-door visits among other things.", "GAO was asked to review changes to the challenge program and the Bureau's use of administrative records." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 1, 1, -1, 0, 1, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 5, 5, 5, 5, 0, 0, 0, 0 ] }

{ "title": [ "Background", "OMB and the Federal CIO Established FDCCI", "IT Acquisition Reform Law Enhanced Data Center Consolidation and Optimization Efforts", "OMB Established DCOI to Address FITARA Data Center Provisions", "OMB Published Proposed Changes to DCOI in November 2018", "Agencies Have Taken Limited Action to Address Prior GAO Recommendations", "Agencies Reported Mixed Results in Efforts and Plans to Meet OMB’s Targets for Data Center Closures and Cost Savings", "About Half of the Agencies Planned to Meet OMB’s Targets for Data Center Closures", "Almost Two-thirds of Agencies Planned to Meet OMB-Assigned Savings Targets", "Most Agencies Continued to Report Limited Progress Toward Meeting Optimization Metrics Targets", "Only Two Agencies Planned to Meet OMB’s Fiscal Year 2018 Optimization Targets", "Selected Agencies Highlighted Successful DCOI Practices", "Obtaining Executive Leadership Support for Consolidation and Optimization Activities", "Using Experiences and Lessons Learned to Refine Consolidation Planning", "Increasing the Use of Cloud and Shared Services to Consolidate or Optimize Data Center Operations", "Emphasizing the Closure of Data Centers to Meet OMB Targets and Achieve Cost Savings", "Increasing the Use of Virtualization to Optimize Data Centers", "Employing an Organization-wide Communications Plan to Facilitate Adoption of Consolidation and Optimization Activities", "Conclusions", "Recommendations", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Commerce", "Appendix III: Comments from the Department of State", "Appendix IV: Comments from the National Aeronautics and Space Administration", "Appendix V: Comments from the Small Business Administration", "Appendix VI: Comments from the Social Security Administration", "Appendix VII: Comments from the Department of Energy", "Appendix VIII: Comments from the Department of Veterans Affairs", "Appendix IX: Comments from the Department of Defense", "Appendix X: Comments from the Department of Homeland Security", "Appendix XI: Comments from the Department of the Interior", "Appendix XII: Comments from the Department of Health and Human Services", "Appendix XIII: Comments from the Environmental Protection Agency", "Appendix XIV: Comments from the General Services Administration", "Appendix XV: Comments from the National Science Foundation", "Appendix XVI: Comments from the Nuclear Regulatory Commission", "Appendix XVII: Comments from the U.S. Agency for International Development", "Appendix XVIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "According to OMB, federal agencies reported that they operated 432 data centers in 1998, 2,094 in July 2010, and 9,995 in August 2016. Operating such a large number of centers has been, and continues to be, a significant cost to the agencies. For example, in 2007, EPA estimated that the annual cost for electricity to operate federal servers and data centers across the government was about $450 million.\nFurther, according to the Department of Energy (Energy), a typical government data center has 100 to 200 times the energy use intensity of a commercial building. However, in 2009, OMB reported server utilization rates as low as 5 percent across the federal government’s estimated 150,000 servers. All of these factors contributed to OMB recognizing the need to establish a coordinated, government-wide effort to improve the efficiency, performance, and environmental footprint of federal data center activities.", "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, OMB’s Federal CIO established FDCCI in February 2010. This initiative’s four high-level goals were to reduce 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.\nIn February 2010, OMB required all of the agencies participating in the FDCCI to submit a data center inventory and a consolidation plan. In October 2010, OMB also clarified the definition of a data center and noted that, for the purposes of FDCCI, a data center was to be defined as any room used for the purpose of processing or storing data that is larger than 500 square feet and meets stringent availability requirements. Under this definition, OMB reported that agencies had identified 2,094 data centers as of July 2010.\nHowever, in 2011, the Federal CIO expanded the definition to include a facility of any size and OMB published its revised definition in March 2012. Based on the revised definition, OMB estimated that there were a total of 3,133 federal data centers in December 2011. In addition, its goal was to consolidate approximately 40 percent, or 1,253 of these data centers, for a savings of approximately $3 billion by the end of 2015.\nFigure 1 shows data center server racks at SSA’s National Support Center in 2017.\nThe number of federal data centers reported by agencies has continued to grow since 2011. In May 2018, we reported that agencies had collectively identified a total of 12,062 data centers in their inventories as of August 2017—an increase of about 9,000 data centers compared to OMB’s October 2011 estimate. According to the Federal CIO, the increase in the number of data centers was primarily due to the expanded definition of a data center (discussed later in this report) and improved inventory reporting by the agencies. See figure 2 for a depiction of the increase in the number of data centers from 1998 through August 2018.\nFurther, OMB placed greater emphasis on data center optimization to improve the efficiency of federal data centers when it issued memorandum M-13-09 in March 2013. Specifically, OMB stated that, to more effectively measure the efficiency of an agency’s data center assets, agencies would also be measured by the extent to which their primary data centers are optimized for total cost of ownership by incorporating metrics for data center energy, facility, labor, and storage, among other things.\nSubsequently, in May 2014, OMB issued memorandum M-14-08, which established a set of data center optimization metrics to measure agency progress, along with target values for each metric. All agencies were expected to achieve the target values by the end of fiscal year 2015.", "Recognizing the importance of reforming the government-wide management of IT, Congress enacted FITARA in December 2014. Among other things, the law required agencies to:\nSubmit to OMB a comprehensive inventory of the data centers owned, operated, or maintained by or on behalf of the agency.\nSubmit, by the end of fiscal year 2016, a multi-year strategy to achieve the consolidation and optimization of the agency’s data centers. The strategy was to include performance metrics that were consistent with the government-wide data center consolidation and optimization metrics.\nReport progress toward meeting government-wide data center consolidation and optimization metrics on a quarterly basis to OMB’s Administrator of the Office of Electronic Government.\nIn addition, according to FITARA, the Office of Electronic Government at OMB was to:\nEstablish metrics applicable to the consolidation and optimization of data centers (including server efficiency), ensure that agencies’ progress toward meeting government-wide data center consolidation and optimization metrics is made publicly available, review agencies’ inventories and strategies to determine whether they are comprehensive and complete, and monitor the implementation of each agency’s strategy.\nDevelop and make publicly available not later than December 19, 2015, a goal broken down by year for the amount of planned cost savings and optimization improvements to be achieved through FDCCI and, for each year thereafter until October 1, 2020, compare reported cost savings and optimization improvements against those goals.", "OMB issued memorandum M-16-19 in August 2016 to establish DCOI and included guidance on how to implement the data center consolidation and optimization provisions of FITARA. Among other things, the guidance required agencies to consolidate inefficient infrastructure, optimize existing facilities, improve their security posture, and achieve cost savings. For example, each agency was required to maintain a complete inventory of all data center facilities owned, operated, or maintained by or on its behalf, and measure progress toward defined optimization performance metrics on a quarterly basis as part of its data center inventory submission.\nOMB’s memorandum also directed each agency to develop a DCOI strategic plan that defined its data center strategy for fiscal years 2016 through 2018. Among other things, this strategy was to include a timeline for agency consolidation and optimization activities, with an emphasis on cost savings and optimization performance benchmarks that the agency could achieve between fiscal years 2016 and 2018. For example, each agency was required to develop cost savings targets due to consolidation and optimization actions and report any realized cost savings. OMB required each agency to publicly post its DCOI strategic plan to its agency-owned digital strategy website by September 30, 2016, and to post subsequent strategic plan updates by April 14, 2017 and April 13, 2018.\nFurther, the memorandum stated that OMB was to maintain a public dashboard (referred to as the IT Dashboard) to display government-wide and agency-specific progress in areas such as planned and achieved data center closures, consolidation-related cost savings, and data center optimization performance information. In this regard, OMB began including data center consolidation and optimization progress information on the IT Dashboard in August 2016.\nOMB’s memorandum also provided new guidance for the classification of a physical data center and expanded the definition of a data center. According to the revised definition, a room with at least one server that provides services (whether in a production, test, staging, development, or any other environment) should be considered a data center, while a room containing only print servers, routing equipment, switches, security devices (such as firewalls), or other telecommunication components, was not to be considered a data center.\nIn light of this new definition, OMB directed each agency to perform a comprehensive review of its data centers and maintain a complete and updated data center inventory. Further, OMB directed each agency to categorize each of its data centers as either a tiered data center or a non- tiered data center. OMB’s memorandum defined a tiered data center as one that uses each of the following: a separate physical space for IT infrastructure; an uninterruptible power supply; a dedicated cooling system or zone; and a backup power generator for a prolonged power outage.\nAccording to the memorandum, all other data centers were to be considered non-tiered.\nMoreover, OMB guidance included a series of performance metrics in the areas of data center closures, cost savings, and optimization progress.\nData center closures: According to the guidance, agencies were to close at least 25 percent of tiered data centers government-wide, excluding those approved as inter-agency shared services providers, by the end of fiscal year 2018. Further, agencies were to close at least 60 percent of non-tiered data centers government-wide by the end of fiscal year 2018. OMB’s guidance further notes that, in the long term, all agencies should continually strive to close all non-tiered data centers, noting that server rooms and closets pose security risks and management challenges and are an inefficient use of resources.\nCost savings: According to the guidance, agencies were to reduce government-wide annual costs attributable to physical data centers by at least 25 percent, resulting in savings of at least $2.7 billion for fiscal years 2016 through 2018.\nData center optimization: According to the guidance, agencies were to measure progress against a series of new data center performance metrics in the areas of server utilization, energy metering, power usage, facility utilization, and virtualization. Further, OMB’s guidance established target values for each metric that agencies were to achieve by the end of fiscal year 2018.\nOMB’s guidance further noted that agency progress against these performance metrics was to be measured by OMB on a quarterly basis, using agencies’ data center inventory submissions and OMB-defined closures, cost savings, and optimization targets.", "In November 2018, OMB published proposed changes to DCOI for public comment. The changes focus federal consolidation and optimization efforts on agencies’ larger, tiered data centers and also de-emphasize the consolidation of non-tiered facilities and other smaller spaces. The draft guidance also revises the classification of data centers and data center optimization metrics.\nThe draft guidance redefines a data center as a purpose-built, physically separate, dedicated space that meets certain criteria. Similarly, OMB does not plan to continue to report on spaces not designed to be data centers. According to the draft, OMB also plans to work with agencies to set agency-specific goals for data center closures and cost savings and to update these targets from those set in OMB’s August 2016 memorandum to match agencies’ current status and progress.\nAdditionally, the proposed changes to DCOI make several changes to the metrics currently used by agencies to monitor the performance of their data centers. Specifically, of the five metrics currently in use (described in detail later in this report), OMB proposes updating three, removing two, and adding one new metric.\nThe draft guidance states that public comments will be collected through the end of December 2018, but does not provide a date for when the proposed changes will be finalized and implemented. However, the draft does state that the new guidance will sunset on September 30, 2020, a date that coincides with the extension of FITARA’s data center provisions.", "Since the enactment of FITARA in December 2014, we have reviewed and verified annually for the quality and completeness of each agency’s (covered by the law) inventory and DCOI strategy. We have also published reports documenting the findings from each of our reviews. In addition, we have examined and reported on agencies’ efforts to optimize their data centers, as well as the challenges encountered and successes achieved.\nIn a report that we issued in March 2016, we noted that agencies had reported significant data center closures—totaling more than 3,100 through fiscal year 2015—with the Departments of Agriculture, Defense (Defense), the Interior (Interior), and the Treasury (Treasury) accounting for 84 percent of the total. Although the agencies fell short of OMB’s fiscal year 2015 consolidation goal, their plans identified about 2,100 additional centers planned for closure through fiscal year 2019.\nAgencies also reported significant consolidation cost savings and avoidances—totaling about $2.8 billion through fiscal year 2015 and expected to increase to over $8.0 billion in future years. The Departments of Commerce, Defense, Homeland Security (DHS), Transportation (Transportation), and the Treasury accounted for 96 percent of the total planned savings.\nHowever, we pointed out that many agencies lacked complete cost savings goals for the next several years despite having closures planned. In addition, we reported that 22 agencies had made limited progress against OMB’s fiscal year 2015 data center optimization performance metrics, such as the utilization of data center facilities. Accordingly, we recommended that the agencies take actions to complete their cost savings targets and improve optimization progress. As of December 2018, 18 of the 32 recommendations from this report had yet to be fully addressed.\nIn May 2017, we reported that the agencies were reporting significant data center closures—totaling more than 4,300 through August 2016— with Agriculture, Defense, Interior, and the Treasury accounting for 84 percent of the total. The agencies’ plans for 2016 had identified more than 1,200 additional centers for closure through fiscal year 2019.\nAgencies also reported significant consolidation and optimization cost savings and avoidances, which totaled about $2.3 billion through August 2016. However, reductions in the amount of achieved savings reported to OMB, particularly by the Treasury, resulted in a net decrease of more than $400 million in these savings, compared to amounts we previously reported as planned in 2015.\nFurther, our report noted that, as of December 2016, agencies’ total planned cost savings of about $656 million were more than $3.3 billion less compared to the amounts that we reported in 2015, and more than $2 billion less than OMB’s fiscal year 2018 cost savings goal of $2.7 billion. This reduction in planned savings was the result of eight agencies reporting less in planned cost savings and avoidances in their DCOI strategic plans compared to the savings amounts previously reported to us in November 2015. The reduction also reflected the absence of cost savings information for one agency (Defense) that did not submit its strategic plan in time for our review.\nIn addition, our May 2017 report identified weaknesses in agencies’ DCOI strategic plans. Of the 23 agencies that had submitted their strategic plans at the time of our review, 7 agencies—Agriculture, the Department of Education (Education), DHS, and the Department of Housing and Urban Development (HUD); GSA; the National Science Foundation (NSF); and the Office of Personnel Management (OPM)—had addressed all five required elements of a strategic plan, as identified by OMB (such as providing information related to data center closures and cost savings metrics). The remaining 16 agencies that submitted their plans either partially met or did not meet the requirements. We also pointed out that there were inconsistencies in the reporting of cost savings in the strategic plans of 11 agencies.\nGiven these findings, we recommended that OMB improve its oversight of agencies’ DCOI strategic plans and their reporting of cost savings and avoidances. We also recommended that 16 agencies and Defense (which did not submit a plan in time for our review) complete the missing elements in their strategic plans, and that 11 agencies ensure the reporting of consistent cost savings and avoidance information to OMB. As of December 2018, 10 of the 30 recommendations had not been fully addressed.\nIn a subsequent report that we issued in August 2017, we noted that 22 of the 24 agencies required to participate in the OMB DCOI had reported (collectively) limited progress against OMB’s fiscal year 2018 performance targets for the five optimization metrics. The 2 remaining agencies, Education and HUD, did not own any data centers and, therefore, did not have a basis to report on progress. Specifically, for each of the five targets, no more than 5 agencies reported that they had met or exceeded that specific target. We reported that this limited progress against OMB’s optimization targets was due, in part, to agencies not fully addressing our prior recommendations in this area.\nIn addition, we noted in the report that most agencies had not yet implemented automated monitoring tools to measure server utilization, as required by the end of fiscal year 2018. Specifically, 4 agencies reported that they had fully implemented such tools, 18 reported that they had not yet done so, and 2 did not have a basis to report on progress because they did not own any data centers. Accordingly, we recommended that OMB require that agencies include plans, as part of existing OMB reporting mechanisms, to implement automated monitoring tools at their agency-owned data centers. We also recommended that the 18 agencies that did not have fully documented plans take action, within existing OMB reporting mechanisms, to complete plans describing how they intended to achieve OMB’s requirement to implement automated monitoring tools at all agency-owned data centers by the end of fiscal year 2018. As of December 2018, none of our 19 recommendations had been fully addressed.\nMost recently, in May 2018, we noted that the 24 agencies participating in DCOI had reported mixed progress toward achieving OMB’s goals for closing their data centers by September 2018. Thirteen agencies reported that they had either already met, or planned to meet, all of their OMB- assigned goals by the deadline. However, 4 agencies reported that they did not have plans to meet all of their assigned goals and 2 agencies were working with OMB to establish revised targets.\nWith regard to agencies’ progress in achieving cost savings, 20 agencies reported, as of August 2017, that they had achieved $1.04 billion in cost savings for fiscal years 2016 and 2017. In addition, the agencies’ DCOI strategic plans identified an additional $0.58 billion in planned savings— for a total of $1.62 billion for fiscal years 2016 through 2018. This total was approximately $1.12 billion less than OMB’s DCOI savings goal of $2.7 billion. This shortfall was the result of 12 agencies reporting less in planned cost savings and avoidances in their DCOI strategic plans, as compared to the savings targets established for them by OMB.\nIn addition, the 24 agencies reported limited progress against OMB’s five data center optimization targets for server utilization and automated monitoring, energy metering, power usage effectiveness, facility utilization, and virtualization. As of August 2017, 1 agency had met four targets, 1 agency had met three targets, 6 agencies had met either one or two targets, and 14 agencies reported meeting none of the targets. Further, as of August 2017, most agencies were not planning to meet OMB’s fiscal year 2018 optimization targets. Specifically, 4 agencies reported plans to meet all of their applicable targets by the end of fiscal year 2018; 14 reported plans to meet some of the targets; and 4 reported that they did not plan to meet any targets.\nBecause GAO had made a number of recommendations to OMB and the 24 DCOI agencies to help improve the reporting of data center-related cost savings and to achieve optimization targets, we did not make new recommendations and noted that, as of March 2018, 74 of the 81 prior recommendations had not been fully addressed. While agencies have made considerable progress, as of December 2018, 47 of the 81 recommendations had not been fully addressed.", "According to OMB guidance, agencies were expected to close at least 25 percent of tiered data centers government-wide, by the end of fiscal year 2018. In addition, agencies were to close at least 60 percent of non-tiered data centers government-wide by this same deadline. Further, agencies were expected to reduce government-wide annual costs attributable to physical data centers by a least 25 percent by the end of fiscal year 2018, resulting in savings of at least $2.7 billion.", "The 24 agencies reported mixed results regarding their data center closure progress and plans, when compared with OMB’s goal for each agency to close at least 25 percent of their tiered data centers and at least 60 percent of their non-tiered centers. Specifically, as of August 2018, 13 agencies reported that they had already met the goal of closing 25 percent of their tiered data centers, another 3 agencies reported that they planned to meet the goal by the end of fiscal year 2018, and 6 agencies reported that they did not plan to meet the goal.\nFurther, as of August 2018, 11 agencies reported that they had already met the goal for closing 60 percent of their non-tiered centers, 3 agencies reported that they planned to meet the goal by the end of fiscal year 2018, and 9 agencies reported that they did not plan to meet the goal by the end of fiscal year 2018. Table 1 displays a breakdown of the number of reported tiered and non-tiered data centers and completed and planned closures by agency, as of August 2018.\nAs shown in the figure below, the 24 agencies reported a total of 6,250 data center closures as of August 2018, which represented about half of the total reported number of federal data centers. In addition, the agencies planned 1,009 closures by the end of fiscal year 2018, with an additional 191 closures planned through fiscal year 2023 for a total of 1,200 more closures. This would further reduce the number of open data centers to about 39 percent of the number reported in the agencies’ inventories. Figure 3 provides a summary breakdown of agencies’ data center inventories that were closed, planned for closure, or not planned for closure, as of August 2018.\nAs noted, while about half of the agencies had met, or had planned to meet, their OMB targets as of August 2018, the other half planned to miss one or both of them. Officials from the 11 agencies that did not plan to meet one or both of their closure goals provided various reasons for why they had not planned to do so. For example, several agencies indicated that they were seeking revised closure goals because they viewed their goals as unattainable. Specifically, officials from Interior’s Office of the CIO stated that a number of the department’s non-tiered data centers were either mission-critical or not cost effective to close. Thus, the officials said Interior was working with OMB to establish a revised closure goal.\nSimilarly, Transportation’s Director for IT Compliance stated that the department was working with OMB to establish a revised closure goal. The department reported having 186 tiered data centers in Federal Aviation Administration control towers that it believes should be excluded from its count of data centers when OMB sets the department’s goal for closures. In addition, officials in Defense’s Office of the CIO stated that the OMB closure targets for the department were based on including special purpose processing nodes that are mission critical and, therefore, are not subject to being closed. The officials noted that the department intends to continue operating its enterprise data centers, close its smaller data centers, and work with OMB to remove the special purpose processing nodes from DCOI consideration.\nWhen OMB launched DCOI in 2016, agencies originally had until the end of fiscal year 2018 to meet OMB’s stated time frame for closing their data centers. However, the extension of FITARA’s data center consolidation and optimization provisions through fiscal year 2020, and OMB’s planned revisions to DCOI goals, provide the 11 agencies that had not planned to meet one or both of OMB’s closure targets with additional time to meet their goals. Until these agencies take action to close enough data centers to meet OMB’s targets, they may not realize the efficiencies and cost savings that were expected from DCOI.", "Since 2013, federal agencies have been required to report on data center cost savings, with guidance from OMB regarding how agencies were to report cost savings and avoidances. Specifically, the guidance required agencies to report both data center consolidation cost savings and avoidances, among other areas, as part of a quarterly reporting process. FITARA also called for each agency to submit a multi-year strategy for achieving the consolidation and optimization of data centers that included year-by-year quarterly calculations of investment and cost savings through fiscal year 2018, which has now been extended to 2020.\nIn addition, in August 2016, OMB M-16-19 provided guidance on how agencies should implement the requirements of FITARA. Specifically, agencies were to develop a strategic plan that included information on historical cost savings and avoidances due to data center consolidation and optimization through fiscal year 2015. This guidance stated that agency strategic plans were also to include year-by-year calculations of target and actual agency-wide spending and cost savings on data centers from fiscal years 2016 through 2018. Further, the guidance established a DCOI combined cost savings goal of $2.7 billion for all federal agencies to achieve from fiscal years 2016 through 2018. This overall goal was then broken down into agency-specific targets on the IT Dashboard.\nIn August 2018, 22 agencies reported through the quarterly reporting process that they had achieved $1.94 billion in cost savings for fiscal years 2016 through 2018, while 2 agencies reported that they had not achieved any savings. Further, 21 agencies identified an additional $0.42 billion planned through fiscal year 2018, for a total of $2.36 billion in planned savings from fiscal years 2016 through 2018. Nevertheless, this total is about $0.37 billion less than OMB’s goal of $2.7 billion for overall DCOI savings. Figure 4 compares the total achieved savings as reported by the 24 agencies for fiscal years 2016 through 2018 and the agencies’ additional planned savings through 2018 to OMB’s DCOI savings goal for fiscal years 2016 through 2018.\nThe 24 participating DCOI agencies had achieved $1.94 billion in savings as of August 2018. In addition, agencies identified an additional $0.43 billion, for a difference of $0.37 billion between planned and achieved savings from fiscal years 2016 through 2018. Table 2 provides specific data related to each agency’s total planned savings, total achieved savings, and additional planned savings through 2018.\nAs shown in table 2, 13 agencies reported that they had met or planned to meet or exceed their OMB targets, and 3 agencies that did not have an OMB target also identified achieved savings. In contrast, 5 agencies reported that they did not plan to meet their targets. Three agencies did not have a savings target and did not report any achieved savings.\nAgencies provided various reasons for why they did not plan to meet their savings targets. For example, the Department of Veterans Affairs (VA) reported that the implementation of its DCOI-related projects in fiscal years 2016 through 2018 was dependent on funding approval and might not result in cost savings and avoidances until later in the projects’ life cycles (i.e., fiscal year 2019 or later). In another example, GSA stated that the OMB target may be difficult for the agency to reach due, in part, to the methods OMB used to set the target for fiscal years 2016 through 2018. According to GSA, OMB used the data that GSA had reported on the IT Dashboard regarding the agency’s expenditure for data center infrastructure and reduced that amount by 25 percent.\nAgencies have now been working toward OMB’s DCOI savings goals since fiscal year 2016; however, almost half of the agencies are still not planning to meet OMB’s targets. Until agencies plan to meet and achieve OMB’s data center-related savings targets, they will likely not realize the expected financial benefits from DCOI.", "FITARA required OMB to establish metrics to measure the optimization of data centers, including server efficiency, and to ensure that agencies’ progress toward meeting the metrics is made public. Pursuant to FITARA, OMB established a set of five data center optimization metrics intended to measure agencies’ progress in the areas of server utilization and automated monitoring, energy metering, power usage effectiveness, facility utilization, and virtualization. According to OMB, while the server utilization and automated monitoring metric applied to agency-owned tiered and non-tiered data centers, the four remaining metrics applied only to agency-owned tiered centers.\nOMB’s memorandum also established a target value for each of the five metrics, which agencies were expected to achieve by the end of fiscal year 2018. OMB measures agencies’ progress against the optimization targets using the agencies’ quarterly data center inventory submission and publicly reports this information on its IT Dashboard. Table 3 provides a description of the five data center optimization metrics and target values.\nAs of August 2018, most (22 of the 24) DCOI agencies continued to report limited progress in meeting OMB’s fiscal year 2018 data center optimization targets identified on the IT Dashboard. The remaining 2 agencies—Education and HUD—reported that they did not have any agency-owned data centers in their inventory and, therefore, did not have a basis to measure and report optimization progress.\nWith regard to the data center optimization targets, agencies reported the greatest progress against two metrics: power usage effectiveness and virtualization metrics. Specifically, 8 agencies reported that they had met OMB’s target for power usage effectiveness and 6 agencies reported that they had met the target for virtualization. However, for the energy metering, facility utilization, and server utilization and automated monitoring metrics, no more than 3 agencies reported meeting each. Figure 5 summarizes the 24 agencies’ progress in meeting each optimization target, as of August 2018.\nAs of August 2018, NSF, SSA, and EPA reported the most progress against OMB’s metrics among the 22 agencies with a basis to report— each met 3 targets. Nine agencies reported that they had met only one target, and 10 agencies reported they had not met any of the targets.\nFurther, OMB began requiring the implementation of automated monitoring tools in August 2016; however, as of August 2018, of the 22 agencies with a basis to report, 5 reported that they had either not implemented the tools at any data centers, or had experienced shortcomings in their implementation. For example, the Department of State (State) reported that it had limited centralized monitoring capability and is installing automated monitoring tools in several phases.\nThus, these 5 agencies were not able to report any progress against either or both of the server utilization or power usage effectiveness metrics because their data centers lacked the required monitoring tools to measure progress in these areas. The remaining 17 agencies reported that they had implemented the tools in at least one data center. Table 4 depicts the performance of the agencies in meeting OMB targets for data center optimization, as of August 2018.\nAs of August 2018, multiple agencies had made changes to their data center inventory and operational environment, such as closing all agency- owned tiered data centers or implementing automated monitoring tools. These changes impacted which metrics were applicable or an agency’s ability to report on the status of its optimization metrics. For example, GSA reported that it no longer had any agency-owned tiered data centers, and, therefore, did not have a basis to report on four of the five optimization metrics. Additionally, NSF, which previously had only owned one non-tiered data center, migrated from the non-tiered center to a tiered data center as part of its headquarters relocation. Accordingly, NSF began reporting on the metrics applicable to its tiered facility.\nFurther, the Nuclear Regulatory Commission (NRC) did not report on power usage effectiveness due to delays in awarding a new contract that was to include monitoring tools that would impact the ability to report on this metric. Agency officials stated that NRC plans to have the monitoring tools in place during fiscal year 2019. Overall, these changes since last year’s report have resulted in no significant changes to the progression of these agencies on their optimization metrics.\nIn addition, agencies’ limited progress against OMB’s optimization targets was due, in part, to not fully addressing our prior recommendations in this area. As previously mentioned, in March 2016, we reported on weaknesses in agencies’ data center optimization efforts, including that 22 agencies did not meet OMB’s fiscal year 2015 optimization targets. We noted that this was partially due to the agencies having challenges in optimizing their data centers, including in their decentralized organizational structures that made consolidation and optimization difficult, and in competing priorities for resources. In addition, consolidating certain data centers was problematic because the volume or type of information involved required the data center to be close in proximity to the users. Accordingly, we recommended that the agencies take action to improve optimization progress, to include addressing any of the identified challenges. Most agencies agreed with our recommendations or had no comments. However, as of December 2018, only 4 of the 22 agencies had fully addressed them.\nThe continuing shortcomings in data center optimization can also be attributed, in part, to agencies viewing OMB’s optimization metric targets as unrealistic. For example, Transportation stated in its DCOI strategic plan that it could not meet multiple optimization metrics due to funds not being available and competing priorities. In addition, Treasury indicated in its DCOI strategic plan that it struggles to report on automated monitoring because many of its data centers do not have the ability to centrally aggregate and report on central processing unit data. Further, DHS officials noted that it has 7 smaller tiered data centers where it has determined that it is not cost effective to equip those centers with the tools needed to report on metrics such as power usage effectiveness. Given these types of challenges, the targets for each optimization metric may not be realistic for every agency. Unless agencies take action to meet the applicable OMB optimization metrics, their data centers may not operate efficiently enough to provide expected cost savings.", "In addition to reporting current optimization progress on the IT Dashboard, OMB required agencies to include in their DCOI strategic plans planned performance levels for fiscal year 2018 for each optimization metric.\nHowever, according to the 24 agencies’ DCOI strategic plan information as of August 2018, only 2—Commerce and the U. S. Agency for International Development (USAID)—reported plans to fully meet their applicable targets by the end of fiscal year 2018. Of the remaining agencies, 14 reported plans to meet some, but not all, of the targets; 6 reported that they did not plan to meet any targets, and—as already discussed—Education and HUD did not have a basis to report planned optimization milestones because they did not report having any agency- owned data centers. Figure 6 summarizes agencies’ progress, as of August 2018, in meeting OMB’s optimization targets and planned progress to be achieved by September 2018.\nAt the time of our review, only two agencies planned to meet all of their applicable targets, and it was doubtful that the agencies would be able to achieve OMB’s collective optimization target of at least $2.7 billion in cost savings by the end of fiscal year 2018. Until the remaining agencies take the steps necessary to meet their optimization targets, it is unlikely that these agencies will achieve the expected benefits of optimization and the resulting cost savings.", "As we noted previously in this report, many agencies have reported challenges that have hindered their efforts to meet OMB’s DCOI targets. However, a number of agencies have also reported success in meeting OMB’s targets ahead of DCOI’s end of fiscal year 2018 deadline. As noted in our methodology section, six agencies that were among the best performers in achieving data center closures, cost savings, and optimization performance reported a number of key practices that had contributed to their success. These practices were: obtaining executive leadership support for consolidation and using experiences and lessons learned to refine consolidation increasing the use of cloud and shared services to consolidate or optimize data center operations; emphasizing closing data centers to meet OMB targets and achieve increasing the use of virtualization to optimize data centers; and employing an organization-wide communications plan to facilitate adoption of consolidation and optimization activities.", "Five of the six agencies (Agriculture, Commerce, Justice, EPA, and GSA) reported that their success in consolidation and optimization activities was due to obtaining support from executive leadership for the agency’s consolidation efforts. Each agency obtained sponsorship and support from its executive leadership (e.g., Deputy Secretary or agency CIO), such as through a memorandum or policy that directed all agency offices to participate in, or comply with, the consolidation effort. For example,\nThe Deputy Secretary for Agriculture issued a memorandum in 2017 that, among other things, declared the department’s intent to consolidate from 39 data centers down to 2 by the end of 2019. According to officials in the Office of the CIO, this memorandum from the Secretary’s office focused all data center owners on the same project task of reducing the data center inventory.\nThe Commerce CIO and the department’s CIO Council provided overall governance through organizational policies, processes, and procedures for the department’s data center consolidation effort. Leveraging this departmental guidance, each component of Commerce developed its own consolidation plan that identified specific approaches and activities. Using these plans, the department and its components focused on reducing spending on redundant software, infrastructure, and data center operations.\nThe Deputy Attorney General issued a memorandum in 2014 to the heads and CIOs of all components. This memorandum formally established Justice’s Data Center Transformation Initiative, established the Department Program Review Board to provide oversight for the initiative, and also directed the consolidation of all data centers into 3 enterprise facilities. In addition, Justice’s CIO issued a memorandum to component CIOs that provided additional details on how to execute planned activities and established further governance associated with the initiative. These memoranda provided clear leadership buy-in and support for the department’s data center consolidation and optimization activities that could be used to resolve any challenges or issues at the departmental level.\nEPA attributed much of its DCOI success to a top-down approach from its CIO office, saying that such support was critical to achieve data center closures. For example, EPA leadership decided to adopt and enforce geographical consolidation of data centers within major areas to minimize costs of consolidation while still meeting closure objectives. In doing so, the agency leadership provided clear direction and support for the agency’s consolidation effort by adopting the strategy to consolidate data centers within specific geographic regions.\nGSA reported that it obtained leadership commitment that made its data center consolidation and optimization activities a priority. The agency noted that having strong CIO and executive leadership was important for sponsoring technology modernization. As a result of the buy-in, the agency reported that it had minimized resistance to change and improved acceptance of its consolidation and optimization activities.", "Four agencies (Agriculture, Commerce, Justice, and SSA) reported that their success with consolidation and optimization activities was due to the use of a refined consolidation plan or process. Each of these agencies developed an initial consolidation plan or process for closing data centers, and then refined their procedures based on their experiences and lessons learned as data centers were closed. For example,\nAgriculture developed a set of streamlined processes to facilitate DCOI closures that were based on the experiences gained from successful data center closures under FDCCI. The set of processes consisted of 5 steps:\nThe planning step included the discovery and documentation of all data center assets, including applications and IT hardware, in a given data center. In addition, this step involved identifying the necessary resources to move the applications and associated data to a target data center.\nThe preparation step included identification of the target data center and development of a project schedule.\nThe data migration step included moving both applications and data to the target data center or cloud-services, as planned.\nThe testing step included ensuring the applications and data that were moved were integrated into the target data center, and functional testing to ensure that the applications worked and data was accessible.\nThe application cutover step included putting the migrated applications and data into operation and closing the original data center.\nUsing and refining this set of processes allowed the department to become more efficient in closing its data centers. After closing 46 data centers in fiscal years 2011 through 2014, the department closed 2,185 data centers over the next 2 years. In total, Agriculture reported that it had closed 2,253 data centers as of August 2018.\nCommerce established departmental guidance and then each departmental component leveraged that guidance to develop its own consolidation plan. The plans identified specific approaches and activities intended to achieve the stated goals and milestones. According to Commerce, the department and its components leveraged their IT planning processes and established IT governance to, among other things, reduce spending on redundant commodity software, infrastructure, and operations.\nJustice’s Office of the CIO developed a master plan for the department’s data center consolidation effort in June 2015. The plan included a planning framework, transformation approach, and a master schedule for data center moves and closures. It also included process steps similar to those used by Agriculture. Further, Justice’s plan noted that the department would use its initial closure efforts to gain experience and to refine its plans. Justice reported that it used the plan’s schedule and semi-monthly progress reports to ensure that consolidation activities stayed on schedule, or the department could make adjustments as needed. As a result, the department closed 84 of its 110 data centers and achieved more than $128 million in cost savings and avoidances as of August 2018.\nSSA used a project management framework process and controls that it believed efficiently addressed requirements, critical path, and risk management. In addition, SSA reported that it used an incremental development approach to its data center optimization plans, with each project expected to accomplish specific tasks that would lead to another project. Accordingly, SSA noted that the agency used a multi-year plan with many initiatives focused on specific goals. Using this approach, the agency successfully moved SSA’s operations and infrastructure from an older facility to the newly-built National Support Center. The agency reports that this facility is state-of-the-art and provides similar capabilities and efficiencies to major cloud service providers.", "Three agencies (Commerce, GSA, and SSA) also attributed their success in consolidation and optimization activities to increasing their agency’s use of cloud and shared services. In doing so, each agency emphasized the move of data center assets and systems to cloud services to optimize their data centers and reduce costs. For example,\nCommerce identified moving to cloud services and utilizing shared services as being most effective in closing data centers. As an example, the department cited the National Oceanic and Atmospheric Administration’s (NOAA) “cloud-first” policy that emphasized using cloud services rather than an agency-owned physical data center whenever feasible. The agency attributed its ability to handle increased traffic as an operational benefit of its increased use of cloud services. For example, NOAA did not have the capacity in its agency- owned facilities to meet the computing demands and requirements of a sudden increase in web traffic on the websites for NOAA and the National Hurricane Center, such as during Hurricanes Irma and Harvey in 2017. Commerce stated that using cloud services allowed NOAA to handle 4.7 billion page hits during Hurricane Harvey over a 6-day span, ensuring the websites were not adversely impacted by the increase in traffic.\nGSA reported that it focused on moving services from agency-owned tiered and non-tiered data centers to cloud services or to shared centers. As a result, GSA had closed 118 data centers as of August 2018, including all of the agency’s tiered centers.\nSSA developed an agency cloud initiative that encourages the adoption of cloud technologies as part of the agency’s infrastructure modernization. The agency reported that it is employing a hybrid cloud strategy that is comprised of both private cloud and public cloud services for the agency’s back office applications. By doing so, the agency will consolidate and standardize SSA’s IT infrastructure systems and software to simplify management of those resources and reduce costs.", "Three agencies (Agriculture, Justice, and EPA) reported that their success in consolidation and optimization activities was due to focusing on the closure of data centers. In doing so, they emphasized the importance of closing data centers to reduce costs and achieve cost savings and avoidances. For example,\nAgriculture determined that the costs to improve DCOI performance metrics in its agency-owned data centers were prohibitive. Accordingly, the department decided that the only viable alternative was to close data centers to remove underperforming centers and improve optimization metrics performance and reduce costs. As a result, Agriculture reported that it had closed 2,253 data centers through August 2018. In addition, the department reported that it had improved its security posture, reduced its real estate footprint, and achieved realized cost savings and avoidance of $51.8 million from fiscal year 2012 through 2018.\nJustice reported that it took a practical approach to selecting the data centers that would remain as its enterprise facilities, considering factors such as the number of physical servers that could be eliminated, the efficiency of the remaining hardware, and potential labor savings. The department reported that it focused on retaining more efficient data centers (e.g., those with more efficient use of electricity or virtualization), rather than simply keeping its biggest existing data centers. As a result, Justice has closed 84 of its 110 data centers and achieved more than $128 million in cost savings and avoidances as of August 2018.\nEPA identified geographical consolidation as its best approach to meeting DCOI goals. Specifically, in its data center consolidation plan, the agency stated that, for geographic areas where it had multiple data centers, a single facility was identified into which data center IT assets would be consolidated. Using this approach, EPA had closed 43 of its 83 data centers as of August 2018.", "Three agencies (Commerce, EPA, and SSA) reported that their success in consolidation and optimization activities also was due to focusing on the increased use of virtualization to run more software on the same or a reduced amount of servers. In doing so, the agencies expected to reduce costs by avoiding the purchase of additional servers to meet computing demands or eliminating unnecessary hardware and floor space in their data centers. For example,\nCommerce focused on moving systems from physical hardware to virtual servers, as part of its component offices’ plans to update technology and in cases where the systems did not require a specific type of server. Using this approach, the department reported that it had reduced the number of physical servers in its data centers, and was working to improve server utilization. The department also cited the ability to automatically increase or decrease computing capability through virtualization, such as when NOAA handled the increased traffic to its hurricane-related web pages during Hurricanes Irma and Harvey in 2017.\nEPA used the agency’s data center consolidation plan to implement an agency-wide “physical-to-virtual” policy that required offices to convert existing physical servers to virtual servers wherever possible. The agency also defined server and software standards for virtualized platforms.\nSSA reported that the agency’s goal, using its “Virtual 1st” policy, was to have failover capability within the data center, disaster recovery capability for both data centers, and balanced load capacity between data centers. The agency reported that it has continued to virtualize not only servers but storage and network applications, as well. For example, SSA stated that it has taken steps to virtualize as much storage as possible and used similar techniques to reduce the physical hardware footprint on the data center floor, as well as power, cooling, and network bandwidth requirements.", "Two agencies (Justice and GSA) reported that their success in consolidation and optimization activities was due to employing an organization-wide communications plan. In doing so, the agencies adopted a structured method for communicating with agency offices to improve acceptance and adoption of consolidation and optimization activities. This also facilitated conflict resolution. For example, Justice reported that it prioritized communications related to its Data Center Transformation Initiative and established an all-encompassing approach to initiative-related communications. To help communicate all related directives, strategies, plans, statuses, and accomplishments, the department used a variety of methods that included: regular meetings to share information, a dedicated email box to provide easy communication for answers or information, without the need to know specific individuals, an intranet web page that provided general information, instructions, templates, decisions, status information, and accomplishments related to the initiative; and email broadcasts on an as-needed basis.\nGSA reported that it communicated and collaborated frequently with business stakeholders to identify the best time frames to move systems, stagger transfers to minimize impact, and determine which systems could be virtualized. The agency indicated that these important factors required continuous communication between system owners, system administrators, and business leadership. As a result, the agency experienced minimal staff resistance to change and a commitment to reach a consensus on moving forward with the agency’s consolidation efforts.\nThe aforementioned practices included elements of sound management techniques, such as gathering leadership support for a project and developing a communications plan to foster adoption of organizational changes. The practices also included activities that aligned with the core tenets of DCOI to consolidate inefficient infrastructure, optimize existing facilities, and achieve cost savings. Further, these practices each proved effective for multiple agencies and, while they were not the only practices that could be effective, they represent concepts that could provide the foundation for an effective data center consolidation and optimization program.", "Federal data center consolidation efforts have been underway since 2010 and OMB’s fiscal year 2018 targets provided clear and transparent goals that helped define the tangible benefits that DCOI was expected to provide. However, most agencies continue to report mixed progress against those targets. Although agencies have taken action to close about half of the data centers in their combined inventories, 11 agencies did not plan to meet all of their closure targets.\nFurther, the data center closures were expected to drive cost savings and avoidances and, to the agencies’ credit, the closures have led to more than $2.37 billion in planned and achieved cost savings and avoidances from fiscal years 2016 through 2018. However, five agencies did not plan to meet their cost savings targets. Until agencies consolidate the data centers required to meet their targets, as well as identify and report the associated cost savings, they will be challenged to realize expected efficiencies and the full benefits of DCOI will not be fully realized.\nSimilarly, although OMB first established optimization metrics in May 2014, agencies continue to report only limited progress against the current performance targets. While two agencies do not have a basis to report any progress as they do not own any data centers, only two agencies reported that they planned to achieve all of DCOI’s fiscal year 2018 optimization targets. Ensuring the optimized performance of data centers is a key component to meeting OMB’s DCOI-wide savings goal and the 20 agencies that did not have plans to meet their targets call into question whether DCOI will realize its full potential savings.\nAlthough many agencies have struggled to meet their individual DCOI targets, other agencies have successfully met OMB’s goals for data center closures, savings, and optimization. Six such agencies that we identified reported on the importance of gathering leadership support, effective communication, and alignment with the core tenets of DCOI. Key practices such as these can play an important role in helping agencies better meet the overall goals and mission of DCOI.", "We are making a total of 36 recommendations to 22 of the 24 agencies in our review. Specifically: The Secretary of Agriculture should take action to meet the data center optimization metric targets established by OMB under DCOI. (Recommendation 1)\nThe Secretary of Commerce should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 2)\nThe Secretary of Defense should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 3)\nThe Secretary of Defense should identify additional savings opportunities to achieve the targets for data center-related cost savings established under DCOI by OMB. (Recommendation 4)\nThe Secretary of Defense should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 5)\nThe Secretary of Energy should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 6)\nThe Secretary of Energy should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 7)\nThe Secretary of the Department of Health and Human Services (HHS) should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 8)\nThe Secretary of HHS should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 9)\nThe Secretary of DHS should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 10)\nThe Secretary of DHS should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 11)\nThe Secretary of Interior should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 12)\nThe Secretary of Interior should take action to meet the data center- related cost savings established under DCOI by OMB. (Recommendation 13)\nThe Secretary of Interior should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 14)\nThe Attorney General should take action to meet the data center optimization metric targets established for Justice under DCOI by OMB. (Recommendation 15)\nThe Secretary of the Department of Labor (Labor) should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 16)\nThe Secretary of State should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 17)\nThe Secretary of State should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 18)\nThe Secretary of Transportation should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 19)\nThe Secretary of Transportation should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 20)\nThe Secretary of Treasury should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 21)\nThe Secretary of VA should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 22)\nThe Secretary of VA should take action to meet the data center-related cost savings established under DCOI by OMB. (Recommendation 23)\nThe Secretary of VA should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 24)\nThe Administrator of EPA should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 25)\nThe Administrator of EPA should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 26)\nThe Administrator of GSA should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 27)\nThe Administrator of the National Aeronautics and Space Administration (NASA) should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 28)\nThe Director of NSF should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 29)\nThe Chairman of NRC should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 30)\nThe Director of OPM should take action to meet the data center-related cost savings established under DCOI by OMB. (Recommendation 31)\nThe Director of OPM should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 32)\nThe Administrator of the Small Business Administration (SBA) should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 33)\nThe Commissioner of SSA should take action to meet the data center- related cost savings established under DCOI by OMB. (Recommendation 34)\nThe Commissioner of SSA should take action to meet the data center optimization metric targets established under DCOI by OMB. (Recommendation 35)\nThe Administrator of USAID should take action to meet the data center closure targets established under DCOI by OMB. (Recommendation 36)", "We requested comments on a draft of this report from OMB and the 24 agencies that we reviewed. Of the 22 agencies to which we made recommendations, 11 agencies agreed with our recommendations; three agencies agreed with some portion, but not all of the recommendations; one agency disagreed with our recommendations; and seven agencies did not state whether they agreed or disagreed with the recommendations. In addition, OMB and two agencies to which we did not make recommendations stated that they had no comments. Further, multiple agencies provided technical comments, which we have incorporated, as appropriate.\nThe following 11 agencies agreed with our recommendations: In written comments from Commerce, State, NASA, SBA, and SSA, the agencies stated that they agreed with the recommendations and indicated their intent to address them. State also provided technical comments, which we have incorporated, as appropriate. The agencies’ comments are reprinted in appendices II through VI.\nIn written comments, Energy agreed with our recommendations to meet its data center closure and optimization metric targets, and described actions that the department planned to take in order to address the recommendations. Energy initially estimated that it would complete these actions by March 1, 2019; however, the department subsequently revised its estimated completion date to April 15, 2019. Energy also provided technical comments, which we have incorporated, as appropriate. Energy’s comments are reprinted in appendix VII.\nIn written comments, VA agreed with our recommendations to meet its data center closure, cost savings, and optimization metric targets. In addition, the department requested that we close our recommendation related to data center closures on the basis of its planned actions to implement a new inventory data collection tool and methodology to improve how the department collects data center inventory information, and a positive trend in its data center closures.\nThe department estimated that its planned actions would be completed in March 2019 and reported that, as of November 2018, it had closed 78 data centers in fiscal year 2018, as compared with 24 in fiscal year 2017.\nHowever, as noted earlier in this report, we found that VA did not plan to meet the closure goal for either tiered or non-tiered data centers, which was the basis for our recommendation. While we acknowledge and encourage VA’s reported closure progress, the department still has not met its DCOI closure goals, as we recommended. Further, VA did not provide an update on the status of its planned actions in time for us to address them in this report. As such, we maintain that this recommendation is still appropriate.\nIn addition, VA referred to OMB’s proposed changes to DCOI guidance when describing actions that it planned to take to meet the department’s cost savings and optimization metrics targets. However, OMB staff told us that the August 2016 DCOI guidance will remain in effect until the revised DCOI guidance is formally issued. Once OMB’s new DCOI guidance is finalized, we plan to assess agency progress against any revised targets, and we will continue to monitor the department’s efforts to address our recommendation. VA’s comments are reprinted in appendix VIII.\nWe received emails from officials of Agriculture, Justice, Transportation, and OPM which stated that these agencies agreed with the recommendations we directed to them. In addition, three agencies agreed with some portion, but not all of our recommendations directed to them: In written comments, Defense stated that it agreed with our recommendation to meet its data center closure targets. However, the department partially agreed with our two other recommendations: to identify additional data center-related savings opportunities and to meet OMB’s data center optimization metric targets.\nIn partially agreeing with our recommendation on data center savings, Defense asserted that it had already identified significant cost savings through activities such as the identification of system migration candidates and the use of cloud services, among others. The department further stated that, while it would continue to optimize its data centers, the need for IT would continue to grow, and this growth might ultimately lead to an increase in total data center costs, despite overall per unit cost reductions.\nHowever, the department’s planned savings of $205.46 million represented only 11 percent of its $1.8 billion savings goal by the end of fiscal year 2018 and, as such, this limited progress by the department formed the basis for our recommendation. As discussed in our report, OMB plans to revise DCOI guidance and work with agencies to set agency-specific targets. According to OMB staff, until the guidance is revised, the current guidance and its targets are still applicable. For these reasons, we maintain that our recommendation is still appropriate.\nFurther, in partially agreeing with our recommendation to meet optimization metric targets, Defense stated that the department will continue to drive towards the achievement of data center optimization targets. It added, however, that it would not invest resources to improve the efficiency of data centers planned for closure and that, as a result, the composite view of Defense’s data center efficiency would fall short of meeting OMB’s targets.\nOur review found that Defense did not plan on meeting any of OMB’s five data center optimization metric targets by the end of fiscal year 2018. This finding was the basis for our recommendation. We acknowledge Defense’s position that investing resources into optimizing data centers that are already planned for closure would not be the best use of taxpayer dollars. We also noted in our report that OMB had proposed revising its optimization metrics, and that any such changes had not yet been finalized. Our recommendation is not intended to imply that an agency should meet a particular version of OMB targets but, rather, that the agency should meet any targets that are established by OMB. This would include any future changes to DCOI targets. Accordingly, we maintain that our recommendation is still appropriate and will continue to monitor the department’s efforts to address our recommendation. Defense’s comments are reprinted in appendix IX.\nIn written comments, DHS stated that it agreed with our recommendation to meet its data center closure targets and disagreed with our recommendation to meet its data center optimization metric targets. Specifically, the department noted that it had met its tiered data center closure targets, and was reviewing the status of its remaining open non-tiered data centers. The department added that it expected to complete this activity by March 31, 2019. However, the department did not provide an update on its efforts in time to be included in this report.\nWhile we encourage DHS’s continued efforts to close its remaining non-tiered data centers, we note that the department’s letter cites an inventory of 18 open non-tiered facilities, which differs significantly from the 202 non-tiered centers counted in our draft report, and which DHS officials confirmed in November 2018. According to the department, this discrepancy is because OMB issued revised inventory reporting requirements in November 2018, and these revised requirements exempted certain types of facilities from DCOI reporting and resulted in the lower number.\nThese changes in reporting requirements are similar to the proposed, but not yet finalized, revisions to the DCOI policy that are discussed earlier in this report. However, OMB staff told us that the August 2016 DCOI guidance will remain in effect until the revised DCOI guidance is formally issued. Once OMB’s new DCOI guidance is finalized, we plan to assess agency progress against any revised targets, and we will continue to monitor the department’s efforts to address our recommendation.\nFurther, in disagreeing with our recommendation on meeting optimization metrics, the department stated that, while the recommendation was applicable under the original DCOI guidance that OMB issued in August 2016, OMB’s proposed changes to DCOI guidance would exempt most, if not all, DHS agency-owned data centers from the optimization metrics. Consequently, the department requested that our recommendation be closed.\nIn our review, we found that the department did not plan on meeting any of OMB’s five data center optimization metric targets established under DCOI. This finding was the basis for our recommendation on meeting optimization metrics. Also, while OMB has proposed changes to its metrics, as we noted previously, it has not provided a date for when any such proposed changes will be finalized and implemented; and, according to OMB staff, until the changes to DCOI guidance are finalized, the current guidance is still applicable. Further, our recommendations do not specify that an agency should meet any particular version of OMB targets, but rather, that an agency should meet the targets established by OMB. This would include any future changes to DCOI targets. Accordingly, we maintain that our recommendation is still appropriate. DHS also provided technical comments, which we have incorporated, as appropriate. DHS’s comments are reprinted in appendix X.\nIn written comments, Interior stated that it partially agreed with our recommendation to meet its data center closure targets and disagreed with our two recommendations to meet its data center-related cost savings target and its data center optimization metric targets. For all three recommendations, the department stated that OMB had proposed changes to DCOI guidance that would result in new targets for closures, cost savings, and optimization metrics and that Interior planned to adopt the new policy and work through OMB to establish its new targets.\nAs noted in our report, Interior met its target for tiered data center closures, but did not plan to meet the closure goal for non-tiered data centers. Further, the department planned on achieving only $15.95 million of its $88.19 million savings target (18 percent) by the end of fiscal year 2018, and did not plan on meeting any of OMB’s five data center optimization metric targets. These three findings were the basis for our recommendations to the department.\nWe also noted that, as part of OMB’s proposed changes to DCOI guidance, it planned to work with agencies to set agency-specific targets for data center closures and planned to modify the metrics currently used by agencies to monitor the performance of their data centers. However, as previously mentioned, OMB has not provided a date for when these proposed changes will be finalized and implemented and, according to OMB staff, until the changes to DCOI guidance are finalized, the 2016 guidance is still applicable. Furthermore, our recommendations do not specify that an agency should meet any particular version of OMB targets, but should meet any targets that are established by OMB. This would include any future changes to DCOI targets. As such, we maintain that our recommendations are appropriate. Interior’s comments are reprinted in appendix XI.\nOne agency disagreed with all of our recommendations: In written comments, HHS disagreed with our two recommendations to meet its data center closure targets and data center optimization metric targets. In regard to both recommendations, the department disagreed with being held to what it termed “expired requirements” from DCOI guidance, pending the assignment of new targets being established by OMB.\nAs noted in our report, HHS met its target for tiered data center closures, but did not plan to meet the closure target for non-tiered data centers. We also found that HHS did not meet any of OMB’s five optimization metric targets and had planned to meet only one of the five by end of fiscal year 2018. These findings were the basis for the two recommendations that we made to the department.\nWe also noted that, as part of OMB’s proposed changes to DCOI guidance, OMB planned to work with agencies to set agency-specific targets for data center closures and planned to modify the metrics currently used by agencies to monitor the performance of their data centers. However, as previously mentioned, OMB did not provide a date for when these proposed changes will be finalized and implemented and, according to its staff, until the changes to DCOI guidance are finalized, the current guidance is still applicable. Further, our recommendations do not specify that an agency should meet any particular version of OMB targets, but rather, that the agency should meet the targets established by OMB. This would include any future changes to DCOI targets. Accordingly, we maintain that our recommendations are still appropriate. HHS’s comments are reprinted in appendix XII.\nFurther, seven agencies did not agree or disagree with the recommendations: In written comments, EPA did not state whether it agreed or disagreed with our recommendations to meet its data center closure and data center optimization metrics targets. However, the agency requested that we close our recommendations, citing its reported progress in closing 21 of 34 targeted data centers and OMB’s proposed changes in its draft DCOI guidance that could result in revised closure targets and optimization metrics.\nAs stated in our report, we found that EPA did not plan to meet its closure target for tiered or non-tiered data centers, nor did it plan to meet its data center optimization targets; these findings were the basis for our recommendations. We also noted that, as part of OMB’s proposed changes to DCOI, OMB planned to work with agencies to set agency-specific targets for data center closures and planned to modify the metrics currently used by agencies to monitor the performance of their data centers. However, OMB has not provided a date for when these proposed changes will be finalized and implemented and, according to OMB staff, until the changes to DCOI guidance are finalized, the current guidance is still applicable. Further, our recommendations do not specify that an agency should meet any particular version of OMB targets, but that it should meet the targets established by OMB. This would include any future changes to DCOI targets. Accordingly, we maintain that our recommendations are appropriate and should remain open. EPA also provided technical comments, which we have incorporated, as appropriate. The agency’s comments are reprinted in appendix XIII.\nIn written comments, GSA did not state whether it agreed or disagreed with our recommendation to meet the agency’s data center optimization metrics targets. Specifically, the agency stated that it had complied with revised inventory reporting requirements, which OMB provided to agencies in November 2018 and which eliminated non- tiered data centers from the requirement to meet optimization targets. As a result, the agency noted that it no longer had a basis to measure and report on the one metric our report cited as applicable to GSA (i.e., server utilization and automated monitoring) and asked that we withdraw the recommendation.\nThese changes in reporting requirements are similar to the proposed, but not yet finalized, revisions to the DCOI policy that are discussed earlier in the report. However, OMB staff told us that the August 2016 DCOI guidance is still in effect until the revised DCOI guidance is formally issued. Until OMB’s new DCOI guidance is finalized and agency progress against any revised targets can be evaluated, we maintain that our recommendation to meet the agency’s optimization metrics targets is appropriate, and we will continue to monitor the agency’s efforts to address it. GSA’s comments are reprinted in appendix XIV.\nIn written comments, NSF did not state whether it agreed or disagreed with our recommendation. The agency’s comments are reprinted in appendix XV.\nIn written comments, NRC agreed with the draft report, but did not state whether it agreed or disagreed with our recommendation. The agency’s comments are reprinted in appendix XVI.\nIn written comments USAID did not state whether it agreed or disagreed with the draft report’s recommendation but agreed with our finding that the agency no longer had any tiered data centers. However, USAID stated that it had met DCOI’s closure targets for the agency by closing its 4 non-tiered data centers, and requested that we close our recommendation to meet those targets.\nWhile we encourage USAID’s continued efforts to close its remaining non-tiered data centers, we note that the agency’s letter cites an inventory of 4 non-tiered facilities, which differs significantly from the 83 non-tiered centers counted in our draft report, and which USAID officials confirmed in October 2018. As USAID communicated in subsequent emails, this discrepancy is because OMB issued revised inventory reporting requirements in November 2018 and these revised requirements exempted certain types of facilities from DCOI reporting, which resulted in the lower number.\nThese changes in reporting requirements are similar to the proposed, but not yet finalized, revisions to the DCOI policy that are discussed earlier in the report. However, OMB staff told us that the August 2016 DCOI guidance is still in effect until the revised DCOI guidance is formally issued. Until OMB’s new DCOI guidance is finalized and agency progress against any revised targets can be evaluated, we maintain that our data center closure recommendation is appropriate, and we will continue to monitor the agency’s efforts to address it. The agency’s comments are reprinted in appendix XVII.\nIn emails received from Labor’s GAO liaison in the department’s Office of the Assistant Secretary for Policy on January 8, 2019, and from an audit liaison in Treasury’s Office of the CIO on February 1, 2019, both departments did not state whether they agreed or disagreed with our respective recommendations.\nFinally, in emails received from a Management and Program Analyst in Education’s Office of the Secretary/Executive Secretariat on January 8, 2019; an audit liaison in HUD’s Office of the CIO, Audit Compliance Branch on February 15, 2019; and a GAO liaison in OMB’s Office of General Counsel on February 25, 2019, these agencies stated that they had no comments on the draft report.\nWe are sending copies of this report to interested congressional committees, the Director of OMB, the secretaries and 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 about this report, please contact me at (202) 512-4456 or harriscc@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 XVIII.", "Our objectives for this engagement were to (1) determine agencies’ progress in data center closures and achievement in related savings to date and describe plans for future savings, (2) evaluate the agencies’ progress against OMB’s data center optimization targets, and (3) identify effective agency practices for achieving data center closures, cost savings, and optimization.\nTo address the first objective, for data center closures, we obtained and analyzed August 2018 data center inventory documentation from the 24 departments and agencies (agencies) that participate in OMB’s Data Center Optimization Initiative (DCOI). To determine data center closures to date, we totaled their reported closures from fiscal year 2010 through August 2018 and to identify future closures, we totaled their reported planned closures through fiscal year 2018. We also compared agencies’ completed and planned closures to OMB’s fiscal year 2018 consolidation goals, as documented in its August 2016 memorandum (M-16-19).\nTo verify the quality, completeness, and reliability of each agency’s data center inventory, we compared information on completed and planned data center closures to similar information reported on OMB’s IT Dashboard—a public website that provides information on federal agencies’ major IT investments. We also checked for missing data and other errors, such as missing closure status information. In some cases identified, we followed-up with agency officials to obtain further information. We determined that the data were sufficiently complete and reliable to report on agencies’ consolidation progress and planned closures.\nFor cost savings and avoidance we obtained and analyzed documentation from the 24 DCOI agencies. This documentation is required by OMB’s March 2013 and August 2016 memorandums and included the agencies’ quarterly reports of cost savings and avoidances posted to their digital services websites and their DCOI strategic plans. To determine cost savings achieved, we totaled agencies’ reported savings and avoidances from the start of fiscal years 2012 through August 2018, as found in the August 2018 quarterly reports posted to the agencies’ digital services websites. To identify future planned savings, we totaled the agencies’ projected savings and avoidances from fiscal years 2016 through 2018, as reported in their DCOI strategic plans.\nTo assess the quality, completeness, and reliability of each agency’s data center consolidation cost savings information, we used the latest version of each agency’s quarterly cost savings report and DCOI strategic plan, as of August 2018. We also reviewed the quarterly reports and DCOI strategic plans for missing data and other errors, such as missing cost- savings information. In addition, we compared agencies cost savings and avoidances with data from our most recent data center consolidation report. As a result, we determined that the data were sufficiently complete and reliable to report on agencies data center consolidation cost-savings information.\nFor our second objective, we analyzed the August 2018 data center optimization progress information of the 24 DCOI agencies. This progress information was obtained from the IT Dashboard—an OMB public website that provides information on federal agencies’ major IT investments. To assess agencies’ planned optimization progress, we obtained the planned optimization performance from the 22 agencies’ DCOI strategic plans. We then compared the agencies’ current and planned optimization progress information to OMB’s fiscal year 2018 optimization targets, as documented in its August 2016 memorandum. Although OMB’s memorandum establishes a single optimization target value for the server utilization and automated monitoring metric, the IT Dashboard displays agencies’ progress for tiered and non-tiered data centers separately. To report consistently with OMB’s implementation memorandum, we combined the progress information for tiered and non-tiered data centers into a single assessment in this report.\nIn addition, to assess the reliability of the planned optimization milestones in the DCOI strategic plans, we reviewed agencies’ documentation to identify any missing or erroneous data. We also compared the planned data center optimization milestones contained in agencies’ documentation against current optimization progress information obtained from the IT Dashboard; we then discussed any discrepancies or potential errors that we identified with agency officials to determine the causes or request additional information. As a result of these efforts, we were able to determine whether each agency’s strategic plan information was sufficiently reliable for reporting on plans to meet or not meet OMB’s fiscal year 2018 optimization targets.\nTo assess the reliability of agencies’ optimization progress information on OMB’s IT Dashboard, we reviewed the information for errors or missing data, such as progress information that was not available for certain metrics. We also compared agencies’ optimization progress information across multiple reporting quarters to identify any inconsistencies in agencies’ reported progress. We discussed with staff from OMB’s Office of the Federal Chief Information Officer any discrepancies or potential errors identified to determine the causes.\nTo identify effective agency practices for achieving data center closures, cost savings, and optimization progress, we selected two of the highest performing departments or agencies for each of those three data center areas that we reported on in our May 2018 report. For the data center inventory closures area, we selected the Departments of Agriculture (Agriculture) and Justice (Justice) from among the five agencies that had, as of August 2017, reached or exceeded both their tiered and non-tiered data center closure targets for the end of fiscal year 2018. For the cost savings area, we identified two departments and two small agencies reporting the highest cost savings DCOI to date, as of August 2017. From those, we selected one department (Commerce) and one small agency (the General Services Administration) to provide balance relative to agency size. For effective practices related to optimization performance, we reviewed agencies’ reported optimization performance as of August 2017 and selected the two highest-performing agencies in this area (the Social Security Administration and the Environmental Protection Agency), since they were the only two agencies reporting that they met more than half of OMB’s optimization targets. Selecting these agencies was designed to provide anecdotal information that could assist agencies struggling with DCOI implementation. The examples they provided are not findings nor should they be taken to be representative of all the agencies participating in DCOI.\nWe asked each selected agency to identify practices that they found effective in implementing DCOI at their agency and in meeting OMB’s established targets in each of the areas, not just the area for which they were selected. We also solicited examples that demonstrated how those practices helped agency implementation or the benefits from implementing DCOI. Additionally, we considered information and examples that these agencies provided as part of our work to identify FITARA best practices. We analyzed the responses to determine the practices and reported those that were identified by at least two agencies.\nWe conducted this performance audit from April 2018 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.", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "In addition to the contact named above, individuals making contributions to this report included Dave Powner (director), Dave Hinchman (assistant director), Justin Booth (analyst-in-charge), Alexander Bennett, Chris Businsky, Nancy Glover, and Jonathan Wall." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 1, 2, 2, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h1_title h3_title", "", "h3_full", "", "", "h0_full h1_full", "h0_title", "h0_full", "h0_full", "h1_full", "h1_full", "h3_full h2_full", "", "", "", "", "", "h2_full", "h1_full", "", "", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What did the 24 agencies participating in DCOI report?", "What specifically did each of the agencies report?", "What is the problem with 16 of the agencies' cost savings target?", "Why is there a shortfall from the DCOI savings goal?", "What did the 24 agencies report?", "What specifically did the agencies report regarding their targets?", "Why did two agencies not have a basis to report progress on?", "What did the agencies report regarding the OMB's optimization goals?", "What did successful agencies report?", "What was important to these agencies' successes?", "Why was past experience important for success?", "What did 2014 legislation allow GAO to do?", "What were GAO's objectives in 2014 legislature?", "How did GAO complete these objectives?", "What did GAO solicit?" ], "summary": [ "The 24 agencies participating in the Office of Management and Budget's (OMB) Data Center Optimization Initiative (DCOI) reported mixed progress toward achieving OMB's goals for closing data centers and realizing the associated savings by September 2018.", "As of August 2018, 13 agencies reported that they had met, or had plans to meet, all of their OMB-assigned closure goals by the deadline. However, 11 agencies reported that they did not have plans to meet their goals. Further, 16 agencies reported that, as of August 2018, they had met, or planned to meet, their cost savings targets, for a total of $2.36 billion in cost savings for fiscal years 2016 through 2018. Three agencies did not have a cost savings target and did not report any achieved savings.", "Further, 16 agencies reported that, as of August 2018, they had met, or planned to meet, their cost savings targets, for a total of $2.36 billion in cost savings for fiscal years 2016 through 2018. This is about $0.38 billion less than OMB's DCOI savings goal of $2.7 billion.", "This shortfall is the result of 5 agencies reporting less in planned cost savings and avoidances in their DCOI strategic plans, as compared to their savings targets established for them by OMB.", "In addition, the 24 agencies reported limited progress against OMB's five data center optimization targets for server utilization and automated monitoring, energy metering, power usage effectiveness, facility utilization, and virtualization.", "As of August 2018, the agencies reported that 3 had met three targets, 9 had met one target, and 10 met none of the targets. Two agencies did not have a basis to report on progress as they do not own any data centers.", "Two agencies did not have a basis to report on progress as they do not own any data centers.", "Further, as of August 2018, 20 agencies did not plan to meet all of OMB's fiscal year 2018 optimization goals. Specifically, only 2 agencies reported plans to meet all applicable targets; 6 reported that they did not plan to meet any of the targets (see figure).", "We selected 6 agencies that had demonstrated success towards meeting their DCOI goals and those agencies reported a number of key practices that contributed to their efforts.", "The officials noted the importance of, among other things, obtaining executive leadership support for consolidation and optimization activities, employing an organization-wide communications plan, and focusing on data center closures. The officials also cited the use of past experience and lessons learned to inform improvements to future consolidation plans and processes.", "The officials also cited the use of past experience and lessons learned to inform improvements to future consolidation plans and processes.", "The 2014 legislation included a provision for GAO to annually review agencies' data center inventories and strategies.", "Accordingly, GAO's objectives were to (1) evaluate agencies' progress and plans for data center closures and cost savings; (2) assess agencies' progress against OMB's data center optimization targets; (3) and identify effective agency practices for achieving data center closures, cost savings, and optimization progress.", "To do so, GAO assessed the 24 DCOI agencies' data center inventories as of August 2018; reviewed their reported cost savings documentation; evaluated their data center optimization strategic plans; and assessed their progress against OMB's established optimization targets.", "GAO also solicited practices that selected agencies reported to be effective in meeting DCOI goals." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, 1, 0, -1, 0, 1, -1, 0, 1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 1, 1, 1, 1 ] }

{ "title": [ "Background", "States Reported $32 Billion in Supplemental Medicaid Payments during Fiscal Year 2010, but the Exact Amount of Supplemental Payments Is Unknown", "States Reported $17.6 Billion in DSH Payments during Fiscal Year 2010", "States Reported $14.4 Billion in Non-DSH Supplemental Payments during Fiscal Year 2010, but the Exact Amount of These Payments Is Not Known", "Reported Non-DSH Supplemental Payments Were over $8 Billion Higher during 2010 Than during 2006, and New and Modified Supplemental Payments Were a Factor in the Increase", "States Reported $8.1 Billion More in Non-DSH Supplemental Payments during 2010 Than during 2006", "New and Modified Supplemental Payments Contributed to Increases in Reported Payments", "Changes in State Reporting Also Contributed to Differences in Reported Supplemental Payments", "Concluding Observations", "Agency Comments", "Appendix I: Scope and Methodology", "Reported Expenditures", "Information from Selected States", "Appendix II: Supplemental Medicaid Payments Reported during 2010", "Appendix III: Non-DSH Supplemental Medicaid Payments Reported during 2006 and 2010", "Appendix IV: Comments from the Department of Health and Human Services", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "Title XIX of the Social Security Act established Medicaid as a federal-state partnership that finances health care for low-income individuals, including children, families, the aged, and the disabled. Medicaid is an open-ended entitlement program and provided health coverage for an estimated 53.9 million individuals in 2010.federal requirements, each state administers and operates its Medicaid Within broad program in accordance with a state Medicaid plan, which must be approved by CMS. A state Medicaid plan details the populations that are served, the categories of services that are covered (such as inpatient hospital services, nursing facility services, and physician services), and the methods for calculating payments to providers. The state Medicaid plan also describes the supplemental payments established by the state and specifies which providers are eligible to receive supplemental payments and what categories of service are covered. Any changes a state wishes to make in its Medicaid plan, such as establishing new payments or changing methods for developing provider payment rates, must be submitted to CMS for review and approval as a state plan amendment. States may also receive approval from CMS for a waiver from certain Medicaid requirements in order to conduct a Medicaid demonstration, and these demonstrations may include supplemental payments. These demonstrations allow states to test new approaches to deliver or pay for health services through Medicaid. Under certain demonstrations, a state may cover populations or services that would not otherwise be eligible for federal Medicaid funding under federal rules. Some states, including California and Massachusetts, have also in recent years been allowed to make supplemental payments under Medicaid demonstrations. The terms and conditions governing such demonstrations are specific to each demonstration.\nAll states make supplemental Medicaid payments to certain providers. DSH payments are made to hospitals and cannot exceed the unreimbursed cost of furnishing inpatient and outpatient services to Medicaid beneficiaries and the uninsured. Non-DSH supplemental payments can be made to hospitals or other providers (such as nursing homes or groups of physicians) for any category of service provided on a fee-for-service basis. For example, a state might make non-DSH supplemental payments on a quarterly basis to county-owned nursing facilities that serve low-income populations to fill the gap between what regular Medicaid rates pay toward the cost of services and higher payments permitted through the UPL. Supplemental payments are typically made for services provided on a fee-for-service basis, rather than those provided through Medicaid managed care contracts.\nNon-DSH supplemental payments need to be approved by CMS.\nTo obtain the federal matching funds for Medicaid payments made to providers, each state files a quarterly expenditure report to CMS—the CMS-64. This form compiles state payments in over 20 categories of medical services, such as inpatient hospital services and outpatient hospital services. States are required to report total DSH payments made to hospitals and mental health facilities separately from other Medicaid payments in order to receive reimbursement for them. From 2001 through 2009, when completing the CMS-64 to obtain federal matching funds for non-DSH supplemental payments, states combined their non-DSH supplemental payments with their regular payments—those made using states’ regular Medicaid payment rates. During this period, CMS requested that states report their non-DSH supplemental payments in a separate informational section of the CMS-64 that was not the basis for states receipt of federal matching funds. Instead, states received federal matching funds based on their reports of expenditure totals that included both regular and non-DSH supplemental payments. In 2008, we found that states reported making $6.3 billion in non-DSH supplemental payments during fiscal year 2006, but that not all states reported their non-DSH supplemental payments separately from other expenditures of Starting with the first quarter of fiscal year 2010, CMS’s the same type.new reporting procedures requested that states report certain non-DSH supplemental payments separately from their regular payments on the section of the CMS-64 used to claim federal matching funds.CMS continues to provide federal matching funds to states that report these payments in combination with regular payments on this form.", "The data CMS finalized for fiscal year 2010 show that states and the federal government spent at least $32 billion for DSH and non-DSH supplemental payments during fiscal year 2010, with the federal share of these payments totaling at least $19.8 billion. States reported $17.6 billion in DSH payments and $14.4 billion in non-DSH supplemental payments during fiscal year 2010, but state reporting of non-DSH supplemental payments separately from regular payments was incomplete, so the exact amount of non-DSH supplemental payments is unknown.", "States reported $17.6 billion in DSH payments during fiscal year 2010, with the federal government reimbursing states $9.9 billion for its share of these payments. Fifty of the 51 states reported making DSH payments during fiscal year 2010, with total reported payments ranging from about $650,000 for South Dakota to over $3.1 billion for New York.10 states reporting the largest total DSH payments in fiscal year 2010 The accounted for more than 70 percent of the $17.6 billion nationwide total, and the 4 states with the largest total DSH payments—New York, California, Texas, and New Jersey—accounted for almost half (47 percent) of the nationwide total.\nIn assessing the contribution of DSH payments to each state’s overall spending, we found that DSH payments as a percentage of states’ reported Medicaid payments varied considerably among the states. Among states that reported DSH payments, the percentage ranged from less than 1 percent (Arizona, Delaware, North Dakota, South Dakota, Wisconsin, and Wyoming) to 17 percent (New Hampshire). Figure 1 provides information on the amount of each state’s DSH payments and each state’s DSH payments as a percentage of its total Medicaid expenditures. (App. II lists each state’s reported DSH payments during fiscal year 2010, the federal share of those payments, the state’s total Medicaid payments, and each state’s total reported DSH payment as a percentage of the state’s total Medicaid payments and of total nationwide DSH payments.)\nThe majority of DSH payments were to hospitals for traditional inpatient and outpatient services. During fiscal year 2010, 83 percent of the nationwide total of reported DSH payments ($14.7 billion) was paid to hospitals for traditional inpatient and outpatient services and 17 percent of the total ($2.9 billion) was paid to mental health facilities for inpatient and outpatient mental health services.", "During fiscal year 2010, states separately reported making $14.4 billion in non-DSH supplemental payments (of which the federal share was $9.9 billion), primarily for inpatient hospital services.states were to report non-DSH supplemental payments on the CMS-64 separately from their regular payments for six categories of service. Thirty states separately reported non-DSH payments during fiscal year 2010, with reported payments ranging from $125,000 for Vermont to $3.1 billion for Texas.\nIn assessing the contribution of non-DSH supplemental payments to each state’s overall spending, we found that non-DSH supplemental payments as a percentage of states’ Medicaid spending also varied considerably across the 30 states that separately reported these payments, ranging from 1 percent for Vermont to over 17 percent for Illinois. Figure 2 provides information on the amount of each state’s non-DSH supplemental payments and each state’s non-DSH supplemental payments as a percentage of its total Medicaid expenditures. (App. II lists each state’s reported non-DSH supplemental payments during fiscal year 2010, the federal share of those payments, the state’s total Medicaid payments, and each state’s total reported non-DSH supplemental payments as a percentage of the state’s total Medicaid payments and of total nationwide non-DSH supplemental payments.)\nOf the six categories of service for which states reported making non-DSH supplemental payments, states reported the largest amount of payments for inpatient hospital services. States reported $11 billion in non-DSH supplemental payments for inpatient services (with a federal share of $7.7 billion). States reported $1.8 billion in non-DSH supplemental payments for outpatient services (with a federal share of $1.15 billion). (See fig. 3.)\nThe proportion of a state’s reported expenditures that were non-DSH supplemental payments varied across states and categories of service. In some states, non-DSH supplemental payments represented very little of the state’s reported expenditures for a category of service, while in other states, non-DSH supplemental payments represented more than one-third of the state’s reported expenditures for a category of service. For example,\n27 states separately reported non-DSH supplemental payments for inpatient hospital services, and the percentage of their expenditures for inpatient hospital services that were non-DSH supplemental payments ranged from less than 1 percent (Virginia and Washington) to 48 percent (Tennessee);\n13 states separately reported non-DSH supplemental payments for outpatient hospital services, and the percentage of their expenditures for outpatient hospital services that were non-DSH supplemental payments ranged from less than 1 percent (Texas) to 57 percent (Illinois); and\n16 states separately reported non-DSH supplemental payments for physician and surgical services, and the percentage of their expenditures for physician and surgical hospital services that were non-DSH supplemental payments ranged from less than 1 percent (Oklahoma) to 34 percent (West Virginia).\nSee appendix II for more information about each state’s reported total and non-DSH supplemental payments for inpatient hospital services, outpatient hospital services, nursing facility services, physician and surgical services, other practitioners’ services, and intermediate care facility services.\nThe exact amount of non-DSH supplemental payments nationwide is unknown, in part because not all states that made non-DSH supplemental payments in 2010 reported them on the CMS-64 separately from regular payments, and some states separately reported some but not all of their non-DSH supplemental payments. For example, Georgia reported $0 for non-DSH supplemental payments during fiscal year 2010, but according to CMS, it made non-DSH supplemental payments of $120.6 million for nursing home services during 2010.\nCMS officials told us that they are aware that some states did not separately report all of their non-DSH supplemental payments. Officials stated that they have taken, and are taking, steps to improve states’ reporting of non-DSH supplemental payments for the six categories of service. They told us that after revising the form CMS-64 to include lines for separate reporting of certain non-DSH supplemental payments, they monitored states’ reports of these payments and, as a result, they learned that some states had not reported these payments separately. They then took steps to improve states’ reporting of these payments, for example, by training state staff in the use of the revised form CMS-64 and asking regional CMS staff to work with states to identify and resolve reporting problems. CMS officials also noted, however, that some states encountered technical difficulties with their state databases. For example, CMS officials told us that the data systems used by some states in 2010 did not permit them to separate the non-DSH supplemental payments from their regular payments. CMS officials confirmed that states did not separately report all non-DSH supplemental payments in 2010 and acknowledged that CMS cannot definitively determine the extent to which reporting is incomplete.", "The 39 states that separately reported non-DSH supplemental payments during either 2006 or 2010 (or both) reported an increase of $8.1 billion in non-DSH supplemental payments during this period. Most of this increase was from 15 states that reported during both years, and most of the reported increase was for inpatient hospital services. However, because of the potential for underreporting of supplemental payments for one or both years, the extent of the actual increase and the contributing factors cannot be quantified. Our examination of information from CMS and from public sources about changes in 11 judgmentally selected states indicates that some states were making new and modified non-DSH supplemental payments during this period, contributing to the reported increase. Changes in reporting also contributed to the increase.", "The 39 states that separately reported non-DSH supplemental payments during either 2006 or 2010, or during both years, together reported $8.1 billion more in non-DSH supplemental payments during 2010 than 2006. Nineteen states separately reported some non-DSH supplemental payments during both years, with 15 of those states reporting more for these payments during 2010 and 4 of those states reporting less for these payments during 2010. Eleven states reported non-DSH supplemental payments separately only during 2010, and 9 states reported non-DSH supplemental payments separately only during 2006. (See fig. 4 and table 1.) Most of the $8.1 billion increase was from the 15 states that separately reported non-DSH supplemental payments during both years, with higher non-DSH supplemental payments reported during 2010. The increase in these states ranged from $1 million (Washington) to $2.3 billion (Texas). For the 4 states that separately reported lower non-DSH supplemental payments during 2010, the decrease ranged from $12 million (Oklahoma) to $608 million (North Carolina).\nThe largest change in non-DSH supplemental payments separately reported during 2006 and 2010 was for inpatient hospital services. The net increase in these separately reported payments was $6.3 billion, and the number of states that separately reported non-DSH supplemental payments for inpatient hospital services increased from 23 during 2006 to 27 during 2010. (App. III lists the amounts each state reported separately for non-DSH supplemental payments during 2006 and 2010 and the categories of service for which they reported these payments.)\nBecause of the potential underreporting of non-DSH supplemental payments during one or both of the years examined, the extent of the actual increase cannot be quantified. On the basis of some reports, Medicaid spending on hospital services is increasing, and growth in non-DSH supplemental payments has been cited as a contributing factor. A January 2012 article on the growth in U.S. health spending found that while overall Medicaid spending growth slowed in 2010, Medicaid spending growth on hospital services increased in 2010 compared to 2009. The researchers attributed the growth in Medicaid spending for hospital services, in part, to a large amount of non-DSH supplemental payments reported during the last quarter of calendar year 2010. A March 2012 report by the Medicaid and CHIP Payment and Access Commission found that states reported over $23 billion in non-DSH supplemental payments for hospital services during 2011.", "Information from CMS and from public sources about changes in 11 judgmentally selected states suggests that some increases from 2006 to 2010 in reported non-DSH supplemental payments were due to increases in payments states made after establishing new non-DSH supplemental payments or increasing their existing non-DSH supplemental payments. The available information suggests that changes to existing payments also resulted in some decreases from 2006 to 2010 in reported non-DSH supplemental payments, including, for example, when states terminated non-DSH supplemental payments.\nIn recent years, states have submitted and received approval to implement new non-DSH supplemental payments, according to CMS officials. Available information, maintained by CMS and derived from state Medicaid plans from 11 selected states, indicates that new or modified supplemental payments made by states contributed to increased non-DSH supplemental payments. For example: Illinois reported $1.4 billion more for non-DSH supplemental payments for inpatient hospital services during 2010 than during 2006. From 2006 through 2010, Illinois established new non-DSH supplemental payments for inpatient hospital services and also modified several existing payments for these services. Taken together, these new and modified payments were estimated to result in an increase in Illinois’s supplemental payments for inpatient services by about $1.2 billion during fiscal year 2010.\nColorado reported $411 million more for non-DSH supplemental payments for inpatient and outpatient hospital services during 2010 than during 2006. Colorado established a set of new non-DSH supplemental payments for inpatient and outpatient hospital services. These supplemental payments were to a variety of hospital types, including rural hospitals, hospitals with neonatal intensive care units, and state teaching hospitals. Effective on July 1, 2009, these new payments were estimated to result in an increase in payments of about $300 million during fiscal year 2010.\nArkansas reported $173 million more for non-DSH supplemental payments for inpatient hospital services during 2010 than during 2006. Arkansas made new non-DSH supplemental payments for inpatient hospital services provided by private hospitals, and it also modified existing non-DSH supplemental payments for inpatient hospital services. Arkansas’s new supplemental payments, effective July 1, 2009, were estimated to increase the state’s supplemental payments for inpatient services by about $110 million during fiscal year 2010.\nSouth Carolina reported $39 million for non-DSH supplemental payments for nursing facility services during 2010, but did not report making such payments during 2006. South Carolina had suspended certain non-DSH supplemental payments for nursing facility services prior to fiscal year 2006, but it reinstated these payments, effective on October 1, 2008, with a slight change to payment qualification criteria. Reinstating these payments was estimated to increase payments by about $25 million during fiscal year 2010.\nAccording to the available information about changes in these 11 judgmentally selected states, some states’ non-DSH supplemental payments decreased from 2006 to 2010 because they terminated supplemental payments or made changes to their Medicaid programs that reduced supplemental payments. For example:\nNorth Carolina reported $607 million less in non-DSH supplemental payments for inpatient and outpatient hospital services in 2010 than in 2006. According to CMS, North Carolina discontinued making non-DSH supplemental payments to non-state government hospitals, effective on October 1, 2006. Discontinuation of these payments for inpatient and outpatient hospitals would have resulted in a reduction in payments.\nGeorgia reported $221 million less in non-DSH supplemental payments for inpatient and outpatient hospital services in 2010 than in 2006. Georgia implemented a managed care program in 2007, and according to CMS, the state estimated that its supplemental payments (which generally can only be made for services provided on a fee-for-service basis) were reduced by more than $100 million per year as a result.\nMissouri reported paying $70 million in non-DSH supplemental payments for inpatient hospital services during 2006 and did not report making such payments during fiscal year 2010. According to CMS, the state reported that it did not make non-DSH supplemental payments for inpatient services during fiscal year 2010 because the State General Assembly did not approve funding for such payments.", "Changes in state reporting of non-DSH supplemental payments also contributed to differences in amounts between 2006 and 2010. In some cases, an apparent increase in non-DSH supplemental payments was due, at least in part, to more complete reporting of non-DSH supplemental payments in 2010 than in 2006. For example:\nPennsylvania reported $0 for non-DSH supplemental payments during 2006 and $410 million for non-DSH supplemental payments for nursing facility services during 2010, for an apparent increase of $410 million in supplemental payments. However, Pennsylvania made, but did not separately report, non-DSH supplemental payments for nursing home services during 2006.\nSouth Carolina reported $0 for non-DSH supplemental payments for physician and surgical services during 2006 and $46 million for non-DSH supplemental payments for these services during 2010, for an apparent increase of $46 million in supplemental payments. However, CMS told us that South Carolina paid $43 million for non-DSH supplemental payments for physician and surgical services during 2006, so the actual increase in payments for these services from 2006 to 2010 was $3 million, not $46 million.\nIn contrast, an apparent decrease in some states’ non-DSH supplemental payments was due, at least in part, to not reporting these payments separately during 2010. For example, as noted above, Georgia made, but did not separately report, non-DSH supplemental payments during 2010. States that did not separately report payments during 2010, but did separately report them in 2006, created the appearance of decreases in non-DSH supplemental payments.", "Medicaid supplemental payments can help ensure that providers make important services available to Medicaid beneficiaries. However, the transparency and accountability of these often very large payments have been lacking. Although CMS has instituted new reporting procedures for, and more complete reporting of, non-DSH supplemental payments, the exact amount of these payments is still not known because not all states have provided complete information as CMS requested during 2010. Nevertheless, as reporting of non-DSH supplemental payments becomes more complete, the significance of these payments, in terms of cost, growth, and contribution to total Medicaid payments for those providers receiving them, is becoming clearer. Identifying and monitoring Medicaid supplemental payments and ensuring that they, along with regular Medicaid payments, are consistent with federal requirements are complex tasks that will require continued vigilance by CMS. Ongoing federal efforts to improve the completeness of reporting of Medicaid supplemental payments are important for effective oversight and to better understand these payments’ role in financing Medicaid services.", "We provided a draft of this report to HHS for review. HHS stated that HHS and CMS will continue their ongoing efforts to improve states’ reporting of Medicaid supplemental payments. HHS’s letter is reprinted in appendix IV.\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 the Centers for Medicare & Medicaid Services, 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, 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 this report. Major contributors to this report are listed in appendix V.", "This appendix provides information about our analyses of reported supplemental Medicaid expenditures and our analyses of information from selected states. Supplemental Medicaid payments include Disproportionate Share Hospital (DSH) payments to hospitals and other supplemental payments to hospitals or other providers, which we refer to as non-DSH supplemental payments. To determine what supplemental Medicaid payments states reported during fiscal year 2010 and how non-DSH supplemental payments reported during 2010 compared with those reported during 2006, we obtained and analyzed data about the Medicaid expenditures states reported during these 2 years. To examine reasons for differences between 2006 and 2010 in reported non-DSH supplemental payments, and to obtain additional information about states’ reports of these payments, we obtained information from the Centers for Medicare & Medicaid Services (CMS) and public sources about non-DSH supplemental payments in a nongeneralizable, judgmental sample of 11 states. In addition, we reviewed relevant federal laws, regulations, and guidance; our prior work on supplemental Medicaid payments; and other relevant documentation. We also interviewed officials from CMS.", "To determine what Medicaid payments states reported, we examined data from the standardized expenditure reports states submit to CMS on a quarterly basis using form CMS-64. States have 30 days after the end of a quarter to submit this form and must certify that the data are correct to the best of their knowledge. CMS reviews these reports and works with states to resolve any questions before certifying them as final. CMS transfers the certified, finalized data into a Financial Management Report (FMR) and makes annual data available on its website. CMS allows states to make adjustments to their prior CMS-64 submissions for up to 2 years. The annual FMR incorporates adjustments reported by the states by applying reported adjustments to the fiscal year during which they are reported, even if an adjustment corrects expenditures reported during an earlier fiscal year.\nExpenditures reported during fiscal year 2010. We obtained fiscal year 2010 FMR data from CMS on December 22, 2011. These data reflected adjustments to expenditures reported by states on the quarterly reports filed during fiscal year 2010 and included states’ reported total Medicaid expenditures, DSH expenditures, and any non-DSH expenditures the states reported separately from their other expenditures. Fiscal year 2010 was the most recent year for which certified data were available from all 50 states and the District of Columbia. To assess the reliability of the fiscal year 2010 data, we reviewed the steps CMS took to ensure the accuracy of expenditure data and we examined the data for outliers or other unusual values, which we discussed with CMS officials. We determined that the data were sufficiently reliable to describe the expenditures reported by the states during fiscal year 2010, although as discussed in this report, we found that states’ separate reporting of non-DSH supplemental payments was incomplete.\nExpenditures reported during fiscal year 2006. We obtained data about expenditures reported during fiscal year 2006 as part of work we For that work, we obtained reported DSH payments reported in 2008. from CMS’s FMR for fiscal year 2006, which included adjustments reported by states for prior years. To obtain data about non-DSH supplemental payments, we extracted expenditure data that had been reported on a section of the CMS expenditure report—the form CMS-64.9I—that states were to use for informational purposes during 2006 to identify non-DSH supplemental payments made under Medicaid’s Upper Payment Limit regulations.adjustments states reported through their CMS-64.9I entries during fiscal year 2006 and through October 5, 2007. As described in our 2008 report, our assessment of the reliability of the fiscal year 2006 data included review of the steps CMS took to ensure the accuracy of expenditure data submitted to the Medicaid Budget and Expenditure System, comparison to data we obtained from a nongeneralizable sample of 5 states, and We adjusted these data to reflect comparison to similar data published by the Urban Institute. We determined that the data were sufficiently reliable to describe the expenditures identified by the states during fiscal year 2006, although as we discussed in our earlier report, we concluded that states’ separate reporting of non-DSH supplemental payments was incomplete.\nOur analyses of reported DSH and non-DSH payments included identification of state-by-state and nationwide expenditures for DSH and non-DSH supplemental payments in both absolute (dollar amount) and relative (percentage) terms. DSH payments can be made to hospitals for traditional inpatient and outpatient services and to mental health facilities for inpatient and outpatient mental health services; we examined reported payments to both types of hospitals. Non-DSH supplemental payments can be made for various categories of service (such as inpatient hospital services or physician and surgical services) provided by hospitals or other types of providers (such as nursing homes or intermediate care facilities); we examined payments for specific categories of services.\nSome states may not have separately reported all of their non-DSH supplemental payments during 2006 or 2010. We did not quantify the extent to which states did not separately report their supplemental payments. Therefore, we may not be capturing the full amount of states’ non-DSH supplemental payments or the degree to which these payments have changed over time. We did not examine whether changes in non-DSH supplemental payments were associated with changes in states’ regular Medicaid payments.", "To examine reasons for differences between 2006 and 2010 in reported non-DSH supplemental payments, and to obtain additional information about states’ reports of these payments, we obtained information from CMS and public sources about non-DSH supplemental payments in a judgmental sample of 11 states selected to include a mix of relevant characteristics. We selected a nongeneralizable sample of states, including some that separately reported non-DSH supplemental payments (1) in fiscal year 2006, but not 2010 (Georgia and Missouri); (2) in fiscal year 2010, but not 2006 (Maine, Massachusetts, and Pennsylvania); and (3) both (Arkansas, Colorado, Illinois, North Carolina, South Carolina, and Texas). These states differed in absolute and relative changes in reported non-DSH supplemental payments and changes in categories of service for which payments were reported. The information we used to select states included published information as well as preliminary information from CMS. (For more information about non-DSH supplemental payments made by these states in 2006 and 2010, see app. III.)\nFor each of our selected states, we asked CMS to provide us with documentation, such as state plan amendments, that could shed light on observed differences from 2006 to 2010 in reported non-DSH supplemental payments. We reviewed this information, along with information from other public sources (such as states’ websites) to identify possible reasons for changes in reported payments and to develop rough estimates of the financial impact of planned changes. The state plan amendments states submit when proposing new supplemental payments, or modifications to existing payments, include an estimate of the financial impact of the state plan amendment. This estimate is intended to reflect the impact of the state plan amendment as a whole, even if the amendment covers several changes. CMS officials told us that these estimates are the best available estimates of the financial impact of changes states make to their state plans.\nWe did not attempt to develop a full, dollar-by-dollar explanation of any state’s changes from 2006 to 2010 in reported amounts of non-DSH supplemental payments. We did not determine the accuracy of states’ estimates of the financial impact of their state plan amendments. Information from our judgmental sample of 11 states cannot be generalized to other states.", "This appendix provides state-by-state and nationwide information about the DSH and non-DSH supplemental Medicaid payments reported during fiscal year 2010 by the states and the District of Columbia.\nTable 2 shows states’ reported Medicaid payments, their DSH and non-DSH supplemental payments, the federal share of DSH and non-DSH supplemental payments, and the percentage of the state Medicaid payments that was for DSH and non-DSH supplemental payments.\nTable 3 shows states’ reported DSH payments, including payments for traditional and mental health hospitals (as dollar amounts and as a percentage of the state DSH payments), total DSH payments, and total DSH payments as a percentage of the national total for DSH payments.\nTable 4 shows states’ reported non-DSH supplemental payments, including the amounts states reported for certain categories of service (as dollar amounts and as a percentage of the state non-DSH supplemental payments), total non-DSH supplemental payments, and total non-DSH supplemental payments as a percentage of the national total for non-DSH supplemental payments. The six categories of service listed are those for which CMS requested information— inpatient hospital services, outpatient hospital services, nursing facility services, physician and surgical services, other practitioners’ services, and intermediate care facility services.\nTables 5 through 10 provide additional information about states’ reported Medicaid payments for the six categories of service for which CMS obtained information about non-DSH supplemental payments— inpatient hospital services, outpatient hospital services, nursing facility services, physician and surgical services, other practitioners’ services, and intermediate care facility services. For each of these six categories, the tables provide the states’ reported Medicaid payments, non-DSH supplemental payments, the federal share of the non-DSH payments, and the percentage of the state Medicaid payments for this category that was for non-DSH supplemental payments.", "This appendix provides state-by-state and nationwide information about non-DSH supplemental Medicaid payments reported during 2006 by the states and District of Columbia in comparison to similar payments reported during 2010.\nTable 11 shows the total amount of non-DSH supplemental payments states reported during 2006 and 2010 and the change from 2006 to 2010 in these amounts, both as a dollar amount and as a percentage of the 2006 total.\nTable 12 shows states’ reported non-DSH supplemental payments for specific categories of service during 2006 and 2010.", "", "", "", "In addition to the contact named above, Tim Bushfield, Assistant Director; Kristen Joan Anderson; Helen Desaulniers; Sandra George; Giselle Hicks; Roseanne Price; and Jessica C. Smith made key contributions to this report.", "Opportunities 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.\nMedicaid: Ongoing Federal Oversight of Payments to Offset Uncompensated Hospital Care Costs Is Warranted. GAO-10-69. Washington, D.C.: November 20, 2009.\nMedicaid: CMS Needs More Information on the Billions of Dollars Spent on Supplemental Payments. GAO-08-614. Washington, D.C.: May 30, 2008.\nMedicaid Financing: Long-standing Concerns about Inappropriate State Arrangements Support Need for Improved Federal Oversight. GAO-08-650T. Washington, D.C.: April 3, 2008.\nMedicaid Financing: Long-Standing Concerns about Inappropriate State Arrangements Support Need for Improved Federal Oversight. GAO-08-255T. Washington, D.C.: November 1, 2007.\nMedicaid Financing: Federal Oversight Initiative Is Consistent with Medicaid Payment Principles but Needs Greater Transparency. GAO-07-214. Washington, D.C.: March 30, 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 Financing: States’ Use of Contingency-Fee Consultants to Maximize Federal Reimbursements Highlights Need for Improved Federal Oversight. GAO-05-748. Washington, D.C.: June 28, 2005.\nMedicaid: States’ Efforts to Maximize Federal Reimbursements Highlight Need for Improved Federal Oversight. GAO-05-836T. Washington, D.C.: June 28, 2005.\nMedicaid: Intergovernmental Transfers Have Facilitated State Financing Schemes. GAO-04-574T. Washington, D.C.: March 18, 2004.\nMedicaid: Improved Federal Oversight of State Financing Schemes Is Needed. GAO-04-228. Washington, D.C.: February 13, 2004.\nMajor Management Challenges and Program Risks: Department of Health and Human Services. GAO-03-101. Washington, D.C.: January 2003.\nMedicaid: HCFA Reversed Its Position and Approved Additional State Financing Schemes. GAO-02-147. Washington, D.C.: October 30, 2001.\nMedicaid: State Financing Schemes Again Drive Up Federal Payments. GAO/T-HEHS-00-193. Washington, D.C.: September 6, 2000.\nMedicaid: Disproportionate Share Payments to State Psychiatric Hospitals. GAO/HEHS-98-52. Washington, D.C.: January 23, 1998.\nMedicaid: Disproportionate Share Hospital Payments to Institutions for Mental Diseases. GAO/HEHS-97-181R. Washington, D.C.: July 15, 1997.\nMedicaid: States Use Illusory Approaches to Shift Program Costs to Federal Government. GAO/HEHS-94-133. Washington, D.C.: August 1, 1994." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 2, 2, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h1_full", "h0_title h1_full", "h0_full", "", "", "", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "h1_full" ] }

{ "question": [ "What accounted for the majority of the 17.6 billion DSH payments?", "What accounted for half of DSH payments?", "How did DSH payments vary?", "Why was Medicaid designated a high risk program?", "Why do states make DSH payments?", "Why do states also make non-DSH supplemental payments?", "What has GAO been asked to do?" ], "summary": [ "A total of $17.6 billion in Disproportionate Share Hospital (DSH) payments. The 10 states reporting the largest total DSH payments in fiscal year 2010 accounted for more than 70 percent of the nationwide total, with 4 states— New York, California, Texas, and New Jersey—accounting for almost half (47 percent).", "The 10 states reporting the largest total DSH payments in fiscal year 2010 accounted for more than 70 percent of the nationwide total, with 4 states— New York, California, Texas, and New Jersey—accounting for almost half (47 percent).", "DSH payments as a percentage of total Medicaid payments varied considerably—ranging from 1 to 17 percent—among the 50 states that reported DSH payments.", "GAO designated Medicaid a high-risk program because of concerns about its size, growth, and inadequate fiscal oversight.", "In addition to regular Medicaid payments to providers, states make supplemental payments, including DSH payments, which are intended to offset the uncompensated costs of care provided to uninsured individuals and Medicaid beneficiaries.", "States also make other supplemental payments, which we refer to as non-DSH supplemental payments, to hospitals and other providers, for example, to help offset the costs of care provided to Medicaid beneficiaries. GAO and others have raised concerns about the transparency of states’ Medicaid supplemental payments.", "GAO was asked to provide information on supplemental payments." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, 1 ], "summary_paragraph_index": [ 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Responsibility for Secure Flight Operations", "Overview of Secure Flight Matching and Screening Processes at Implementation", "Passenger Screening at Airport Security Checkpoints", "Secure Flight Initially Identified Passengers on Terrorist Watchlists and Now Also Differentiates Passengers Based on Risk", "Secure Flight Is Using New High-Risk Lists for Screening, Including Two Lists of Individuals Who Meet Various Threat Criteria, but Who May Not Be Known or Suspected Terrorists", "Rules-Based Watchlists", "The Expanded Selectee List", "Secure Flight Is Identifying Low-Risk Passengers by Screening against TSA PreTM Lists and Conducting Passenger Risk Assessments", "TSA PreTM Lists of Preapproved Low-Risk Travelers", "TSA PreTM Risk Assessments", "New Secure Flight Screening Activities Allow TSA to Differentiate Passengers by Risk Category", "TSA Has Processes in Place to Implement Secure Flight Screening Determinations at Checkpoints, but Could Take Further Action to Address Screening Errors", "TSA Has Developed Processes to Implement Secure Flight Determinations at Airport Checkpoints", "TSOs Have Made Errors in Implementing Secure Flight Screening Determinations at the Screening Checkpoint, and Additional Actions Could Reduce the Number of Screening Errors", "Fraudulent Documents Pose Risks at Airport Screening Checkpoints, and TSA’s Planned Technology Solutions Are in Early Stages", "TSA Lacks Key Information to Determine whether the Secure Flight Program Is Achieving Its Goals", "Secure Flight Measures Do Not Fully Assess Progress toward Goals", "Measures Addressing Accuracy (Goals 1 through 4)", "Measures Addressing Risk- Based Security Capabilities (Goal 5)", "Measures Addressing Privacy (Goal 6)", "TSA Does Not Have Timely and Reliable Information on the Secure Flight System’s Matching Errors", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Secure Flight Screening Lists and Activities", "Appendix III: Secure Flight Performance Data for Fiscal Years 2012 and 2013", "Overview of the Secure Flight Screening Process", "Appendix IV: Comments from the Department of Homeland Security", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Several entities located within TSA’s Office of Intelligence and Analysis share responsibility for administering the Secure Flight program. Among these are the Operations Strategy Mission Support Branch, which acts as the program’s lead office; the Secure Flight Operations Branch, which oversees passenger vetting and other operational activities; and the Systems Management and Operations Branch and the Secure Flight Technology Branch, both of which focus on technology-related issues. Collectively, these entities received about $93 million to carry out program operations in fiscal year 2014.", "The Secure Flight program, as implemented pursuant to the 2008 Secure Flight Final Rule, requires U.S.- and foreign-based commercial aircraft operators traveling to, from, within, or overflying the United States, as well as U.S. commercial aircraft operators with international point-to-point flights, to collect information from passengers and transmit that information electronically to TSA. This information, known collectively as Secure Flight Passenger Data (SFPD), includes personally identifiable information, such as full name, gender, date of birth, passport information (if available), and certain nonpersonally identifiable information, such as itinerary information and the unique number associated with a travel record (record number locator).\nSince implementation began in January 2009, the Secure Flight system has identified high-risk passengers by matching SFPD against the No Fly List and the Selectee List, subsets of the Terrorist Screening Database (TSDB), the U.S. government’s consolidated watchlist of known or suspected terrorists maintained by the Terrorist Screening Center, a multiagency organization administered by the Federal Bureau of Investigation (FBI). (We discuss screening activities initiated after TSA began implementing Secure Flight in 2009 later in this report.) To carry out this matching, the Secure Flight system conducts automated matching of passenger and watchlist data to identify a pool of passengers who are potential matches to the No Fly and Selectee Lists. Next, the system compares all potential matches against the TSA Cleared List, a list of individuals who have applied to, and been cleared through, the DHS redress process. Passengers included on the TSA Cleared List must submit a redress number when making a reservation, which allows the Secure Flight system to recognize and clear them. After the system performs automated matching, Secure Flight analysts are to conduct manual reviews of potential matches, which may involve consulting other classified and unclassified data sources, to further rule out individuals who are not those included on the No Fly and Selectee Lists.\nAfter the completion of manual reviews, TSA precludes passengers who remain potential matches to certain lists from receiving their boarding passes. These passengers, for whom air carriers receive a “passenger inhibited” message from Secure Flight, must undergo a resolution process at the airport. This process may involve air carriers sending updated passenger information back to Secure Flight for automated rematching or placing a call to Secure Flight for assistance in resolving the match. At the conclusion of automated and manual screening processes (including the airport resolution process) air carriers may not issue a boarding pass to a passenger until they receive from Secure Flight a final screening determination. These determinations include a “cleared” message, for passengers found not to match a watchlist, and a “selectee” message, for matches to the Selectee List who are to be to be designated by air carriers for enhanced screening. For passengers matching the No Fly List, Secure Flight’s initial “passenger inhibited” message is the final determination, and the air carrier may not issue a boarding pass (see fig. 1).", "In general, passengers undergo one of three types of screening, based on the Secure Flight determinations shown on boarding passes— standard screening, enhanced screening for selectees, and expedited screening for low-risk passengers. Standard screening typically includes a walk-through metal detector or Advanced Imaging Technology screening, which is to identify objects or anomalies concealed under clothing, and X-ray screening for the passenger’s accessible property. In the event a walk-through metal detector triggers an alarm, the Advanced Imaging Technology identifies an anomaly, or the X-ray machine identifies a suspicious item, additional security measures, such as pat- downs, explosives trace detection searches (which involve a device certified by TSA to detect explosive particles), or additional physical searches may ensue as part of the resolution process. Enhanced screening includes, in addition to the procedures applied during a typical standard screening experience, a pat-down and an explosives trace detection search or physical search of the interior of the passenger’s accessible property, electronics, and footwear. Expedited screening typically includes walk-through metal detector screening and X-ray screening of the passenger’s accessible property, but unlike in standard screening, travelers do not have to, among other things, remove their belts, shoes, or light outerwear. Passengers not designated for enhanced or expedited screening generally receive standard screening unless, for example, identified by TSA for a different type of screening through the application of random and unpredictable security measures at the screening checkpoint.", "Since January 2009, the Secure Flight program has changed from one that identifies high-risk passengers by matching them against the No Fly and Selectee Lists to one that assigns passengers a risk category: high risk, low risk, or unknown risk.passengers as high risk if they are matched to watchlists of known or suspected terrorists or other lists developed using certain high-risk criteria, as low risk if they are deemed eligible for expedited screening through TSA PreTM—a 2011 initiative to preapprove passengers for expedited screening—or through the application of low-risk rules, and as unknown risk if they do not fall within the other two risk categories. To separate passengers into these risk categories, TSA utilizes lists in addition to the No Fly and Selectee Lists, and TSA has adapted the Secure Flight system to perform risk assessments, a new system functionality that is distinct from both watchlist matching and matching against lists of known travelers. At airport checkpoints, those passengers identified as high risk receive enhanced screening, passengers identified Specifically, Secure Flight now identifies as low risk are eligible for expedited screening, and passengers identified as unknown risk generally receive standard screening.", "Since January 2009, TSA has been using new high-risk lists for screening, including two lists to identify passengers who may not be known or suspected terrorists, but who—based on TSA’s application of threat criteria—should receive enhanced screening, and an expanded list of known or suspected terrorists in the TSDB. As initially implemented under the October 2008 Secure Flight Final Rule, the program matched the names of passengers against the No Fly and Selectee List components of the TSDB. According to the rule, comparing passenger information against the No Fly and Selectee components of the TSDB (versus the entire TSDB) would be generally satisfactory during normal security circumstances to counter the security threat. The rule also provides that TSA may use the larger set of watchlists maintained by the federal government as warranted by security considerations, for example, if TSA learns that flights on a particular route may be subject to an increased security risk.compare passenger information on some or all flights on that route against the full TSDB or other government databases, such as intelligence or law enforcement databases.", "After the December 25, 2009, attempt to detonate a concealed explosive on board a U.S.-bound flight by an individual who was not a known or suspected terrorist in the TSDB, TSA sought to identify ways to mitigate unknown threats—individuals not in the TSDB for whom TSA has determined enhanced screening would be prudent. To that end, TSA worked with CBP to develop new lists for Secure Flight screening, and in April 2010, began using the lists to identify and designate for enhanced screening passengers who may represent unknown threats. To create these lists, TSA leveraged CBP’s access to additional data submitted by passengers traveling internationally and the capabilities of CBP’s Automated Targeting System-Passenger (ATS-P)—a tool originally created and used by CBP that targets passengers arriving at or departing the United States by comparing their information against law enforcement, intelligence, and other enforcement data using risk-based targeting scenarios and assessments. Specifically, analysts within the Intelligence and Analysis Division of TSA’s Office of Intelligence and Analysis review current intelligence to identify factors that may indicate an elevated risk for a passenger. TSA creates rules based on these factors and provides them to CBP. CBP then uses ATS-P to identify passengers who correspond with the rules and provides TSA information on them in the form of a list. Upon receiving the list, TSA creates another rules-based list—a subset of the larger rules-based list—based on additional criteria. Through Secure Flight screening, TSA designates passengers matching either rules-based list as selectees for enhanced screening.", "In addition to the two ATS-P-generated lists, Secure Flight incorporated an additional list derived from the TSDB into its screening activities in order to designate more passengers who are known or suspected terrorists as selectees for enhanced screening. Specifically, in April 2011, TSA began conducting watchlist matching against an Expanded Selectee List that includes all records in the TSDB with a full name (first name and surname) and full date of birth that meet the Terrorist Screening Center’s reasonable suspicion standard to be considered a known or suspected terrorist, but that are not already included on the No Fly or Selectee List. TSA began using the Expanded Selectee List in response to the December 25, 2009, attempted attack, as another measure to secure civil aviation. Collectively, the No Fly, Selectee, and Expanded Selectee Lists are used by Secure Flight to identify passengers from the government’s consolidated database of known or suspected terrorists.", "Since October 2011, TSA has also begun using Secure Flight to identify passengers as low risk, and therefore eligible for expedited screening, through the use of new screening lists and by performing passenger risk assessments. According to TSA, identifying more passengers as eligible for expedited screening will permit TSA to reduce screening resources for low-risk travelers, thereby enabling TSA to concentrate screening resources on higher-risk passenger populations. In August 2013, TSA officials stated that this approach would support the agency’s goal of identifying 25 percent of airline passengers as eligible for expedited screening by the end of calendar year 2013. As of May 2014, TSA officials stated the goal had been revised to identify 50 percent of airline passengers as eligible for expedited screening by the end of calendar year 2014. According to officials within TSA’s Office of Chief Counsel, TSA’s efforts to identify low-risk travelers also fulfill a stated goal of the 2008 Secure Flight rule to implement a “known traveler” concept that would allow the federal government to assign a unique number to known travelers for whom the federal government had conducted a threat assessment and determined did not pose a security threat.", "We expect to issue a report on TSA’s PreTM program later this year. entry). Since then, TSA has established separate TSA PreTM lists for additional low-risk passenger populations, including members of the U.S. armed forces, Congressional Medal of Honor Society members, and members of the Homeland Security Advisory Council (see app. II for a full listing of TSA PreTM lists used by Secure Flight for screening). To identify these and other low-risk populations, TSA coordinated and entered into agreements with a lead agency or outside entity willing to compile and maintain the associated TSA PreTM list. Members of the list-based, low-risk populations participating in TSA PreTM are provided a unique known traveler number, and their personal identifying information (name and date of birth), along with the known traveler number, is included on lists used by Secure Flight for screening.\nIn addition to TSA PreTM lists sponsored by other agencies or entities, TSA created its own TSA PreTM list composed of individuals who apply to be preapproved as low-risk travelers through the TSA PreTM Application Program, an initiative launched in December 2013. The program is another DHS trusted traveler program, in which DHS collects a fee to conduct a background investigation for applicants. Applicants approved as low risk through the program receive a known traveler number and are included on an associated TSA PreTM Application Program list used by Secure Flight for screening. To be recognized as low risk by the Secure Flight system, individuals on TSA PreTM lists must submit their known traveler numbers when making a flight reservation. As of April 2014, there were about 5.6 million individuals who, through TSA PreTM program lists, were eligible for expedited screening.", "To further increase the number of passengers identified as low risk (and therefore TSA PreTM eligible), TSA adapted the Secure Flight system to begin assigning passengers risk scores to designate them as low risk for a specific flight. Beginning in 2011, TSA piloted a risk-based security program to identify certain members of participating airlines’ frequent flier programs as low risk, and therefore eligible for expedited screening for a specific flight. Specifically, TSA used the Secure Flight system to assess data submitted by these frequent fliers during the course of travel and assign them scores, which were then used to determine eligibility for expedited screening. In October 2013, TSA expanded the use of these assessments to all passengers, not just frequent fliers, and also began using other travel-related data to assess passengers. These assessments are conducted only if the passenger has not been designated as high risk by other Secure Flight screening activities or matched to one of the TSA PreTM Lists. The scores assigned to passengers correspond with a certain likelihood of being designated as eligible to receive expedited screening through TSA PreTM. According to officials within TSA’s Office of Chief Counsel, the assessments are not watchlist matching, rather they are a means to facilitate the secure travel of the public—a purpose of Secure Flight, as stated in the program’s final rule and in accordance with TSA’s statutory responsibilities to ensure the security of civil aviation.\nAs of May 2014, TSA uses PreTM risk assessments to determine a passenger’s low-risk status and resulting eligibility for TSA PreTM expedited screening, but according to TSA officials, TSA also has the capability to use this functionality to identify high-risk passengers for enhanced screening. TSA made adjustments to enable the Secure Flight system to perform TSA PreTM risk assessments to identify high-risk passengers in March 2013. However, TSA officials stated the agency has no immediate plans to use the assessments to identify high-risk passengers beyond those already included on watchlists.", "Given the changes in the program since implementation, the current Secure Flight system screens passengers and returns one of four screening results to the air carriers for each passenger: TSA PreTM eligible (expedited screening), cleared to fly (standard screening), selectee (enhanced screening), or do not board (see fig. 2).", "TSA has developed processes to help ensure that individuals and their accessible property receive a level of screening at airport checkpoints that corresponds to the level of risk determined by Secure Flight. However, TSA could take additional actions to prevent TSO errors in implementing these risk determinations at the screening checkpoint. Furthermore, fraudulent identification or boarding passes could enable individuals to evade Secure Flight vetting, creating a potential vulnerability at the screening checkpoint. TSA’s planned technology solutions could reduce the risk posed by fraudulent documents at the screening checkpoint.", "TSA has developed processes to help ensure that individuals and their accessible property receive a level of screening at airport checkpoints that corresponds to the level of risk determined by Secure Flight.are primarily responsible for ensuring that passengers receive the appropriate level of screening because they are to verify passengers’ identities and identify passengers’ screening designations. TSA requires passengers to present photo identification and a boarding pass at the TDCs screening checkpoint. Using lights and magnifiers, which allow the TDC to examine security features on the passenger’s identification documents, the TDC is to examine the identification and boarding pass to confirm that they appear genuine and pertain to the passenger. The TDC is also to confirm that the data included on the boarding pass and in the identity document match one another. According to TSA standard operating procedures, TDCs may accept minor name variations between the passenger’s boarding pass and identification.information on the identification varies significantly from the boarding pass, the TDC is to refer the passenger to another TSA representative for identity verification through TSA’s Identity Verification Call Center (IVCC). If the passenger’s information varies from the SFPD submitted to Secure Flight, the IVCC is to contact Secure Flight to vet the new information. If the identification or boarding pass appears fraudulent, the TDC is to contact law enforcement.\nIf the TDC finds that the The TDC is also required to review the passenger’s boarding pass to identify his or her Secure Flight passenger screening determination—that is, whether the passenger should receive standard, enhanced, or expedited screening. TDCs either examine the boarding pass manually or, where available, scan the boarding pass using an electronic boarding pass scanning system (BPSS). In addition, Secure Flight provides TSA officials in the airports with advance notice of upcoming selectees from the Selectee and Expanded Selectee Lists, as well as those on the No Fly List. Secure Flight provides this information to TSA officials at the passenger’s airport of departure via e-mail beginning 72 hours prior to flight departure for the No Fly and Selectee Lists, and via a shared electronic posting beginning 26 to 29 hours prior to flight departure for the Expanded Selectee List.\nTSA also has requirements related to TDC performance. First, according to TSA officials, TSA designated the TDC a qualified position in February 2013, meaning that TSOs must complete training and pass a job knowledge test to qualify as TDCs. Second, TSA has documented processes to govern the screening checkpoint, such as standard operating procedures applicable to the TDC, the screening checkpoint, and expedited screening that specify responsibilities and lines of reporting. In March 2011, TSA also updated its Screening Management standard operating procedures to clarify that supervisory TSOs are required to monitor TSO performance to ensure compliance with all applicable standard operating procedures and correct improper or faulty application of screening procedures to ensure effective, vigilant, and courteous screening. According to officials in TSA’s Office of Inspection, many checkpoint failures resulted from a lack of supervision. These officials stated that when TDCs are not properly supervised, they are more likely to take shortcuts and miss steps in the standard operating procedures and that because working as a TDC can be tedious and repetitive, supervision and regular rotation are particularly important to ensure TDCs’ continued vigilance.", "Our analysis of TSA information from May 2012 through February 2014 found that TSOs have made errors in implementing Secure Flight risk determinations at the screening checkpoint. By evaluating the root causes of these errors and implementing corrective measures to address those root causes, TSA could reduce the risk posed by TSO error at the screening checkpoint. TSA officials we spoke with at five of the nine airports conduct after-action reviews of screening errors at the checkpoint and have used these reviews to take action to address the root causes of those errors. However, TSA does not have a systematic process for evaluating the root causes of screening errors at the checkpoint across airports, which could allow TSA to identify trends across airports and target nationwide efforts to address these issues.\nTSA OSO officials told us that evaluating the root causes of screening errors would be helpful and could allow them to better target TSO training efforts. In January 2014, TSA OSO officials stated that they are in the early stages of forming a group to discuss these errors. However, TSA was not able to provide documentation of the group’s membership, purpose, goals, time frames, or methodology. Standards for Internal Control in the Federal Government states that managers should compare actual performance with expected results and analyze significant differences.will be important for TSA to develop a process for evaluating the root causes of screening errors at the checkpoint and identify and implement corrective measures, as needed, to address these root causes. Uncovering and addressing the root causes of screening errors could help TSA reduce the number of these errors at the checkpoint.", "Fraudulent identification or boarding passes could enable individuals to evade Secure Flight vetting, creating a potential vulnerability at the screening checkpoint. TDCs are responsible for verifying the validity of identification documents and boarding passes presented by passengers. In June 2012, the TSA Assistant Administrator for the Office of Security Capabilities testified before Congress that the wide variety of identifications and boarding passes presented to TDCs poses challenges to effective manual verification of passenger identity, ticketing, and vetting status. He testified that there are at least 2,470 different variations of identification that could be presented at security checkpoints and stated that it is very difficult for a TSO to have a high level of proficiency for all of those identifications. From May 2012 through July 2013, TSA denied 1,384 individuals access to the sterile area as a result of identity checking procedures. These denials include travelers who did not appear to match the photo on their identification, who presented identification that appeared fraudulent or showed signs of tampering, and who were unwilling or unable to provide identifying information.time period, TDCs also made 852 referrals to airport law enforcement because of travelers who did not appear to match the photo on their identification, presented identification or boarding passes that appeared fraudulent or showed signs of tampering, or exhibited suspicious behaviors. However, TSA would not know how many travelers successfully flew with fraudulent documents unless those individuals came to TSA’s attention for another reason.\nDuring this same We have previously reported on security vulnerabilities involving the identity verification process at the screening checkpoint. For example, in our May 2009 report on Secure Flight, we identified a vulnerability involving the Secure Flight system—namely, airline passengers could provide fraudulent information when making a flight reservation to avoid detection. In addition, in June 2012, we reported on several instances when passengers used fraudulent documentation to board flights. For example, we reported that in 2006, a university student created a website that enabled individuals to create fake boarding passes. In addition, in 2011, a man was convicted of stowing away aboard an aircraft after using an expired boarding pass with someone else’s name on it to fly from New York to Los Angeles. We also reported that news reports have highlighted the apparent ease of ordering high-quality counterfeit driver’s licenses from China.\nTSA’s planned technology solutions could reduce the risk posed by fraudulent documents at the screening checkpoint. Boarding pass scanners are designed to verify the digital signature on these boarding passes, allowing TDCs to know that the boarding passes are genuine. The scanners are also to notify the TDC when a passenger is a selectee. In September 2013, TSA purchased 1,400 boarding pass scanners, at a cost of $2.6 million, and planned to deploy 1 for every TDC at airport security checkpoints, beginning with TDCs in TSA PreTM lines. According to TSA officials, as of March 2014, TSA had deployed all 1,400 scanners at airport security checkpoints.\nIn December 2013, TSA released a request for proposal for Credential Authentication Technology (CAT), which is a system that is designed to verify passenger identity, ticketing status, and Secure Flight risk determination at the screening checkpoint. CAT could address the risks of fraudulent identifications, as well as TSO error and reliance on air carriers to properly issue boarding passes. CAT is to verify the authenticity of identification documents presented at the screening checkpoint, confirm the passenger’s reservation, and provide the Secure Flight screening result for that traveler. TDCs would no longer need to examine passengers’ boarding passes to identify those who should receive enhanced screening, which could reduce the potential for error. In April 2014, TSA awarded a contract for the CAT technology solution.\nTSA has faced long-standing challenges in acquiring CAT technology. In May 2009, we found that TSA had begun working to address the vulnerability posed by airline passengers providing fraudulent information when making a flight reservation to avoid detection. TSA has issued four previous requests for proposals for CAT/BPSS technology, two of which resulted in no vendors meeting minimum requirements. In 2012, TSA piloted a joint CAT/BPSS technology from three vendors at a cost of $4.4 million. According to TSA’s final report on the pilot, TSA decided not to move forward with these systems because of significant operability and performance difficulties. None of the units tested met TSA’s throughput requirements, creating delays at the screening checkpoint. According to TSA officials, after the joint CAT/BPSS pilot failed, TSA decided to separate CAT technology from BPSS technology and procure each separately.\nTSA has also faced challenges in estimating the costs associated with the CAT system. In June 2012, we reported that we could not evaluate the credibility of TSA’s life-cycle cost estimate for CAT/BPSS because it did not include an independent cost estimate or an assessment of how changing key assumptions and other factors would affect the estimate. At that time, according to the life-cycle cost estimate for the Passenger Screening Program, of which CAT/BPSS is a part, the estimated 20-year life-cycle cost of CAT/BPSS was approximately $130 million based on a procurement of 4,000 units. As of April 2014, TSA had not approved a new life-cycle cost estimate for the CAT program, so we were unable to evaluate the extent to which TSA has addressed these challenges in its new estimate.", "", "Secure Flight has six program goals that are relevant to the results of screening performed by the Secure Flight computer system and the program analysts who review computer-generated matches, including the following: goal 1: prevent individuals on the No Fly List from boarding an aircraft, goal 2: identify individuals on the Selectee List for enhanced goal 3: support TSA’s risk-based security mission by identifying high- risk passengers for appropriate security measures/actions and identifying low-risk passengers for expedited screening, goal 4: minimize misidentification of individuals as potential threats to goal 5: incorporate additional risk-based security capabilities to streamline processes and accommodate additional aviation populations, and goal 6: protect passengers’ personal information from unauthorized use and disclosure.\nTo assess progress with respect to these goals, the program has nine performance measures that it reports on externally (see app. III for the nine Secure Flight performance measures and performance results for fiscal years 2012 and 2013). In addition, Secure Flight has measures for a number of other program activities that it reports internally to program managers to keep them apprised of program performance with respect to the goals (such as the number of confirmed matches identified to the No Fly and Selectee Lists).\nHowever, Secure Flight’s performance measures do not fully assess progress toward achieving its six program goals. For goals 1 through 4 and goal 6, we found that while TSA measured some aspects of performance related to these goals, it did not measure aspects of performance necessary to determine overall progress toward the goals. In addition, for goal 5, we could not identify any program measures that represented the type of performance required to make progress toward achieving the goal, in part because the goal itself did not specify how performance toward the goal should be measured. GPRA establishes a framework for strategic planning and performance measurement in the federal government. Part of that framework involves agencies establishing quantifiable performance measures to demonstrate how they intend to achieve their program goals and measure the extent to which they have done so. These measures should adequately indicate progress toward performance goals so that agencies can compare their programs’ actual results with desired results.\nOur prior body of work has shown that measures adequately indicate progress toward performance goals when they represent the important dimensions of their performance goals and reflect the core functions of their related programs or activities. Further, when performance goals are not self-measuring, performance measures should translate those goals into concrete conditions that determine what data to collect in order to learn whether the program has made progress in achieving its goal.", "With respect to the program’s first four goals, which address the Secure Flight system’s ability to accurately identify passengers on various watchlists for high- and low-risk screening, the program does not measure all aspects of performance that are essential to achieving these goals. To measure performance toward the first three goals, Secure Flight collects various types of data, including the number of passengers TSA identifies as matches to high- and low-risk lists (including the No Fly, Selectee, Expanded Selectee, rules-based, and TSA PreTM lists). However, Secure Flight has no measures to address the extent to which Secure Flight is missing passengers who are actual matches to these lists (see table 1).\nTSA Secure Flight officials stated that measuring the extent to which the Secure Flight system may miss passengers on high-risk lists is difficult to perform in real time. However, our prior work and current program documentation show that the Secure Flight program has used proxy methods to assess the extent to which the system is missing passengers on watchlists. For example, we reported in May 2009 that when the Secure Flight system was under development, TSA conducted a series of tests—using a simulated passenger list and a simulated watchlist created by a TSA contractor with expertise in watchlist matching—to measure the extent to which Secure Flight did not identify all simulated watchlist records. In addition, for this review, we examined meeting minutes of the Secure Flight Match Review Board—a multidepartmental board that reviews system performance and recommends changes—for the period May 2010 through August 2013, to determine how the board assesses system performance. The minutes show that Secure Flight, when contemplating a change in the system’s search capabilities, measures the impacts of proposed changes on system performance, including the extent to which the changes result in failures to identify watchlisted individuals. To make these assessments, Secure Flight rematches historical passenger data and watchlist data under proposed system changes, and compares the results with prior Secure Flight screening outcomes to determine whether any previously identified individuals on high-risk lists were missed. While helpful for Match Review Board deliberations, the testing reflected in meeting minutes was performed on an ad hoc basis and therefore is not a substitute for ongoing performance measurement.\nIn addition, with respect to low-risk lists, TSA could measure the extent to which the Secure Flight system correctly identifies passengers submitting valid known traveler numbers (i.e., an actual number on a TSA PreTM list) and designates them for expedited screening. TSA officials have stated that variations in the way passengers enter information when making a reservation with a valid known traveler number can cause the system to fail to identify them as TSA PreTM eligible. For example, TSA Match Review Board documentation from December 2012 identified that the Secure Flight system had failed to identify participants on one TSA PreTM list because they used honorific titles (e.g., the Honorable and Senator) when making reservations, and, as a result, they were not eligible for expedited screening.TSA has a process in place to review and resolve inquiries from passengers who believe they should have received TSA PreTM but did not during a recent travel experience.helpful for addressing some TSA PreTM-related problems, the process does not provide information on the extent to which TSA is correctly identifying passengers on low-risk lists, because some passengers may not report problems.\nTSA’s fourth goal (to minimize the number of passengers misidentified as threats on high-risk lists) also addresses system accuracy. The program’s related performance measure, its false positive rate, accounts for the number of passengers who have been misidentified as matches to some, but not all, high-risk lists and, thus does not fully assess performance toward the related goal (as shown above, in table 1). TSA’s false positive rate does not account for all misidentifications, because, under the current Secure Flight process, TSA has information on passengers misidentified to the No Fly and Selectee Lists, but does not have information on passengers misidentified to the Expanded Selectee or rules-based lists. TSA is currently implementing changes that will allow it to collect more information about passengers misidentified to other high-risk lists.positive measure, would allow TSA to more fully assess the program’s ability to minimize the misidentification of individuals as potential threats to aviation security.", "TSA does not have any measures that clearly address its goal of incorporating additional risk-based security capabilities to streamline processes and accommodate additional aviation populations (goal 5). According to TSA officials, the goal addresses the program’s ability to adapt the Secure Flight system for risk-based screening initiatives, such as TSA PreTM and similar efforts that allow TSA to distinguish high-risk from low-risk passengers. TSA officials identified several measures that address this goal, including program measures for responding to a change in the national threat level, the system false positive rate, and the system availability measure. identified clearly relate to the goal of adapting the Secure Flight system for different risk-based screening activities, or specify what data should be collected to measure progress toward the goal.", "The Secure Flight system availability measure—a Key Performance Parameter and an OMB 300 Measure—tracks the total amount of time the Secure Flight system (within Secure Flight bounds) is available for matching activities. Secure Flight’s false positive measure was discussed previously. All Secure Flight measures are defined in app. III. implemented.scoring activities from the Secure Flight system, TSA ensures that passenger data do not remain in the system and thus will not be subject to unauthorized use or disclosure. Nevertheless, the measure does not assess other points in time in which the records could be subject to unauthorized use or disclosure, such as before the records are purged or when other government agencies request the results of Secure Flight screening for various purposes, such as an ongoing investigation. When the Secure Flight program was in development, TSA included among a list of possible measures for the fully implemented program a measure for privacy incident compliance (i.e., percentage of privacy incidents reported in compliance with DHS Privacy Incident Handling Guidance). According to TSA officials, since then, TSA has determined that such a measure is not needed because privacy incidents are tracked and publicly reported on at the department level. Nevertheless, additional measures, such as the percentage of government agencies’ requests for Secure Flight data that are handled consistently with program privacy requirements, would allow Secure Flight to determine the extent to which the program is appropriately handling passenger information before it is purged from the system.\nBy purging the results of Secure Flight matching and Secure Flight’s performance measures provide program managers some information on its progress with respect to its accuracy-related and privacy-related goals (goals 1 through 4 and 6), but do not measure all aspects of performance critical to achieving these goals. In addition, the measures do not provide information on progress toward the program’s risk-based security capabilities goal (goal 5). Additional measures that address key performance aspects related to program goals, and that clearly identify the activities necessary to achieve goals, would allow the program to more fully assess progress toward its goals. For example, the extent to which the Secure Flight system is missing individuals on the No Fly, Selectee, and other high- and low-risk lists is an important dimension of performance related to each of the accuracy-related goals and speaks to a core function of the Secure Flight program—namely to accurately identify passengers on lists. Without measures that provide a more complete understanding of Secure Flight’s performance, TSA cannot compare actual with desired results to understand how well the system is achieving these goals. Similarly, without a measure that reflects misidentifications to all high-risk lists, TSA cannot appropriately gauge its performance with respect to its goal of limiting such misidentifications. Likewise, with respect to its privacy-related goal, additional measures that address other key points in the Secure Flight process in which passenger records could be inappropriately accessed would allow Secure Flight to more fully assess the extent to which it is meeting its goal of protecting passenger information. Finally, establishing measures that clearly represent the performance necessary to achieve the program’s goal that addresses risk-based security capabilities (goal 5) will allow Secure Flight to determine the extent to which it is meeting its goal of adapting the Secure Flight system for different risk-based screening activities.", "TSA does not have timely and reliable information on past Secure Flight system matching errors. As previously discussed, preventing individuals on the No Fly List from boarding an aircraft and identifying individuals on the Selectee List for enhanced screening are key goals of the Secure Flight program. Standards for Internal Control in the Federal Government states that agencies must have relevant, reliable, and timely information to determine whether their operations are performing as expected, and that such information can assist agencies in taking any necessary corrective actions to achieve relevant goals. According to TSA officials, when TSA receives information related to matching errors of the Secure Flight system (i.e., the computerized matching and manual reviews conducted to identify matches of passenger and watchlist data), the Match Review Board reviews this information to determine if any actions could be taken to prevent similar errors from happening again. We reviewed meeting minutes and associated documentation for the 51 Match Review Board meetings held from March 2010 through August 2013, and found 16 meetings in which the Match Review Board discussed system matching errors; investigated possible actions to address these errors; and, when possible, implemented changes to strengthen system performance.\nHowever, when we asked TSA for complete information on the extent and causes of system matching errors, we found that TSA does not have readily available or complete information. It took TSA over 6 months to compile a list of such errors, a process that, according to TSA officials, required a significant amount of manual investigation and review. Further, we found that the list was not complete because it did not reflect all system errors that were discussed at the Match Review Board meetings.discussion of a system error that was not included in the Match Review Board documentation. We also found that, for many incidents on the list, TSA’s description of the cause of the error was not sufficiently detailed to understand whether the Secure Flight system was at fault.\nInformation on the time frames of our request and the number of system matching errors TSA identified is considered sensitive information and cannot be included in a public report. all potential causes of these errors, and identify and implement sufficient corrective actions.", "The Secure Flight program is one of TSA’s key tools for defending civil aviation against terrorist threats. Since TSA began implementing the program, in January 2009, Secure Flight has expanded from a system that matches airline passengers against watchlists of known or suspected terrorists to a system that uses additional high-risk lists and conducts risk- based screening assessments of passengers. Specifically, through the use of new high-risk screening lists, the program now identifies a broader range of high-risk travelers—including ones who may not be on lists of known and suspected terrorists but who nevertheless correspond with known threat criteria. TSA has also begun using Secure Flight to identify low-risk passengers eligible for expedited screening through TSA PreTM. Given Secure Flight’s importance to securing civil aviation and achieving TSA’s risk-based screening goals, the extent to which passengers are being accurately identified by the system (including computerized matching and manual reviews) for standard, expedited, and enhanced screening is critically important. More broadly, to fully realize the security benefits of the Secure Flight program, it is critical that TSA checkpoint personnel correctly identify and appropriately screen travelers according to Secure Flight determinations. Better information on both system and checkpoint performance, therefore, would provide TSA with greater assurance that Secure Flight is achieving its desired purpose to correctly identify passengers for standard, expedited, and enhanced checkpoint screening.\nSpecifically, TSA would have better assurance that all passengers are screened in accordance with their Secure Flight risk determinations by investigating checkpoint errors and taking appropriate corrective action. Evaluating the root causes of screening errors across all airport checkpoints would provide TSA more complete information on such cases and serve as the basis for policies to ensure the checkpoint is correctly processing passengers. In addition, implementing corrective measures to address the root causes that TSA identifies through its evaluation process would help strengthen checkpoint operations. Furthermore, establishing measures that cover all activities necessary to achieve Secure Flight program goals would allow TSA to more fully assess progress toward these goals. Finally, when TSA learns of Secure Flight system matching errors, a mechanism to systematically document the number and causes of these errors would help ensure that TSA had timely and reliable information to take any corrective action to strengthen system performance.", "We recommend that the Transportation Security Administration’s Administrator take the following four actions: to further improve the implementation of Secure Flight risk determinations at the screening checkpoint, develop a process for regularly evaluating the root causes of screening errors across airports so that corrective measures can be identified; to address the root causes of screening errors at the checkpoint, thereby strengthening checkpoint operations, implement the corrective measures TSA identifies through a root cause evaluation process; to assess the progress of the Secure Flight program toward achieving its goals, develop additional measures to address key performance aspects related to each program goal, and ensure these measures clearly identify the activities necessary to achieve progress toward the goal; and to provide Secure Flight program managers with timely and reliable information on cases in which TSA learns of Secure Flight system matching errors, develop a mechanism to systematically document the number and causes of such cases, for the purpose of improving program performance.", "We provided a draft of this report to DHS and the Department of Justice for their review and comment. DHS provided written comments on August 25, 2014, which are summarized below and reproduced in full in appendix IV. DHS concurred with all four of our recommendations and described actions under way or planned to address them. In addition, DHS provided written technical comments, which we incorporated into the report as appropriate.\nDHS concurred with our first recommendation, that TSA develop a process for regularly evaluating the root causes of checkpoint screening errors across airports so that corrective measures can be identified. DHS stated that TSA is collecting data on the root causes of checkpoint screening errors in its Security Incident Reporting Tool (SIRT) and that TSA OSO’s Operations Performance Division will develop a process for regularly evaluating the root causes of checkpoint screening errors across airports and identify corrective measures. DHS estimates that this will be completed by September 30, 2014. These actions, if implemented effectively, should address the intent of our recommendation.\nRegarding our second recommendation, that TSA implement the corrective measures it identifies through a root cause evaluation process, DHS concurred. DHS stated that TSA OSO’s Operations Performance Division will evaluate the data gathered from airports through SIRT to identify root causes of checkpoint screening errors and on the basis of the root cause, work with the appropriate TSA program office to implement corrective measures. Such actions could help to reduce the likelihood that TSA will fail to appropriately screen passengers at the screening checkpoint.\nAdditionally, DHS concurred with our third recommendation, that TSA develop additional measures to address key performance aspects related to each program goal and ensure these measures clearly identify the activities necessary to achieve progress toward the goal. DHS stated that TSA's Office of Intelligence and Analysis will evaluate its current Secure Flight performance goals and measures and develop new performance measures as necessary. DHS further stated that TSA will explore the possibility of implementing analyses to measure match effectiveness through the use of test data sets. Such actions could help TSA better monitor the performance of the Secure Flight program.\nDHS also concurred with our fourth recommendation, that TSA develop a mechanism to systematically document the number and causes of cases in which TSA learns that the Secure Flight system has made a matching error. DHS stated that TSA's Office of Intelligence and Analysis will develop a more robust process to track all known cases in which the Secure Flight system has made a matching error, and that the Secure Flight Match Review Board will conduct reviews to identify potential system improvement measures on a quarterly basis. TSA plans to implement these efforts by December 31, 2014. These actions, if implemented effectively, should address the intent of our recommendation. We will continue to monitor DHS’s efforts.\nThe Department of Justice did not have formal comments on our draft report, but 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 of this report to the Secretary of Homeland Security, the TSA Administrator, the United States Attorney General, and interested congressional committees as appropriate. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nShould you or your staff have any questions about this report, please contact Jennifer A. Grover at 202-512-7141 or groverj@gao.gov. Key contributors to this report are acknowledged in appendix IV. Key points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report.", "This report addresses the following questions: 1. How, if at all, has Secure Flight changed since implementation began in January 2009? 2. To what extent does the Transportation Security Administration (TSA) ensure that Secure Flight screening determinations for passengers are fully implemented at airport security checkpoints? 3. To what extent do TSA’s performance measures appropriately assess progress toward achieving the Secure Flight program goals?\nTo identify how the Secure Flight program has changed since implementation began, we analyzed TSA documentation related to new agency initiatives involving Secure Flight screening since January 2009, including the Secure Flight program concept of operations, privacy notices TSA issued from 2008 (in preparation to begin program implementation) through 2013, and TSA memorandums describing the rationale for new agency initiatives involving the Secure Flight system. We also submitted questions on how Secure Flight has changed to TSA’s Office of Chief Counsel and reviewed its responses. To clarify our understanding of a new agency initiative to identify high-risk passengers not already included in the Terrorist Screening Database (TSDB)—the U.S. government’s consolidated list of known or suspected terrorists—we spoke with relevant officials in the Intelligence and Analysis Division of TSA’s Office of Intelligence and Analysis, who are responsible for the initiative, and with officials from U.S. Customs and Border Protection, who facilitate the generation of one rules-based list. In addition, to understand new initiatives involving Secure Flight screening to identify low-risk travelers, we spoke with Secure Flight program officials and with officials in TSA’s Office of Risk Based Security who oversee TSA PreTM, a 2011 program that allows TSA to designate preapproved passengers as low risk, and TSA Pre✓™ risk assessments, another initiative to identify passengers as low risk for a specific flight.\nTo determine the extent to which TSA ensures that the Secure Flight vetting results are fully implemented at airport security checkpoints, we analyzed TSA documents governing the screening checkpoint, such as standard operating procedures for checkpoint screening operations and Travel Document Checkers (TDC) and reviewed reports about the performance of Transportation Security Officers (TSO) at the checkpoint by TSA’s Office of Inspections and GAO. To determine the extent to which TSA made errors at the screening checkpoint, we analyzed certain TSA data on TSO performance at the screening checkpoint from May 2012, when TSA began tracking these data, through February 2014, when we conducted the analysis. We examined documentation about these data and interviewed knowledgeable officials, and determined that the data were sufficiently reliable for our purposes. In addition, to clarify our understanding of TSA’s checkpoint operations and inform our analysis, we interviewed officials within TSA’s Office of Security Operations, which is responsible for checkpoint operations, and TSA officials at nine airports. We selected these nine airports based on a variety of factors, such as volume of passengers screened and geographic dispersion. The results of these interviews cannot be generalized to all airports, but provide insight into TSA’s challenges to correctly identify and screen passengers at checkpoints. To better understand how TSA ensures that all passengers have been appropriately screened by Secure Flight, we visited TSA’s Identity Verification Call Center to interview officials and observe their identity verification procedures. We compared TSA’s checkpoint procedures against Standards for Internal Control in the Federal Government.Finally, to determine the extent to which TSA’s planned technology solutions could address checkpoint errors, we analyzed documents, such as requests for proposals, related to TSA’s planned technology solutions and interviewed knowledgeable TSA officials.\nTo determine the extent to which Secure Flight performance measures appropriately assess progress toward achieving the program goals, we reviewed documentation of TSA’s program goals and performance measures for fiscal years 2012 and 2013—including the measures Secure Flight reports externally to the Department of Homeland Security and the Office of Management and Budget (OMB), as well as other internal performance measures Secure Flight officials use for program management purposes—and discussed these measures with Secure Flight officials. We assessed these measures against provisions of the Government Performance and Results Act (GPRA) of 1993 and the GPRA Modernization Act of 2010 requiring agencies to compare actual results with performance goals. Although GPRA’s requirements apply at the agency level, in our prior work, we have reported that these requirements can serve as leading practices at lower levels within an organization, such as individual programs or initiatives, through a review of our related products, OMB guidance, and studies by the National Academy of Public Administration and the Urban Institute. We also interviewed relevant TSA officials about the current performance measures for the Secure Flight program and the adequacy of these measures in assessing TSA’s progress in achieving program goals.\nIn addition, to understand how TSA uses Secure Flight-related performance data, we reviewed documentation related to all meetings that TSA identified of the Secure Flight Match Review Board—a multidepartmental entity established to, among other things, review performance measures and recommend changes to improve system performance—from the time was the board was initiated, in March 2010, through August 2013, a total of 51 meetings. To identify the extent to which TSA monitors and evaluates the reasons for any Secure Flight system matching errors, we analyzed a list of such errors that occurred from November 2010 (the point at which the Secure Flight program was implemented for all covered domestic and foreign air carriers) through July 2013 that TSA compiled at our request. To assess the accuracy and completeness of the list TSA provided, we also checked to see if system matching errors we identified in documentation from the Match Review Board meetings were included in TSA’s list. We evaluated TSA’s efforts to document system matching errors against standards for information and communications identified in GAO’s Standards for Internal Control in the Federal Government.\nWe conducted this performance audit from March 2013 to September 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.", "In January 2009, the Transportation Security Administration (TSA) began implementing the Secure Flight program to facilitate the identification of high-risk passengers who may pose security risks to civil aviation, and designate them for additional screening at airport checkpoints. Since then, TSA has begun using Secure Flight to identify low-risk passengers eligible for more efficient processing at the checkpoint. This appendix presents an overview of the lists and other activities as of July 2013 that Secure Flight uses to identify passengers as high risk or low risk. The Secure Flight program, as implemented pursuant to the 2008 Secure Flight Final Rule, requires commercial aircraft operators traveling to, from, within, or overflying the United States to collect information from passengers and transmit that information electronically to TSA. The Secure Flight system uses this information to screen passengers by conducting computerized matching against government lists and other risk assessment activities. As a result of this screening, passengers identified as high risk receive enhanced screening, which includes, in addition to the procedures applied during a typical standard screening experience, a pat-down and either an explosive trace detection search involving a device certified by TSA to detect explosive particles or a physical search of the interior of the passenger’s accessible property, electronics, and footwear. Those passengers Secure Flight identifies as low risk are eligible to receive expedited screening, which unlike standard screening, affords travelers certain conveniences, such as not having to remove their belts, shoes, or light outerwear when screened.\nFigure 3 provides information on the lists Secure Flight uses to identify high-risk passengers. Figure 4 describes Secure Flight’s activities to identify low-risk passengers, including screening against lists associated with the TSA PreTM Program, a 2011 initiative that allows TSA to designate preapproved passengers as low risk, and TSA Pre✓™ risk assessments, which assess passengers’ risk using data submitted to Secure Flight for screening. Figure 5 describes two additional lists Secure Flight uses for passenger screening that, depending on the list, exempt passengers from being designated as low or high risk.", "This appendix presents data on the Secure Flight program’s performance measures and associated performance results that the Transportation Security Administration (TSA) reported externally to the Department of Homeland Security (DHS) and the Office of Management and Budget (OMB). Specifically, table 2 displays data on six Secure Flight Key Performance Parameters—key system capabilities that must be met in order for a system to meet its operational goals—that TSA management reported to DHS for fiscal years 2012 and 2013. Table 3 displays data on five Secure Flight program measures that TSA management reported to OMB for fiscal years 2012 and 2013. The OMB measures are part of the program’s yearly exhibit 300, also called the Capital Asset Plan and Business Case, a document that agencies submit to OMB to justify resource requests for major information technology investments. TSA reports performance data for all these measures on a monthly basis, and for each measure, we have provided the range of the performance measurement results for each fiscal year.", "The Secure Flight program, as implemented pursuant to the 2008 Secure Flight Final Rule, requires commercial aircraft operators traveling to, from, or overflying the United States to collect information from passengers and transmit that information electronically to TSA. This information, known collectively as Secure Flight Passenger Data (SFPD), includes personally identifiable information, such as full name, gender, date of birth, passport information (if available), and certain nonpersonally identifiable information, such as itinerary information and the unique number associated with a travel record (record number locator).\nThe Secure Flight program designates passengers for risk-appropriate screening by matching SFPD against various lists composed of individuals who should be identified, for the purpose of checkpoint screening, as either high risk or low risk. With respect to matching passengers against lists, the Secure Flight computer system first conducts automated matching of passenger and watchlist data to identify a pool of passengers who are potential matches to various lists. Next, the system compares all potential matches against the TSA Cleared List, a list of individuals who have applied to, and been cleared through, the DHS redress process. Passengers included on the TSA Cleared List submit a redress number when making a reservation, which allows the Secure Flight system to recognize and clear them.performs automated matching, Secure Flight analysts conduct manual reviews of potential matches to further rule out individuals who are not included on the No Fly and Selectee Lists.\nAfter the completion of manual reviews, TSA precludes passengers who remain potential matches to certain lists from receiving their boarding passes. These passengers, for whom air carriers receive a “passenger inhibited” message from Secure Flight, must undergo a resolution process at the airport. This process may involve air carriers sending updated passenger information back to Secure Flight for automated rematching or placing a call to Secure Flight for assistance in resolving the match. At the conclusion of automated and manual screening processes, Secure Flight provides air carriers with a final screening determination for each passenger. At airport checkpoints, those passengers identified as high risk receive enhanced screening and those identified as low risk are eligible for expedited screening.", "", "", "", "In addition to the contact named above, Maria Strudwick (Assistant Director), Mona Nichols Blake (Analyst-in-Charge), John de Ferrari, Michele Fejfar, Imoni Hampton, Eric Hauswirth, Susan Hsu, Richard Hung, Justine Lazaro, Benjamin Licht, Tom Lombardi, Linda Miller, David Plocher, and Ashley Vaughan made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 3, 3, 2, 3, 3, 2, 1, 2, 2, 2, 1, 2, 3, 3, 3, 2, 1, 1, 1, 1, 1, 1, 2, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "h0_full h2_full", "h0_title", "h0_full", "h0_full", "h0_full", "", "h0_full", "", "h1_full", "", "h1_full", "", "h2_title", "h2_title", "", "", "h2_full", "h2_full", "h2_full h1_full", "", "h3_full", "h3_full h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How has Secure Flight changed its program?", "Why did TSA begin to use risk-based criteria?", "What other changes has TSA made?", "Why is TSA conducting TSA Pre✓™ risk assessments?", "What has TSA done to implement Secure Flight?", "What is the problem with TSA's implementation?", "Why can TSA not fix these problems?", "How can TSA strengthen security screening?", "What problems does TSA have despite establishing new program goals?", "How for example can Secure Flight not fully assess it progress towards achieving its goals?", "How can Secure Flight better assess its program goals?", "What would allow TSA to help Secure Flight?", "What was GAO asked to do?", "What does the report examine?", "What actions has GAO taken?" ], "summary": [ "Since 2009, Secure Flight has changed from a program that identifies passengers as high risk solely by matching them against the No Fly and Selectee Lists to one that assigns passengers a risk category: high risk, low risk, or unknown risk.", "In 2010, following the December 2009 attempted attack of a U.S.-bound flight, which exposed gaps in how agencies used watchlists to screen individuals, the Transportation Security Administration (TSA) began using risk-based criteria to identify additional high-risk passengers who may not be in the Terrorist Screening Database (TSDB), but who should be designated as selectees for enhanced screening.", "In addition, as part of TSA PreüTM, a 2011 program through which TSA designates passengers as low risk for expedited screening, TSA began screening against several new lists of preapproved low-risk travelers. TSA also began conducting TSA Pre✓™ risk assessments, an activity distinct from matching against lists that uses the Secure Flight system to assign passengers scores based upon travel-related data, for the purpose of identifying them as low risk for a specific flight.", "TSA also began conducting TSA Pre✓™ risk assessments, an activity distinct from matching against lists that uses the Secure Flight system to assign passengers scores based upon travel-related data, for the purpose of identifying them as low risk for a specific flight.", "TSA has processes in place to implement Secure Flight screening determinations at airport checkpoints, but could take steps to enhance these processes.", "TSA has processes in place to implement Secure Flight screening determinations at airport checkpoints, but could take steps to enhance these processes.", "However, TSA does not have a process for systematically evaluating the root causes of these screening errors.", "Evaluating the root causes of screening errors, and then implementing corrective measures, in accordance with federal internal control standards, to address those causes could allow TSA to strengthen security screening at airports.", "Since 2009, Secure Flight has established program goals that reflect new program functions to identify additional types of high-risk and also low-risk passengers; however, current program performance measures do not allow Secure Flight to fully assess its progress toward achieving all of its goals.", "For example, Secure Flight does not have measures to assess the extent of system matching errors.", "Establishing additional performance measures that adequately indicate progress toward goals would allow Secure Flight to more fully assess the extent to which it is meeting program goals.", "More systematic documentation of the number and causes of these cases, in accordance with federal internal control standards, would help TSA ensure Secure Flight is functioning as intended.", "GAO was asked to assess the current status of the program.", "This report examines (1) changes to the Secure Flight program since 2009, (2) TSA's efforts to ensure that Secure Flight's screening determinations for passengers are implemented at airport checkpoints, and (3) the extent to which program performance measures assess progress toward goals.", "GAO analyzed TSA data and documents—including checkpoint data from 2012 through 2014 and Secure Flight performance measures—and interviewed relevant DHS officials." ], "parent_pair_index": [ -1, -1, 1, 2, -1, 0, 1, -1, -1, 0, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 1, 1, 1 ] }

{ "title": [ "Background", "TSA Collects and Uses Data to Track Canine Program Performance, but Could Better Analyze These Data to Identify Program Trends", "Training Minutes", "Utilization Minutes", "Certification Rates", "Short Notice Assessments", "Final Canine Responses", "TSA Has Not Deployed Passenger Screening Canine Teams to the Highest- Risk Airports and Did Not Determine Their Effectiveness Prior to Deployment", "TSA Has Deployed PSC Teams to Airports; However, PSC Teams Have Not Been Deployed to the Highest-Risk Terminals and Concourses", "TSA Plans to Complete PSC Effectiveness Assessments in 2013; Initial Results Indicate Performance Challenges", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: TSA Has Taken Actions to Enhance Program Training and Evaluation, and Research, Development, and Testing", "Appendix II: Objectives, Scope, and Methodology", "Appendix III: Comments from the Department of Homeland Security", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "NCP’s mission is to deter and detect the introduction of explosive devices into the transportation system. As of September 2012, NCP has deployed 762 of 921 canine teams for which it is able to fund across the transportation system. Table 1 shows the number of canine teams by type for which funding is available, as well as describes their roles, responsibilities, and costs to TSA. There are four types of LEO teams: aviation, mass transit, maritime, and multimodal, and three types of TSI teams: air cargo, multimodal, and PSC.\nTSA’s start-up costs for LEO teams include the costs of training the canine and handler, and providing the handler’s agency a stipend. The annual costs to TSA for LEO teams reflect the amount of the stipend. TSA’s start-up and annual costs for TSI canine teams are greater than those for LEO teams, because TSI handlers are TSA employees, so the costs include the handlers’ pay and benefits, service vehicles, and cell phones, among other things. PSC teams come at an increased cost to TSA compared with other TSI teams because of the additional training costs associated with providing decoys (i.e., persons pretending to be passengers who walk around the airport with explosive training aids).\nFrom fiscal year 2010 to 2012, TSA funding for NCP increased from approximately $52 million to $101 million. During this time, TSA requested and was provided funding to increase the stipend it provides to law enforcement agencies for participating in NCP, and of amounts appropriated in fiscal year 2012, $5 million was directed for 20 new canine teams. For fiscal year 2013, TSA is requesting approximately $96 million for its canine program, which is about $5 million less in funding than was appropriated in fiscal year 2012. TSA plans to continue to fund 921 canine teams, and cited savings on supplies, and efficiencies in operations, among others, as reasons for the reduced funding request.\nFigure 1 shows LEO, TSI, and PSC teams performing searches in different environments.\nTSA obtains canines at no cost to TSA through an interagency agreement with the Department of Defense. DOD reported that the most recent agreement, dated January 2012, requires TSA to request the number of canines it needs based on its annual requirement. TSA reported that on the basis of how many canine teams it plans to train, it requests up to 190 canines each year. TSA also breeds canines at its Canine Breeding and Development Center at Lackland Air Force Base. Canines undergo 10 weeks of explosives detection training before being paired with a handler at TSA’s CTES, also located at Lackland Air Force Base. Conventional canine handlers attend a 10-week training course, and PSC handlers attend a 12-week training course. Canines are paired with a LEO or TSI handler during their training course. After canine teams complete this initial training, and are acclimated to their home operating environment, they undergo a 10- to 14-day “training mission” with a CTES evaluator to obtain initial certification to work in their home operating environment. During the training mission, the evaluator uses a checklist as a guide to determine if a canine team should be certified. Some items on the checklist are considered critical, and the canine team must demonstrate those necessary skills in order to be certified. After initial certification, canine teams are evaluated on an annual basis to maintain certification.\nDuring the conventional explosives detection evaluation, canine teams must demonstrate their ability to detect all the explosive training aids the canines were trained to detect in five search areas. The five search areas are randomly selected among all the possible areas, but according to CTES, include the area that is most relevant to the type of canine team (e.g., teams assigned to airports will be evaluated in areas such as aircraft and cargo). Canine teams must find a certain percentage of the explosive training aids to pass their annual evaluation. In addition, a specified number of nonproductive responses (NPR)—when a canine responds to a location where no explosives odor is present—are allowed to pass an evaluation and maintain certification. After passing the conventional evaluation, PSC teams are required to undergo an additional annual evaluation that includes detecting explosives on a person, or being carried by a person. PSC teams are tested in different locations within the sterile area of an airport. A certain number of persons must be detected, and a specified number of NPRs are allowed for PSC certification.", "TSA collects and uses key canine program data in its Canine Website System, a central management database, but it could better analyze these data to identify program trends. Through CWS, TSA captures the amount of time canine handlers spend on proficiency training as well as screening for explosives, among other functions. Table 2 highlights some of the key data elements included in CWS.\nNCP uses CWS data to track and monitor canine teams’ performance. Specifically, FCCs review CWS data to determine how many training and utilization minutes canine teams are conducting on a monthly basis. NCP management also analyzes CWS data to determine, for example, how many canine teams are certified in detecting explosive odors, as well as the number of teams that passed short notice assessments. However, TSA has not fully analyzed the performance data it collects in CWS to identify program trends and areas that are working well or in need of corrective action. Such analyses could better position TSA to determine canine teams’ proficiency, guide future deployment efforts, and help ensure that taxpayer funds are being used effectively.", "TSA tracks the number of training minutes canine teams conduct on a monthly basis, as well as the types of explosives and search areas used when training, to ensure teams maintain their proficiency in detecting explosive training aids. However, TSA does not analyze training minute data over time (from month to month) and therefore is unable to determine trends related to canine teams’ compliance with the requirement. On the basis of our analysis of TSA’s data, we determined that some canine teams were repeatedly not in compliance with TSA’s 240-minute training requirement, and identified differences in the rate of compliance between TSI and LEO teams.\nAccording to senior NCP officials, reasons canine teams may not meet the requirement include the canine or handler taking leave, sometimes as a result of sickness or injury, and participating in an annual evaluation, among other reasons. While these circumstances may lead to a team not completing the required minutes certain months during a year, our analysis further revealed that a certain number of canine teams did not meet the training requirement for a more extended period, at least 6 months during the period analyzed. In light of this broader trend, NCP officials agreed that it would be useful to monitor compliance with training requirements over time to ensure canine teams maintain their proficiency in detecting explosives odor and stated that this information was previously unknown to TSA until we brought it to its attention. Analyzing the existing training data could help alert TSA to trends in noncompliance that could assist the agency in identifying canine team deficiencies and areas in need of corrective action. Specifically, such analyses could be used by program managers to place the canine handlers who do not meet the training requirement on a performance improvement plan, or ultimately remove the handlers from the canine program, among other actions.", "TSA tracks and monitors on a monthly basis the number of utilization minutes canine teams conduct searching for explosives, screening air cargo, and serving as a deterrent. TSA also collects monthly data on the amount of cargo TSI air cargo teams screen in accordance with the agency’s requirement, but hasn’t analyzed these data over time to determine if, for example, changes are in needed in the screening requirement or the number of teams deployed. Our analysis of CWS utilization data for the period from May 2011 through April 2012 showed that LEO teams consistently reported greater levels of monthly utilization minutes than TSI teams, and that on average, from September 2011 through July 2012, TSI air cargo teams exceeded their monthly screening requirement. However, according to senior NCP officials, it is difficult to compare utilization rates directly because LEO and TSI teams record utilization minutes differently. LEO teams report their utilization minutes based on the amount of time they spend patrolling transportation terminals, searching baggage and vehicles, and screening air cargo, among other things. TSI teams, on the other hand, report their utilization minutes based on the time spent primarily screening air cargo.\nAccording to senior NCP officials, the differences in how utilization minutes are recorded explains why utilization minutes vary so widely between LEO and TSI teams. While variances exist in utilization minutes for canine teams, opportunities exist to determine whether LEO and TSI teams are being utilized effectively. Unlike TSA’s monthly 240-minute training requirement, there is no minimum monthly canine utilization requirement to help ensure that canine teams are effectively utilized. According to senior NCP officials, the agency is considering whether a minimum requirement for, and a consistent definition of, utilization minutes should be applied to LEO and TSI teams in response to our review. In the absence of a consistent definition of utilization minutes or goals for utilization, it will be difficult for TSA to determine whether canine teams are being utilized effectively. Analysis of utilization minutes in light of stated goals could help TSA determine where LEO and TSI canine teams are most effectively utilized and could leverage such analysis to drive future deployment efforts.\nIn addition to capturing utilization minutes, TSA also collects and analyzes data monthly on the amount of cargo TSI air cargo canine teams screen in accordance with the agency’s requirement. However, it is unclear how the agency uses this information to identify trends to guide longer-term future program efforts and activities. Our analysis of TSA’s cargo screening data from September 2011 through July 2012 showed that TSI air cargo teams nationwide generally exceeded their monthly requirement to screen air cargo placed on passenger aircraft. This suggests that TSA could increase the percentage of air cargo it requires canine teams to screen, or redeploy additional TSI air cargo teams. For example, while TSI air cargo teams have generally met or exceeded their monthly screening requirement, as of September 2012, the agency has yet to deploy all of its 120 TSI air cargo teams for which funding is available. However, TSA has not utilized the trends in cargo screening data to guide agency decision making as to whether the current and planned deployment number of TSI teams by location is appropriate. Three of the four supervisory TSI officials we interviewed stated that staffing levels of TSI teams were sufficient. However, one supervisory TSI official stated that his TSI staffing level was more than double what was needed to meet TSA’s screening requirement and provide adequate coverage for the airport. However, TSA plans to deploy additional TSI teams to this airport in the near future. As TSA continues to roll out TSI air cargo teams to reach its goal of 120 teams nationwide for which it has funding, an analysis of utilization data could better inform agency decision makers regarding future TSI air cargo screening requirements, and number of canine team deployments by location.", "TSA tracks the number of certified and decertified canine teams, but is unable to analyze these data to identify trends in certification rates because these data were not consistently tracked and recorded prior to 2011. Our analysis of CWS certification data revealed that approximately the same percentage of LEO and TSI teams were TSA certified in 2011 and 2012. While the certification data show a high percentage of certified canine teams for the time periods analyzed, it is unclear whether certifications rates have changed over time for LEO and TSI canine teams because reliable data for older periods of time were not available.\nAccording to TSA officials, while LEO certification rates have remained constant for a 2-year time period, TSI certification rates have increased substantially since 2008, when TSI teams were initially deployed. TSA officials attributed the initially low TSI certification rates to lack of management support and limited availability of explosive training aids. However, we could not determine what, if any, variances existed in the certification rates among LEO and TSI teams over time because CTES reported it was unable to provide certification rates by type of canine team for calendar years 2008 through 2010. According to CTES, the agency recognizes this deficiency and is in the process of implementing procedures to address data collection, tracking, and record-keeping issues. It will be important for TSA to continue to capture and analyze these data to understand the differences that may exist between LEO and TSI canine teams; how these differences may affect their effectiveness; and what steps, if any, need to be taken to address any differences.", "To help provide reasonable assurance that canine teams are proficient in detecting explosives odor, NCP conducts and collects information on covert tests conducted by FCCs that assess canine teams’ operational effectiveness in detecting and responding to possible explosives, which TSA refers to as short notice assessments. However, TSA has not analyzed the results of these assessments beyond the pass and fail rate, which limits NCP’s ability to determine the effectiveness of its canine teams. Furthermore, these assessments were suspended in May 2012 because of FCC staffing shortages. NCP began conducting short notice assessments in April 2011, and FCCs conducted 159 short notice assessments in 2011. While these tests can be helpful in identifying canine deficiencies, without analyzing the results of these tests to determine if there are any search areas or type of explosives in which canine teams are more effective compared with others, and what, if any, training may be needed to mitigate deficiencies, TSA is missing an opportunity to fully utilize them. Resuming and analyzing the results of short notice assessments will provide TSA with additional information on the effectiveness of its canine teams in detecting explosives odor, including determining the conditions under which canine teams are most or least effective. According to NCP officials, TSA is in the process of hiring 10 additional FCCs and expects all 10 will be employed in early 2013, at which time NCP plans to resume the assessments, and analyze the results.", "Our analysis of final canine responses and data on corresponding swab samples used to verify the presence of explosives odor revealed that canine teams are not submitting swab samples to NCP’s Canine Explosives Branch, which is an important component of TSA’s quality assurance process. In March 2011, TSA issued guidance to FCCs instructing canine handlers on how to collect and submit swab samples of final responses to CEB to verify the presence of explosives odor. Such samples can confirm canines are effectively detecting explosives odor, although there are limitations to taking swab samples, and a sample that does not confirm the presence of odor does not necessarily mean the canine falsely detected explosives odor (e.g., the sample may have been taken from the wrong part of the item). The purpose of the guidance was to develop a standardized process of collecting swab samples to determine canine teams’ effectiveness in detecting explosives odor.\nHowever, we found that canine handlers did not always submit swab samples. Specifically, we determined that the number of swab samples sent by canine handlers to TSA’s CEB for scientific review was far lower than the number of final canine responses recorded in CWS. For instance, in 2011, of the total number of final canine responses recorded in CWS, LEO and TSI canine teams submitted swab samples for 8 percent of the final responses to CEB for scientific study after the guidance was issued. NCP stated that 49 percent of the final canine responses entered in CWS were improperly or incorrectly recorded by canine handlers, and the remaining 51 percent of cases did not have to be submitted to CEB for scientific study since submission under the guidance was not a requirement. However, NCP officials agreed that tracking and scientifically measuring final canine responses could help NCP measure canine teams’ effectiveness in detecting explosives in their operational environments, such as an airport or air cargo facility. According to these officials, the agency will take steps to require canine handlers to submit swab samples to CEB. For example, the requirement will be added to NCP’s Standard Operating Practices and Procedures, which is expected to be issued by March 2013. In addition, senior NCP officials told us the agency will clarify this policy with program supervisors and canine handlers, and modify CWS to more easily allow handlers to document when a swab sample is collected and sent to CEB for study. If these steps are implemented effectively, the issues we raised will be addressed.\nOf the final canine responses that could have been submitted to CEB, NCP reported that almost half were resolved locally by identifying sources of odors consistent with those canines are trained to detect. However, NCP could not determine the resolution of the remaining cases that were not submitted to CEB, and for which no final resolution was documented at the local level. As our analysis has shown, capturing and analyzing additional information on final canine responses over time is an important quality assurance step and may help TSA and other interested stakeholders to more accurately determine the extent to which canine teams are effectively detecting explosive materials in real world scenarios.\nStandards for Internal Control in the Federal Government requires agencies to ensure that ongoing monitoring occurs during the course of normal operations to help evaluate program effectiveness. TSA collects and uses key canine team performance data, but it has not fully analyzed these data, consisting of training and utilization minutes, certification rates, and results of short notice assessments and final canine responses. Such analyses could help TSA management identify program trends to better target resources and activities based on what is working well and what may be in need of corrective action. According to NCP officials, while FCCs review training and utilization data on a monthly basis, NCP does not have the time or staff resources to analyze such data over time. However, canine handlers collectively spend a significant amount of time providing the data to NCP, and such analyses could better position TSA to determine the proficiency of its canine teams, guide future deployment efforts, and help ensure taxpayer funds are being used effectively.", "TSA’s 2012 Strategic Framework calls for the deployment of PSC teams based on risk; however, airport stakeholder concerns about the appropriateness of TSA’s response resolution protocols for these teams have resulted in PSC teams not being deployed to the highest-risk airport terminals and concourses. Moreover, TSA began deploying PSC teams prior to determining the teams’ operational effectiveness and before identifying where within the airport these teams could be most effectively utilized to screen passengers.", "In April 2011, TSA began deploying PSC teams to airports terminals and concourses, and plans to deploy all 120 PSC teams for which it has funding by the end of calendar year 2013. TSA’s Strategic Framework calls for the deployment of PSC teams based on risk; however, we found that PSC teams have not been deployed to the highest-risk airport terminals and concourses based on TSA’s high-risk list. TSA officials stated that PSC teams were not deployed to the highest-risk terminals and concourses for various reasons, including concerns from an airport law enforcement association about TSA’s decision to deploy PSC teams with civilian TSI handlers and the appropriateness of TSA’s response resolution protocols. These protocols require the canine handler to be accompanied by two additional personnel that may, but not always, include a law enforcement officer. According to representatives from an airport law enforcement association, these protocols are not appropriate for a suicide bombing attempt requiring an immediate law enforcement response.\nAccording to TSA officials, the lack of agreed-upon response resolution protocols with local law enforcement officials has complicated efforts to introduce PSCs at some airports. For example, seven airport operators have declined the deployment of PSC teams because of concerns expressed by airport stakeholders regarding TSA’s response resolution protocols and whether they are adequate for dealing with potential threats, such as suicide bombers. According to TSA’s Assistant Administrator for the Office of Security Operations, TSA’s goal is to deploy PSC teams to airports where there is a supportive working environment, and accordingly, TSA does not generally require that PSC teams be accepted for use at an airport. However, TSA reported that if it identified a specific threat to an airport, it would use its authority to deploy the PSC teams regardless of any airport stakeholder opposition to the decision, but it has not had to do so.\nRepresentatives from three major aviation industry associations we interviewed support using PSC teams in airports, but also raised concerns surrounding TSA’s PSC response resolution protocols. These concerns were primarily related to TSA deploying PSCs with unarmed TSI handlers rather than LEO handlers because of the differences in their abilities to respond to a potential threat, such as a suicide bomber. According to TSA officials, TSA deployed PSCs with TSI handlers in a manner consistent with the report of the Committee on Appropriations of the House of Representatives, which accompanies the committee’s DHS fiscal year 2013 appropriations bill. Officials from an association representing airport law enforcement officers recommended that PSC teams be accompanied by three LEOs, among other reasons, to help reduce the potential liability and response times associated with responding to a possible suicide bomber. Representatives from an association representing airport law enforcement officers and TSA officials stated that they have been working together to try to address concerns regarding TSA’s response resolution protocols; however, they have not been able to reach an agreement on this issue, as of September 2012. TSA maintains that PSCs are similar to the agency’s other screening tools used to detect explosives, and thus a final response from a PSC should trigger the same type of law enforcement response to potential threats identified through other screening measures. Additionally, TSA officials stated that airport operators are required to adopt and maintain TSA-approved security programs that, among other things, provide for a law enforcement presence and capability at the airport that is adequate to ensure the safety of passengers, and that their current approach of using LEOs in support of TSI-led PSC operations is consistent with this requirement.\nHowever, TSA’s decision to deploy PSC teams only to airports where they would be willingly accepted by stakeholders has resulted in PSC teams not being deployed to the highest-risk airport terminals and concourses on its high-risk list. Given that PSC teams cost $164,000 annually per team, TSA is not using the teams in the most cost-effective manner to enhance security if it is limited to deploying them at lower-risk airports and concourses. Moreover, PSC teams at the two high-risk airports we visited are not being used for passenger screening because TSA and the local law enforcement agencies have not reached agreement on the PSC response resolution protocols. Thus, rather than being utilized for their intended primary purpose—passenger screening— PSC teams are being used to screen air cargo or conduct training. TSA officials agreed that the decision to defer to airport stakeholders’ willingness to have PSC teams deployed to their airports has resulted in PSCs not being optimally utilized. While we recognize the value of obtaining airport stakeholder buy-in, deploying PSC teams to the highest- risk airport terminals and concourses in accordance with its Strategic Framework, could help TSA better deploy future PSC teams in a cost- effective manner, and utilize the PSC teams that have already been deployed for their intended purposes to enhance security.", "TSA began deploying PSC teams in April 2011 prior to determining the teams’ operational effectiveness and before identifying where within the airport environment these teams would be most effectively utilized. According to TSA officials, operational assessments did not need to be conducted prior to their deployment because canines were being used to screen passengers by other entities, such as airports in the United Kingdom, and TSA leadership focused on initially deploying PSC teams to a single location within the airport—the sterile area—because it thought it would be the best way to foster stakeholders’ acceptance of the teams. However, in June 2012, DHS S&T and TSA began conducting operational assessments to help demonstrate the effectiveness of PSC teams, and plans to complete additional PSC effectiveness testing in 2013 at additional airports. To assess the effectiveness of PSC teams in detecting explosives odor, TSA and DHS S&T are assessing their capabilities based on several factors. On the basis of these results, DHS S&T and TSA’s NCP recommended that the assessment team conduct additional testing and that additional training and guidance be provided to canine teams.\nAs part of our review, we visited two airports at which PSC teams have been deployed and observed training exercises in which PSC teams accurately detected explosives odor (i.e., positive response), failed to detect explosives odor (i.e., miss), and falsely detected explosives odor (i.e., non productive response). See the hyperlink in the note for figure 2 for videos of training exercises at one airport showing instances when PSC teams detected, and failed to detect explosives odor.\nOn the basis of the results of DHS’s assessments, TSA could have benefited from completing operational assessments of PSCs before deploying them on a nationwide basis to determine whether they are an effective method of screening passengers in the U.S. airport environment. TSA officials stated that operational assessments did not need to occur prior to deployment because the agency does not consider PSCs a new screening method. Moreover, according to DHS S&T’s Canine Explosives Detection Project Manager, some PSC teams needed to be deployed operationally at airports before their effectiveness could be assessed. While we agree that some PSC teams needed to be deployed for operational assessments to occur, this testing could have been completed before TSA started deploying additional PSC teams on a nationwide basis beyond the three pilot site airports. As discussed earlier, TSA plans to deploy all 120 teams for which it has funding by the end of calendar year 2013. Best practices for program performance call for agencies to use performance information to assess efficiency, identify performance gaps, and ensure intended goals are met. We previously reported on the need for TSA to validate detection methods before deploying new screening methods. For example, TSA proceeded with deploying its Screening of Passengers by Observation Techniques behavior detection program on a nationwide basis before determining whether the list of passenger behaviors and appearances underpinning the program were scientifically validated, and whether these techniques could be applied on a large scale for counterterrorism purposes in an airport environment. Assessing the effectiveness of PSCs in the operational environment could help provide TSA with reasonable assurance that PSCs are effective in identifying explosives odor on passengers and provide an enhanced security benefit.\nAdditionally, TSA has not completed an assessment to determine where within the airport PSC teams would be most effectively utilized. According to TSA’s Assistant Administrator for the Office of Security Operations, to alleviate airport stakeholders’ concerns regarding TSA’s response resolution protocols, the agency initially deployed PSC teams to the sterile areas, thereby enabling TSA to gather data on the value of PSC teams in the airport environment while reducing the likelihood of a final response from a PSC resulting in the closure of a checkpoint since an individual has already passed through several layers of screening when entering the sterile area. However, aviation stakeholders we interviewed, raised concerns about this deployment strategy, stating that PSC teams would be more effectively utilized in non sterile areas of the airport, such as curbside or in the lobby areas. Specifically, two of the three aviation industry representatives we interviewed stated that deploying PSC teams to the sterile area, rather than the public area, could limit their ability to detect and deter potential suicide bombers entering the airport. According to TSA’s Assistant Administrator for the Office of Security Operations, TSA initially deployed PSC teams to the sterile area because it thought it would foster stakeholders’ acceptance of PSC teams and does not generally consider the deployment of PSC teams to the sterile area as a permanent or most optimal use of the PSC teams. Instead, the agency maintains that the best use of PSC teams is in the public area or at the screening checkpoint.\nTSA has since deployed PSC teams to the passenger screening checkpoints. According to NCP officials, the agency is also considering providing some PSCs to LEOs to work on the public side of the airport. However, DHS S&T does not plan to assess the effectiveness of PSCs on the public side, beyond the checkpoint, since TSA was not planning to deploy PSCs to the public side of the airport when DHS S&T designed its test plan. Comprehensive operational assessments that include a comparison of PSC teams in both the sterile and public areas of the airport could help TSA determine if it is beneficial to deploy PSCs to the public side of airports, in addition to or in lieu of the sterile area and checkpoint. Moreover, Standards for Internal Control in the Federal Government stresses the need for agencies to provide reasonable assurance of the effectiveness and efficiency of operations, including the use of the entity’s resources.\nDuring the June 2012 assessment of PSC teams’ effectiveness, TSA conducted one of the search exercises with three conventional canine teams. Although this assessment was not intended to be included as part of DHS S&T and TSA’s formal assessment of PSC effectiveness, the results of this assessment suggest, and TSA officials and DHS S&T’s Canine Explosives Detection Project Manager agreed, that a systematic assessment of PSCs with conventional canines could provide TSA with information to determine whether PSCs provide an enhanced security benefit compared with conventional LEO aviation canine teams that have already been deployed to airport terminals. An assessment would help clarify whether additional investments for PSC training are warranted. Moreover, since PSC teams are trained in both conventional and passenger screening methods, TSA could decide to convert existing PSC teams to conventional canine teams, thereby limiting the additional resource investments associated with training and maintaining the new PSC teams. Additionally, as previously discussed, should TSA decide to deploy some of the PSCs scheduled to be deployed in 2013 with LEO handlers, rather than TSI handlers, TSA could further reduce program costs and increase costs savings, as a PSC team led by a LEO handler could cost TSA $53,000 annually per team, compared with $164,000, the current annual cost per TSI-led PSC team. Moreover, TSA officials and aviation industry stakeholders stated that deploying PSCs with experienced LEO canine handlers could reduce the learning curve associated with becoming a PSC handler.", "Securing the nation’s vast and diverse transportation system is a challenging task that is complicated by the ever-changing and dynamic threat environment. TSA’s National Canine Program is an important and growing component of its efforts to achieve this goal. However, a systematic analysis of key program data that TSA currently collects, consisting of training and utilization minutes, certification rates, results of short notice assessments (covert tests), and canine responses to the possible presence of explosives, could better position TSA to identify program trends to better target resources and activities based on what is working well and what may be in need of corrective action. In addition, a comprehensive assessment of passenger screening canines and conventional canine teams in all areas of the airport could provide TSA with greater assurance that passenger screening canine teams are a cost-effective screening tool and are being optimally utilized. Such analyses could help TSA determine the appropriate number, type, and placement of canine teams needed to best secure the U.S. transportation system. Finally, if effective, deploying passenger screening canine teams to the highest-risk airport terminals and concourses will provide TSA with greater assurance that the PSC teams are deployed in a manner that targets the most pressing security needs in a cost-effective manner.", "To help ensure TSA analyzes canine team data to identify program trends, and determines if PSC teams provide an added security benefit to the civil aviation system, and if so, deploys PSC teams to the highest-risk airports, we recommend that the Administrator of the Transportation Security Administration direct the Manager of the NCP to take the three following actions:\nRegularly analyze available data to identify program trends and areas that are working well and those in need of corrective action to guide program resources and activities. These analyses could include, but not be limited to, analyzing and documenting trends in proficiency training, canine utilization, results of short notice assessments (covert tests) and final canine responses, performance differences between LEO and TSI canine teams, as well as an assessment of the optimum location and number of canine teams that should be deployed to secure the U.S. transportation system.\nExpand and complete testing, in conjunction with DHS S&T, to assess the effectiveness of PSCs and conventional canines in all airport areas deemed appropriate (i.e., in the sterile area, at the passenger checkpoint, and on the public side of the airport) prior to making additional PSC deployments to help (1) determine whether PSCs are effective at screening passengers, and resource expenditures for PSC training are warranted, and (2) inform decisions regarding the type of canine team to deploy and where to optimally deploy such teams within airports.\nIf PSCs are determined to provide an enhanced security benefit, TSA should coordinate with airport stakeholders to deploy future PSC teams to the highest-risk airports, and ensure that deployed PSC teams are utilized as intended, consistent with its statutory authority to provide for the screening of passengers and their property.", "We provided a draft of the sensitive version of this report to the Departments of Defense and Homeland Security on November 13, 2012, for their review and comment. DOD did not provide comments. DHS provided written comments, which are reprinted in appendix III. DHS concurred with all three recommendations, and identified actions taken or planned to implement the recommendations.\nDHS concurred with the first recommendation, that TSA regularly analyze canine team data to identify program trends, and areas working well and those in need of correction action. DHS stated that NCP is planning to reestablish yearly comprehensive assessments of canine teams’ compliance with program requirements, and implement corrective action, when necessary. Furthermore, TSA is upgrading CWS, and in March 2013 will be able to capture data on PSC teams, as it currently does for conventional canine teams. We support TSA’s actions to implement these yearly assessments, as well as the upgrade to CWS to collect information on PSC teams. We believe it is important for TSA to also review its analysis of canine teams’ performance screening air cargo in order to inform future decisions on the percentage of air cargo that it requires canine teams to screen, as well as the number of TSI air cargo canine teams needed to meet TSA’s air cargo screening requirement. TSA should also analyze its data, including results of short notice assessments and final canine responses, to assess canine team performance in order to mitigate any explosives detection challenges and determine canine teams’ strengths. Such actions, in conjunction with TSA’s planned efforts, would meet the intent of the recommendation.\nDHS concurred with the second recommendation, to expand and complete testing to assess the effectiveness of PSC teams and conventional canines in areas of the airport deemed appropriate. DHS stated that TSA and DHS S&T will conclude testing of PSC teams in the sterile areas of airports in February 2013, and have begun testing PSC teams in the public areas of the airports. In addition, TSA will discuss with DHS S&T developing testing protocols for conventional canines. We support TSA’s actions to assess the effectiveness of PSC teams, and encourage TSA to incorporate conventional canines into future testing to demonstrate if PSCs provide an enhanced explosives detection benefit relative to conventional canines, given their increased cost.\nDHS also stated that TSA anticipates deploying all 120 of the PSC teams for which it received authorization by the end of calendar year 2013. If PSC teams are not proven to be effective based on TSA and DHS S&T’s assessments, we strongly encourage TSA to reconsider deploying PSC teams for which it has not already allocated or obligated resources. Such action, in conjunction with TSA’s planned efforts, would meet the intent of the recommendation.\nDHS concurred with the third recommendation, to deploy PSC teams to the highest-risk airports. DHS stated that TSA will deploy future teams to the highest-priority airports as identified by both its operational and risk- based analyses, and it continues to evaluate and modify its risk-based analysis as needed. We support TSA’s efforts to deploy PSC teams to the highest-risk airports in order to provide an additional layer of security where it is most needed, and continue to believe that TSA first needs to determine if PSCs provide an enhanced security benefit and, if so, coordinate such deployments with airport stakeholders. Such action, in conjunction with TSA’s planned efforts, should address the intent of the recommendation.\nDHS also provided technical comments which we incorporated, as appropriate.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4379 or lords@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "Since our review of the Transportation Security Administration’s (TSA) National Canine Program (NCP) in 2008, the agency has taken actions to enhance the program in the areas of (1) training and evaluation, and (2) research, development, and testing with the DHS Science and Technology Directorate (S&T). Table 3 provides an overview of these efforts.\nTraining and evaluation. Canine handlers we interviewed in four locations (74 of 75 handlers), generally spoke positively of the instruction they had received during their training courses and missions. For example, some canine handlers cited the hands-on instruction and feedback they received from TSA Canine Training and Evaluation Section (CTES) evaluators during their training missions as particularly beneficial. However, some canine handlers we interviewed (26 of 67 evaluated) suggested that TSA seek ways to improve the consistency and objectivity of the evaluation process. For example, some canine handlers stated that while one evaluator may consider a canine sitting a few feet away from the explosive training aid a “fringe” response and count it positively, another evaluator would consider the same scenario a nonproductive response (NPR). As noted earlier, a specified number of NPRs are allowed to pass an evaluation and maintain certification. In July 2011, CTES formed a committee comprising various TSA officials and canine handlers to conduct a review of its evaluation process. The committee suggested creating a “Train the Evaluator” course to reduce inconsistencies in the evaluation process. CTES subsequently created an evaluation unit, which will be implementing the course on consistently applying evaluation guidelines later this calendar year. Furthermore, in January 2012, CTES began sending its most experienced evaluators to all annual evaluations to help improve the consistency and objectivity of the evaluation process. Specifically, according to CTES officials, one of the two evaluators conducting the evaluation is to be from the evaluation unit, which is composed of CTES’s 12 most experienced evaluators. The committee supported actions to provide greater consistency during the evaluation process but stated that the evaluations are fair, and ultimately not the reason for canine teams failing evaluations. Rather, the committee cited a lack of local training support for canine teams once they are deployed to their home units. As a result, CTES is in the process of deploying regional trainers to the field to assist canine teams with proficiency training. Thus far, 23 of 27 regional trainers have been deployed to the field. CTES planned to deploy all 27 regional trainers by December 2012.\nResearch, development, and testing. Through its Canine Explosives Detection Project, DHS S&T is working to enhance TSA canine effectiveness through two efforts: (1) conducting operational assessments of canine detection capabilities in the air cargo environment, and (2) determining the behavioral, physiological, and genetic identifiers of a successful explosives detection canine.\nOperational assessments: DHS S&T has conducted a series of tests assessing the ability of canine teams to detect explosives in air cargo. During the most recent series of tests, conducted in 2009 and 2010, DHS S&T determined canines can be an effective tool in detecting explosives in the air cargo environment, but recommended more frequent and appropriate training.\nDHS S&T and TSA also conducted a pilot test to determine if private, or third-party, canine teams could be used by the air cargo industry to screen air cargo for the purposes of meeting the mandate to screen 100 percent of air cargo. According to TSA, the pilot concluded in September 2011, and TSA determined that utilizing third-party canine teams to screen air cargo could be a viable option, but there would also be challenges, including providing the resources needed to maintain oversight of the program. TSA leadership is evaluating whether to move forward with the implementation of a third-party canine program. Allowing the air cargo industry to use canines could increase its ability to meet the screening mandate by overcoming challenges we have previously reported.\nBehavior and genetics: DHS S&T, in collaboration with a private company, Dog Genetics, and the University of Texas, is researching behavioral, physiological, and genetic identifiers of a successful explosives detection canine. DHS S&T is reviewing the history of proven explosives detection canines within NCP and is attempting to identify behaviors and DNA markers that are indicative a canine will be successful at explosives detection. The goal of this research is to allow TSA to better select which canines to breed, and which to select for explosives detection training. This is a long-term effort and DHS S&T estimates this research will be completed in fiscal year 2015.", "This report addresses the following objectives: (1) What data does TSA have on its canine program, what do these data show, and to what extent has TSA analyzed these data to identify program trends? (2) To what extent has TSA deployed passenger screening canine teams using a risk-based approach and determined their effectiveness prior to deployment?\nIn addition, this report summarizes the actions TSA has taken to enhance its National Canine Program since we issued our last report, in 2008.\nTo determine what data TSA has on its canine program, what these data show, and the extent to which TSA has analyzed these data to identify program trends, we interviewed TSA’s Office of Security Operations headquarters and field officials about the type of data they collect and how they analyze the data to monitor canine team effectiveness consistent with Standards for Internal Control in the Federal Government. Specifically, we interviewed canine branch chiefs at headquarters who oversee the operations of NCP. We also interviewed an area canine coordinator and field canine coordinators, and supervisory transportation security inspectors who oversee canine teams in the field. Using data from the agency’s Canine Website System (CWS), we analyzed training and utilization minutes from May 2011 through April 2012—the most recent data available at the time of our analysis. We compared the number of training minutes canine teams conducted each month with TSA’s training requirement documented in its Canine Manual and cooperative agreements with law enforcement agencies. We analyzed the number of minutes canine teams were utilized by type of canine team to identify any differences between law enforcement officer (LEO) and transportation security inspector (TSI) teams. In addition, we collected and reviewed monthly reports on canine team training and utilization from an area canine coordinator and field canine coordinators. Further, we analyzed certification data from CWS for May 2012—the most recent data available at the time of our analysis—to determine the number of certified and decertified canine teams by type of team (LEO and TSI). Moreover, we reviewed TSA certification data by type of team from January 2011 through August 2012. To assess the reliability of the CWS data on canine team training, utilization, and certification, we interviewed knowledgeable officials, reviewed the data for obvious errors and anomalies, and reviewed documentation. We determined the data were sufficiently reliable for our purposes. We also reviewed and analyzed the number of final canine responses documented in CWS, and corresponding swab samples sent to TSA’s Canine Explosives Branch (CEB) to validate canines’ ability to detect explosives odor. Specifically, we compared the number of final canine responses recorded in CWS with the number of swab samples sent to CEB from the time the guidance was issued on collecting swab samples in March 2011 to July 2012—the most current data available at the time of our request. We found limitations in the final canine response data, as discussed in the report, but we believe the data to be sufficiently reliable for generally comparing the number of canine responses with the number of swab samples.\nTo assess the extent TSA deployed passenger screening canines (PSC) in a risk-based manner, consistent with TSA’s 2012 Strategic Framework, we compared the risk rankings TSA assigned to airport terminals with NCP’s September 2012 canine asset spreadsheet—which tracks the deployment location of TSA’s canine assets. We also interviewed senior TSA and NCP headquarters and field officials to obtain information on the extent to which risk and other factors, such as stakeholder concerns, were considered when deploying PSC teams. We also reviewed TSA’s Recommended Operational Procedures for Canine Screening of Individuals to understand the agency’s operational procedures and protocols for deploying and resolving final responses by PSC teams. In addition, we interviewed PSC handlers at two locations we visited where PSCs were initially deployed. We also interviewed officials from Amtrak police, and three major aviation industry associations—Airport Law Enforcement Agencies Network (ALEAN), Airports Council International- North America (ACI-NA), and American Association of Airport Executives (AAAE)—to discuss their views on PSC utilization and response protocols. While the results from our interviews are not generalizable to all PSC handlers and aviation stakeholders, they provided views on TSA’s utilization of PSC teams and protocols for resolving final responses.\nTo determine the extent to which TSA determined the effectiveness of PSC teams, we compared the PSC assessment approach used by TSA and DHS S&T with DHS guidance and best practices. We also interviewed senior TSA and DHS S&T officials to obtain information on the extent to which a comprehensive assessment of the effectiveness of PSC teams had been completed in the operational environment, including determining (1) where within the airport environment (i.e. sterile, checkpoint, and public areas) PSC teams would most effectively utilized, and (2) whether PSCs provide an added benefit in terms of cost and security to conventional canines. Moreover, we reviewed the test results from TSA and DHS S&T’s assessment to determine the extent to which PSC teams have been proven effective in different areas at the airport, consistent with the environments described in TSA’s Recommended Operational Procedures for Canine Screening of Individuals and best practices in Standards for Internal Control in the Federal Government. In addition, we interviewed DHS S&T officials regarding the testing methodology, and determined that the results are reliable. We also observed PSC teams in their operational environments during our site visits, and served as decoys—passengers with concealed explosive training aids—during PSC training exercises in airport terminals, and videotaped the PSC teams. We reviewed canine team costs data, as of January 2012, to identify the difference in costs among the various types of canine teams. To assess the reliability of the canine team cost data, we interviewed knowledgeable officials, reviewed the data for obvious errors and anomalies, and reviewed documentation. We determined the data were sufficiently reliable for our purposes.\nTo summarize the actions TSA has taken to enhance NCP since our 2008 review, we reviewed TSA’s canine team training and evaluation procedures. We discussed these procedures with trainers, instructors, and evaluators at TSA’s CTES. In addition, we observed canine training at CTES at Lackland Air Force Base in Texas, as well as Auburn University’s Canine Detection Training Center in Alabama because this is where some PSC teams were trained. We discussed canine training and evaluation practices with the Department of Defense’s Military Working Dog Program, and the Scientific Working Group on Dog and Orthogonal Detector Guidelines. Furthermore, we conducted site visits to the three locations with the greatest number of deployed canine teams in the mass transit, airport, and air cargo environments to observe canine teams training in their operational environments and interview LEO and TSI canine handlers. We also observed canine teams and interviewed handlers during a site visit we conducted to a fourth location so we could observe additional PSC teams. While the results from our interviews are not generalizable to all canine handlers, they provided a range of perspectives on canine handlers’ views on the training and evaluation process. We reviewed DHS S&T’s efforts to conduct research, development, and testing to enhance canine effectiveness through its Canine Explosives Detection Project. Specifically, we reviewed agreements and contracts with project participants to develop homemade explosive training aids to broaden threat detection, evaluate the effectiveness of canine teams in detecting explosives in air cargo, and conduct research on breeding and genetics to select canines best suited for explosives detection. We also discussed the status of these efforts with DHS S&T officials.\nWe conducted this performance audit from January 2012 through 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, Steve Morris, Assistant Director, and Lisa Canini, Analyst-in-Charge, managed this review. Josh Diosomito and Michelle Woods made significant contributions to the work. Lydia Araya, Chuck Bausell, Michele Fejfar, Richard Hung, Thomas F. Lombardi, Douglas Manor, Linda Miller, Erin O’Brien, Jessica Orr and Jessica Smith also contributed to this report." ], "depth": [ 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_full h2_title", "", "h0_full h2_full", "", "", "h0_full h2_full", "h2_title h1_full", "h1_full", "h2_full h1_full", "h2_full", "h3_full", "h0_full h3_full", "h0_full", "h2_full h1_full", "", "", "", "" ] }

{ "question": [ "What is TSA doing with regards to NCP?", "How does TSA collect canine team data?", "What is the problem with TSA's collection?", "How could analysis of TSA's data be helpful?", "What has TSA not yet done?", "Why have some airport operators not used PSC teams?", "What is the result of not using PSC teams?", "What is TSA in the process of doing?", "How would comprehensive testing be more beneficial to TSA?", "What has TSA implemented?", "What is the importance of NCP?", "What has GAO examined regarding TSA?", "How did GAO examine TSA?", "What does GAO recommend?", "What does GAO recommend if PSCs are effective?", "How did DHS respond to GAO's recommendations?" ], "summary": [ "The Transportation Security Administration (TSA), the federal agency that administers the National Canine Program (NCP), is collecting and using key data on its canine program, but could better analyze these data to identify program trends.", "TSA collects canine team data using the Canine Website System (CWS), a central management database. TSA uses CWS to capture the amount of time canine teams conduct training as well as searching for explosives odor, among other functions.", "However, TSA has not fully analyzed the data it collects in CWS to identify program trends and areas that are working well or in need of corrective action.", "Such analyses could help TSA to determine canine teams' proficiency, inform future deployment efforts, and help ensure that taxpayer funds are used effectively.", "TSA has not deployed passenger screening canines (PSC)--trained to identify and track explosives odor on a person--consistent with its risk-based approach, and did not determine PSC teams' effectiveness prior to deployment.", "TSA officials stated that the agency generally defers to airport officials on whether PSC teams will be deployed, and some airport operators have decided against the use of PSC teams at their airports because of concerns related to the composition and capabilities of PSC teams.", "As a result of these concerns, the PSC teams deployed to higher-risk airport locations are not being used for passenger screening as intended, but for other purposes, such as screening air cargo or training.", "TSA is in the process of assessing the effectiveness of PSC teams in the operational environment, but testing is not comprehensive since it does not include all areas at the airport or compare PSCs with already deployed conventional canines (trained to detect explosives in stationary objects).", "As a result, more comprehensive testing could provide TSA with greater assurance that PSC teams are effective in identifying explosives odor on passengers and provide an enhanced security benefit.", "TSA has implemented a multilayered system composed of people, processes, and technology to protect the transportation system.", "One of TSA's security layers is NCP, composed of over 760 deployed explosives detection canine teams, including PSC teams trained to detect explosives on passengers.", "As requested, GAO examined (1) data TSA has on its canine program, what these data show, and to what extent TSA analyzed these data to identify program trends, and (2) the extent to which TSA deployed PSC teams using a risk-based approach and determined their effectiveness prior to deployment.", "To address these questions, GAO conducted visits to four geographic locations selected based on the number and type of canine teams deployed. GAO also analyzed TSA data from 2011 through 2012, such as utilization data; reviewed documents, including response protocols; and interviewed DHS officials.", "GAO is recommending that TSA (1) regularly analyze data to identify program trends and areas working well or in need of corrective action, and (2) take actions to comprehensively assess the effectiveness of PSCs.", "If PSCs are determined to be effective, GAO is recommending that TSA coordinate with stakeholders to deploy PSC teams to the highest-risk airport locations and utilize them as intended.", "DHS concurred with GAO's recommendations." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, 1, -1, 3, -1, 0, -1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 4, 4, 4, 4, 4, 0, 0, 0, 0, 6, 6, 6 ] }

{ "title": [ "", "The Relationship Between Growth and Unemployment", "The Unemployment Rate During Postwar Recoveries", "The Outlook for the Unemployment Rate in the Next Few Years" ], "paragraphs": [ "Despite the resumption of economic (output) growth in June 2009, the unemployment rate remains at an historically high level more than three years into the recovery from the 11 th recession of the postwar period. Not until the fourth quarter of 2012 did the unemployment rate drop below 8%, its lowest level since January 2009.\nThe persistently high unemployment rate is a cause of concern to Congress for a variety of reasons. Among them are the high rate's deleterious impact on individuals' economic well-being and the budget deficit due to lower revenue and higher expenditures. The slow rebound of the labor market has renewed calls in some quarters for measures to stimulate the economy beyond those Congress has previously enacted.\nFrom a public policy perspective, the main driver of the unemployment rate is the pace of economic growth. This report first examines the long-run relationship between the two economic variables and then narrows its focus to the periods of recovery from the postwar recessions.", "In the short run, the relationship between economic growth and the unemployment rate may be a loose one. It is not unusual for the unemployment rate to show sustained decline some time after other broad measures of economic activity have turned positive. Hence, it is commonly referred to as a lagging economic indicator. One reason that unemployment may not fall appreciably when economic growth first picks up after a recession's end is that some firms may have underutilized employees on their payrolls because laying off workers when product demand declines and rehiring them when product demand improves has costs. As a result, employers may initially be able to increase output to meet rising demand at the outset of a recovery without hiring additional workers by raising the productivity of their current employees. This temporarily boosts labor productivity growth above its trend (long-run) rate.\nOnce the labor on hand is fully utilized, output can grow no faster than the rate of productivity growth until firms begin adding workers. As an economic expansion progresses, output growth will be determined by the combined rates of growth in the labor supply and labor productivity. As long as growth in real gross domestic product (GDP) exceeds growth in labor productivity, employment will rise. If employment growth is more rapid than labor force growth, the unemployment rate will fall.\nOver an extended period of time, there is a negative relationship between changes in the rates of real GDP growth and unemployment. This long-run relationship between the two economic variables was most famously pointed out in the early 1960s by economist Arthur Okun. \"Okun's law\" has been included in a list of \"core ideas\" that are widely accepted in the economics profession. Okun's law, which economists have expanded upon since it was first articulated, states that real GDP growth about equal to the rate of potential output growth usually is required to maintain a stable unemployment rate.\nThus, the key to the long-run relationship between changes in the rates of GDP growth and unemployment is the rate of growth in potential output. Potential output is an unobservable measure of the capacity of the economy to produce goods and services when available resources, such as labor and capital, are fully utilized. The rate of growth of potential output is a function of the rate of growth in potential productivity and the labor supply when the economy is at full employment. When the unemployment rate is high, as it is now, then actual GDP falls short of potential GDP. This is referred to as the output gap.\nIn the absence of productivity growth, as long as each new addition to the labor force is employed, growth in output will equal growth in the labor supply. If the rate of GDP growth falls below the rate of labor force growth, there will not be enough new jobs created to accommodate all new job seekers. As a result, the proportion of the labor force that is employed will fall. Put differently, the unemployment rate will rise. If the rate of output growth exceeds the rate of labor force growth, some of the new jobs created by employers to satisfy the rising demand for their goods and services will be filled by drawing from the pool of unemployed workers. In other words, the unemployment rate will fall.\nIf GDP growth equals labor force growth in the presence of productivity growth, more people will be entering the labor force than are needed to produce a given amount of goods and services. The share of the labor force that is employed will fall. Expressed differently, the unemployment rate will rise. Only as long as GDP growth exceeds the combined growth rates of the labor force and productivity (potential output) will the unemployment rate fall in the long run.\nKnowing what that rate of GDP growth is might be useful to policymakers interested in undertaking stimulus policies to bring down the unemployment rate. But as just stated, the rate of output growth necessary to lower the unemployment rate requires knowledge of the rates of labor force and productivity growth. Both have changed over time.\nBetween 1950 and 2000, the civilian labor force grew at an average annual rate of 1.6%. The growth rate has slowed since then and is expected to continue doing so partly as a result of the aging of the baby-boom generation. Between 2000 and 2010, the annual rate of labor force growth fell to 0.8%. It is projected to fall further, to 0.7% per year on average, between 2010 and 2020.\nPredicting productivity growth is more difficult than predicting labor force growth. Economists had, until recently, identified three time periods that correspond with three different trend rates of growth in productivity. Between 1947 and 1973, output per hour of labor in the private nonfarm business sector grew at an annual rate of 2.8%. Between 1973 and 1995, productivity slowed to an annual average rate of 1.4%. Between 1995 and 2005, it accelerated to 2.9% per year. Since then (2005-2011), the rate of productivity growth has slowed to 1.6% annually.\nIf recent trends in labor force and productivity growth continue, real GDP growth above about 2.5% will be needed to push down the unemployment rate from its currently elevated level. \"More specifically, according to currently accepted versions of Okun's law, to achieve a 1 percentage point decline in the unemployment rate in the course of a year, real GDP must grow approximately 2 percentage points faster than the rate of growth of potential GDP over that period.\"", "As previously discussed, it is not unusual for some time to elapse between the start of an economic recovery and the start of a declining unemployment rate. Suppose that two successive monthly declines are taken as the beginning of a meaningful downward trend in the unemployment rate. Table 1 shows how long it has taken following the end of each of the 11 economic contractions for that trend to begin. At one extreme, it was well over a year following the start of the economy's rebound from the 1990-1991 and 2001 recessions before the unemployment rate began to steadily decline. This contributed to the two periods being labeled jobless recoveries. At the other extreme, the unemployment rate began trending downward at five or fewer months after the end of five earlier recessions. The current recovery lies within but closer to the high-end of this range. As the unemployment rate experienced two successive monthly declines 12 months after the start of the recovery from the 2007-2009 recession, it too was dubbed a jobless recovery.\nNot only has the length of time for the unemployment rate to begin falling varied by recovery, but its pace of decline also has varied. After eight of the eleven postwar recessions, it took at least eight months for the unemployment rate to fall by one full percentage point. The slowest decline occurred after the recession that ended in November 2001 when the unemployment rate stood at 5.5%, the lowest unemployment rate recorded at the start of an expansion. About 3½ years elapsed before the unemployment rate fell one-half of a percentage point. In contrast, the expansion that followed the July 1981-November 1982 downturn began with the highest unemployment rate of the postwar period (10.8%). In that case, it took only eight months for the unemployment rate to fall more than one percentage point (to a still high 9.4%).\nA debate recently broke out over the applicability of Okun's law to changes in economic growth and the unemployment rate. Following a period of growth rates early in the recovery high enough (above 3.5%) to have produced a downward trend in the unemployment rate, the unemployment rate stalled at about 9.0% in the first three quarters of 2011. This resulted from slow annual growth in real GDP of 0.1% in the first quarter, 2.5% in the second quarter, and 1.3% in the third quarter of 2011. Output growth accelerated at an annual rate of 4.1% in the fourth quarter of 2011, and the unemployment rate resumed its downward trend—dropping to 8.5% in December 2011.\nBut as noted by the chairman of the Federal Reserve Board at a March 2012 conference of economists,\nthe decline in the unemployment rate over the course of 2011 was greater than would seem consistent with GDP growth over that period. Indeed, with last year's real GDP growth below 2 percent, less than what most economists would estimate to be the U.S. economy's potential rate of growth, one might have expected little change in the unemployment rate last year or even a slight increase.\nBernanke suggested that this temporary disconnect may have compensated for an earlier deviation from Okun's law. In 2009, workers were laid off and the unemployment rate rose beyond the level commensurate with the contraction in economic growth.\nWhen McCarthy, Potter, and Ng at the New York Federal Reserve Bank examined long recovery periods after the trough of the three recessions before the 2007-2009 recession, they estimated that Okun's law underpredicted the actual decline in the unemployment rate. Others similarly estimated periods of instability in the relationship between the rates of economic growth and unemployment. Some of the variation may be due to the stage of the business cycle, with the rule of thumb perhaps holding up better during recessions than recoveries. Based on their analysis, Owyang and Sekhposyan suggest \"that back-of-the-envelope calculations used to relate changes in the unemployment rate to changes in output growth or the output gap should not be taken too seriously but rather as an approximation to be taken with a grain of salt.\"\nIn contrast, Ball et al estimated that, as posited by Okun, increases and decreases in output have the same effect on unemployment. In other words, the rule-of-thumb applies equally well to recoveries and recessions. They also demonstrated that Okun's law did not break down during the recent jobless recoveries. Between 2009 and 2011, for example, Ball et al estimated that the relationship between output and unemployment gaps approximated the relationship predicted by Okun. The difference between the recoveries from the 1990-1991, 2001, and 2007-2009 recessions and recoveries from earlier recessions appears to be that large output gaps (i.e., slow economic growth relative to trend) persisted well into the three jobless (high-unemployment) recoveries. The researchers conclude by stating that \"it is rare to call a macroeconomic relationship a 'law.' Yet we believe that Okun's Law has earned its name. It is not as universal as the law of gravity ... , but it is strong and stable by the standards of macroeconomics. Reports of deviations from the Law are often exaggerated.\"", "According to estimates by economist Robert J. Gordon, potential output has grown at an average annual rate of 3.4% since 1875. Gordon doubts, however, that growth in potential GDP will be that rapid over the next 20 years as gains from information technology investments have been diminishing. His assumption of slower productivity growth along with the previously discussed expected declines in labor force growth led him to project a 2.4% rate of growth in potential output over the next 20 years. If that view is correct, then real economic growth in excess of 2.4% would be likely to yield a declining rate of unemployment.\nEconomists Susanto Basu and John G. Fernald also examined the current outlook for growth in potential output. They point out that household net worth declined significantly during the 2007-2009 recession. That drop in wealth, they argue, will make it more difficult for workers to afford leisure time (e.g., retirement). Consequently, the supply of labor may be larger in the near term than it might otherwise have been. This would tend to temporarily raise growth in potential output. At the same time, Basu and Fernald expect that disruptions in financial markets will tend to constrain growth in potential output over the near term because of higher risks associated with investment spending. These offsetting factors mainly serve to emphasize how uncertain estimates of growth in potential output can be.\nWeidner and Williams examined the relationship between real economic growth and the strength of past recoveries. The economists estimate that potential output growth was comparatively rapid during the initial expansions of the 1960s through 1980s (at 3.6%). In contrast, potential output was much more moderate (2.5%) during the first two years of recovery from the 1990-1991 and 2001 recessions. They estimate potential GDP growth at the outset of the recovery from the Great Recession was a more sluggish 2.1% due to the slow rate of labor force growth. If they are correct, real economic growth greater than 2.1% would likely produce a falling unemployment rate.\nThe Congressional Budget Office (CBO) regularly publishes projections of growth in potential output. In its August 2012 economic outlook, CBO forecast that potential output of the overall economy will grow at an average annual rate of 2.2% between 2012 and 2022. In contrast, the agency estimated a considerably higher average annual growth rate of potential GDP between 1950 and 2011 (3.3%). The lower projection of potential output growth going forward chiefly reflects CBO's projection of greatly reduced potential labor force growth (from 1.5% between 1950 and 2011 to 0.5% between 2012 and 2022) mostly due to increasing retirements among workers of the baby-boom generation.\nCBO also projected in August 2012 that the annual average growth rate of real GDP will stay below the growth rate of potential output until 2018. The annual average rate of unemployment is therefore estimated to remain above 8.0% through 2014, and then fall to 5.9% by 2017 as the output gap progressively narrows." ], "depth": [ 0, 1, 1, 1 ], "alignment": [ "h0_title", "h0_full", "h0_full", "" ] }

{ "question": [ "What factor affects the rate of reduction in the unemployment rate?", "What is potential output?", "What is the growth rate of potential output?", "How are the potential output growth rate and GDP growth rate related?" ], "summary": [ "What appears to matter for a reduction in the unemployment rate is the size of the output gap, that is, the rate of actual output (economic) growth compared with the rate of potential output growth.", "Potential output is a measure of the economy's capacity to produce goods and services when resources (e.g., labor) are fully utilized.", "The growth rate of potential output is a function of the growth rates of potential productivity and the labor supply when the economy is at full employment.", "If potential output growth is about 2.5% annually at full employment, then the growth rate in real gross domestic product (GDP) would have to be greater to yield a falling unemployment rate. How much greater will determine the speed of improvement in the unemployment rate, according to a rule of thumb known as Okun's law." ], "parent_pair_index": [ -1, 0, 0, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2 ] }

{ "title": [ "Background", "Obstacles to Safe and Routine Integration of UAS", "Role of the Department of Homeland Security in Domestic UAS Use", "Preliminary Observations on Emerging UAS Issues", "GAO Contact and Staff Acknowledgements" ], "paragraphs": [ "Current domestic uses of UAS are limited and include law enforcement, monitoring or fighting forest fires, border security, weather research, and scientific data collection. UAS have a wide-range of potential uses, including commercial uses such as pipeline, utility, and farm fence inspections; vehicular traffic monitoring; real estate and construction site photography; relaying telecommunication signals; and crop dusting. FAA’s long-range goal is to permit, to the greatest extent possible, routine UAS operations in the national airspace system while ensuring safety. Using UAS for commercial purposes is not currently allowed in the national airspace. As the list of potential uses for UAS grows, so do the concerns about how they will affect existing military and non-military aviation as well as concerns about how they might be used.\nDomestically, state and local law enforcement entities represent the greatest potential use of small UAS in the near term because small UAS can offer a simple and cost effective solution for airborne law enforcement activities for agencies that cannot afford a helicopter or other larger aircraft. For example, federal officials and one airborne law enforcement official said that a small UAS costing between $30,000 and $50,000 is more likely to be purchased by state and local law enforcement entities because the cost is nearly equivalent to that of a patrol car. According to recent FAA data, 12 state and local law enforcement entities have a Certificate of Waiver or Authorization (COA) while an official at the Department of Justice said that approximately 100 law enforcement entities have expressed interest in using a UAS for some of their missions. According to law enforcement officials with whom we spoke, small UAS are ideal for certain types of law enforcement activities. Officials anticipate that small UAS could provide support for tactical teams, post-event crime scene analysis and critical infrastructure photography. Officials said that they do not anticipate using small UAS for routine patrols or missions that would require flights over extended distances or time periods.\nFAA has been working with the Department of Justice’s National Institute of Justice to develop a COA process through a memorandum of understanding to better meet the operational requirements of law enforcement entities. While the memorandum of understanding establishing this COA process has not been finalized, there are two law enforcement entities that are using small UAS on a consistent basis for their missions and operations. The proposed process would allow law enforcement entities to receive a COA for training and performance evaluation. When the entity has shown proficiency in operating its UAS, it would then receive an operational COA allowing it to operate small UAS for a range of missions. In May 2012, FAA stated that it met its first requirement to expedite the COA process for public safety entities. FAA’s reauthorization also required the agency to enter into agreements with appropriate government agencies to simplify the COA process and allow a government public safety agency to operate unmanned aircraft weighing 4.4 pounds or less if flown within the line of sight of the operator, less than 400 feet above the ground, and during daylight conditions, among others stipulations.", "In 2008, we reported that UAS could not meet the aviation safety requirements developed for manned aircraft and posed several obstacles to operating safely and routinely in the national airspace system.\nSense and avoid technologies. To date, no suitable technology has been identified that would provide UAS with the capability to meet the detect, sense, and avoid requirements of the national airspace system. Our ongoing work indicates that research has been carried out to mitigate this, but the inability for UAS to sense and avoid other aircraft or objects remains an obstacle. With no pilot to scan the sky, UAS do not have an on-board capability to directly “see” other aircraft. Consequently, the UAS must possess the capability to sense and avoid an object using on-board equipment, or with the assistance of a human on the ground or in a chase aircraft, or by other means, such as radar. Many UAS, particularly smaller models, will likely operate at altitudes below 18,000 feet, sharing airspace with other vehicles or objects. Sensing and avoiding other vehicles or objects represents a particular challenge for UAS, because other vehicles or objects at this altitude often do not transmit an electronic signal to identify themselves and, even if they did, many small UAS, do not have equipment to detect such signals if they are used and may be too small to carry such equipment.\nCommand and control communications. Similar to what we previously reported, ensuring uninterrupted command and control for UAS remains a key obstacle for safe and routine integration into the national airspace. Without such control, the UAS could collide with another aircraft or crash, causing injury or property damage. The lack of dedicated radiofrequency spectrum for UAS operations heightens the possibility that an operator could lose command and control of the UAS. Unlike manned aircraft that use dedicated radio frequencies, non-military UAS currently use undedicated frequencies and remain vulnerable to unintentional or intentional interference. To address the potential interruption of command and control, UAS generally have pre-programmed maneuvers to follow if the command and control link becomes interrupted (called a “lost-link scenario”). However, these procedures are not standardized across all types of UAS and, therefore, remain unpredictable to air traffic controllers who have responsibility for ensuring safe separation of aircraft in their airspace.\nStandards. A rigorous certification process with established performance thresholds is needed to ensure that UAS and pilots meet safety, reliability, and performance standards. Minimum aviation system standards are needed in three areas: performance; command and control communications; and sense and avoid. In 2004, RTCA, a standards-making body sponsored by FAA, established a federal advisory committee called the Special Committee 203 (or SC 203), to establish minimum performance standards for FAA to use in developing UAS regulations. Individuals from academia and the private sector serve on the committee, along with FAA, NASA, and DOD officials. ASTM International Committee F38 on UAS, an international voluntary consensus standards-making body, is working with FAA to develop standards to support the integration of small UAS into the national airspace.\nRegulations. FAA regulations govern the routine operation of most aircraft in the national airspace system. do not contain provisions to address issues relating to unmanned aircraft. As we highlighted in our previous report, existing regulations may need to be modified to address the unique characteristics of UAS. Today, UAS continue to operate as exceptions to the regulatory framework rather than being governed by it. This has limited the number of UAS operations in the national airspace, and that limitation has, in turn, contributed to the lack of operational data on UAS in domestic operations previously discussed. One industry forecast noted that growth in the non-military UAS market is unlikely until regulations allow for the routine operation of UAS. Without specific and permanent regulations for safe operation of UAS, federal stakeholders, including DOD, continue to face challenges. The lack of final regulations could hinder the acceleration of safe and routine integration of UAS into the national airspace.\nGiven the remaining obstacles to UAS integration, we stated in 2008 that Congress should consider creating an overarching body within FAA to coordinate federal, academic, and private-sector efforts in meeting the safety challenges of allowing routine access to the national airspace system. While it has not created this overarching body, FAA’s Joint Planning and Development Office has taken on a similar role. In addition, Congress set forth requirements for FAA in its February 2012 reauthorization to facilitate UAS integration. Additionally, we made two recommendations to FAA related to its planning and data analysis efforts to facilitate the process of allowing UAS routine access to the national airspace, which FAA has implemented.\nTitle 14, Code of Federal Regulations (14 CFR).", "DHS is one of several partner agencies of FAA’s Joint Planning and Development Office (JPDO) working to safely integrate UAS into the national airspace. TSA has the authority to regulate the security of all transportation modes, including non-military UAS, and according to TSA officials, its aviation security efforts include monitoring reports on potential security threats regarding the use of UAS. While UAS operations in the national airspace are limited and take place under closely controlled conditions, this could change if UAS have routine access to the national airspace system. Further, DHS owns and uses UAS.\nSecurity is a significant issue that could be exacerbated with an increase in the number of UAS, and could impede UAS use even after all other obstacles have been addressed. In 2004, TSA issued an advisory in which it stated that there was no credible evidence to suggest that terrorist organizations plan to use remote controlled aircraft or UAS in the United States. However, the TSA advisory also provided that the federal government remains concerned that UAS could be modified and used to attack key assets and infrastructure in the United States. TSA advised individuals to report any suspicious activities to local law enforcement and the TSA General Aviation Hotline. Security requirements have yet to be developed for UAS ground control stations—the UAS equivalent of the cockpit. Legislation introduced in the 112th Congress would prohibit the use of UAS as weapons while operating in the national airspace.\nIn our 2008 report, we recommended that the Secretary of Homeland Security direct the Administrator of TSA to examine the security implications of future, non-military UAS operations in the national airspace and take any actions deemed appropriate. TSA agreed that consideration and examination of new aviation technologies and operations is critical to ensuring the continued security of the national airspace. According to TSA officials, TSA continues to work with the FAA and other federal agencies concerning airspace security by implementing security procedures in an attempt to protect the National Airspace System. Examples of this collaboration include the coordinated efforts to allow access to temporary flight restricted airspace such as those put in place for Presidential travel and DHS Security Events. However, to date, neither DHS nor TSA has taken any actions to implement our 2008 recommendation. According to TSA officials, TSA believes its current practices are sufficient and no additional actions have been needed since we issued our recommendation.\nDHS is also an owner and user of UAS. Since 2005, CBP has flown UAS for border security missions. FAA granted DHS authority to operate UAS to support its national security mission along the United States northern and southern land borders, among other areas. Recently, DHS officials told us that DHS has also flown UAS over the Caribbean to search for narcotics-carrying submarines and speedboats. According to DHS officials, CBP owns ten UAS that it operates in conjunction with other agencies for various missions. As of May 2012, CBP has flown missions to support six federal and state agencies along with several DHS agencies. These missions have included providing the National Oceanic and Atmospheric Administration with videos of damaged dams and bridges where flooding occurred or was threatened, and providing surveillance for DHS’s Immigration and Customs Enforcement over a suspected smuggler’s tunnel. DHS, DOD, and NASA, are working with FAA to identify and evaluate options to increase UAS access in the national airspace. DHS officials reported that if funding was available, they plan to expand their fleet to 24 total UAS that would be operational by fiscal year 2016, including 11 on the southwest border.\nThe DHS Inspector General reviewed CBP’s actions to establish its UAS program, the purpose of which is to provide reconnaissance, surveillance, targeting, and acquisition capabilities across all CBP areas of responsibility. The Inspector General assessed whether CBP has established an adequate operation plan to define, prioritize, and execute its unmanned aircraft mission. The Inspector General’s May 2012 report found that CBP had not achieved its scheduled or desired level of flight hours for its UAS. It estimated that CBP used its UAS less than 40 percent of the time it would have expected.", "Our ongoing work has identified several UAS issues that, although not new, are emerging as areas of further consideration in light of the efforts towards safe and routine access to the national airspace. These include concerns about 1) privacy as it relates to the collection and use of surveillance data, 2) the use of model aircraft, which are aircraft flown for hobby or recreation, and 3) the jamming and spoofing of the Global Positioning System (GPS).\nPrivacy concerns over collection and use of surveillance data.\nFollowing the enactment of the UAS provisions of the 2012 FAA reauthorization act, members of Congress, a civil liberties organization, and others have expressed concern that the increased use of UAS for surveillance and other purposes in the national airspace has potential privacy implications. Concerns include the potential for increased amounts of government surveillance using technologies placed on UAS as well as the collection and use of such data. Surveillance by federal agencies using UAS must take into account associated constitutional Fourth Amendment protections against unreasonable searches and seizures. In addition, at the individual agency level, there are multiple federal laws designed to provide protections for personal information used by federal agencies. While the 2012 FAA reauthorization act contains provisions designed to accelerate the safe integration of UAS into the national airspace, proposed legislation in the 112th session of Congress, seeks to limit or serve as a check on uses of UAS by, for example, limiting the ability of the federal government to use UAS to gather information pertaining to criminal conduct without a warrant.\nCurrently, no federal agency has specific statutory responsibility to regulate privacy matters relating to UAS. UAS stakeholders disagreed as to whether the regulation of UAS privacy related issues should be centralized within one federal agency, or if centralized, which agency would be best positioned to handle such a responsibility. Some stakeholders have suggested that FAA or another federal agency should develop regulations for the types of allowable uses of UAS to specifically protect the privacy of individuals as well as rules for the conditions and types of data that small UAS can collect. Furthermore, stakeholders with whom we spoke said that developing guidelines for technology use on UAS ahead of widespread adoption by law enforcement entities may preclude abuses of the technology and a negative public perception of UAS. Representatives from one civil liberties organization told us that since FAA has responsibility to regulate the national airspace, it could be positioned to handle responsibility for incorporating rules that govern UAS use and data collection. Some stakeholders have suggested that the FAA has the opportunity and responsibility to incorporate such privacy issues into the small UAS rule that is currently underway and in future rulemaking procedures. However, FAA officials have said that regulating these sensors is outside the FAA’s mission, which is primarily focused on aviation safety, and has proposed language in its small UAS Notice of Proposed Rulemaking to clarify this.\nModel aircraft. According to an FAA official with whom we spoke and other stakeholders, another concern related to UAS is the oversight of the operation of model aircraft—aircraft flown for hobby or recreation—capable of sustained flight in the atmosphere and a number of other characteristics. Owners of model aircraft do not require a COA to operate their aircraft. Furthermore, as part of its 2012 reauthorization act, FAA is prohibited from developing any rule or regulation for model aircraft under a specified set of conditions.\nHowever, the 2012 reauthorization act also specifies that nothing in the act’s model aircraft provisions shall be construed to limit FAA’s authority to take enforcement action against the operator of a model aircraft who endangers the safety of the national airspace system.\nThe Federal Bureau of Investigation report of the arrest and criminal prosecution of a man plotting to use a large remote-controlled model aircraft filled with plastic explosives to attack the Pentagon and U.S. Capitol in September 2011 has highlighted the potential for model aircraft to be used for non-approved or unintended purposes.\nThe Academy of Model Aeronautics, which promotes the development of model aviation as a recognized sport and represents a membership of over 150,000, published several documents to guide model aircraft users on safety, model aircraft size and speed, and use. For example, the Academy’s National Model Aircraft Safety Code specifies that model aircraft will not be flown in a careless or reckless manner and will not carry pyrotechnic devices that explode or burn, or any device that propels a projectile or drops any object that creates a hazard to persons or property (with some exceptions). Aeronautics also provides guidance on “sense and avoid” to its members, such as a ceiling of 400 feet above ground of aircraft weighing 55 pounds or less. However, apart from FAA’s voluntary safety standards for model aircraft operators, FAA has no regulations relating to model aircraft. Currently, FAA does not require a license for any model aircraft operators, but according to FAA, the small UAS Notice of Proposed Rule Making, under development and expected to be published late 2012, may contain a provision that requires certain model aircraft to be registered.\nGPS jamming and spoofing.\nThe Academy of Model Aeronautics National Model Aircraft Safety Code allows members to fly devices that burn producing smoke and are securely attached to the model aircraft and use rocket motors if they remain attached to the model during flight. Model rockets may be flown but not launched from a model aircraft.\nGPS spoofing is when counterfeit GPS signals are generated for the purpose of manipulating a target receiver’s reported position and time. Todd E. Humphreys, Detection Strategy for Cryptographic GNSS Anti-Spoofing, IEEE Transactions on Aerospace and Electronics Systems (August 2011). cost devices that jam GPS signals are prevalent. According to one industry expert, GPS jamming would become a larger problem if GPS is the only method for navigating a UAS. This problem can be mitigated by having a second or redundant navigation system onboard the UAS that is not reliant on GPS. In addition, a number of federal UAS stakeholders we interviewed stated that GPS jamming is not an issue for the larger, military-type UAS, as they have an encrypted communications link on the aircraft. A stakeholder noted that GPS jamming can be mitigated for small UAS by encrypting its communications, but the costs associated with encryption may make it infeasible. Recently, researchers at the University of Texas demonstrated that the GPS signal controlling a small UAS could be spoofed using a portable software radio. The research team found that it was straightforward to mount an intermediate-level spoofing attack but difficult and expensive to mount a more sophisticated attack.\nThe emerging issues we identified not only may exist as part of efforts to safely and routinely integrate UAS into the national airspace, but may also persist once integration has occurred. Thus, these issues may warrant further examination both presently and in the future.\nChairman McCaul, Ranking Member Keating, and Members of the Subcommittee, this concludes my prepared statement. We plan to report more fully this fall on these same issues, including the status of efforts to address obstacles to the safe and routine integration of UAS into the national airspace. I would be pleased to answer any questions at this time.", "For further information on this testimony, please contact Gerald L. Dillingham, Ph.D., at (202) 512-2834 or dillinghamg@gao.gov. In addition, 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 testimony include Maria Edelstein, Assistant Director; Amy Abramowitz; Erin Cohen; John de Ferrari; Colin Fallon; Rebecca Gambler; Geoffrey Hamilton; David Hooper; Daniel Hoy; Joe Kirschbaum; Brian Lepore; SaraAnn Moessbauer; Faye Morrison; Sharon Pickup; Tina Won Sherman; and Matthew Ullengren.\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, 1, 1 ], "alignment": [ "h3_full", "h0_full h3_full h2_full", "h0_full h3_full h1_full", "h0_full h2_full", "" ] }

{ "question": [ "What issues did GAO identify with the UAS's safety protocols?", "How did GAO recommend amending these issues?", "How did FAA respond to these recommendations?", "What is the DHS partnering with JPDO to do?", "What has FAA granted DHS authority on?", "What authority does TSA have within the DHS?", "How could security considerations be exacerbated?", "What has TSA done in response to GAO's 2008 recommendations?", "What UAS issues has GAO identified?", "Who is responsible for privacy matters relating to UAS?", "Why is the use of model aircraft in national airspace an issue?", "How does jamming and spoofing of the Global Positioning System a concern?", "What does GAO plan to report on?", "How do UAS operate?", "How are UAS classified?", "How are UAS used?", "How is UAS usage regulated?", "What did GAO report in 2008?" ], "summary": [ "GAO earlier reported that unmanned aircraft systems (UAS) could not meet the aviation safety requirements developed for manned aircraft and posed several obstacles to operating safely and routinely in the national airspace system. These include 1) the inability for UAS to detect, sense, and avoid other aircraft and airborne objects in a manner similar to “see and avoid” by a pilot in a manned aircraft; 2) vulnerabilities in the command and control of UAS operations; 3) the lack of technological and operational standards needed to guide the safe and consistent performance of UAS; and 4) the lack of final regulations to accelerate the safe integration of UAS into the national airspace.", "GAO stated in 2008 that Congress should consider creating an overarching body within the Federal Aviation Administration (FAA) to address obstacles for routine access.", "FAA’s Joint Planning and Development Office (JPDO) has taken on a similar role. FAA has implemented GAO’s two recommendations related to its planning and data analysis efforts to facilitate integration.", "The Department of Homeland Security (DHS) is one of several partner agencies of JPDO working to safely integrate UAS into the national airspace.", "Since 2005, FAA has granted DHS authority to operate UAS to support its national security mission in areas such as the U.S. northern and southern land borders.", "DHS’s Transportation Security Administration (TSA) has the authority to regulate security of all modes of transportation, including non-military UAS, and according to TSA officials, its aviation security efforts include monitoring reports on potential security threats regarding the use of UAS.", "Security considerations could be exacerbated with routine UAS access.", "TSA has not taken any actions to implement GAO’s 2008 recommendation that it examine the security implications of future, non-military UAS.", "GAO’s ongoing work has identified several UAS issues that, although not new, are emerging as areas of further consideration in light of greater access to the national airspace. These include concerns about privacy relating to the collection and use of surveillance data.", "Currently, no federal agency has specific statutory responsibility to regulate privacy matters relating to UAS.", "Another emerging issue is the use of model aircraft (aircraft flown for hobby or recreation) in the national airspace. FAA is generally prohibited from developing any rule or regulation for model aircraft. The Federal Bureau of Investigation report of a plot to use a model aircraft filled with plastic explosives to attack the Pentagon and U.S. Capitol in September 2011 has highlighted the potential for model aircraft to be used for unintended purposes.", "An additional emerging issue is interruption of the command and control of UAS operations through the jamming and spoofing of the Global Positioning System between the UAS and ground control station.", "GAO plans to report more fully this fall on these issues, including the status of efforts to address obstacles to the safe and routine integration of UAS into the national airspace.", "UAS aircraft do not carry a human operator on board, but instead operate on pre-programmed routes or by following commands from pilot-operated ground stations.", "An aircraft is considered to be a small UAS if it is 55 pounds or less, while a large UAS is anything greater.", "Current domestic uses of UAS are limited and include law enforcement, monitoring or fighting forest fires, border security, weather research, and scientific data collection by the federal government.", "FAA authorizes military and non-military UAS operations on a limited basis after conducting a case-by-case safety review. Several other federal agencies also have a role or interest in UAS, including DHS.", "In 2008, GAO reported that safe and routine access to the national airspace system poses several obstacles." ], "parent_pair_index": [ -1, 0, 1, -1, -1, 1, 2, 2, -1, 0, 0, 0, -1, -1, 0, 0, 2, -1 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4, 4, 5, 5, 5, 5, 5, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Subsidized Premium Rates", "Program History", "Policy Goals Framework", "Stakeholders Identified Several Conditions That Must Exist to Encourage Private Sector Involvement in Flood Insurance", "Private Insurers Must Be Able to Accurately Assess Flood Risk", "Private Insurers Would Need Freedom to Charge Adequate Rates and Manage Risk", "Adequate Consumer Participation Would Also Be Necessary", "Several Strategies Could Encourage Private Sector Involvement, but a Governmental Role Would Likely Be Required", "Several Strategies Could Help Create Conditions for Private Sector Involvement", "Full-Risk Rates with Targeted Subsidies", "Government as Residual Insurer", "Government as Reinsurer", "Other Strategies", "A Governmental Role Would Remain Even in a Private Flood Insurance Market", "Concluding Observations", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Floods are the most common and destructive natural disaster in the United States. However, flooding is generally excluded from homeowners insurance policies, which typically cover damages from other losses, such as wind, fire, and theft. Because of the catastrophic nature of flooding, the difficulty of adequately predicting flood risks, and uncertainty surrounding the possibility of charging actuarially sound premium rates, private insurance companies have historically been largely unwilling to underwrite flood insurance. NFIP, which makes federally backed flood insurance available to residential property owners and businesses, was intended to reduce the federal government’s escalating costs for repairing flood damage after disasters. Under NFIP, the federal government currently assumes the liability for the insurance coverage and sets rates and coverage limitations, among other responsibilities, while private insurers sell the policies and administer the claims for a fee determined by FEMA. NFIP is managed by FEMA’s Federal Insurance and Mitigation Administration, which is responsible for administering programs that provide assistance for mitigating future damages from natural hazards. Some private insurers provide coverage for flood insurance above the limit of NFIP coverage, generally referred to as excess flood insurance. Further, NFIP policies do not provide coverage for business interruption or additional living expenses, which currently are available through some private insurers.\nCommunity participation in NFIP is voluntary, but communities must join NFIP and adopt and enforce FEMA-approved building standards and floodplain management strategies in order for their residents to purchase flood insurance through the program. Additionally, communities in Special Flood Hazard Areas (SFHA)—areas subject to a 1 percent or greater chance of flooding in any given year—must participate in NFIP for property owners to be eligible for any aid in connection with a flood, including disaster assistance loans and grants for acquisition or construction purposes. Participating communities agree to enforce regulations for land use and new construction in high-risk flood zones and to adopt and enforce state and community floodplain management regulations to reduce future flood damage. Participating communities can receive discounts on flood insurance if they establish floodplain management programs that go beyond NFIP’s minimum requirements.\nFEMA can suspend communities that do not comply with the program, and communities can withdraw from it by submitting a copy of a legislative action stating its desire to withdraw from NFIP. As of May 2013, about 22,000 communities voluntarily participated in NFIP.\nNFIP has mapped flood risks across the country, assigning flood zone designations based on risk levels, and these designations are a factor in determining premium rates. To help reduce or eliminate the long-term risk of flood damage to buildings and other structures insured by NFIP, FEMA has used a variety of mitigation efforts, such as elevation, relocation, and demolition. Despite these efforts, the number of repetitive loss properties—generally, those that have had two or more flood insurance claims payments of $1,000 or more over 10 years—has continued to grow.", "NFIP policies have what FEMA describes as either subsidized or full-risk premiums. The type of policy and the subsequent rate a policyholder pays depend on several property characteristics—for example, whether the structure was built before or after a community’s FIRM was issued and the location of the structure in the floodplain. Structures built after a community’s FIRM was published must meet FEMA building standards, and the property owner must pay full-risk rates, which reflect FEMA’s estimates of the actual risk of flooding. Post-FIRM structures are generally less flood prone than pre-FIRM properties because they have been built to flood-resistant building codes or mitigation steps have been taken to reduce flood risks.\nSubsidized rates do not reflect the estimated total flood risk and instead are highly discounted. Even with highly discounted rates, subsidized premiums are, on average, higher than full-risk premiums because subsidized pre-FIRM structures generally are more prone to flooding (that is, riskier) than other structures. In general, pre-FIRM properties were not constructed according to the program’s building standards or were built without regard to base flood elevation—the level relative to mean sea level at which there is an estimated 1 percent or greater chance of flooding in a given year. For example, the average annual subsidized premium with October 2011 rates for pre-FIRM subsidized properties was about $1,224, while the average annual premium for post-FIRM properties paying full-risk rates was about $492.", "Flooding disasters of the 1920s and 1930s led to federal involvement in protecting life and property from flooding, with the passage of the Flood Control Act of 1936. Generally, the only available financial recourse to assist flood victims was postdisaster assistance. When flood insurance was first proposed in the 1950s, it became clear that private insurance companies could not profitably provide flood coverage at a price that consumers could afford, primarily because of the catastrophic nature of flooding and the difficulty of determining accurate rates.\nIn 1965 Congress passed the Southeast Hurricane Disaster Relief Act that provided financial relief for victims of flooding. In addition, the act mandated a feasibility study of a national flood insurance program, which helped provide the basis for the National Flood Insurance Act of 1968 that created NFIP. From 1969 through 1977, the Department of Housing and Urban Development (HUD), which administered NFIP at the time, had an agreement with a consortium of private insurers known as the National Flood Insurers Association. Under this agreement, HUD reimbursed the association of insurers for operating costs and provided an annual operating allowance equal to 5 percent of policyholders’ premiums. HUD ended the partnership in 1978 and converted NFIP to a government- operated program because it could not come to an agreement with the private insurers on issues such as HUD’s right to approve their operating budgets and its authority over policy decisions and regulations. HUD also estimated $15 million in cost savings by ending the partnership. The insurers wanted to continue the partnership, but the HUD Secretary decided to use her statutory authority to convert NFIP to a government program. In 1978, we determined that the partnership had not reached a last resort status and that the potential for a new agreement existed.\nThe Flood Disaster Protection Act of 1973 made the purchase of flood insurance mandatory for owners of properties in special flood hazard areas that are secured by mortgages from federally regulated lenders and provided additional incentives for communities to join the program. The National Flood Insurance Reform Act of 1994—which amended the 1968 act and the 1973 act—strengthened the mandatory purchase requirements for owners of properties located in SFHAs with mortgages from federally regulated lenders. The Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004 authorized a pilot program to encourage owners of properties that suffer from repeated flood losses to take steps to reduce the risk of damage, known as mitigation. Owners of these “severe repetitive loss” properties who refuse an offer to mitigate the risks face higher premiums.\nFinally, in 2012 the Biggert-Waters Act reauthorized the program through 2017 and removed subsidized rates for a number of insured properties, such as residential properties that are not an individual’s primary residence, severe repetitive loss properties, business properties, and properties that had received payments for flood-related damage that cumulatively equaled or exceeded the property’s fair market value. The Biggert-Waters Act also included several other provisions, such as the following.\nRates that fully reflect flood risk for specified properties are to be phased in over several years—with increases of 25 percent each year—until the average risk premium rate for these properties equals the average of the full-risk premium rates for all properties in that risk classification.\nProperties will no longer qualify for subsidies if the policyholder has deliberately chosen to let the policy lapse and if a prospective insured refuses to accept any offer of mitigation assistance (including relocation) following a major disaster.\nProperties that did not have NFIP insurance when the act was enacted and properties purchased after that date will not receive subsidies. Subsidized properties that are sold will lose their subsidies.\nFEMA must adjust rates to accurately reflect the current risk of flooding to properties when an area’s flood map is changed. FEMA is determining how this provision will affect properties that were grandfathered into lower rates.\nIn addition, the act allows average premium increases of 20 percent annually by risk class (the previous cap was 10 percent), establishes minimum deductibles, requires FEMA to establish a reserve fund, and requires FEMA to include losses from catastrophic years in determining premiums that are based on the “average historical loss year,” among other things. The potential adverse effects on certain property owners of the premium rate increases arising out of the Biggert-Waters Act and the possibility of delaying some rate increases have been the subject of congressional hearings and recent legislative proposals.", "We previously identified goals for federal involvement in natural catastrophe insurance programs. These goals can be adapted to help evaluate strategies for increasing private sector involvement in flood insurance. The goals include: charging premium rates that fully reflect estimated risks, encouraging private markets to provide flood insurance, encouraging property owners to buy flood insurance, and limiting costs to taxpayers before and after a flood.\nThe four-goal framework captures the public policy goals for providing insurance against natural catastrophes such as flooding. Stakeholders with whom we spoke generally agreed that these goals were appropriate.", "Stakeholders with whom we spoke or who participated in our roundtable discussion identified several conditions that would be needed to increase private sector involvement in flood insurance. First, private insurers would have to perceive floods as an insurable risk that they could profitably cover—that is, they would need to be able to estimate both the frequency and severity of future losses with some accuracy. Second, they would need the freedom to charge adequate rates and decide which applicants they would insure. Third, private insurers would need adequate consumer participation in order to manage and diversify their risk.", "Private insurers generally cover only what they see as insurable risks whose frequency and severity they can estimate with some accuracy. Being able to calculate the average frequency and severity of future losses enables insurers to set premium rates that are likely to be sufficient to pay all claims and expenses and yield a profit. For this reason, homeowners policies do not cover a variety of risks, such as flooding, which tend to occur unexpectedly and can cause a devastating amount of damage. NFIP was created in part because the catastrophic nature of flooding made it difficult for private insurance companies to develop an actuarial rate structure that could adequately reflect the risks to flood-prone properties. The program is the only provider of affordable flood insurance for most U.S. homeowners.\nStakeholders indicated that private insurers would need more information and more sophisticated modeling to assess flood risk before they could begin providing flood insurance. Risk modelers with whom we spoke questioned the reliability of FEMA’s flood risk zones, which in many areas, such as along coastlines, were determined using a less sophisticated methodology than what is available today. For example, one risk modeler said that FEMA’s base flood elevations were likely too low in many places and that many structures across the country were at higher flood risk than the flood maps indicated. According to one insurer, determining flood risk for commercial policyholders involves reviewing specific information, including FEMA flood maps and satellite imagery, to determine a structure’s flood zone, proximity to other flood zones, and elevation. This insurer uses geographical address information to determine flood risk on a building-by-building basis based on a range of factors that include the structural elements of a building and its contents. One risk modeler suggested that FEMA should design flood risk maps for future building stock and should model both current and future flood levels; however, the risk modeler said that determining future flood risks was a challenge and that the industry lacked consensus on the methodology that should be used.\nStakeholders anticipated that risk modeling firms would be releasing new flood models in the next several years, providing the tools that private insurers would need to evaluate flood risk. Stakeholders also noted that a private market for flood insurance would likely create a market for modeling flood risk, attracting many companies to fill that need. Stakeholders said that if other conditions for private sector involvement in flood insurance were met, more risk-modeling companies or private insurers would begin developing models that private insurers could use to determine risks more accurately. For example, one risk modeler said risk modelers could determine how different bodies of water, such as two rivers, would interact and contribute to flood events—information that FEMA’s flood maps do not include.\nStakeholders said that in addition to advanced computer modeling, access to NFIP policy and claims data would help private insurers assess flood risks and determine which properties they might be willing to insure. However, FEMA officials said the agency would need to address privacy concerns to provide property-level information to insurers, because the Privacy Act prohibits the agency from releasing detailed NFIP policy and claims data. The Privacy Act governs how federal agencies may use the personal information that individuals supply when obtaining government services or fulfilling obligations. FEMA officials said that while the agency could release data in the aggregate, some information could not be provided in detail. For example, FEMA could provide zip-code level information to communities but would need to determine how to release property-level information while protecting the privacy of individuals.", "Stakeholders said that private insurers would also need to be able to charge adequate rates that would reflect the full estimated risk of flood loss and allow for profit. In our prior work, one of the public policy goals we adapted for evaluating options for increasing private sector involvement in flood insurance was charging premium rates that fully reflected estimated risks. Actuarially sound rates determined by private insurers would differ from NFIP rates in that they would be calculated to account for potential losses, reflect the cost of capital to cover potential catastrophic losses, and provide a reasonable return for investors. As a result, these rates would be higher than present NFIP rates for many properties and could present affordability challenges for consumers. One stakeholder said higher prices could lead some homeowners to purchase lower amounts of coverage or choose not to purchase flood insurance at all. Further, another stakeholder said higher flood insurance rates could affect property owners’ home value and ability to sell their property. For example, one stakeholder said that potential buyers might decide not to purchase a home in a high-risk area after determining the cost of flood insurance for the property.\nStakeholders said that the political environment could prevent insurers from setting adequate rates. For example, they expressed concerns that efforts to increase flood insurance rates would likely face public resistance or be politically unpopular. Stakeholders said it was challenging for private insurers to gain enough confidence to enter the flood insurance market because they feared not being able to charge actuarially sound rates or obtain a reasonable rate of return. For example, stakeholders said that state by state approval of flood insurance rates might impede insurers’ ability to obtain adequate rates. An insurer said that most state insurance regulators lacked knowledge about flood policies, but a state regulation official said that most states took a measured approach to rate regulation, with an eye toward allowing insurers to earn a reasonable profit. Further, one stakeholder said that private insurers would need flexibility to account for potential climate change effects when pricing flood, hurricane, and other risks associated with sea level rise. Although potential climate change effects would have a long time horizon, the stakeholder suggested it was an issue to consider regarding the regulatory environment for private insurers.\nIn addition, stakeholders said that private insurers would need freedom in underwriting policies so that they could accept and reject applicants as necessary to manage their risk portfolios. Insurable risks have certain characteristics that make providing coverage possible. As well as being estimable, for example, loss exposure should not be potentially catastrophic for the insurer. Freedom to manage risk would help insurers manage potentially catastrophic losses and further encourage their participation in the flood insurance market. For example, insurers might determine that they needed to limit the number of policies in a geographic area because a single flood event could result in losses on many of those policies at the same time. Stakeholders said incentives would be needed to encourage insurers to assume greater risk, particularly in flood-prone areas. One stakeholder said the political environment could limit insurers’ ability to accept and reject applicants as necessary to manage their risk exposure. Further, stakeholders said that different insurance regulations across states could further complicate insurers’ ability to underwrite flood insurance. One stakeholder said that insurers would need clarity on the political and regulatory environment before entering the flood market.", "Insurers need to be able to manage their risk exposure by having a large, diverse risk pool with premiums at a level that property owners are willing and able to pay. Having a large and diversified risk pool would enable an insurer to better estimate losses based on loss data it collected over time and to spread the losses over a large number of properties. Economically feasible premiums would provide an opportunity or incentive for property owners to obtain coverage. Further, in our prior work, one of the public policy goals we adapted for evaluating strategies for increasing private sector involvement in flood insurance was encouraging broad consumer participation in the flood insurance market. We previously have found that efforts to encourage broader participation in NFIP could reduce costs, depending on how they were implemented. Likewise, a large risk pool could help private insurers manage their exposure.\nBroad consumer participation in the market would also be necessary to address adverse selection—the phenomenon that occurs when only those most in need typically purchase insurance, creating a pool of only the highest-risk properties. In this case, insurers must be confident that homeowners other than those in the highest-risk areas will obtain flood insurance, because adverse selection can hamper an insurer’s efforts to manage its risk. A 2006 study estimated that NFIP participation rates were as low as 50 percent in SFHAs, where property owners with loans from federally insured and regulated lenders were required to purchase flood insurance. The study also found that participation rates outside of SFHAs were as low as 1 percent. Another study found that homeowners both within and outside SFHAs who did obtain flood insurance when purchasing their homes typically kept it for 2 to 4 years before canceling their policies. Stakeholders said that homeowners were more likely to purchase flood insurance immediately following a flood event and to drop it later as their perception of their flood risk decreased.\nHomeowners that do not purchase flood insurance, including many residing in SFHAs, make that decision for a number of reasons that would have to be addressed in order to make private flood insurance possible. Stakeholders said that affordability was one of the key challenges to providing flood insurance. In addition, stakeholders said that affordability could be a particularly difficult issue for low- and moderate-income homeowners, as evidenced by complaints surrounding rate increases under the Biggert-Waters Act. Further, stakeholders said that not all homeowners would be able to afford flood insurance at rates that private insurers would consider adequate for reflecting the full estimated risk of flood loss and allowing for profit.\nBased on our analysis of stakeholder views and other information, many property owners may also have an inaccurate perception of their risk of flooding and thus do not buy flood insurance. For example, a 2012 study suggested that some property owners believe that only properties in SFHAs are in a flood zone and that properties located outside of SFHAs are not at risk of flooding. Stakeholders said that it was difficult to convince homeowners to pay for coverage for an unlikely event, despite the potential for severe damage. The former definition of SFHAs as a “100-year” flood zone has contributed in part to this misperception, given the long time horizon, so that some property owners have assumed that after experiencing a flood loss, their properties would be free from flooding for the next 100 years. And one stakeholder indicated that many consumers mistakenly assumed that their homeowners insurance policies included flood coverage. In addition, a banking association with whom we spoke said that some lending institutions did not see flood risk as a threat to their safety and soundness and therefore often did not require flood coverage at mortgage origination, potentially contributing further to homeowners’ misperception of flood risk.\nFinally, stakeholders suggested that many consumers did not obtain flood insurance because they assumed they would receive federal or state disaster assistance after a flood event. However, federal disaster assistance to individuals is limited. Disaster assistance is administered through several federal programs and is generally made available only after the President issues a disaster declaration, but homeowners seeking such assistance must first seek assistance from their flood insurance policy. Further, while one federal grant program is available— the Individuals and Households Program—federal disaster assistance to individuals and businesses for the repair or replacement of structures consists primarily of federal loan programs. These include loans from the U.S. Small Business Administration that are available to all first-time applicants but to repeat applicants only if they have flood insurance. Homeowners can apply for up to $200,000 in home and property disaster loans for the repair or replacement of a primary residence to its predisaster condition. Business disaster loans of up to $2 million are the primary form of federal assistance for the repair and rebuilding of nonfarm, private sector disaster losses. One stakeholder said many homeowners without flood insurance would not qualify for individual assistance or loans from the U.S. Small Business Administration and that homeowners might not have options—other than filing for bankruptcy—to recover financially from a flood event. We previously reported that while the federal government has provided significant financial assistance after major disasters, the federal role is primarily to assist state and local governments, which have the central role in recovery efforts.\nBased on our analysis, all of these issues would need to be addressed to create the conditions that would encourage private insurers to consider providing flood insurance. Addressing them would be a complex task and would require difficult trade-offs. For example, raising rates beyond what FEMA currently charges could create significant hardship and put at risk the homes of those who could not afford flood insurance. Further, it could be a challenge to encourage property owners to purchase flood insurance, particularly when many of them do not believe they are exposed to the risk of flooding.", "Stakeholders with whom we spoke or who participated in our roundtable discussion identified several strategies that could be used to help transfer some of the responsibility of providing flood insurance from the federal government to the private sector. These strategies, or certain aspects of them, could be used jointly to promote the conditions that stakeholders said would be necessary for private sector involvement—the ability to assess risk, the freedom to charge adequate rates and manage risk, and adequate consumer participation. These strategies serve only as broad potential frameworks, and because of the complexity of providing flood insurance, the success of any reform effort would also depend on how it is structured and implemented. Further, stakeholders said that any strategy will likely require certain roles for federal, state, and local government entities.", "One strategy stakeholders identified, which we have also mentioned in previous reports, would be for Congress to eliminate subsidized rates, charge full-risk rates to all policyholders, and appropriate funding for a direct means-based subsidy to some policyholders. A second strategy that stakeholders identified would be for the federal government to provide only residual insurance, serving as the insurer of last resort for properties that the private sector is unwilling to insure. Alternatively, a third strategy would be for the federal government to serve as a reinsurer and charge private insurers a premium for the federal government to assume risk for losses that exceed a predetermined amount. In addition to these strategies, stakeholders proposed others, including mandatory coverage, reinsurance for NFIP, and catastrophe bonds.", "Stakeholders proposed eliminating all subsidized rates and charging all policyholders rates that reflected the full estimated risk of flooding, with Congress providing a direct means-based subsidy to some policyholders. Stakeholders generally agreed that any subsidies should be explicit and provided directly to the policyholder instead of hidden in a discounted premium rate, partly because such hidden subsidies conceal a property’s actual flood risk and encourage development in high-risk areas. While the premium levels may be sufficient to cover claims in years with lower losses, the subsidies result in insufficient premium revenue over the long term to cover years with higher losses. As a result, the cost of subsidies is disguised from taxpayers and evident only in FEMA’s need to borrow from Treasury. Making the subsidies explicit would require Congress to appropriate funds for them, increasing transparency by showing the exact annual cost of the subsidies. Such subsidies could require determining eligibility requirements—for example, a means test—as well as the amount of subsidies. We suggested that Congress consider this approach in a previous report and this strategy continues to be an option that could offer benefits to the program and could be implemented independent of any increase in private sector involvement in flood insurance.\nStakeholders said that removing the hidden subsidies and charging full- risk rates to all policyholders has a number of advantages. For example, demonstrating the political will to charge full-risk rates within NFIP could signal to private insurers a greater likelihood of being allowed the freedom to charge adequate rates in a private flood insurance market, thus encouraging their potential participation. However, stakeholders expressed concerns over discussions of proposals to delay rate increases, specifically those authorized by the Biggert-Waters Act. These stakeholders said that such delays would increase private insurers’ skepticism about the feasibility of participating in a private flood insurance market. Although raising rates could create affordability concerns for some, delaying the increases could reduce the chances of increasing private sector involvement in flood insurance, leaving taxpayers to continue paying for flood claims through future borrowing from Treasury.\nBased on our analysis, providing means-tested subsidies to some property owners would allow Congress to address affordability concerns associated with premium rate increases. Currently, subsidies are available regardless of a property owner’s ability to afford a full-risk premium. Means testing the subsidies would ensure that only those who could not afford full-risk rates would receive assistance and should increase the amount in premiums NFIP collects to cover losses. Collecting more in premiums by providing subsidies to fewer policyholders would reduce taxpayer costs, one of the goals for reforming catastrophe insurance. Finally, charging full-risk rates to all policyholders would demonstrate a property’s actual flood risk to property owners, discourage further development in high-risk areas, and encourage property owners to invest in mitigation to lower their exposure to flood risk as well as their premium rate. However, while means-tested subsidies could make premium rates more affordable, they could also decrease a property owner’s incentive to mitigate.\nStakeholders raised other concerns about increases in flood insurance premium rates. One stakeholder noted that rate increases could lower a home’s market value because the cost of owning the home would rise. Further, stakeholders said that some communities with a high risk of flooding could become economically unviable if premium rate increases made flood insurance unaffordable for too many residents. For example, stakeholders as well as participants in congressional hearings have said that rate increases in some high-risk areas could make it unaffordable for many homeowners within a community to stay in their homes, which could lead to declining property values for homes and businesses. Premium rate increases could also cause some property owners to cancel their coverage or opt not to purchase it, particularly those who were not already mandated to purchase flood insurance. Reduced participation could negate some of the benefits of providing the targeted subsidies. Means-based subsidies could soften some of these potential effects, but any solution will need to consider whether other steps would be necessary to limit adverse effects on particular communities.\nFinally, the Biggert-Waters Act eliminates the transfer of subsidies when homes are sold and the renewal of subsidized policies if a policyholder deliberately chooses to allow flood coverage to lapse. We previously have reported that the continuing implementation of the act is expected to decrease the number of subsidized policies. As the number of subsidized policies falls, NFIP’s premium shortfall will decrease, helping its financial condition. Means-based subsidies could provide greater up- front savings by limiting the number of policyholders that would be eligible for the subsidies. However, there could be a point when the cost of continued means-based subsidies could exceed the level of subsidies that will otherwise exist as homes are sold or coverage lapses. Some stakeholders suggested that targeted subsidies should be temporary to help address this concern.", "According to stakeholders, another strategy for increasing the private sector’s role in flood insurance is to have the federal government serve as the insurer of last resort. This strategy would give private insurers the opportunity to provide flood insurance to most property owners who desire it, and the federal government would offer coverage only to the highest-risk properties that private insurers were unwilling to underwrite. Stakeholders said that particularly in the early years, private insurers might be conservative regarding the properties they were willing to insure, but many might be willing to insure more properties as they grew comfortable with underwriting flood coverage. Some states have similarly structured residual insurance programs for other perils that could provide insight and offer lessons in structuring such a program for flood insurance. For example, representatives from state residual insurance programs with whom we spoke said their programs charged rates that are higher than what would be available in the private market to ensure they remain insurers of last resort and discourage property owners from using it as an alternative to private sector coverage.\nThis strategy could help create the conditions we identified earlier in this report for increasing private sector involvement. To address private sector concerns about being able to accurately set rates, FEMA could grant private insurers access to historical claims data. However, as noted earlier FEMA would need to ensure that any disclosure complies with the Privacy Act. Further, the premium rates for residual coverage should be above what private market rates would be for comparable coverage to discourage property owners from using it as an alternative to private coverage.\nBecause this strategy would transfer many of NFIP’s policies to the private sector, NFIP’s total exposure would likely decrease. To the extent that the residual policies sold by NFIP were priced at full-risk rates, long- term taxpayer costs could be reduced. However, while full-risk rates would reduce taxpayer costs in the long-term, the average cost and volatility of the program’s remaining policies would increase, because NFIP would be left with the highest-risk policies. Further, because these residual policies would have the highest risk, they would require high premium rates to cover their full risk of loss, potentially reducing consumer participation. Combining this option with means-based subsidies could help address affordability concerns and maintain consumer participation.", "According to stakeholders, a third strategy for increasing private sector involvement in flood insurance would be for the federal government to provide reinsurance to private insurers. Specifically, the federal government could provide a backstop for private insurers by agreeing to pay the difference when total claims exceeded a certain amount within a specified period. To fund reinsurance claims for catastrophic losses, the federal government could collect premiums from private insurers. Some stakeholders said that the private reinsurance industry might be able to provide some reinsurance to private insurers, reducing the federal government’s potential role in reinsurance. However, other stakeholders expressed concerns that private reinsurers might raise premium rates or cancel coverage after a catastrophic loss year, creating uncertainty for private insurers that could affect their willingness to enter the flood insurance market.\nStakeholders said that the risk of insolvency in the event of catastrophic flood losses might make some private insurers hesitant to enter the flood insurance market and that providing reinsurance could help address these concerns and encourage their participation. If the federal government collected adequate reinsurance premiums, this strategy could also reduce costs to taxpayers, one of the goals for reforming natural catastrophe insurance, because most of the flood risk would be transferred to the private sector. However, the costs of these reinsurance premiums would likely be passed onto the policyholder, and the resulting higher rates could reduce consumer participation. Once again, means- based subsidies could help soften these rate increases and maintain consumer participation.", "Stakeholders identified several other strategies that could help encourage private sector involvement in flood insurance.\nMandatory coverage. In particular, some stakeholders said that a federal mandate could help achieve the level of consumer participation necessary to make the private sector comfortable with providing flood insurance coverage. For example, some stakeholders said that the federal government could mandate that homeowners insurance policies include flood coverage or that all homeowners purchase flood insurance. Either mandate could increase the number of homeowners purchasing flood insurance, something that could help private insurers diversify and manage the risk of their flood insurance portfolio and address concerns about adverse selection. However, the stakeholders were also concerned that private companies might oppose a mandate that homeowners policies include flood coverage, potentially raising legal issues. Further, stakeholders said that some property owners— particularly those who perceived their flood risk to be low—might also resist being required to purchase flood insurance. Finally, as we have reported the federal government has faced challenges with enforcing the current mandatory purchase requirement for flood insurance, which applies to properties in high-risk areas with federally regulated mortgages. If the federal government faces similar challenges with additional mandates, it might not realize the intended benefits of increased consumer participation.\nReinsure NFIP. Other stakeholders discussed NFIP purchasing reinsurance from the private sector to cover exposure to catastrophic losses rather than relying on borrowing from Treasury. While doing so would increase private sector involvement in flood insurance, the federal government would still play an active role in flood insurance, because NFIP would still serve as the main provider of primary flood insurance coverage. However, the federal government’s exposure to catastrophic losses could be reduced. On the other hand, stakeholders noted that private companies might cancel reinsurance after a catastrophic loss year, leading to uncertainty as to the degree to which the federal government’s exposure would be mitigated. Further, stakeholders said that NFIP may need to collect additional premiums on its existing policies to pay for the reinsurance. However, given that NFIP’s current premium levels are insufficient, NFIP may be unable to pay for this additional expense.\nCatastrophe bonds. Stakeholders said that as an alternative to reinsurance, NFIP might be able to limit its exposure to large losses by transferring risk to capital markets through insurance-linked securities such as catastrophe bonds. For example, NFIP could issue interest- bearing bonds to investors willing to bear the risk of losing some of their investment if flood claims exceeded a predetermined amount. Like reinsurance, catastrophe bonds could help NFIP manage its risk exposure, but again it would need to be able to collect adequate premiums to cover any necessary payments of principal or interest. We have previously reported that state insurance entities, as well as private sector insurers, have used catastrophe bonds to manage their risk.", "Stakeholders with whom we spoke or who participated in our roundtable discussion said that no matter which strategies Congress might choose for increasing private sector involvement in flood insurance, the federal government would likely still have some role. For example, some strategies include transforming the federal government’s role from primary provider of flood insurance to a residual insurer or a reinsurer. As the private sector increases its role in providing flood coverage, various government entities could collaborate on other important roles. In particular, stakeholders said that it would continue to be important for federal, state, and local governments to encourage mitigation through direct funding or other less costly strategies and to promote risk awareness among consumers. Stakeholders said that government entities want to reduce property owners’ current and future exposure to flood risk and increase the resiliency of their structures. Stakeholders also said that with private flood insurance, both the insurance company and the policyholder would have some incentive to mitigate, the insurer to reduce its risk exposure and the policyholder to lower the premium rate. More generally, stakeholders also said that various government entities should continue developing and enforcing building codes and land use agreements in order to reduce the flood risk of current structures and prevent future development in high-risk areas. Stakeholders also said that the federal government should ensure consistent insurance standards and regulations across states, in part through streamlined state regulations or federal oversight, to allow insurers to charge adequate rates.", "While a number of conditions are important to attract private sector participation in the flood insurance market, key among them is the ability to charge rates that fully reflect the estimated risk of flooding. The Biggert-Waters Act includes a number of provisions that begin moving NFIP toward full-risk rates for some properties, a critical first step. Delaying or repealing rate increases in the Biggert-Waters Act may address affordability concerns but would likely continue to increase NFIP’s long-term burden on taxpayers. Further, it may reinforce private insurers’ skepticism that they would ever be permitted to charge adequate rates and make their participation unlikely in the foreseeable future. As debates over the private sector’s role continue, one step to address the burden on low- and moderate-income policyholders could be taken immediately. As we have suggested previously, Congress could eliminate subsidized rates, charge full-risk rates to all policyholders, and appropriate funds for a direct means-based subsidy to eligible policyholders. The movement to full-risk rates would encourage private sector participation, and the explicit subsidy would address affordability concerns, raise awareness of the risks associated with living in harm’s way, and decrease costs to taxpayers, depending on the extent and amount of the subsidy.", "We provided a draft of this report to the Federal Emergency Management Agency (FEMA) and the Federal Insurance Office for their review and comment. FEMA provided technical comments, which we have incorporated into the report.\nWe are sending copies of this report to the appropriate congressional committees, FEMA, and the Federal Insurance Office. 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, please contact me at (202) 512-8678 or cackleya@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.", "The Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act) mandated that GAO conduct a number of studies, including this study on assessing a broad range of options, methods, and strategies for privatizing the National Flood Insurance Program (NFIP). This report discusses (1) conditions needed for private sector involvement in flood insurance and (2) strategies for increasing it.\nTo both identify conditions needed for private sector involvement in flood insurance and evaluate the benefits and challenges of strategies for increasing private sector involvement, we reviewed the laws, regulations, and history of NFIP, Federal Emergency Management Agency (FEMA) reports, academic studies, our prior work on NFIP, and other documentation and reports. We also held a roundtable in August 2013 composed of a variety of stakeholders to obtain their views on these issues. The 14 stakeholders participating in the roundtable included FEMA officials; state insurance regulators; a catastrophe modeling firm; an academic; and individuals representing associations of private insurers, reinsurers, actuaries, consumers, and floodplain managers. We supplemented information obtained through the roundtable with interviews with stakeholders representing the groups listed above as well as Federal Insurance Office officials; state residual insurance programs; and groups representing insurance adjusters, insurance agents, realtors, and mortgage bankers. We selected a diverse group of stakeholders for the roundtable and interviews based on type of organization, role, and membership. In addition, we identified some stakeholders based on work conducted from a prior report, and suggestions from other stakeholders. The roundtable discussion focused on four broad themes that included: a policy goals framework for evaluating options for increasing private sector involvement in flood insurance, barriers to private sector involvement that would need to be options for private sector involvement and associated benefits and challenges, and the governmental role that would remain in a private flood insurance market.\nWe identified four public policy goals to evaluate options for changing the federal role in natural catastrophe insurance in a prior report. These goals are generally consistent with the evaluation criteria the stakeholders discussed. Roundtable participants and other stakeholders generally agreed that these goals were applicable for evaluating options for increasing private sector involvement in flood insurance.\nWe conducted this performance audit from March 2013 to 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, Patrick Ward (Assistant Director); Emily Chalmers; Heather Chartier; William Chatlos; Christopher Forys; Patricia Moye; and Carrie Watkins made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_title", "", "h1_full", "", "h0_full h2_title", "h2_full", "", "", "h0_title h2_title h1_title", "h0_title h2_title h1_full", "h0_full h1_full", "h2_full h1_full", "", "", "", "h0_full", "h3_full", "h0_full h3_full", "", "", "" ] }

{ "question": [ "What did stakeholders explain to GAO regarding private sector involvement in flood insurance sales?", "What is the first condition?", "What is the second condition?", "What is the third condition?", "How could Congress create a direct means-based subsidy for some policyholders?", "How might this subsidy be beneficial, according to stakeholders?", "How might delaying the Biggert-Waters Act help?", "What has NFIP's debt accrual highlighted?", "What has this resulted in?", "Why was NFIP created?", "What does the Biggert-Waters Flood Insurance Reform Act mandate?", "What does this report address?", "How did GAO collect data for this report?" ], "summary": [ "According to stakeholders with whom GAO spoke, several conditions must be present to increase private sector involvement in the sale of flood insurance.", "First, insurers need to be able to accurately assess risk to determine premium rates. For example, stakeholders told GAO that access to National Flood Insurance Program (NFIP) policy and claims data and upcoming improvements in private sector computer modeling could enable them to better assess risk.", "Second, insurers need to be able to charge premium rates that reflect the full estimated risk of potential flood losses while still allowing the companies to make a profit, as well as be able to decide which applicants they will insure. However, stakeholders said that such rates might seem unaffordable to many homeowners.", "Third, insurers need sufficient consumer participation to properly manage and diversify their risk, but stakeholders said that many property owners do not buy flood insurance because they may have an inaccurate perception of their risk of flooding.", "Congress could eliminate subsidized rates, charge all policyholders full-risk rates, and appropriate funding for a direct means-based subsidy to some policyholders.", "Stakeholders said full-risk NFIP rates would encourage private sector participation because they would be much closer to the rates private insurers would need to charge. The explicit subsidy would address affordability concerns, increase transparency, and reduce taxpayer costs depending on the extent and amount of the subsidy.", "The Biggert-Waters Act eliminates some subsidized rates, but some have proposed delaying these rate increases. Doing so could address affordability concerns, but would also delay addressing NFIP's burden on taxpayers.", "NFIP has accrued $24 billion in debt, highlighting structural weaknesses in the program and increasing concerns about its burden on taxpayers.", "As a result, some have suggested shifting exposure to the private sector and eliminating subsidized premium rates, so individual property owners--not taxpayers--would pay for their risk of flood loss.", "NFIP was created, in part, because private insurers were unwilling to insure against flood damage, but new technologies and a better understanding of flood risks may have increased their willingness to offer flood coverage.", "The Biggert-Waters Flood Insurance Reform Act of 2012 moves NFIP toward charging more full-risk rates. It also mandates that GAO conduct a study on increasing private sector involvement in flood insurance.", "This report addresses (1) the conditions needed for private sector involvement in flood insurance and (2) strategies for increasing private sector involvement.", "To do this work, GAO reviewed available documentation and hosted a roundtable in August 2013 that included stakeholders from FEMA, the insurance and reinsurance industries, and state insurance regulators, among others. GAO also interviewed other similar stakeholders." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "TAA Certification Process", "2009 Changes to the TAA Program", "TAA Funding", "Role of State and Local Workforce Agencies", "TAA Performance and Reporting Requirements", "Related TAA Programs", "Labor Faced Initial Challenges in Implementing the 2009 Legislation and Took Steps to Address Them", "2009 Legislation Increased Volume and Processing Complexity of TAA Petitions", "Labor’s Processing Timeliness Adversely Affected by Increased Petition Volume and Initial Staff Shortage", "Labor Took Corrective Action to Address Challenges in Processing Petitions", "Nearly All of the Changes Benefited Participants and Some Helped Administrators As Well", "Dedicated Funding for Case Management and Employment Services", "New Authority to Waive Deadlines", "Enhanced and Expanded Training Benefits", "Increase in Available Training Funds", "Over 107,000 Workers Received Benefits and Services, but Little Is Known About Their Outcomes", "About Half of the Participants in the 2009 Program Enrolled in Training, but Other Benefits Were Less Utilized", "Limited Outcome Data are Available", "Concluding Observations", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Selected States", "Analysis of Labor’s Training Funds Expenditure Data", "Analysis of Labor’s Participant Data", "Appendix II: Comparison of Key 2002, 2009, and 2011 TAA Statutory Provisions", "2002 TAA Program", "2002 TAA Program", "ADMINISTRATIVE CHANGES Training Fund Amount", "2002 TAA Program Employment and Case Management Services", "Office Responsible for Administering TAA • No statutory provision. TAA was", "Appendix III: TAA Training Fund Expenditures by State, as of March 31, 2012", "Appendix IV: Comments from the Department of Labor", "Appendix V: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The TAA for Workers program covers workers whose jobs have been threatened or lost due to changing trade patterns. While the specific services and benefits available through the program have changed over time, the primary forms of assistance that have been extended include income support and training.", "In order for workers to apply for TAA benefits, Labor must certify that their This certification process begins when separation was trade-affected.workers or their representatives file a petition with Labor on behalf of a group of laid-off workers. The agency then conducts fact-finding investigations to determine whether the workers’ jobs were adversely affected by international trade. In nearly all investigations, Labor contacts company officials to gather information on the circumstances of the layoff. This information is the basis for many petition decisions. As needed, Labor may also gather information by surveying the company’s customers or examining aggregate industry data.\nThe TAA statute lays out certain basic requirements that all petitions must meet in order to be certified by Labor, including that a significant proportion of workers employed by a company be laid off or threatened with layoff. In addition, a petition must demonstrate that the layoff is related to international trade in one of several ways—for example, because the firm shifted production overseas or because increased imports competed with its products.\nBy law, Labor is required to conclude its investigation and either certify or deny a petition within 40 days of receiving it. Once Labor reaches a decision on the investigation, it notifies the relevant state, which has responsibility for contacting the workers regarding Labor’s decision. If the workers are certified, the state informs the workers of the benefits available to them, and when and where to apply for benefits. If a petition is denied, a worker may challenge the decision through an appeals process.", "The 2009 legislation made substantial changes to the TAA program, including extending eligibility to workers in a greater variety of circumstances. For example, the law extended coverage to workers at firms that provide services—previously, eligibility was restricted to workers in firms producing goods. It also changed eligibility rules for other types of workers, such as those whose firms shifted production overseas, as shown in figure 1. To reflect this broadened eligibility, Labor more than doubled the number of categories by which it could certify a petition.\nThe 2009 legislation also generally enhanced TAA benefit levels. The amount of funding available for training nationally more than doubled— from $220 million to $575 million for fiscal years 2009 and 2010. Further, the legislation increased either the amount or duration of many specific benefits and services, which are available to eligible workers covered by certified petitions filed between May 18, 2009, and February 14, 2011. Specifically, these enhanced benefits and services include:\nExtended deadline for enrollment. The 2009 legislation extended the deadline by which workers must enroll in or receive a waiver from training to be eligible to receive income-based support to the later of 26 weeks from the date of TAA certification or the date of separation from employment. Previously, the deadline for enrolling in training was the later of 8 weeks after TAA certification or 16 weeks after separation from employment. The deadline was extended in part to give laid-off workers more time to search for a job before deciding to enroll in training.\nExtended income support. Participants enrolled in full-time training who have exhausted their unemployment insurance may receive a continuation of income support equal to their final unemployment insurance benefit. The 2009 legislation provided that participants may receive up to 130 weeks of income support, up from 104 weeks under the prior law. For participants who require remedial or prerequisite courses, the maximum level of income support increased from 130 to 156 weeks. Income support was extended in part to enable workers to participate in longer training programs.\nTraining. Under the 2009 program, participants have additional training opportunities beyond those that were available under the 2002 program. The 2009 legislation authorized training for workers threatened with a layoff that has not yet occurred in addition to workers who have been laid off. The law also authorized participants to attend training part-time, but limited eligibility for income support to workers in full-time training.\nWage supplement. The 2009 legislation increased the income eligibility threshold and maximum wage supplement benefit for some older workers. TAA participants 50 years or older who secure a new, lower paying job than their previous trade-impacted job may be eligible to receive wage supplements. The 2009 legislation eliminated the requirement that such workers find employment within 26 weeks of being laid off. It also allowed older workers receiving the wage supplement to participate in full-time training if employed at least 20 hours per week. Workers employed on a full-time basis who were not enrolled in training maintained their eligibility for wage supplements.\nJob search and relocation allowances. The 2009 legislation increased the amount of job search and relocation expenses for which state workforce agencies could reimburse eligible participants.Specifically, the 2009 legislation provided that the lump sum of job search and relocation expenses would cover 100 percent (up from 90 percent) of the costs, to a maximum of $1,500 (up from $1,250).\nHealth coverage benefit. The 2009 legislation increased the amount of the tax credit TAA participants could receive through the Health Coverage Tax Credit (HCTC) program from 65 percent to 80 percent of qualifying monthly health plan premiums. The Internal Revenue Service administers this program.\nThe 2009 legislation also affected Labor’s operations by, for example, establishing a new Office of Trade Adjustment Assistance and requiring Labor to collect additional information on workers who receive TAA benefits and services, as well as data on service sector workers, including the service workers’ state, industry, and reason for certification.\nAlthough the changes made by the 2009 legislation were set to expire on December 31, 2010, Congress extended them through February 12, 2011. At that time, the TAA program reverted to provisions as authorized by the prior law, the Trade Adjustment Assistance Reform Act of 2002. Eight months later, in October 2011, Congress passed the Trade Adjustment Assistance Extension Act of 2011, which reinstated many of the program provisions established by the 2009 legislation, including eligibility for service sector workers. However, this most recent legislation also reduced some of the other benefits and services to the levels set by the 2002 program, such as scaling back the maximum number of weeks of income support from 130 to 104 for participants enrolled in basic training and lowering allowances for job search and relocation from $1,500 to $1,250. See appendix II for a detailed comparison of the 2002, 2009, and 2011 program provisions.", "In addition to changes in participant benefits and services, the 2009 legislation added requirements regarding the allocation of TAA training funds to the states. It required Labor to make an initial distribution of no more than 65 percent of available funds, holding 35 percent in reserve for additional distributions throughout the year, but ensuring a distribution of at least 90 percent of funds no later than July 15 of the fiscal year. The law specified a number of factors for Labor to take into account in making distributions to the states, including factors Labor might consider appropriate, and specified that a state’s initial distribution had to be at least 25 percent of the distribution it received in the preceding fiscal year.\nThe 2009 legislation required that, to cover states’ administrative costs and employment and case management services, Labor distribute to each state an additional amount equal to 15 percent of its annual training allocation. States were required to use at least one-third of those administrative funds for case management and employment services. The 2009 legislation also required that each state be provided an additional $350,000 for case management and employment services. States have 3 years to expend these federal funds. As such, fiscal year 2009 funds had to be used by the end of fiscal year 2011.", "State and local workforce agencies play key roles in the petition certification process and help workers take advantage of the services and benefits available through the TAA program. The agencies assist workers and employers in filing petitions and can also file petitions on behalf of workers. After a petition is certified, the agencies contact employers to obtain a list of workers affected by the layoff and send each worker a letter notifying him or her of potential eligibility. The agencies may also hold orientation sessions to provide workers with detailed information on the TAA program and other services and benefits available. In addition, case managers provide vocational assessments and counseling to help workers enroll in the program and decide which services or benefits are most appropriate. Local case managers also refer workers to other programs, such as the Adult and Dislocated Worker Programs under the Workforce Investment Act, for additional services.", "Labor is responsible for monitoring the performance of the TAA program. Its primary reporting system, the Trade Activity Participant Report, is intended to track information on TAA activity for individuals from the point of TAA eligibility determination through post-participation outcomes.Prior to 2010, the TAA information was reported only on those who had exited the program, as required by Labor. Each quarter, states are required to submit data on participants who received TAA program services. These data include participant demographics; information on services and benefits received, such as case management and reemployment services; income support; and participant outcomes such as employment status and earnings after program exit. States primarily track these outcomes using the Unemployment Insurance wage records. Labor uses data submitted by states to report national outcomes on the TAA performance measures for each fiscal year.\nThe 2009 legislation added a new requirement for states to report on all participants who are enrolled in the TAA program and not just those who exited the program, as required by Labor. As a result of this change, Labor revised its reporting system and required states to submit additional information to track individual benefits and services provided to participants under the new law. In addition, the 2009 legislation required states to report on program outcomes for a longer period after participants exit the program.core measures of program performance: entered employment rate, average earnings, and employment retention rate. For fiscal year 2012, Labor’s performance goals for the TAA program were 59 percent for entered employment, $13,248 for average earnings over a 6-month period, and 83.2 percent for employment retention.", "The TAA for Workers program is one of four trade adjustment assistance programs; the other three provide assistance to firms, farms, and communities. The Department of Commerce administers a TAA program that provides funds for manufacturing and other types of firms to develop and implement a business recovery plan. The Department of Agriculture administers the TAA for Farmers program, which provided help to individual producers of raw agricultural commodities, such as farmers and fishermen, to become more competitive in producing their current commodity or transitioning to a different commodity. Under a TAA program to assist trade-affected communities, Labor awards grants to institutions of higher education for expanding or improving education and career training programs for persons eligible for training under the TAA for Workers program, and the Department of Commerce provides technical assistance to trade-affected communities and awards and oversees strategic planning and implementation grants. In addition to mandating that GAO report on the TAA for Workers program, the 2009 Act mandated that GAO report on the other TAA programs as well. Our report on the Farmers program was issued in July 2012 and our reports related to the TAA programs that assist firms and communities were issued in September 2012.", "", "Labor took multiple steps to implement the 2009 legislation after it was enacted. For example, it set up the Office of Trade Adjustment Assistance established by the legislation, which took over administration of the TAA program from the Office of National Response. Also, as required by the legislation, Labor issued a regulation implementing the new requirements for the distribution of training funds to states. Agency officials told us that they also drafted a regulation on investigation standards, as required, but did not publish the regulation because by the time it was ready for publication, the 2009 provisions were set to expire.with the legislation, the agency updated its information technology system to collect data on service sector workers and implemented a new reporting system for states to collect data on participant activities and outcomes. Labor also took implementation steps beyond those specifically required by law, such as providing training and technical Also, in accordance assistance to state workforce agencies and issuing revised guidance on program operations. According to the state officials we interviewed, this assistance was generally both helpful and timely.\nLabor’s primary implementation challenge after the 2009 legislation was addressing a substantial increase in its workload to process petitions. As depicted in figure 2, the number of petitions the agency received in the third quarter of fiscal year 2009, when the law took effect in May 2009, was more than triple the number received the previous quarter. Multiple factors contributed to this increase. According to agency officials, the increase in petitions was caused by the 2009 legislation’s expansion of eligibility to new categories of workers as well as the economic recession, which may have increased trade-related layoffs. Another cause for the spike in petitions is that in the months before the law took effect, Labor allowed petitioners to withdraw and then resubmit petitions after the 2009 legislation took effect, so they could take advantage of the new, enhanced benefit levels. As a result, an agency official estimated that roughly 500 petitions were withdrawn before May 18, 2009, and then resubmitted after the law took effect.\nAccording to Labor officials, the 2009 legislation generally made it more challenging to determine TAA eligibility. As described earlier, the law expanded the number of categories for which petitions could be certified. Agency officials told us that this expansion complicated investigators’ efforts because petitions needed to be evaluated against a greater number of eligibility criteria than before. Further, some of the new categories presented additional challenges. According to Labor officials, the firms identified in service-related petitions tended to be more dispersed geographically than manufacturing firms, making it more difficult to evaluate certain service-related petitions. For example, in cases where the work that was shifted abroad was performed by workers in multiple locations, it may be difficult to determine exactly which workers had been affected. In addition, some officials said that investigating petitions in which workers produce finished articles that contain foreign components, such as tubes used in televisions, proved challenging. Labor said these petitions often require contact with foreign firms, which can present communication challenges—for example, due to differences in currencies and time zones. Further, they noted the absence of any legal requirement for foreign companies to comply with Labor’s data requests. In contrast to these challenges, Labor officials told us that the 2009 legislation made some investigations easier. Previously, TAA eligibility standards were different for nations that did and did not have a free trade agreement or preferential trade relationship with the United States. The 2009 legislation eliminated this difference, making it more straightforward to investigate shifts in production.", "Labor initially had insufficient capacity to handle its increased workload, and thus, lagged in processing petitions. As described previously, Labor is required to process a petition—that is, determine whether to certify or deny it—within 40 days. The quarter after the 2009 legislation took effect, on average, Labor took 153 days to process a petition—nearly four times as long as the statutory limit (see fig. 3). Multiple factors contributed to the lag, including an increased volume of petitions, initial staff shortages and turnover, and the need for staff to become familiar with the new provisions of the 2009 legislation. An official noted that initially, hiring proved challenging because the 2009 legislation did not authorize funds for implementation. As a result, Labor paid for new hires through the agency’s general management funds. Most new staff members were hired in July 2009, approximately 2 months after the law took effect.\nDuring our review of TAA data and petition case files, we discovered that Labor mislabeled the basis for several certifications in its records, suggesting that data reported to Congress may contain inaccuracies. These errors were likely caused by the high volume of petitions that required processing, staff shortages and turnover, and gaps in internal controls. Moreover, as described earlier, the number of categories by which petitions could be certified more than doubled after the 2009 legislation. Labor told us that investigators’ unfamiliarity with these new categories may have also contributed to errors. In one instance, Labor certified a petition based on imports of goods, but the staff member who entered this information into the information technology system inaccurately recorded the eligibility category as imports of services. In another case, Labor officials acknowledged that a certification based on imports of goods was improperly documented as imports of services in the petition case file itself. Among other gaps in internal controls, we found that a single staff member was responsible for recording the reason for each certification in Labor’s information technology system. The errors we found do not necessarily indicate that petitions were wrongly determined, and we did not examine whether any individual determinations were correct. However, the errors indicate that some petitions were mislabeled after they were certified. Agency officials acknowledged that both types of errors occurred and told us that they were most likely to occur in petitions filed during the first year of the 2009 program, a period in which approximately 4,000 petitions were processed.", "Labor took steps to address its implementation challenges, including roughly doubling its staff. In the months after the 2009 legislation took effect in May 2009, Labor hired approximately 30 new staff, some on a permanent basis and others as temporary hires. Although most new staff members were hired in July 2009, agency officials estimate that it takes approximately 6 months to fully train a new investigator. As a result, officials said the Office of Trade Adjustment Assistance reached its peak operating capacity in January 2010, approximately 8 months after the 2009 legislation took effect. Labor’s efforts to increase staff were hampered by frequent employee turnover. According to Labor officials, many staff hired on a temporary basis left the agency when they found permanent positions elsewhere, diminishing Labor’s overall capacity to process petitions.\nIn tandem with its efforts to increase capacity, Labor took steps to enhance its internal controls by adding quality controls to its petition investigation process. As shown in figure 4, Labor incorporated these controls over approximately 2 years. In December 2009, for example, Labor began requiring a senior investigator to review each petition case file before and after the determination was reached to ensure the file included appropriate documentation. Previously, petitions were subject to a single review by the certifying officer. Second, in May 2010, the agency created a checklist that specified standard operating procedures and accuracy checks for investigations. The final version of this checklist, established in the spring of 2011, has specific targets for data entry accuracy, timeliness of investigations, customer outreach, and more. Finally, in the fall of 2011, Labor began quarterly tests to gauge how often these targets were reached. In the first quarter that tests were conducted, Labor told us that investigators met the quality control targets 87 percent of the time on average, slightly below the agency’s internal goal of 90 percent.\nIt took some time for the benefits of increased staffing and improved quality controls to take effect. By the end of fiscal year 2010, petition processing times had fallen substantially, although by this time the number of petitions Labor received had declined. Moreover, in June 2012, we reviewed Labor’s petition investigation process and found that it generally conformed to best practices for internal controls.\nFurther, in September 2012, Labor conducted an internal audit to determine how often the basis for a certification was improperly recorded in either the petition case file or the agency’s information technology system. This review covered the period from May 18, 2009, until May 31, 2010, when Labor introduced additional quality control steps. Through an audit of 351 randomly selected petitions, Labor estimated the error rate to be 1.4 percent, with a margin of error of plus or minus 5 percent. According to Labor, this audit suggests that errors were more likely to be present in the information technology system than in the petition case file itself. Labor concluded that this low percentage of error had a minimal impact on the petition data reported in its 2010 annual report to Congress. Labor said it has corrected all errors found in its audit findings, and as part of new quality control procedures, has established a more frequent internal audit system that will identify and correct such errors throughout each quarterly reporting cycle.", "Participants benefited from nearly all of the 2009 legislative changes, some of which also helped administrators better serve the participants, according to the state officials we interviewed. For example, the expanded eligibility for workers, such as for those in the service sector, benefited participants by providing access to program benefits for trade- affected workers under a wider array of circumstances, such as call center employees whose jobs were moved overseas. Figures 5 and 6 summarize the views of officials in the six states we examined.\nBoth participants and administrators benefited from a simplified and extended training enrollment deadline—which must be met to qualify for TAA-based income support—according to officials from all six states. Previously, eligible workers had to enroll in training within 8 weeks of their petition’s certification or 16 weeks of their separation, whichever was later. The 2009 legislation extended the training enrollment deadline to 26 weeks after the later of certification or separation. An official from one state told us that the new extended deadline was easier for eligible workers to understand since the period of time within which individuals had to enroll in training was the same, regardless of whether that period began at the date of separation or certification. According to several officials we interviewed, the extended deadline allowed participants to more fully consider their employment and training options, and therefore facilitated better decision making. The longer enrollment period also positively affected administrators. Some state officials noted that the extension provided case managers with more time to assess participants’ skills and abilities and advise them on employment and training options.", "In addition to extending time frames for participants, the 2009 legislation provided dedicated funding to states for case management and employment services, which indirectly benefited participants, according to several state officials. Previously, states did not receive funds for case management and employment services, and so resources from other programs were often used to support TAA participants. Several state officials said that dedication of these funds allowed case managers to better serve participants. Generally, these funds were used to pay the In some cases, this built capacity, salaries of TAA case managers., such as when the funds were used to hire new TAA staff who provided these services. In other cases, the TAA funds replaced funding from other sources, for example, when services were provided through the Workforce Investment Act, according to several state officials. Officials from several states said that the dedication of these funds reduced the financial burden the TAA program had previously placed on other workforce programs.", "Under a rule Labor published on April 12, 2010, states were required, no later than February 12, 2011, to use state government employees covered by a merit system of personnel administration to perform TAA funded functions undertaken to carry out TAA provisions. 75 Fed. Reg. 16, 988 (April l 2, 2010) (codified at 20 C.F.R. §618.890). (The Omnibus Trade Act of 2010 extended the initial regulatory deadline of December 15, 2010, to February 12, 2011. Pub. L. No. 111-344, §102, 124 Stat. 3614.) As a result, officials from one state told us that they calculated exactly how many TAA staff they could support with the TAA funding and then used funds from other sources to pay non-merit staff providing case management. waive deadlines for TAA-based income support and enrollment in training. Similarly, it also provided an exception to the training enrollment deadline in cases where an eligible worker missed the deadline because he or she was not given timely notification of the deadlines. Both participants and administrators benefited from these changes, according to the officials from five of the six states we interviewed. Officials from one of these states told us that the waivers reduced the administrative burden of processing appeals from eligible workers who missed the enrollment deadline.", "Further, several of the changes made by the 2009 legislation benefited participants who enrolled in training, according to most of the officials we interviewed, including: an increase in the amount of training funds available. the possibility of receiving income support for longer than previously available; the option to start training while threatened with job loss (prior to actually losing their jobs); the flexibility to attend training on a part-time basis; and According to several officials, the additional 26 weeks of potential income support while in training allowed program participants to consider longer- term training options, such as health care, a high-demand profession. In addition, officials said that since participants often drop out of training after income support expires, this change bolstered training program completion. Some officials also said that in some cases, the flexibility to attend training part-time may have contributed to higher training completion rates. For example, some full-time training participants who gained employment before their training program ended opted to finish their training part-time. Officials said that without the part-time option, such participants would have likely dropped out of training altogether. Officials from five states said the shift allowing part-time training had a neutral effect on administration. However, officials from one state attributed their state’s relatively low part-time enrollment rates to the requirement that TAA-based income is contingent upon full-time enrollment in training.", "Moreover, according to state officials, the increase in available training funds from $220 million to $575 million per fiscal year benefited participants. In one state, officials said that having access to additional funds increased its statewide caps on training program costs, which allowed them to keep pace with higher education institutions’ rising tuitions. Officials in another state said that receiving these additional funds allowed them to train all eligible participants rather than putting some on waiting lists for training. Further, a few state officials noted that the increased funds for training enabled them to serve an increased volume of participants. As shown in figure 7, five of the selected six states expended all of their fiscal year 2009 training funds—the only 3-year spending period that has expired. Thus far, these states have drawn down, on average, 76 percent of the training funds allocated to them for fiscal year 2010.expenditures.", "", "TAA provides participants with a variety of benefits and services—some were used more than others. As of September 30, 2011, 107,896 participants received services under the 2009 TAA program. As shown in figure 9, the majority of these participants were male and most were white. Nearly half the participants were age 50 or older and nearly two- thirds had a high school education or less.\nAll 107,896 participants who received services under the 2009 TAA program received case management and employment services and nearly half enrolled in training. Most of the participants who enrolled in training had only one training activity, but some enrolled in two or three training activities (see fig.10).\nParticipants can receive different types of training, but occupational skills training—training in specific occupations typically provided in a classroom setting—was the most common type of training provided (see fig. 11). In addition to occupational training, participants received other types of training, such as remedial training, which includes adult basic education and English as a Second Language. These types of training were provided less frequently than occupational training.\nParticipants in the 2009 TAA program received training in a variety of occupational fields, most commonly related to computers, health, and production occupations (see table 1).\nAs of the end of fiscal year 2011, approximately half of the 2009 program participants who had enrolled in training were still in a training activity. For those 24,568 participants who completed or withdrew from training, the average amount of time spent in training was approximately 43 weeks. As shown in figure 12, nearly one-third of these participants spent between a half year and a full year in training.\nWhile approximately 50,000 participants enrolled in training under the 2009 program, fewer participants took advantage of several benefits and services that were added to, or expanded under, the 2009 program. For example, the 2009 legislation added part-time training and pre-layoff training for adversely affected incumbent workers. The legislation also increased the job search and relocation allowances and modified the program providing wage supplements for older workers. As shown in table 2, fewer than 8 percent of the participants who received benefits under the 2009 program used each of these benefits.\nThe wage supplement for older workers and the job search and relocation allowances are benefits that have not been widely utilized in the past. For example, we previously reported that fewer than 3,500 workers had utilized this benefit each year between 2004 and 2006. Similarly, not many participants have typically received job search and relocation allowances. For example, the Congressional Research Service reported that fewer than 500 workers received job search allowances each year between fiscal years 2006 and 2008, while fewer than 800 received relocation allowances during those years.\nWhile not used extensively, about 13 percent of the 5,521 older workers who participated in the wage supplement program also enrolled in training—a benefit available to eligible older workers participating in the 2009 program. Under the 2002 program, workers who participated in the wage supplement program for older workers were not eligible to receive training.\nBased on our prior work on HCTC, we found that participation in the program initially increased after the 2009 legislation. HCTC was another benefit that was enhanced under the 2009 legislation, increasing the tax credit covering monthly health insurance premiums from 65 percent to 80 percent. Because HCTC is administered by the IRS, Labor does not collect information on how many TAA participants used this benefit. However, we reported in 2010 that during the 6 months after key changes in the 2009 legislation took effect, the average monthly participation rate for TAA individuals was about 10,000. This represented an increase in participation compared to the 6 months prior to the passage of the legislation.\nUnder the 2009 TAA program, participants could receive up to 130 weeks of income support, plus an additional 26 weeks if they are also enrolled in remedial or prerequisite education. In total, the number of weeks for which participants could receive income support increased by 26 weeks. cases.expire, the number of participants receiving TAA income support and the average duration of TAA income support may increase substantially.", "Little is yet known about the outcomes achieved by participants in the 2009 program largely because nearly two-thirds of the participants were still enrolled in the program as of September 30, 2011. States are not required to begin tracking employment outcomes for participants until they exit the program. Of the 107,896 participants enrolled in the 2009 program, approximately 66 percent had not exited the program as of September 30, 2011. The one-third of participants who exited the program spent an average of about 37 weeks in the program. Approximately 76 percent of those exiting were in the program for 1 year or less (see fig.13).\nIn addition, little is known about participants’ outcomes because the information needed to assess these outcomes was not yet available. For the approximately 36,000 participants who had exited the program as of September 30, 2011, information to calculate entered employment rates, employment retention rates, and average earnings was not yet available for many participants. For example, the entered employment rate is based on the number of participants who were employed 6 months after exiting the program. Yet, as of September 30, 2011, states had reported the 6-month employment status on only about 60 percent of the participants who had exited the program. Similarly, states reported the earnings information needed to calculate the average earnings performance measure for only about a third of the approximately 13,000 participants who would have been included in the calculation.result, few of the participants in the 2009 program would have been included in calculating TAA performance outcomes through fiscal year 2011 (see fig. 14).\nIncomplete outcome data for TAA participants is a longstanding issue. The primary data source for outcome information is Unemployment Insurance wage records. As we have previously reported, these wage records provide a common yardstick for assessing performance across states but suffer from time delays. We reported on these delays in 2006, noting that most of the outcome data reported in a given program year actually reflect participants who left the program up to 2 years earlier.\nAnother factor contributing to the unavailability of outcome data for the 2009 program participants at the time we analyzed the data is that the 2009 legislation required states to report on job retention and earnings for a year after the participant exits the program—an additional 3 months beyond what states had previously reported. Labor officials stated that they were aware of the lack of outcome information being reported and are requiring states to submit updated outcome information by September 2012.\nEven when employment and earnings information becomes available, more information will be needed to assess the effectiveness of the changes made by the 2009 legislation. First, Labor uses information on employment rates and earnings to compare the TAA program to national program goals, but the information is reported on a fiscal year basis and combines data for participants under the 2002 and 2009 programs. Therefore, these reports will not provide a complete or separate picture of outcomes for 2009 program participants. However, Labor officials stated that their annual report for fiscal year 2012 would primarily consist of 2009 participants. Second, a program’s effectiveness cannot be determined solely by outcomes because they cannot show whether an outcome is a direct result of program participation or whether it is a result of other influences, such as the state of the local economy. Labor officials told us they have no plans to conduct an impact evaluation of the 2009 program since the program is no longer in effect. However, Labor is conducting a 5-year evaluation study of the 2002 TAA program, which is expected to be completed by November 2012. The study will address the operation and impacts of the program after the passage of the Trade Adjustment Assistance Reform Act of 2002 and will include an impact study on participants’ employment-related outcomes, overall and for key worker subgroups, and a benefit-cost analysis.", "The 2009 TAA legislation made extensive changes to the TAA for Workers program benefitting program participants—training funds were more than doubled, new benefits were added, eligibility was broadened, and existing benefits were enhanced. This contributed to a substantial increase in the number of petitions immediately following implementation of the changes in May 2009. Yet, when confronted with the initial surge in petition volume and faced with pressure to process these petitions quickly, Labor made some errors in recording the reasons why petitions were certified. Since that time, Labor has enhanced its quality controls for investigating petitions and determined that the data errors we found were not widespread.\nIn addition, because most participants were still enrolled in the program at the time of our review, sufficient information was not available to determine whether the program changes contributed to better performance outcomes. However, even when outcome data become available, it will be very difficult to isolate the effect of the 2009 legislative changes because the results cannot differentiate program participation from other outside factors, including the overall state of the economy. While Labor plans to release the results of its 5-year evaluation study of the 2002 program later this year, it will not include a definitive determination of the effectiveness of the substantial changes made by the 2009 legislation. Further, the TAA program was modified again in October 2011, further complicating any future evaluation of the 2009 program.", "We provided officials from the Department of Labor a draft of this report for review and comment. Labor provided written comments, which are reproduced in appendix IV, as well as technical comments, which we incorporated as appropriate. In its written comments, Labor generally agreed with our findings. Labor noted that the report validated its efforts to improve employment and retention outcomes for trade-affected workers, made possible by the expansion of benefits and services under the 2009 TAA program.\nWe will send copies of this report to the Secretary of Labor, relevant congressional committees, and other interested parties and will make copies available to others upon request. In addition, the report will be available at no charge on GAO’s Web site at http://www.gao.gov.\nA list of related GAO products is included at the end of this report. If you or your staff have any questions about this report, please contact me at (202) 512-7215 or at sherrilla@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Other contacts and staff acknowledgments are listed in appendix V.", "Our objectives were to determine: (1) what challenges Labor faced in implementing the 2009 legislation, (2) the effect selected state government officials say the 2009 legislative changes had on participants and on state and local administrators, and (3) the extent participants received TAA benefits and services as established by the 2009 legislation and what is known about employment outcomes. To address these objectives, we reviewed relevant federal legislation, regulations, and departmental guidance and procedures. We also interviewed Labor officials and state government officials in six states—Massachusetts, Michigan, North Carolina, Oregon, Pennsylvania, and Texas. We also interviewed selected local government officials in three of these states (Michigan, North Carolina, and Oregon). We obtained and reviewed Labor data on petitions, training fund expenditures, and participant activities. We conducted this performance audit from May 2011 through September 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 selected the six specific states because they had a high fiscal year 2010 training fund allocation, a high volume of TAA certifications, and geographic diversity (see table 3).\nWe also spoke with select local officials in three states (see table 4). Through these interviews, we obtained state and local officials’ opinions on what effects key changes made by the 2009 legislation had on their administration of the program and on participants.\nWe analyzed Labor’s data on petitions filed from fiscal years 2007 to 2011. We assessed the reliability of key data by interviewing Labor officials knowledgeable about the data, reviewing related documentation, manually and electronically testing the data, and assessing internal controls at Labor. During our manual testing of this petition data, we discovered Labor made errors in recording the reasons why several petitions were certified, although the results of our review are not generalizable. We brought this issue to the attention of Labor officials. Because we did not know the extent of these errors during the period of our review, we did not include information on certification categories in this report. In late September 2012, Labor provided us with the results of its internal audit, which indicated that this data was reliable. Moreover, we determined that information regarding the number of petitions filed, the dates petitions were received by Labor, and the dates Labor issued determinations were sufficiently reliable for the purposes of this report.\nWe also assessed what internal controls were present in Labor’s petition investigation process as of June 2012. We compared Labor’s written procedures with GAO-published standards for internal controls and conducted an onsite review of seven petitions to assess whether Labor followed its written procedures when conducting investigations. We selected petitions filed from May 2009 to February 2011. They are nongeneralizeable and used only for illustrative purposes. The selected petitions were diverse with respect to the month/year petitions were received; whether petitions were certified or denied; whether petitions represented manufacturing or service sector workers; and other factors, such as the reason for the layoff (i.e., a shift in production overseas versus an increase in imports).", "We analyzed Labor’s data on TAA training fund expenditures for fiscal years 2009 through 2011, with data current through the second quarter of fiscal year 2011 (March 31, 2011). This data included expenditures by state for training, administration (inclusive of employment/case management), job search and relocation, income support, and the wage supplement program for older workers. We assessed the reliability of these data by electronically testing for errors and by interviewing knowledgeable agency officials. Further, we compared these expenditure data with fund allocation data published in Labor’s annual reports to Congress. Overall, we found that the data were sufficiently reliable for the purposes of this report.", "We analyzed Labor’s participant data file containing data elements on characteristics, activities, and outcomes for TAA participants. We conducted our analyses on those participants who were covered by petitions filed between May 18, 2009 and February 14, 2011—the dates covered by the 2009 legislative changes. We assessed the reliability of these data by interviewing Labor officials about the internal controls in place to assure the quality of data reported by states and reviewed the edit checks Labor established to identify inconsistencies and data errors. We also performed electronic testing of individual data elements to remove duplicate entries and ensure that the data being entered were consistent with instructions provided by Labor to the states. We determined that information related to participant characteristics and activities was sufficiently reliable to be used in the report. However, our testing of the outcome data surfaced issues with information being reported on employment status and earnings for participants who had exited the program. Specifically, we found that the employment status and earnings information for many participants who had exited the program was not identified. We believe that reporting outcomes would be misleading when two-thirds of the participants in the 2009 program were still enrolled as of September 30, 2011, and outcome information for many participants who had exited the program was not yet available. As a result, we did not include entered employment rates, employment retention rates, and average earnings in this report.", "", "Waivers may be issued because the worker: 1. Cannot participate in training due to a health condition 2. Enrollment date is not 3.\nAvailable only for workers earning less than $50,000 per year in reemployment\nMaximum benefit of $10,000\nRequires full-time employment within 26 over a period of up to 2 years (104 weeks) weeks of separation Available only for workers earning less than $50,000 per year in reemployment\nWorkers may participate in TAA-approved training and receive employment and case management services Allows for part-time employment if enrolled in training Eliminates deadline for reemployment Available only for workers earning less than $55,000 per year in reemployment\nMaximum benefit of $12,000 over a period of up to 2 years (104 weeks)", "", "", "", "The deadline to submit a report to Senate Finance and House Ways and Means Committees was extended to February 15 The 2011 legislation required Labor, with regard to petitions filed between February 13, 2011, and October 21, 2011, to consider petitions and automatically reconsider denied petitions using the 2011 eligibility provisions.\nAlthough the Omnibus Trade Act of 2010 extended the effective date of the expiration of the 2009 amendments to February 12, 2011, Labor interpreted this to mean petitions filed on or before 11:59 PM EST on Monday, February 14, 2011, the next business day after February 12, which was a Saturday. Suppliers produce and supply component parts directly to other firms, which produced articles that were the basis for a TAA certification. Downstream producers perform additional, value-added production processes for firms producing articles that were the basis for a TAA certification. If a worker’s firm is a supplier, and component parts it supplies to the primary firm accounted for at least 20 percent of production or sales of the worker’s firm, then the loss of business from the primary firm by the worker’s firm is not required to have contributed importantly to the separation or threatened separation. See third statement in table note c. The training fund amount was $143,750,000 for October 1, 2010 to December 31, 2010. The training fund amount will be $143,750,000 for October 1, 2013 to December 31, 2013.", "", "", "", "", "In addition to the contacts named above, Laura Heald, Assistant Director; Kathryn O’Dea, Ellen Ramachandran, and Wayne Sylvia made key contributions to this report. Also contributing to this report were James Bennett, Jessica Botsford, Susannah Compton, Daniel Concepcion, Kathy Leslie, Jean McSween, and Vanessa Taylor.", "Trade Adjustment Assistance: States Have Fewer Training Funds Available than Labor Estimates When Both Expenditures and Obligations Are Considered. GAO-08-165. Washington, D.C.: November 2, 2007.\nTrade Adjustment Assistance: Industry Certification Would Likely Make More Workers Eligible, but Design and Implementation Challenges Exist. GAO-07-919. Washington, D.C.: June 29, 2007.\nTrade Adjustment Assistance: Changes Needed to Improve States’ Ability to Provide Benefits and Services to Trade-Affected Workers. GAO-07-995T. Washington, D.C.: June 14, 2007.\nTrade Adjustment Assistance: Program Provides an Array of Benefits and Services to Trade-Affected Workers. GAO-07-994T. Washington, D.C.: June 14, 2007.\nTrade Adjustment Assistance: Changes to Funding Allocation and Eligibility Requirements Could Enhance States’ Ability to Provide Benefits and Services. GAO-07-701, GAO-07-702. Washington, D.C.: May 31, 2007.\nTrade Adjustment Assistance: Labor Should Take Action to Ensure Performance Data Are Complete, Accurate, and Accessible. GAO-06-496. Washington, D.C.: April, 25, 2006.\nTrade Adjustment Assistance: Most Workers in Five Layoffs Received Services, but Better Outreach Needed on New Benefits. GAO-06-43. Washington, D.C.: January 31, 2006.\nTrade Adjustment Assistance: Reforms Have Accelerated Training Enrollment, but Implementation Challenges Remain. GAO-04-1012. Washington, D.C.: September 22, 2004." ], "depth": [ 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h3_title", "", "h3_full", "", "", "", "h3_full", "h0_title", "h0_full", "h0_full", "h0_full", "h1_full", "", "", "h1_full", "", "h2_title", "h2_full", "h2_full", "h2_full", "", "h3_full h0_title", "h0_full h3_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "h3_full" ] }

{ "question": [ "What was Labor challenged to do in 2009?", "Why was this a challenge for Labor?", "How did Labor respond to this challenge?", "What results did Labor's response yield?", "What did GAO find in regards to Labor's petition investigation process?", "According to state officials, how did the 2009 changes affect participants?", "How was the new deadline beneficial to workers and administrators?", "How did participants enrolled in training benefit from these changes?", "How was the longer period for income support beneficial?", "What benefits established by the 2009 law did participants receive?", "How did this impact employment outcomes?", "Why will isolating the benefits of the 2009 law be challenging?", "How has international trade negatively impacted Americans?", "What does Labor do to offset this impact?", "How did the Trade Globalization and Adjustment Assistance Act of 2009 affect the TAA program?", "What does this report examine?", "How did GAO collect and process data for this report?" ], "summary": [ "The Department of Labor (Labor) was challenged to process the substantial increase in petitions filed for the Trade Adjustment Assistance (TAA) for Workers program after related legislation was enacted in 2009.", "Labor initially had insufficient capacity to handle this increased workload, leading to processing delays and data recording errors. For example, in the quarter after the 2009 legislation took effect, Labor took an average of 153 days to process a petition—nearly four times the statutory limit.", "Labor responded with corrective action, including hiring new staff and adding additional quality control steps for processing petitions.", "Partly as a result of these efforts, processing times fell substantially.", "Moreover, GAO found that Labor's petition investigation process, as of June 2012, generally conformed to best practices for internal controls.", "According to selected state officials, virtually all of the 2009 changes benefited participants, and some also helped administrators serve participants. Officials in all six states GAO interviewed expressed the view that both participants and administrators benefited from the simplified and extended training enrollment deadline.", "Some officials said the new deadline was easier for eligible workers to understand and provided administrators with more time to advise participants on their training and employment options.", "Moreover, officials said participants who enrolled in training benefited from other program changes, including increased training funds, the option to attend training part-time, and a longer period for income support.", "Some state officials said that the additional weeks of income support allowed participants to consider longer-term training options, such as health care programs.", "Over 107,000 participants received benefits and services as established by the 2009 law, but little is yet known about their employment outcomes. Nationally, all the participants received case management and reemployment services and about half enrolled in training, most commonly occupational skills training. Less than 8 percent of participants used other benefits.", "Little is known about employment outcomes because nearly two-thirds of the participants were still enrolled as of September 30, 2011, and employment and earnings information was often not available for those who had exited the program.", "While this information will eventually be available, other factors, including the overall state of the economy, affect these outcomes so isolating the effects of the 2009 legislative changes would be difficult.", "While international trade has benefited Americans in a number of ways, it has also contributed to layoffs in a range of industries.", "To assist trade-displaced workers, Labor administers the TAA for Workers program, which provides income support, job training, and other benefits.", "The Trade Globalization and Adjustment Assistance Act of 2009, enacted as part of the American Recovery and Reinvestment Act, made substantial changes to the TAA program, such as extending eligibility to workers in the service sector and increasing benefits levels.", "The Act also required GAO to report on the operation and effectiveness of those changes. Specifically, GAO examined (1) the challenges Labor faced in implementing the 2009 legislation, (2) selected state officials' assessment of the 2009 legislation's effect on participants and state and local administrators, and (3) the extent to which participants received program benefits and services established by the 2009 legislation and achieved employment outcomes.", "GAO interviewed officials at Labor and in six states, selected for having a high level of TAA activity and geographic diversity. GAO also reviewed Labor's internal controls for investigating petitions, which are filed on behalf of workers and are the starting point for determining their TAA eligibility. GAO analyzed participant data on specific benefits and services received and employment outcomes, as available." ], "parent_pair_index": [ -1, 0, 0, 2, -1, -1, 0, 0, 0, -1, 0, -1, -1, 0, 1, -1, 3 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Labor Supply", "Effective Marginal Tax Rates for Selected Policy Options", "Responsiveness of Labor Supply to Changes in the Effective Marginal Tax Rate", "Overall Labor Supply Response to Limiting Itemized Deductions", "Capital Stock", "Tax Rates Under Current Law", "Effects of Capital Cost Recovery Provisions", "Overall Effect of Base-Broadening Options", "Production Activities Deduction", "Accelerated Depreciation", "Indexing Interest for Inflation", "Limiting Itemized Deductions", "Effects of Base-Broadening Changes on the Capital Stock", "Conclusion" ], "paragraphs": [ "T he federal tax system has the ability to influence the economy and decisions of individual taxpayers. This influence has engendered a healthy debate about the extent to which the current federal tax system promotes the socially optimal amounts of economic growth and income redistribution.\nThis debate has played itself out in recent years in the context of tax reform. In these discussions, the Tax Reform Act of 1986 (TRA86, P.L. 99-514 ) is often used to represent an example for tax reform. TRA86 lowered marginal tax rates by broadening the tax base for both individuals and corporations, while roughly maintaining revenue and distributional neutrality.\nWhile there are many possible goals for tax reform, subsequent economic analysis of TRA86 did not find the significant supply-side effects some expected from the reductions in marginal tax rates that occurred as part of the act. Supply-side growth results from factors that reduce effective marginal tax rates . According to advocates of supply-side economics, high marginal tax rates strongly discourage income, output, and the efficiency of resource use.\nIn a meta-analysis of the economic effects of TRA86, Auerbach and Slemrod suggest that large supply-side effects were not observed because the reduction in marginal tax rates overstates the overall reduction in effective marginal tax rates, once other provisions are taken into account. As the authors state,\nThe constraints put on the tax reform—revenue and distributional neutrality—made large overall effective rate reductions ... unlikely or even logically impossible.\nAs the Tax Reform Act of 2014 ( H.R. 1 , 113th Congress) and proposals put forward by various other bills, commissions, panels, and think tanks have followed a similar model as TRA86, an examination of how changes to provisions other than marginal tax rates affect effective marginal tax rates may be instructive.\nThe potential for economic growth continues to motivate tax reform. This growth arises from four basic sources: labor employed in the economy, the stock of capital, land, and technological advance. Land is fixed, and most technological advance is generally treated as exogenous and not influenced by policy, although tax policy can affect investments, for example, in research and development which create intangible assets. Thus the basic sources of inputs affected by tax policy are labor and capital.\nThis report attempts to show how options to broaden the tax base by placing limitations on itemized deductions can potentially work against the expansionary effects of reducing marginal tax rates. After base-broadening tax reform taxpayers may face lower statutory marginal rates but some taxpayers—those who itemize—may have more of their income subject to tax, effectively increasing their marginal tax rates. The report also addresses other common base-broadening provisions that increase the effective marginal tax rate on the return to capital.\nThe report considers the effects on labor supply and savings (which affects the stock of capital) in turn. The primary effect of the increase in marginal tax rates arising from itemized deductions is to labor supply as taxpayers respond to higher marginal tax rates. The capital stock is also affected through changes in savings and investment, but this change takes place slowly. The report also analyzes the eventual effects of restricting itemized deductions, along with other base-broadening provisions, such as slowing depreciation, on the capital stock.\nThis report does not attempt to model a full-scale tax reform with multiple policy levels moving simultaneously. Instead it models, in the case of labor supply, the principal driver of output effects in the budget window, a simplified version of current law applied to a sample of 2008 tax filers in which the only policy changes made are new limits on itemized deductions. The report also examines, in addition to the new limits on itemized deductions, several different types of changes to tax burdens on savings and investment that have commonly appeared in tax reform proposals.", "The effect of marginal tax rates on labor supply occurs through what economists term the \"substitution effect.\" In the context of labor supply, the substitution effect represents the effect of taxes on the relative prices of leisure and consumption. According to economic theory, the substitution effect predicts that an increase in taxes on labor will decrease the amount of labor supplied because lower after-tax wages make the alternative use of time, leisure, less expensive. The magnitude of this reduction depends upon two factors, the change in effective marginal tax rates and the responsiveness of workers to the change in effective marginal tax rates (what economists refer to as the elasticity).\nThe analysis in this section examines the effects of several base-broadening proposals that have appeared in tax reform proposals. In particular, all of the proposals examined would limit itemized deductions. The resulting changes in effective marginal tax rates are then multiplied by commonly used labor supply elasticities of substitution to arrive at the estimated effects on labor supply.\nThis calculation does not take into account feedback effects from the economy. The contraction in supply causes the wage to decline which could, in turn, affect labor supply. As shown in Appendix C , such effects are likely to be negligible. Similarly, eventual changes in the capital stock are likely to have negligible effects on labor supply.\nEffects on investment, where the effective marginal rate is only one input, are examined in the \" Capital Stock \" section.", "Effective marginal tax rates in this report are calculated by applying a simplified individual income tax calculator to the 2008 IRS Statistics of Income Public Use File (see Appendix A ). The parameters in the calculator are from 2014, with dollar values discounted to 2008 dollars.\nTax rates are estimated for six options to limit itemized deductions (plus a current law base case). The tax rate estimates are weighted by their shares of labor income, interest income, dividend income, capital gains income, and business income for each decile (see Table A-4 in Appendix A ). These estimates are used as inputs into the analysis in the next section of the report. The remainder of this section estimates effective marginal tax rates and changes in effective marginal tax rates for the following policy options:\nElimination of itemized deductions for state and local taxes Elimination of itemized deductions for charitable giving Elimination of itemized deductions for state and local taxes and charitable giving Elimination of itemized deductions Capping itemized deductions at $17,000 Capping itemized deductions at $25,000\nThese policy options were chosen to illustrate the potential effects, though they do not necessarily reflect current policy proposals.\nThe resulting effective marginal tax rates for itemizers for current law and each of the six options are shown in Table 1 . The rows in Table 1 differ by how they treat tax rates faced over different portions of the income distribution—for each of the listed sources. For example, taxpayers in the top decile of income earn just over one-third of all interest income. As a result, the tax rate faced by taxpayers in the top decile receives a weight of just over one-third for all estimates weighted by labor income.\nTo estimate the effects of the policy options on the effective marginal tax rates of itemizers as calculated in this report, one can subtract the effective marginal tax rate in the current law column from the columns representing the policy options. While the resulting differences reflect the effect of the policy option on itemizers, they cannot be correctly applied to economy-wide estimates of labor supply—as this difference does not account for the income earned by taxpayers that do not itemize.\nTable 2 presents the effects of the policy options after adjustment for non-itemizers. Regardless of the type of income used to weight the change in effective marginal tax rates across deciles, the option to eliminate itemized deductions for charitable contributions yields the smallest effect—well less than one percentage point. Conversely, the option to eliminate all itemized deductions results in the largest effect in all cases.\nFinally, in order to calculate the labor supply effects, the estimated percentage point changes presented in Table 2 need to be converted into the percentage changes in the after-tax share (the change in the tax rate divided by one minus the tax rate). These percentage point changes are presented in Table 3 .", "The size of the taxpayer response to policy options to limit itemized deductions is governed by how sensitive their work decision is to changes in the effective marginal tax rate. As noted earlier, the substitution effect between leisure and consumption causes the labor supply to increase in response to increases in the marginal wage. The elasticities discussed in this subsection are estimates of the labor supply response to a permanent wage change (such as one that would arise from a permanent tax cut or increase) for the labor force. That type of supply response is incorporated in dynamic models with supply-side effects. The labor supply response to a change in wage is uncertain in direction because it is the result of a positive elasticity of substitution and a negative elasticity of income (i.e., as wages increase, consumption of both goods and leisure increases). Previous analyses have accounted for income effects as well as the substitution effects from changing tax rates, and this analysis considers only the additional marginal (substitution) effects from base-broadening.\nRecent surveys of labor supply responses of men indicated that labor supply was largely inelastic. A working paper by researchers at the Congressional Budget Office reviewed recent research and indicated a substitution elasticity for men from 0.1 to 0.3; married women had substitution elasticities from 0.2 to 0.4. For the work force as a whole, a substitution elasticity of 0.1 to 0.3 was indicated and is reported in Table 4 . In addition, a 2014 Macroeconomic Analysis conducted by the Joint Committee on Taxation used a wage-weighted population substitution elasticity of 0.1 to 0.2.", "As discussed above, the supply-side response to limiting itemized deductions—as a manner of base broadening—can be calculated using the percentage change in marginal effective tax rates and the labor supply substitution elasticity. Increases in effective marginal tax rates—which decrease the portion of labor income that a person keeps—provide an incentive for individuals to work less and, in aggregate, supply less labor to the economy. Estimates of this aggregate labor supply response are presented in Table 5 .\nIn tax reform proposals, these negative effects on labor supply from base broadening would partly offset the positive effects on labor supply from lower marginal tax rates. To put the results presented in Table 5 in perspective, the Joint Committee on Taxation (2014) analysis of a comprehensive tax reform proposal, the Tax Reform Act of 2014 ( H.R. 1 , 113 th Congress), found labor supply increases ranging from 0.4% to 0.8% for FY2014-FY2023. This estimate was for a complex proposal with many elements. Depending on how changes in effective marginal tax rates are incorporated in macroeconomic models, including these effects could reduce estimated growth effects of tax reform. It appears, however, that incorporating the supply reductions from using the high elasticity estimates associated with eliminating itemized deductions for state and local income taxes (a provision included in that proposal) could offset a significant share of the gains in labor supply estimated in an analysis of the growth effects of tax reform.", "The effects of many base-broadening provisions, such as slowing depreciation, have frequently been included in calculations of how tax reform affects savings and investment. Increases in individual income rates through base broadening, however, also affect the return on savings and investment, through effects on the tax rate for unincorporated businesses, as well as taxes on passive investment returns (interest, dividends, and capital gains). These effects have generally been excluded from calculations of tax reforms' effects on economic growth. This section examines the effect of both individual base-broadening provisions as discussed in the previous section and of other base-broadening changes that have been widely considered in analyzing the macroeconomic effects of tax reform. These effects are estimated for the returns on investment in equipment, structures, and intangible business assets.\nIn the 10-year budget horizon, the effect of base broadening on the capital stock is likely to be smaller than the effect on labor because capital changes accrue gradually while labor participation can change more quickly. And, as in the case of labor supply, the response is likely to be modest. Capital could also be attracted from abroad for some changes, but these effects are also likely small. In addition, with base-broadening effects, a revenue-neutral tax reform accompanied by rate reduction can have no effect or even a negative effect on the cost of capital.\nThe effective marginal tax rates for investment income are the same measure as the marginal tax rates for labor income: they estimate the share of the earnings from investments that are paid in taxes. Many features of the tax code outside of statutory rates affect this share, which depends on the amount and timing of tax payments, deductions, and credits. The effective marginal tax rates on earnings from investment are calculated by first determining a required after-tax rate of return and an expected rate of decline in productivity of the asset due to economic depreciation. Economic depreciation measures the change in the value of the asset as it is used up over time, and in an infinitely lived investment the rate of decline in this value is equal to the rate of decline in productivity. The analysis then determines how much the investment must initially produce in order for the sum of after-tax profits over time, discounted by the after-tax rate of return, to equal the investment outlay (i.e., to break even). Then all of the tax payments and deductions are eliminated, and the before-tax profit flows are used to determine what pre-tax discount rate would match the flows to the original cost. The effective tax rate is the pre-tax rate of return minus the after-tax rate of return, divided by the pre-tax rate. This discounted cash flow method produces a formula termed the user cost of capital or the rental price of capital, which can be used to derive an effective tax rate. The formula accounts for the major tax provisions that affect tax burdens, including tax rates and the speed with which the investment cost is deducted (tax depreciation rates).\nThe analysis begins with the tax rates under current law. These estimates do not include the effects of \"extender\" provisions: bonus depreciation and the tax credit for research and development. They include all business assets (and thus exclude owner-occupied housing) except for land (where taxes are likely to be capitalized) and inventories (which are expected to be relatively unresponsive to rates of return).\nTax rates are estimated for 32 different assets: 22 equipment assets, 7 structures assets, and 3 categories of intangible assets. Separate estimates are provided for corporate and noncorporate capital stocks with the totals weighted by their shares of different types of assets. The details of the asset distribution and other measures incorporated in these estimates are shown in Appendix B . The remainder of this section estimates effective tax rate effects for the following changes:\nThree capital cost recovery provisions that affect how quickly the cost of an investment is deducted for tax purposes. One is to move to the alternative depreciation system that forms the baseline used by the Joint Committee on Taxation for measuring the benefits of accelerated depreciation. The other two provisions are to depreciate two types of intangible investments, research and development and advertising, over a 10-year period. These investments are currently expensed (deducted immediately). Repeal of the production activities deduction, which allows a 9% deduction from taxable income for certain domestic production, such as manufacturing. Indexation of interest deductions and payments for inflation. Elimination of the itemized deduction for state and local income taxes. Elimination of all itemized deductions.", "Current effective tax rates for equity investments, just considering the firm's taxes, are shown for each asset in Table 6 . These rates capture the effects of accelerated depreciation (deducting the cost of investments faster than their decline in economic value), as well as the production activities deduction. The rates in this table can be compared with the statutory corporate tax rate of 35% and the estimated statutory tax rate for noncorporate firms of 27% (as determined by the analysis of the Public Use Files as discussed in the previous section on labor).\nAs this table indicates, most assets are taxed at effective rates below the statutory rate. Most equipment assets, along with public utility structures (treated as equipment in the tax code), are taxed at rates well below the statutory rate, even after considering the effects of the production activity deduction (which decreases the corporate statutory rate by about a percentage point and the noncorporate rate by less than 0.2 percentage points). These lower rates are due to generous tax depreciation rules that allow costs to be recovered faster than the estimated economic decline in the value of capital. Tax rates on intangibles are zero because these costs are expensed (deducted in full when acquired), and tax rates on mining structures (primarily oil and gas) are also low because much of the cost is expensed. Commercial and industrial structures, such as office buildings and plants, tend to be taxed at a higher rate because of the much longer recovery period (39 years), although farm buildings and residential rental structures are favored relative to other buildings due to shorter depreciation periods.\nTable 7 provides some aggregated tax rates, combining equipment and nonresidential structures other than public utility structures into groups. Equipment overall and public utility structures are taxed at about two-thirds of the statutory rate for corporations and about 77% of the rate for noncorporate businesses. Intangibles have a zero tax rate.\nNote that the tax rates may be understated because they do not incorporate the effects of bonus depreciation, which allows half of investment in equipment to be expensed (deducted when acquired). Bonus depreciation further accelerates deductions and reduces the effective tax rate on equipment by about 40%, so that the rate for equipment would be around 14%. It also does not include the effects of the research and experimentation tax credit, which would produce a negative tax rate for R&D intangibles. These two provisions have currently expired, although the R&D credit has been in place since 1981. These provisions may be extended again.", "This section examines the effects of base broadening achieved by slowing the deductions for investments. The capital cost recovery provisions have differential effects for different assets and thus are also shown for all 32 assets. Table 8 shows the effective tax rates for these assets from moving to the alternative depreciation system, which has longer periods over which deductions must be taken and uses a slower depreciation method. (This system uses a straight line method that allows deductions in equal amounts in each year rather than an accelerated method.) It affects both equipment and structures, but not intangibles. The table also shows the effects of recovering investments in research and development and in advertising over a 10-year period using the straight line method.\nFocusing on assets affected by the alternative depreciation system, a number of assets (equipment, including public utility structures, and farm structures) that currently have tax rates about a third below the statutory rate are now much closer or even above the statutory tax rate. Nonresidential structures, excluding public utilities and farm structures, are not affected, although residential structures are.\nThe tax rates on intangible assets are increased significantly, to slightly above the statutory rate for intangibles created by research and significantly above for advertising, where estimated depreciation rates are large (suggesting that the return on advertising is generally short lived).\nH.R. 1 (113 th Congress), which proposed the amortization of intangibles, also proposed making the R&D credit permanent. If both were included, the effective tax rate would be estimated at 4.4%.\nTable 9 provides aggregated effective tax rates after base broadening through changes in capital cost recovery provisions. The estimates indicate that equipment overall would have a tax rate close to the statutory rate but slightly below it, since the rate is lower by about a percentage point due to the production activities deduction. Rates on various structures are slightly lower, although, as shown in Table 8 , buildings have rates slightly higher than equipment (with the aggregated rate for other nonresidential structures reduced by the lower tax rates on mining and farm structures).", "The other tax changes (the production activities deduction, disallowing interest deductions that reflect inflation, and changing individual effective tax rates through restricting itemized deductions) do not result in effective tax rates that vary substantially across assets. They are presented, along with the capital cost recovery provisions, for the overall tax system. In addition to firm-level taxes on equity investment that can be compared to the statutory rate, these numbers also provide an overall tax rate that includes the effects of other elements in the tax system: shareholder-level taxes (dividends and capital gains) on corporate equity investments, as well as the tax benefits of borrowing and deducting nominal interest at the firm's rate while only part of this interest is taxed to the creditor. Because of this effect, debt-financed investment tends to be taxed at negative rates or very low rates for many assets and the overall tax rate is lower than the firm-level rate on equity.\nTable 10 shows current effective tax rates and the effects of various base-broadening provisions. Accounting for taxes paid by stockholders, the deductibility of interest by the firm, and the taxation of interest by the creditors reduces the current effective tax rate from 22.3% to 12.8% for the corporate sector and from 20.8% to 11.9% for the noncorporate sector. This is a reduction in the tax rate of 43%. The relatively low total tax rate under current law is due to two factors: the rapid cost recovery allowed for many types of investments, and the benefit of deducting nominal interest at the firm's tax rate, while most of that interest (80%) is not taxed to the creditors. This effect is more pronounced because the nominal interest rate includes inflation.\nIt may also be of interest to compare the effective tax rates in Table 10 with the rates that would exist without the benefits that lower effective rates. These rates are calculated by adjusting the formulas in Appendix B . The rates are calculated assuming economic depreciation and no production activities deduction (which makes effective firm-level taxes equal to the statutory rate). They also assume all passive income (interest, capital gains, and dividends) are taxed, but retain the lower tax rates on capital gains and dividends. With these changes, the overall tax rate for the corporate sector would be 39.7%. This number reflects a share of income taxed at the creditor's rate of 22.0%, the rate on equity of 35.0% at the corporate level, and additional taxes on capital gains and dividends that result in a combined 44.5% tax rate for corporate equity. For the noncorporate sector, the rate would be 25.6%, between the creditor's rate of 22.0% and the firm's rate of 27.0%. These rates are reduced to 30.0% and 21.6% if the exclusions of most interest, capital gains, and dividends are taken into account. The remaining effects that lower effective tax rates arise from the provisions addressed by the base-broadening provisions considered below: accelerated cost recovery, deducting the inflation portion of interest, and the production activities deduction. Each provision is discussed in turn.", "As noted earlier, this provision reduces the effective statutory rate by approximately one percentage point (0.9) for corporate equity but has a 0.2 percentage point effect on noncorporate equity. Eliminating the production activities deduction increases the tax on equity investment but reduces it on debt-financed investment by increasing the rate at which interest is deducted. Overall, the deduction reduces the total tax rate by 0.3 percentage points.", "The most significant base-broadening provision overall, and in the case of any measure of the effect on the effective tax rate, is the move to the alternative depreciation system (third row of Table 10 ), increasing the overall tax rate by 4.6 percentage points. The effects are somewhat smaller for the noncorporate sector because its share of affected assets is smaller.\nLike other capital assets, research and development and advertising create a stream of income in the future. For example, patented innovations allow the firm to be the sole producer for many years. Advertising creates brand identification which affects consumer choice into the future. Both of these create intangible assets that have longevity, and deducting the costs over time is consistent with measuring income. Depreciating research expenses over 10 years has the third-largest effect of any of the provisions considered, increasing effective tax rates by 2.8 percentage points. Although this asset is not a large part of the capital stock, its tax rate is changed significantly. Depreciating advertising expenses over 10 years results in a one-percentage-point increase in the effective tax rate; it is a relatively small part of the capital stock, although its tax rate increased substantially.\nThese changes affect the tax rates of both debt-financed and equity-financed capital.", "The second-largest provision in terms of the effect on effective tax rates is indexation of interest for inflation (i.e., disallowing the portion of the nominal interest rate that reflects inflation as a deduction and not taxing it to the recipient). It increases the overall tax rate by three percentage points. Given the values used in the calculations (see Appendix B ), a nominal interest rate of 7.5% and an inflation rate of 2%, 27% (2/7.5) of interest deductions would be disallowed. It affects only debt-financed capital.", "Disallowing the state and local tax deduction or disallowing itemized deductions has the largest effect on noncorporate equity investment for any provision other than adopting the alternative depreciation system. These two changes increase the overall tax rate by 0.6 to 0.7 percentage points, respectively. These effects are smaller than most of the other provisions, but larger than the production activities deduction.\nIt may be useful to compare these effects of itemized deduction limits to the effect of lowering the statutory corporate tax rate, which is one of the objectives of tax reform. Lowering the statutory corporate rate by five percentage points decreases the effective corporate equity rate to 18.6% and the overall corporate effective rate to 10.7%, while reducing the overall effective rate to 11.2% for a 1.2-percentage-point difference. Thus the effects of itemized deductions are the equivalent of 2.5-to-2.9-percentage-point changes in the corporate rate, suggesting the importance of considering these provisions in measuring the effects of tax reform on the rate of return on investment.", "How these alternative policies affect the capital stock depends on the user cost of capital, or the rental price of capital, the sum of the required pre-tax return, and the economic depreciation rate. The user cost of capital is the price of using capital as an input into production. It might be thought of as the amount to be paid to a third party for the lease of an asset. An increase in the effective marginal tax rate through base broadening will increase, holding the after-tax rate of return fixed, the required pretax return to capital and thus the user cost. The user cost of capital is R/(1-t)+d where the tax rate, t, is shown in the last column of Table 10 . The depreciation rate, d, is estimated to be 9.2% overall, and the after-tax return, R, is 6.2% (see Appendix B ). Again, this measure holds the after-tax return constant, although changes in that return will be allowed in measures of the long-run effect on the capital stock.\nTable 11 shows the increases in the cost of capital for each of the provisions considered (without accounting for feedback effects from the economy if investment changes).\nTable 12 estimates the effects in the long run for the capital stock. These effects depend on two measures of behavioral response: the ease with which capital and labor can be substituted in the production function (the factor substitution elasticity, S) and the responsiveness of the savings rate to the after-tax rate of return (the savings elasticity, E). Table 12 reports results with two-factor substitution elasticities: a value of one, which is commonly used, and a value that appears more consistent with recent empirical studies. Estimates are done with values of E ranging from 0.2 to 0.4, which reflects the range of estimates used by the Congressional Budget Office, the Joint Committee on Taxation, and the Treasury Department. The table also shows the effects for an infinitely elastic savings function that contracts the capital stock until the after-tax return is restored to its original value.\nThe effects on changing tax variables on the capital stock are limited by the small part the tax plays in the cost of capital. Even repealing the most important provision, alternative depreciation, only reduces the capital stock by around 1%. The effects of limiting itemized deductions that are generally not taken into account, nevertheless, have effects (outside of infinite elasticities) up to 0.25%. By comparison, the five-percentage-point decrease in the corporate rate (discussed earlier to compare with the effects of itemized deduction restrictions) would be estimated to increase the capital stock under the unitary factor substitution elasticity by 0.28% under the 0.2 savings elasticity and by 0.43% under the 0.4 elasticity. For a factor substitution elasticity of 0.5, the effects of a five percentage point decrease are 0.21% and 0.29%. (For infinite elasticities they are 0.89% and 0.45%.) The effects of limiting itemized deductions offset half or more of this effect.\nThese findings indicate that tax reform that affects savings and investment is unlikely to have significant effects on growth in capital. Under reasonable assumptions about elasticities, for example, a five-percentage-point reduction in the corporate rate would increase the capital stock by 0.2% to 0.4%. A 10 percentage point corporate rate reduction, the tax rate reduction proposed in The Tax Reform Act of 2014 and a common target for proposed tax reforms, would increase the capital stock by 0.4% to 0.8%. Even the larger rate cut would be more than offset by a move to the alternative depreciation system, a contraction in the capital stock from 0.8% to 1.7%. Moreover, changes in the individual tax rates through disallowing itemized deductions for state and local taxes or eliminating itemized deductions altogether, which have not been taken into account in prior macroeconomic studies, offset 20% to 30% of the 10-percentage-point rate reduction.", "The analysis in this report shows that provisions that broaden the base can offset in part or more than offset effects of changing tax rates. Some of the effects analyzed, primarily those increasing the marginal effective tax rate on capital income, are commonly considered in macroeconomic analyses of tax reform. Others, such as the itemized deduction restrictions, may not be incorporated but can significantly offset the effects of lower statutory rates on both labor and capital income.\nThe analysis also suggests that the goal of increasing economic growth as part of a revenue and distributionally neutral tax reform may not be easily attainable, a view consistent with the findings of economists considering growth effects of the Tax Reform Act of 1986. This finding does not mean that tax reform cannot achieve other goals. For example, an important goal of tax reform is to reduce the distortions differential tax treatment causes (such as favoring investment in equipment compared to structures, or encouraging too much spending on housing). These distortions cause the economy to use its resources in a less than optimal way. This efficiency gain is different from growth and unlikely to have more than a negligible effect on measured output. Another potential goal of revenue-neutral tax reform is to simplify the tax system, which may reduce the costs of taxpayer compliance as well as direct costs of tax administration.\nData and Methods for Calculating Individual Marginal Effective Tax Rates\nThe data used in the analysis to estimate individual tax rates and changes due to changes in itemized deductions are the 2008 Internal Revenue Service (IRS) Statistics of Income (SOI) Public Use File. The Public Use File is a nationally representative sample of tax returns for the 2008 tax year. To protect the identity of individual taxpayers while preserving the character of the data, the IRS made changes to the data. Consequently, while reliable aggregate information can be obtained, individual taxpayer records in the data may or may not contain information from just one tax return. The unit of analysis is the tax return for a taxpayer, and IRS-provided sample weights are used throughout the analysis. The analysis sample contains information for 139,651 taxpayers (representing 142.6 million taxpayers).\nThe measure of taxable income used in this analysis departs from that used in the 2014 tax code. Specifically, above-the-line deductions (that have the effect of lowering taxable income) are not included in this analysis. Thus the measure of taxable income is total income minus personal exemptions and the value of itemized deductions.\nCurrent law tax parameters were adjusted to 2008 levels using the Consumer Price Index for All Urban Consumers (CPI-U) and are reported for married filing jointly in Table A-1 . (Parameters were different for other filing statuses.)\nTax liabilities were calculated using a tax module prepared by the authors based upon the 2014 IRS form 1040 as well as other forms and schedules of the regular income tax. The resulting tax liabilities generated do not take into account the Alternative Minimum Tax, phase in/outs, or any tax credits. As the focus of the analysis is on limitations on itemized deductions, all non-itemizers are dropped from the analysis, although non-itemizers are subsequently added back to compute the overall effects.\nEffective marginal tax rates for taxpayers that choose to itemize deductions are calculated by first calculating an initial tax liability. Second, an additional $1,000 in ordinary income is allocated to each taxpayer. In addition to increasing taxable income, this additional income can increase the value of itemized deductions for state and local taxes and charitable giving (based on observed shares of income). A second tax liability is calculated using these figures. These calculations reflect the rate structure and other tax aspects depending on filing status. The difference between the second and first tax liabilities is then divided by $1,000 to arrive at the effective marginal tax rate. This effective marginal tax rate is then weighted by the shares of income realized by itemizers (versus non-itemizers) and the distribution of income within itemizers. These individual marginal tax rates are then averaged across modified taxable income deciles. Break points for the deciles are listed in Table A-2 .\nUsing these deciles, average effective marginal tax rates are calculated for a base case and for each option to limit itemized deductions examined. These rates are displayed in Table A-3 .\nA composite marginal effective tax rate is created to simplify the analysis. In this composite, the share of income earned by each decile is used to allocate each decile's effective marginal tax rate to the composite number according to the amount of ownership. The income shares for wage, capital gains, dividend, interest, and business income are presented in Table A-4 .\nCombining the information in Table A-3 and Table A-4 results in a single estimate of the effective marginal tax rate weighted by source of income. The resulting estimates are presented in Table 1 . Differencing the current law effective marginal tax rate from the effective marginal tax rate for each policy option yields the difference in effective marginal tax rates faced by taxpayers that itemize. This, however, overstates the effective change for all taxpayers, as only taxpayers who chose to itemize can have limits placed on their itemized deductions. To account for this effect, the interim estimates are multiplied by the share of each income source earned by taxpayers who itemize. The resulting differences in effective marginal tax rates are presented in Table 2 .\nData and Methods for Measuring Tax Rates on Capital Income\nThis appendix provides the methodology and data for calculating the changes in effective tax rates arising from the various base-broadening provisions affecting savings and investment.\nHow to Calculate Effective Tax Rates\nThe basic formula for calculating the effective firm-level tax rate is (r-R)/r, where r is the pre-tax return, or internal discount rate for an investment with no taxes, and R is the after-tax discount rate that discounts all flows to the cost of the investment with taxes.\nFor a corporate depreciable investment, the relationship between r and R, with R the firm's real discount rate, derived from an investment with geometric depreciation and continuous time, is from the standard user cost formula:\n(1) r = (R+d)(1-uz)/(1-u)-d\nwhere u is the corporate tax rate, d is the economic depreciation rate, and z is the present discounted value of tax depreciation deductions (discounted at the nominal rate, that is, the real rate plus the inflation rate).\nFor a noncorporate business taxed at an effective statutory tax rate t, the pre-tax return is:\n(2) r = (R(1-v) +d)(1-tz)/(1-t)-d\nIn this formula, v is the effective tax rate on capital gains and dividends in the corporate sector. The discount rates differ between corporate and noncorporate firms given the assumption that the noncorporate investor's opportunity cost is investment in the corporate sector, net of shareholder taxes. Thus the R for the noncorporate sector is the corporate discount rate reduced by the taxes on capital gains and dividends. These shares are subject to special tax rates and are adjusted for the extent of earnings that are not subject to tax in an overall economy-wide portfolio because some capital gains are not realized and some earnings on corporate stock are exempt because they are held in pension funds and retirement accounts.\nThe effective tax rate is determined in part by the effective statutory rate and in part by how quickly costs are recovered (the value of z) and any credits. Without the production activities deduction, the tax rate is equal to the statutory rate when z equals the present value of economic depreciation (d/(R+d)). More rapid depreciation decreases the effective tax rate.\nThe formula in (1) is applied to obtain firm-level tax rates in Table 6 through Table 9 . To calculate the total sectoral tax rate, which would account for the deductibility of interest by the firm and the taxation of interest, dividends, and capital gains to creditors and stockholders, the firm's discount rate used in equation (1) is adjusted to include debt finance. For the corporate sector:\n(3) R d = f(i(1-u)-p)+(1-f)R\nwith R d a weighted average of the after-tax real interest rate (i(1-u)-p) where f is the share of investment financed by debt, i is the nominal interest rate, p is the inflation rate, and R is the required real return on equity before individual tax.\nFor the noncorporate sector,\n(4) R d = f(i(1-t)-p)+(1-f)R(1-v)\nThe pretax return on total investment is estimated by substituting R d for R in equations (1) and (2). The tax rate is calculated using that r as (r-R i )/r, where R i is the final after-tax return to investors:\n(5) R i = f(i(1-ati)-p)+(1-f)R (1-v)\nwhere t i is the tax rate of creditors, a is the share subject to tax, and v is the effective tax rate on corporate equity.\nData on Assets and Depreciation\nTo provide overall effective tax rates that cover a broad category of investments, the pre-tax returns estimated for each of 32 different types of assets are weighted by asset share to provide an overall pre-tax return. The estimates reflect equipment, structures, and intangible assets used in business. They exclude land (which is relatively fixed in quantity and where taxes tend to be capitalized in prices) and inventories, which are small and relatively unresponsive to taxes on the cost of interest. Assets are assigned to the corporate or the noncorporate sector.\nTable B-1 lists the asset values and economic depreciation rates for the assets, including 22 types of equipment assets, 7 types of structures, and 3 types of intangibles.\nThe value of z depends on how quickly costs are recovered for tax purposes, which is a function of the tax life and whether the recovery is straight-line (equal amounts in each year) or accelerated (larger amounts in earlier years). For tax lives, depreciation methods, and depreciation formulas, see [author name scrubbed], The Economic Effects of Taxing Capital Income , Cambridge, MA, MIT Press, 1994. The alternative lives simulated in the report are available on request. For mining structures, largely oil and gas, based on data from the Independent Petroleum Association of America, 57.7% of costs are expensed either through intangible drilling costs of dry holes, 16.7% recovered through depletion, 1.9% over seven years, and the remainder over five years.\nTable B-2 provides data on the share of assets held in the corporate and noncorporate sectors, combining the equipment assets and nonresidential structures outside of sets; summarizes this data; and provides a distribution by share of the capital stock that combines the equipment assets and the structures assets outside of public utilities in summary estimates.\nValues Used\nIn addition to the data used above, data are needed for the rates of return (R and i), the inflation rate, the share of debt finance, and the tax rates. Note that the effective tax rates are not very sensitive to real rates of return but are quite sensitive to the inflation rate.\nThe equity rate of return based on historical trends after corporate tax but before individual tax is set at 7%, allowing a 4% dividend rate and a 3% real growth rate. (The rate of growth in real GDP from 1965 to the last year before the recession, 2007, was 3.2%.) The nominal interest rate is set at 7.5%, and the inflation rate at 2%, reflecting recent experience with the Baa corporate bond rate and the GDP deflator before the recession (for a real interest rate of 5.5%). Debt is weighted at 36% and equity at 64% based on data from the Flow of Funds Accounts.\nThe statutory corporate tax rate is 35%, but it is reduced slightly by the production activities deduction. Based on claims as a percent of taxable income by manufacturing and non-manufacturing on corporate income tax returns and the distribution of equipment, structures, and intangible assets between those categories in the National Income and Product Accounts, the estimated rate for the three categories of assets (equipment, structures, and intangible assets) , respectively, is 34.12%, 34.29%, and 33.83%, with an overall rate of 34.14%, or approximately one percentage point lower that the corporate statutory rate.\nThe estimated statutory tax rate for unincorporated business income, using the public use file data, is 27%. Using the aggregate for individual returns and distributing it in the same proportions, the estimated tax rates for the three categories (equipment, structures, and intangible assets), including the production activities deduction, are 26.74%, 26.87%, and 26.56%, for an overall rate of 26.83%, a reduction of less than 0.2 percentage points. Disallowing itemized deductions for state and local taxes increased the rate by 1.69 percentage points, and disallowing all itemized deductions increased the rate by 2.5 percentage points.\nThe marginal rates for interest, dividends, and capital gains, respectively, are 22%, 14.6%, and 15.4%. These values were increased by 1.22, 1.68, and 1.7 percentage points if disallowing itemized deductions for state and local income taxes and by 1.93, 2.45, and 2.44 percentage points if disallowing all itemized deductions. A large fraction of interest and dividends paid do not appear on individual income tax returns, according to Tables 7.1 and 7.2 of the National Income and Product Accounts and IRS Statistics of Income. In previous years a direct reconciliation had been prepared, and the current amounts included, 19% and 25%, are slightly lower than in the past, but similar. This same share for dividends is used for capital gains. The small share reported is largely due to the large share of assets in pension, retirement, and insurance plans. In addition, half of capital gains held privately is assumed to be untaxed because it is held until death.\nFor the calculation that incorporates the research tax credit, firms may choose between two credits. One is a credit of 20% in excess of a rolling base that is unrelated to prior spending and thus has a marginal effective rate of 20%. The other is a credit of 14% in excess of 50% of the past three years of research expenditures. Because each dollar of research today increases the base in each of three future years (by 50 cents divided by 3) it reduces future credits, this offset must be taken into account. The credit is 14% times (1 minus 0.5 times the sum of 1/(1+R+p), 1/(1+r+P) 2 and 1/((1+R+p) 3 divided by 3). Given the weighted real discount rate of around 0.05, the result is an effective marginal rate of slightly more than half, or 7.9%. According to data on the research credit in the IRS Statistics of Income, the share claiming the 20% credit was 28%, leading to an average rate of 11.3%.\nGeneral Equilibrium Effects of Tax Changes on Labor and the Capital Stock\nThis model uses a constant elasticity of substitution (CES) production function and, with the first-order conditions, obtains the following differentials, where dx/x is a percentage change for a small change:\n(6) dQ/Q = a(dK/K) +(1-a)(dL/L)\nwhere Q is output, K is the capital stock, L is labor, and a is the income share of capital and, thus, (1-a) is the share of labor income. The value of a is set at 1/3.\nEvery model has a \"numeraire\" or a fixed value since economic effects depend on relative, rather than absolute, values. The numeraire for this model is the overall price level, P.\n(7) dP/P = a(dC/C) + (1-a)(dW/W) = 0\nwhere P is the product price, C is the user cost of capital (the price of using capital inputs), and W is the wage rate. This equation allows the relationship between the change in the wage rate and the change in the cost of capital when price is fixed. The cost of capital is R/(1-t c ) +d, where R is the after-tax real return, t c is the tax rate, and d is the rate of economic depreciation. The final wage links the relative demand for labor and capital to their relative prices\n(8) dL/L-dK/K= -S(dW/W-dC/C)\nwhere S is the factor substitution elasticity.\nShort-Run Labor Supply Effects\nIn the short run, the capital stock is fixed, so dK/K = 0.\nThe labor supply function is\n(9) dL/L = (E LS -E LI ) (dW/W) – E LS dt/(1-t))\nwhere E LS is the substitution elasticity, E LI is the income elasticity, and t is the tax rate on labor.\nTo measure the effect on W, the labor demand from (8) is equated to labor supply from (9) (using the price relationships in (7) to eliminate C) to solve for wages and then labor. The result is:\n(10) dL/L = ((E LS -E LI ) E LS /(E LS -E LI +S/a) dt/(1-t) – E LS dt/(1-t))\nNote that if the income and substitution elasticities are equal, the first term (which is the feedback effect on labor from wage increases) disappears. Using a typical income elasticity with an absolute value of 0.1, there would be no effect in the case of a substitution elasticity of 0.1 (the lower limit used in this study), and the effect would offset only about 6% of the effect using a 0.3 substitution elasticity, a value of S equal to 1, and a value of a equal to 0.33.\nLong-Run Effects on Capital and Labor\nFor the long run, we specify a supply function for capital in the form of a savings rate, s\n(11) ds/s = E (dR/R)\nwhere R is the after tax return and E is the savings elasticity\nFinally, in the steady state, savings equals investment,\n(12) gK = sQ\nwhere g is a constant exogenous growth rate of population and technology. Thus,\n(13) dK/K = ds/s + dQ/Q\nCombining these equations, the model can be solved for the change in capital and labor due to changes in the tax rate on labor income (t) and the tax rate on capital income (t c ).\n(14) dL/L = ((E LS -E LI ) (a/(1-a))((R/(1-tc))/c)(E/(E+S(R/(1-t))/c)( dt c /(1-t c )) – E LS dt/(1-t))\nand\n(15) dK/K = -[(S/(1-a) +((E LS -E LI ) (a/(1-a)][(R/1-tc)/c][E//(E+S(R/(1-t))/c) ) dt c /(1-t c ) - E LS dt/(1-t))\nIn the calculations of the effect on the capital stock, E LS -E LI is assumed to be equal (labor does not respond to the wage rates). With no change in labor supply, in this case\n(16) dK/K = -[S/(1-a) ][(R/1-tc)/c][E//(E+S(R/(1-t))/c) )( dt c /(1-t c ),\nand its effect depends on the factor substitution elasticity.\nNote that without a change in the tax rate on capital, no feedback effect changes wages in (14). That occurs because without a change in the savings rate, capital and labor, and therefore prices, continue in their same relative shares. As labor declines, the savings its income generates also declines to keep relative pretax prices of inputs the same." ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 2, 3, 3, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_title h2_full h1_full", "h2_full", "h0_full", "h2_full", "h3_full h4_full h1_full", "", "", "h4_title", "", "", "", "h4_full", "h4_full", "h0_full h3_full" ] }

{ "question": [ "Why is there interest in tax reform that broadens the base and lowers the rate?", "Why might predictions of growth be mistaken?", "Why might growth have been limited?", "What does this report show?", "What effects are addressed in this report?", "What does the analysis examine?", "How would eliminating itemized deductions affect marginal tax rates?", "How do these effects compare to the projected effects of the Tax Reform Act of 2014?", "What is the relationship between itemized deductions and labor supply?", "What itemized deduction restrictions does this analysis examine?", "What effects would eliminating these provisions have?", "What other provisions does this analysis consider?", "What effects would moving to the alternative depreciation system yield?", "How does this differ from the effects of indexing interest deductions and payments for inflation?", "How does this differ from the effects of repealing itemized deductions either partially or fully?" ], "summary": [ "One source of interest in a tax reform that broadens the base and lowers the rate is the potential increase in growth, as labor supply and investment respond to lower marginal tax rates.", "Yet, studies of a signature reform in the past, the Tax Reform Act of 1986, found little effect on growth. The act was revenue and distributionally neutral, which is a goal of some recent tax reform proposals.", "One reason advanced for the limited effects on growth is that the effects of provisions that broaden the base to finance lower statutory rates increase effective marginal tax rates for some taxpayers.", "This report shows how options to broaden the tax base by placing limitations on itemized deductions can potentially work counter to the growth effects of reducing marginal tax rates, primarily through reducing labor supply. It also shows how these effects—along with other base-broadening provisions, such as slowing depreciation—limit the effects on investment and savings and can eventually reduce the size of the capital stock in the economy.", "The effects on labor supply and the capital stock are considered in turn.", "To examine the potential effects of base broadening on effective tax rates facing labor, the analysis examines provisions to eliminate itemized deductions for state and local taxes, for charitable contributions, and for both. It also examines provisions to eliminate itemized deductions altogether or to impose dollar caps ($17,000 and $25,000).", "Eliminating itemized deductions would raise effective marginal tax rates by almost two percentage points on average and is estimated, using common behavioral responses, to reduce labor supply by 0.2% to 0.6%.", "These effects are significant compared to projected effects in the Tax Reform Act of 2014 (H.R. 1, 113th Congress), where labor supply was projected to increase by 0.4% to 0.8%.", "More limited restrictions to itemized deductions result in smaller reductions in labor supply.", "Similar to the analysis for labor supply, the potential effects of base broadening on effective tax rates for capital investment are examined. The analysis includes two itemized deduction restrictions: disallowing the deduction for state and local taxes and disallowing all itemized deductions.", "Eliminating these provisions increases the effective marginal tax rate on business income, interest income, dividends, and capital gains.", "It also included the effects of three provisions that affect how quickly an investment is recovered. One is to move to the alternative depreciation system that forms the baseline for measuring the benefits of accelerated depreciation. The other two provisions are to depreciate two types of intangible investments, research and development and advertising, over a 10-year period. The analysis also considered repeal of the production activities deduction (which allows a 9% deduction from taxable income for certain domestic production, such as manufacturing) and indexation of interest deductions and payments for inflation.", "Moving to the alternative depreciation system had the greatest effect, reducing the long-run capital stock (using a range of behavioral responses) by 0.8% to 1.6%. It more than offset the effect of a 10 percentage point corporate rate reduction.", "Indexing interest deductions and payments for inflation had the next largest effect, 0.5% to 1.1%.", "Repealing itemized deductions for state and local taxes reduced the capital stock by 0.1% to 0.2%, and repealing all itemized deductions reduced it by 0.1% to 0.3%. Repealing all itemized deductions offset about a third of the effect of reducing the statutory corporate tax rate by 10 percentage points." ], "parent_pair_index": [ -1, 0, 1, -1, 0, -1, 0, 1, 0, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "Patenting in the United States", "Patent Infringement Litigation", "Administrative Proceedings for Challenging Patent Validity before the Patent Trial and Appeal Board", "Court Decisions on Eligibility for Review under the CBM Program", "More Than 350 Patents Have Been Challenged under the CBM Program, and About One-Third of These Patents Were Ruled Unpatentable", "Petitioners Have Challenged the Validity of 359 Patents under the CBM Program, but Use of the Program Has Declined Overall", "Patents Are Infrequently Challenged More Than Once or Twice", "Claims Have Been Ruled Unpatentable in More Than One-Third of Patents Challenged under the CBM Program", "The Board Met Timeliness Requirements and Has Taken Steps to Analyze Decisions and Improve Proceedings but Does Not Have Guidance to Ensure Decision Consistency", "Patent Trial and Appeal Board Data Indicate Trials Have Been Completed within Statutorily Directed Time Frames", "The Board Has Taken Several Steps to Review Issues That Affect Trial Proceedings, but It Does Not Have Guidance to Ensure the Consistency of Its Decisions", "The Patent Trial and Appeal Board Has Taken Several Steps to Engage Stakeholders and Address Stakeholder Concerns", "Stakeholders Agree the CBM Program Has Reduced Litigation, and Many See Value in Maintaining Aspects of the Program", "Stakeholders Generally Agreed the CBM Program Has Contributed to a Decrease in Litigation Involving Business Method Patents", "Stakeholders Generally Agreed the CBM Program Has Had Positive Effects on Innovation and Investment", "Most Stakeholders Said There Is Value in Maintaining Aspects of the CBM Program", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Commerce", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "This section provides an overview of patenting in the United States, patent infringement litigation, and administrative proceedings for patent validity challenges. It also includes a brief history of court decisions that clarified eligibility requirements for the Patent Trial and Appeal Board’s CBM program. See “Related GAO Products” at the end of this report for a list of our prior work related to patents and intellectual property.", "In the United States, patents may be granted by USPTO for any new and useful process or machine, or any new and useful improvement on an existing process or machine, but there are some exceptions. Laws of nature, physical phenomena, and abstract ideas are not patentable. The U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have refined the boundaries of these exceptions over time, allowing some subject matter that was previously not patentable to become so. For example, U.S. Supreme Court decisions in the 1970s found mathematical formulas used by computers (i.e., software) were like laws of nature and therefore not patentable subject matter. However, a 1981 Supreme Court decision overturned USPTO’s denial of a patent application for a mathematical formula and a programmed digital computer because, as a process, the claimed invention was patentable subject matter. Similarly, business methods were widely considered unpatentable subject matter until 1998, when the U.S. Court of Appeals for the Federal Circuit ruled in the State Street Bank decision that they were patentable. In 2014, however, the Supreme Court effectively limited the patentability of some business methods by ruling in Alice Corp.\nPty. Ltd. v. CLS Bank Int’l that using a generic computer to implement an abstract idea is not patentable.\nTraditionally, economic theory has held that intellectual property rights, such as those conferred by patents, can help encourage innovation and stimulate economic growth. Exclusive rights provided by patents, for example, can help patent owners recoup investments in technology and earn greater profits than if their patented technologies could be freely imitated. Moreover, to the extent that intellectual property rights encourage specialization, innovators may be more productive than they would be in the absence of patent laws. Because of complex trade-offs, however, some economists hold a more nuanced view of the potential for patents to promote innovation and increase productivity. By increasing the cost of using technologies, for example, patents may discourage not only diffusion of these technologies but also cumulative innovation that uses such technologies to develop new technologies. In addition, attempts to quantify the effect of patents on economic growth often fail to account for the creation of useful knowledge outside the patent system. Furthermore, to the extent that innovation occurs in the absence of patent laws, the need for patents can vary across industries or over time. Some researchers have suggested that some patents are currently limiting innovation, especially in areas such as software and computer technologies that overlap with business methods.\nUSPTO receives hundreds of thousands of applications each year from inventors seeking patents to protect their work. According to USPTO data, applications for patents have increased in recent years, and the share of patents granted for business methods has significantly increased over the past 2 decades (see fig. 1). In calendar year 2014, patents related to business methods accounted for more than 28 percent of all issued patents.\nA patent’s claims define the legal boundaries of the invention, often in complex technical language. A patent application can be written to define an invention broadly or narrowly. Patent applicants often prefer broader claims because their competitors are less able to avoid infringement by making only small changes to their patented invention, as we reported in June 2016.\nBefore issuing a patent, USPTO patent examiners determine whether claimed inventions in the application meet requirements for patentable subject matter, novelty, non-obviousness, and clarity—the four patentability grounds that are established by statute. Patent examiners assess whether the claimed invention consists of patentable subject matter and also ensure that the claims are described clearly enough to enable a person skilled in the art to make the claimed invention. In addition, examiners determine whether a patent application’s claimed invention is novel and non-obvious by comparing the application’s content to “prior art”— existing patents and patent applications both in the United States and abroad, as well as non-patent literature such as scientific articles.\nIn February 2015, USPTO launched an Enhanced Patent Quality Initiative, which included several proposals designed to improve the quality of patent examination and issued patents. However, we found in June 2016 that USPTO faced challenges in issuing patents in accordance with standards. For example, we found that a majority of examiners (67 percent) said they have somewhat or much less time than needed to complete an examination, given a typical workload, and many examiners felt a time pressure that reduced their ability to conduct thorough searches. Examiners also said that it was difficult to issue patents that met the statutory requirements because of the limited availability of and access to non-patent prior art such as offers for sale and public use. Examiners said another limitation is their being responsible for examinations in subject areas in which they do not have adequate technical knowledge. We made seven recommendations to USPTO aimed at improving patent quality, clarity, and prior art search. USPTO agreed with the recommendations and is working to address them.", "Patent owners can bring infringement lawsuits against anyone who uses, makes, sells, offers to sell, or imports the patented invention without authorization. Only a small percentage of patents in force are ever litigated, but some scholars believe that low-quality patents can make such litigation not only more complex and expensive but also more frequent. During an infringement case, the accused infringer may seek to have the lawsuit dismissed by showing the patent is invalid. When the courts rule on validity, they generally invalidate almost half of the patents, according to academic research.\nExactly what a patent covers and whether another product infringes the patent’s claims are rarely easy questions to resolve in litigation, and defending a patent infringement lawsuit in district court can take years and cost millions of dollars, not including damages if infringement is found. Whatever the outcome, costly litigation can leave defendants with fewer resources for innovation. Consequently, patent infringement defendants often find it in their best interest to settle lawsuits quickly, as we reported in August 2013.", "The AIA in 2011 created the Patent Trial and Appeal Board and stated any references in federal law to USPTO’s then-existing Board of Patent Appeals and Interferences be deemed to refer to the new board. By statute, the Patent Trial and Appeal Board consists of the USPTO Director, Deputy Director, Commissioner for Patents, Commissioner for Trademarks, and administrative patent judges. In practice, to issue decisions in the matters that come before it, the board involves more than 300 people serving in many positions, according to the board. The board is led by the Chief Judge and Deputy Chief Judge, who, along with other members of senior management, meet regularly to discuss operational and procedural matters of importance to the board’s overall mission, according to the board.\nThe AIA created three new administrative proceedings for the board to administer, each with different statutory rules (see table 1). Two proceedings were made permanent:\nPost-grant review provides a 9-month opportunity following the issuance of a patent during which a third party can file a petition to challenge a patent’s validity on any of the four statutory grounds: subject matter eligibility, novelty, non-obviousness, and clarity.\nInter partes review is available to third parties for the life of the patent, but on a limited set of grounds (non-novelty or obviousness), and on a limited set of acceptable prior art (previously issued patents and printed publications).\nThe third proceeding—the CBM program—was included in the act as a temporary proceeding that can be used to challenge a patent at any point in its life, as allowable under the inter partes review program. However, under the CBM program, only a party (e.g., a company or an individual) that is sued or charged in an infringement suit can petition. Such petitioners can challenge a patent’s validity on any of the four statutory grounds without the limits on prior art in inter partes review. Additionally, rules about which arguments parties are officially barred from being raised again in later legal actions (called estoppel provisions) are less restrictive under the CBM program than for the other two board proceedings. However, the body of patents that qualify for review under the CBM program is limited to those that claim a non-technological method involved in the practice, administration, or management of a financial service or product. A patent is “technological” if it claims a technological feature that solves a technical problem using a technical solution. Many software and business method patents issued in the wake of State Street Bank describe implementing an abstract idea on a generic computer. Since the Supreme Court’s 2014 decision in Alice, which closely aligns with the CBM program’s “non-technological” designation, these types of ideas are no longer thought to be patentable.\nInter partes review is the most-used of the proceedings created by the AIA and the one stakeholders we interviewed were most familiar with when they discussed the Patent Trial and Appeal Board. The other proceedings have been used less frequently, likely because of the short window for filing a challenge, in the case of post-grant review, and because of additional restrictions on what patents may be challenged, in the case of CBM.\nUnder statute and regulation, the full review process at the Patent Trial and Appeal Board for any of the three proceedings generally takes up to 18 months and comprises two phases: (1) the petition phase, which lasts up to 6 months, and (2) the trial phase, which generally lasts up to 12 months. During the petition phase, the petitioner—typically a party accused of patent infringement, in the CBM program— files a petition challenging the validity of one or more of the patent’s claims and pays fees for each challenged claim. In some cases, a petitioner will file more than one petition challenging a patent. This might occur when a petitioner is constrained by the maximum number of pages allowed in a petition. Multiple petitions can also be filed against a single patent if the patent owner has sued more than one party for infringement, and each files a separate petition challenging the patent’s validity. Petitioners might also file a petition under more than one proceeding, either concurrently or sequentially.\nWhen a petition is received and the fees paid, administrative personnel of the board, under direction of the Chief Judge, assign three technically trained administrative patent judges to the case. According to agency documents, these three-judge panels are put together taking into account many factors, including technical experience, experience at the board, potential conflicts of interest, and availability. The patent owner may then, within 3 months of the petition date, file a preliminary response to the petitioner’s arguments. Within 3 months of submission of any preliminary response, or the last date on which such response may be filed, the panel of judges determines whether to allow the petition to move to the trial phase for review. This determination is called the “institution decision.” According to statute and regulations, in the case of the CBM program and post-grant review, a panel of judges may not institute a review unless the information presented in the petition, if not rebutted, would demonstrate that it is “more likely than not” that at least one of the claims challenged in the petition is unpatentable, or in the case of inter partes review, if the petitioner has a “reasonable likelihood” of prevailing.\nThe first step in the trial phase is discovery (a step that exists in all federal civil litigation), during which the parties produce documents or testimony relevant to the challenged claims. Each party has 3 months to file discovery documents for the panel of judges’ review. If a petitioner and patent owner do not settle a case or it does not otherwise terminate, the case will proceed to the oral hearing. The hearing is an opportunity for the parties to make their strongest arguments and to answer judges’ questions, according to a board official, and after the hearing, the panel of judges will deliberate over the course of a few weeks or months and then issue its final written decision. The final written decision must be issued within 1 year of the institution decision, with limited exceptions. The patent owner may, for example, cancel one or more claims in the patent in an attempt to avoid institution of the trial.\nFigure 2, shows the progression of a case from the petitioner’s filing to the panel of judges issuing a final written decision.\nUnder its Standard Operating Procedures, every Patent Trial and Appeal Board decision is, by default, a routine opinion until it is designated as “representative,” “informative,” or “precedential.”\nRepresentative decisions typically provide a representative sample of outcomes on a particular matter; they are not binding authority.\nInformative decisions provide norms on recurring issues, guidance on issues of first impression, and guidance on the board’s rules and practices; they are not binding authority.\nPrecedential decisions are binding authority and emphasize decisions that resolve conflicts or address novel questions.\nNominations for these designations can be made by a Patent Trial and Appeal Board judge, the Chief Judge, the Director of USPTO, the Deputy Director of USPTO, the Commissioner for Patents, or the Commissioner for Trademarks. Also, a member of the public may nominate a decision for a precedential designation within 60 days of its issuance. The Chief Judge can designate a nominated decision as representative or informative, but under Standard Operating Procedures, a precedential designation requires a majority agreement among all voting members of the board, including administrative patent judges and statutory members, as well as concurrence by the Director of the USPTO.", "Petitioners and patent owners may appeal the final written decisions of the Patent Trial and Appeal Board to the U.S. Court of Appeals for the Federal Circuit, just as unsatisfied plaintiffs or defendants may appeal a federal district court decision, and decisions may ultimately be appealed to the U.S. Supreme Court. The following decisions have significantly influenced the eligibility rules for CBM review, for different reasons: In Cuozzo Speed Technologies, LLC v. Lee (June 2016), the U.S. Supreme Court affirmed the board’s use of the “broadest reasonable construction” standard—meaning the ordinary meaning that someone skilled in the art would reach—to define the language of the claims during post-grant review as a reasonable exercise of the board’s rulemaking authority. Defining claim language using the broadest reasonable interpretation meant that the number of business method patents that could be determined as financial in nature is larger than it would otherwise be, so more patents are potentially eligible for review under the CBM program.\nIn Unwired Planet, LLC v. Google Inc. (November 2016), the U.S. Court of Appeals for the Federal Circuit ruled that the USPTO’s policy of assessing whether a claim’s activities were “incidental” or “complementary” to a financial activity was too broad a standard to apply when determining whether a patent claim was eligible for a CBM review. The court stated that, to be CBM-eligible, a patent must claim a method used in the practice, administration, or management of a financial product or service. Applying this narrower standard effectively reduced the number of patents accepted for review under the CBM program.\nIn Secure Axcess, LLC v. PNC Bank Nat’l Assoc. (February 2017), the U.S. Court of Appeals for the Federal Circuit clarified that a CBM patent must specifically have a claim that contains an element of financial activity in order for a patent to qualify for review under the CBM program. Like the Unwired Planet decision, the narrower standard expressed by the court has led to fewer patents being eligible for review under the CBM program.", "From September 2012 through September 2017, parties accused of patent infringement filed 524 petitions challenging the validity of 359 distinct patents under the CBM program, resulting in rulings against about one-third of these patents. The average monthly number of CBM petitions fluctuated during this period, but use of the program has declined since about 2015. Some stakeholders have expressed concern about multiple petitions being filed against the same patent, but our analysis of petition data showed that the vast majority of patents challenged under the CBM program were challenged once or twice. Overall, through September 2017, the Patent Trial and Appeal Board completed reviews of 329 of the 359 patents challenged under the program, and the board ruled at least some challenged patent claims unpatentable in about one-third of these patents.", "Parties accused of patent infringement filed 524 petitions for patent review under the CBM program from September 2012 through September 2017, with the number of petitions per month fluctuating but tapering off over time (see fig. 3). During this 5-year period, an average of more than 9 petitions per month were filed under the CBM program, but this average rate has declined since 2015 to fewer than 5 per month in the last fiscal year, with no petitions filed in August or September 2017. As a point of comparison, the number of petitions for inter partes review has generally increased over the 5-year period.\nStakeholders we interviewed suggested several possible reasons for the decline in CBM petitions. Specifically, some stakeholders told us that recent Federal Circuit and Supreme Court decisions that have changed what is patentable subject matter and the eligibility criteria for CBM review may have reduced the set of business method patents eligible for CBM review. Some stakeholders also suggested CBM petitioners successfully targeted the lowest-quality business method patents in the early years of the program, and now that those patents have been challenged, there are fewer patents that do not meet patentability requirements. Another possibility, according to stakeholders, is that owners of business method patents are wary of asserting their intellectual property and risking its invalidation, especially in light of the Alice decision, which effectively limited the patentability of some business methods. As a result, according to these stakeholders, fewer such patents end up in litigation and subsequently before the Patent Trial and Appeal Board. Some stakeholders also told us the CBM program has reduced patent infringement lawsuits, including some filed by non- practicing entities. In addition, a few stakeholders told us some patent owners may be waiting until after the CBM program sunsets to assert their patents.", "Some stakeholders we interviewed were concerned about multiple petitions being filed against the same patents; however, our analysis showed that the vast majority of the 359 distinct patents challenged under the CBM program were challenged only once or twice under that program. Stakeholders have suggested that petitioners are, in some cases, using the CBM program and the inter partes review program as tools to increase costs borne by patent owners, and in the case of the CBM program, as a tool to delay district court proceedings. Some stakeholders have stated that the use of the AIA trials in this manner amounts to harassment, and at least one stakeholder has written letters to USPTO requesting the Director to intervene.\nHowever, our analysis of petition data showed that among the 359 patents challenged under the CBM program, 73.3 percent were challenged once and 18.4 percent were challenged twice during the 5- year period we reviewed. Another thirty patents, or 8.4 percent, were challenged more than twice under the CBM program during this period (see fig. 4). Of these 30 patents, in many cases multiple parties challenged a single patent; in others, a single petitioner or set of petitioners challenged a patent multiple times.\nIn addition, of the 359 patents challenged under the CBM program during the 5-year period we reviewed, 92 were also challenged at least once in inter partes review. In some instances, petitioners filed concurrent petitions for CBM and inter partes review if, for example, they were unsure if the claims were eligible for a CBM review. In other instances, petitioners first sought CBM review and, when that was unsuccessful, filed an inter partes review. In these cases, petitioners may initially be seeking CBM review because of the additional grounds available for challenging the patents, and then turning to the inter partes review program if the CBM challenge proves unsuccessful. In other instances, petitioners first had success under the inter partes review program and then filed another petition under the CBM or inter partes review programs, according to our analysis of petition data.\nWhen including patent challenges under both the CBM and inter partes review programs, 52.1 percent of the 359 patents challenged under the CBM program were challenged once and 29.3 percent were challenged twice (see fig. 4). More than half of the patents challenged under both programs (50 of 92 patents) did not have any challenged patent claims instituted for trial under the CBM program, meaning that those patents, in many cases, did not meet the CBM program’s eligibility requirements and may have been more appropriately challenged with an inter partes review.\nThere are several other reasons why petitioners may file more than one petition against a single patent, according to stakeholders we interviewed. First, the board limits the number of pages that a petitioner may use to submit prior art and arguments for invalidity. Some petitioners might file more than one petition so they have room to present all of their art and arguments at once. Data we analyzed on CBM petitions show that many follow-on petitions are filed on or near the same day as the first petition, supporting this argument. Second, in some cases the patent owner may not identify all the asserted patent claims in the district court right away or may change the set of asserted claims later in the proceedings, necessitating an additional CBM or inter partes review petition to cover the new claims. Third, in order to get the expensive district court proceedings stayed—that is, halted pending the board’s decision on the patent’s validity—a petitioner may file a CBM petition on patentability or clarity grounds soon after the district court trial commences, because these arguments require limited time to formulate. Later, once the petitioner takes the time to investigate the prior art, the petitioner might file a second petition challenging the patent for non-novelty or obviousness. In our analysis of petition data, we found some examples that were consistent with this approach. Fourth, if a patent owner charges multiple entities with patent infringement, each of the alleged infringers has an individual right to file a petition challenging the patent’s validity. The defendants in the infringement suits who become petitioners at the board may collaborate with one another and join their cases, but they may also choose to file petitions individually. In our analysis of petition data, we found examples of both. Petitioners might choose to join their cases in order to share the cost of counsel, while others may choose not to join their cases, perhaps because they use substantially different art and arguments in their petitions.\nOur analysis of the petition data found some examples of multiple petitions against a single patent that may raise questions about the legitimacy of the follow-on petitions. In some instances, a second, follow- on petition challenging the patent’s validity on the same statutory grounds as it did in the first petition was filed by the same petitioner after the first petition was denied institution. This type of multiple petitioning may occur when, for instance, a procedural termination resulted from a technical error in the first petition. Board officials said it may also occur because a petitioner is using the first denial of institution to alter the arguments and guide the second petition, a strategy that the board has labeled “road- mapping.” In other instances, a single petitioner filed a second, follow-on petition challenging the patent on different statutory grounds after the first petition was denied institution. These follow-on petitions may be legitimate attempts to correct simple errors in the first petitions, or they may reflect practices that might raise questions about whether the program is being used as intended.\nPatent Trial and Appeal Board officials are aware of concerns over multiple petitions and recently concluded a study about the prevalence of such practices in relation to all three types of proceedings created by the AIA. The board found that almost two-thirds (63.4 percent) of follow-on petitions were filed on or near the same day as the first petition. Nearly three in four (72.4 percent) follow-on petitions were filed before the institution decision on the first petition. These findings suggest that most petitioners are not waiting to use the board’s decision of non-institution as a guide for developing a second petition. Moreover, the board officials we interviewed told us they are empowered to deny a petition if they determine the petition presents the same or substantially the same prior art or arguments previously presented in another petition. Board officials told us they had denied several recent petitions on this basis. In addition, in a recent precedential opinion, the board clarified the characteristics it looks for to determine whether it should deny an inter partes review when a petitioner submits a follow-on petition. These characteristics include whether the petitioner previously filed a petition against the same patent claims; whether the petitioner provides adequate explanation for the time elapsed between filing two or more petitions against the same patent claims; and whether the petitioner knew, or should have known, about the prior art presented in the second petition at the time of the first petition.", "The Patent Trial and Appeal Board has ruled unpatentable some or all of the patent claims instituted for trial in about one-third of challenged patents and about one-third of petitions under the CBM program. Data on petition outcomes, however, are open to different interpretations depending on how they are presented. For example, board judges ruled some or all of the patent claims considered at trial unpatentable in 96.7 percent of petitions (175 of 181) under the CBM program for which they issued a final written decision from September 2012 through September 2017. On the basis of this statistic, the board could seem to invalidate the majority of the patents it reviews, as noted by some stakeholders. However, this outcome is predictable given the criteria for institution of a CBM trial—a judge panel will institute a petition to the trial phase if it is “more likely than not” that at least one of the claims challenged in a petition is unpatentable—which tips outcomes for instituted petitions toward rulings of unpatentability. In addition, board judges did not issue final written decisions for all petitions that enter the trial phase because the parties often reach a settlement before the final written decision. When taking into account all of the CBM petitions that had an outcome as of Sept 30, 2017, board judges ruled some or all of the claims considered at trial unpatentable in 35.6 percent of the cases (175 of 492).\nThe results are similar when considered by patent rather than by petition. Specifically, for patents challenged between September 2012 and September 2017 and for which a final written decision was issued in at least one petition, 95.2 percent of patents (120 of 126) had some or all the patent claims that were instituted for trial ruled unpatentable. However, because not all challenged patent claims are instituted for trial and because final written decisions are not issued for all petitions that enter the trial phase, it is also accurate to say the board judges ruled some or all of the patent claims unpatentable for 36.5 percent of challenged patents (120 of the 329) that had an outcome as of September 30, 2017 (see fig. 5).\nChanges in petition outcomes over time also challenge the idea that the board invalidates most patents it reviews. In particular, the percentage of CBM petitions instituted for trial has decreased over time (see fig. 6). In 2012, about 80.0 percent of CBM petitions had some or all challenged claims instituted. In comparison, in 2016 about 53.5 percent of CBM petitions had some or all claims instituted. Preliminary data for 2017 suggests that this trend might continue: through September 2017, about 38.5 percent of CBM petitions had some or all claims instituted. Similar to the decline in number of petitions filed, this trend might have a few explanations, according to stakeholders. Specifically, board panels might be less likely to institute a petition for trial based on conclusions of the U.S. Court of Appeals for the Federal Circuit in Unwired Planet and Secure Axcess. Another possibility is that the patents in earlier cases represented the easiest targets for validity challenges, and thus the more recent challenges are based on shakier legal grounds and less likely to meet the CBM program’s institution threshold.\nIn addition to declining institution rates, there has been an increase in the percentage of CBM petitions that settle before reaching an outcome. Specifically, the percentage of cases where the parties settled their dispute either before or after the institution decision increased from about 6.7 percent in 2012 to about 28.9 percent in 2016. When a case before the board is settled, it generally concludes any concurrent district court infringement case. The patent owner’s intellectual property remains in place, and the patent owner is free to assert the patent against other alleged infringers later.", "The Patent Trial and Appeal Board has completed all trials under AIA- authorized proceedings within statutorily directed time frames, according to board data, and the board has taken steps to review issues that could affect the consistency of its trial proceedings and decisions and to engage with stakeholders to improve its proceedings. To ensure timeliness of trial proceedings, the board provided a checklist of information and time frames to petitioners and patent owners, among other things. According to board documents and interviews with officials, the board has also taken steps to review and assess its trial proceedings and decisions, but it does not have guidance for reviewing trial decisions, or the processes that lead to the decisions, for consistency. The board has also taken several steps to engage with stakeholders regarding various aspects of trial proceedings.", "According to data on Patent Trial and Appeal Board proceedings, as of September 31, 2017, all trials under AIA-authorized proceedings, including the CBM program, have been completed within statutorily directed time frames. The board maintains a database of trial proceedings that includes the date of each petition, decision to institute a trial, and final written decision. Board officials we interviewed told us the timeliness of decisions to institute a trial and of final written decisions has not been a concern in the 5 years that it has operated. According to board officials, as of November 2017, two AIA trials—one under the inter partes review program and one under the CBM program—have been extended for good cause past the typical 1-year time limit between the institution decision and the final written decision, as allowed by statute.\nBoard officials told us they have taken several steps to ensure that trials are completed within required time frames. According to board documentation, between 2012 and 2017, for example, the board hired more than 150 additional administrative patent judges, in part to preside over AIA trials. In addition, the board has taken several proactive administrative steps to help ensure that stakeholders are aware of requirements for information filing and dates. For example, when a petition is filed, the board’s administrative staff creates a checklist of information required and due dates, and communicates these dates and requirements to petitioners and patent owners throughout the trial.\nSome stakeholders have expressed concern that AIA trial time frames are too short and deprive patent owners and petitioners of due process rights. One patent attorney that we spoke with, for example, noted that the short time frames limit discovery. As directed by the AIA, a final determination for a review generally must be issued not later than 1 year after the date a review has been instituted, and the director may extend that period by up to 6 months for good cause. Board officials we interviewed stated that they do not believe parties are having trouble completing discovery activities in the time allotted in view of the limited discovery allowed at the board. Board officials further stated that they have not found compelling reasons to extend trial proceedings on the basis of the need for additional discovery. As reflected in USPTO’s strategic plan, timeliness of the board’s trial process is a key program goal, and board officials said trials would be extended only in unusual circumstances. In addition, board officials stated that the board adheres to the 12-month timeline for final written decisions because this timeline gives the district courts a definitive and predictable endpoint for the trials.", "The Patent Trial and Appeal Board has decision review processes that help ensure trial decisions are revisited as appropriate, but the board cannot ensure the consistency of these decisions because it does not have guidance for reviewing them or the processes that lead to them. For trials still in progress, board officials told us that there are several ways that management gets involved in reviews. According to officials, a review of an ongoing trial is triggered if and when a paneled judge raises any issue deserving of management attention. Such issues are brought to the attention of the Chief Judge or other members of the board’s management team and are acted upon at their discretion. According to board officials, the usual response is a management meeting with the three-judge panel, with the goal of ensuring the judges are aware of any precedent or ongoing trials dealing with similar issues. The officials said these review meetings are also meant to ensure that board management is aware of any decisions that may be relevant to the stakeholder community or the public. According to board officials, issues that may prompt action include those that are not routine in nature, that involve novel questions of law, or that may result in decisions that could contradict previous board decisions. Board officials called these review meetings the first step for keeping track of key issues. Board officials told us these reviews raise a fair number of issues, but the process relies on self-reporting by the judges, and board officials told us the effectiveness of these reviews is not measured.\nBoard officials also told us that a separate internal review process has evolved over time, whereby a small group of board judges, in consultation with board management, seeks to ensure decision quality and consistency by reading a large number of draft AIA trial decisions and giving feedback or suggestions to authoring judges prior to issuance. The board is currently drafting a formal charter that will outline the group’s function, reviewer selection, and membership term. According to board officials, these reviews are meant to help ensure consistency with applicable board rules, other board decisions, and Federal Circuit and Supreme Court case law. In addition, such reviews may result in coaching and training to increase an individual judge’s quality of performance.\nRegarding completed trials, board officials told us they review any board AIA trial decisions that are appealed to the U.S. Court of Appeals for the Federal Circuit and that the appeals court reverses or remands. Specifically, the board monitors Federal Circuit decisions and board management then reviews any reversals or remands for opportunities to improve processes and stay abreast of emerging issues. According to board officials, for any reversal or remand, board management and members of the three-judge panel that decided the case meet to discuss what steps could have been taken to avoid the Federal Circuit reversal or remand, and what else can be learned from the Federal Circuit decision. In some instances, according to officials, the board will host a session where all board judges are invited to review and discuss the trial court decision and the decision of the Federal Circuit. In addition, board officials told us they track data on Federal Circuit affirmances, remands, and reversals. The board has recently updated its Standard Operating Procedure to provide guidance on how it handles cases remanded by the Federal Circuit. This procedure creates internal norms to promote timeliness and consistency of the board’s response to remands. The procedure includes a goal for the board to issue decisions on remands within 6 months of receipt and calls on the Chief Judge and the Deputy Chief Judge to discuss each remanded case with the presiding three- judge panel before the panel expends substantial effort on the case. The Chief Judge may also elect to expand the panel assigned to the remanded case, when deemed prudent.\nFurthermore, officials told us that all board decisions—including final written decisions, decisions to institute a trial, and any substantive orders—are reviewed by board judges on the date of issuance. Specifically, a rotating group of judges, on a voluntary basis, reads and analyzes each day’s decisions and, according to board officials, sends a summary list of the number of decisions made that day along with a brief decision summary for any cases where key issues of interest were raised. Board officials said that most decisions are straightforward and generally not summarized in detail. For decisions highlighted in the summary report, according to officials, a lead judge, in most cases, will then review the decision more closely. Example summary lists provided to us by the board show brief summaries of a trial involving interpretations of prior art admissibility and a trial dealing with an interpretation of a challenge based on clarity.\nFinally, board officials told us that the board has begun to increase the number of trial decisions considered for precedential and informative designations as part of its efforts to ensure the consistency of trial decisions. Board officials also told us that increasing the number of these designations had not been a priority while the AIA trial procedures and processes were being operationalized and as the board was hiring more than 150 administrative patent judges over the past 5 years. However, officials said that they are now taking steps to simplify the vetting and voting process, and the board expects more precedential and informative designations going forward.\nTaken together, the board’s review processes help ensure that board trial decisions are reviewed in some manner. However, because the board does not have documented procedures for how to review decisions for consistency, the board cannot fully ensure the consistency of the decisions or the processes that lead to them. USPTO’s 2014-2018 strategic plan includes the goal to “optimize patent quality and timeliness,” which includes an objective to “maintain ability to provide high-quality decisions.” As part of this objective, the plan states that it is “critical for the to ensure consistency in its decisions through review of decisions in proceedings.”\nUnder federal standards for internal control, management should design control activities to achieve objectives and respond to risks. Such control activities include clearly documenting internal control in a manner that allows the documentation to be readily available for examination. The documentation may appear in management directives, administrative policies, or operating manuals. However, the board has not yet clearly documented how judges are to review trial decisions, or the processes that lead to the decisions, to ensure consistency. Without developing guidance, such as documented procedures, outlining the steps USPTO will take to review the Patent Trial and Appeal Board decisions and the processes that lead to decisions, USPTO cannot ensure that it is fully meeting the objective of ensuring consistency of its decisions.", "The Patent Trial and Appeal Board has taken several steps to engage stakeholders regarding trial proceedings and decisions and address related concerns. USPTO’s strategic plan states that the board should expand outreach to stakeholders by providing opportunities for interaction and updates on board operations and other important issues. The board has done so through several types of public outreach efforts, including participating in roundtables, webinars, and judicial conferences, among other activities. The board has made several changes to policies and procedures based on stakeholder feedback gathered through these mechanisms.\nFor example, after the Patent Trial and Appeal Board had been operational for about 18 months, it conducted a series of eight roundtables in April and May of 2014 at locations around the country to publicly share information concerning trial proceedings, to obtain public feedback on these proceedings, and to launch the process of revisiting its trial rules and trial practice guide. At these roundtables, the board provided the public with statistics summarizing the administrative trial proceedings, as well as lessons learned for filing effective petitions, engaging in successful discovery and amendment practice, and effectively presenting a case at oral hearing, among other things. The board also asked for and received feedback from the public on the AIA administrative trial proceeding rules and trial practice guide, as well as on experiences in general with the AIA administrative trial proceedings. Subsequent to the 2014 roundtables, the USPTO sought public input on all aspects of AIA trial proceedings through a June 27, 2014 Federal Register notice, which included 17 specific questions regarding certain trial rules, such as claim construction, the claim amendment process, and good cause trial extensions. USPTO took a two-step approach in responding to the 37 comments received in response to this Federal Register notice. First, USPTO implemented several immediate changes to board proceedings, including changes to page limits for some documents. According to the annual report of USPTO’s Patent Public Advisory Committee, these changes were favorably received by the stakeholder community. Second, in April 2016, the board implemented more substantive changes, including allowing testimonial evidence to be submitted with a patent owner’s preliminary response to a petition and changing from a page limit to a word count for major briefings, among other things.\nIn addition to roundtables, the board has engaged with stakeholders through several other mechanisms, including webinars and judicial conferences. For example, in February 2015, the board announced its inaugural “Boardside Chat” lunchtime webinar series, which has been held bi-monthly ever since. These webinars are designed to update the public on current board activities and statistics, and to allow a means for the board to regularly receive public feedback about AIA trial proceedings and any issues of concern. Topics discussed at these events include key trial decisions, proposed changes to trial rules, and best practices for prior art presentations in AIA trials, among other things. Since 2015, the board has hosted an annual judicial conference, where the board engages with stakeholders and educates them about AIA trial proceedings, answers questions, and receives feedback. Board judges present trial statistics, information about the internal functioning of the board, practice tips, and engage in discussions on topics of current interest to stakeholders. Topics have included motions to amend and the prevalence of multiple petitions. More recently, the board has conducted other outreach sessions, including: an August 2017 roundtable meeting with stakeholders from the American Intellectual Property Law Association to address a broad range of topics affecting practitioners before the board, including how patent claims are interpreted, claim amendments, and conditions under which multiple petitions from a single petitioner would be denied; a webinar on August 31, 2017, addressing common evidentiary issues that occur during AIA trial proceedings; and a webinar on September 12, 2017, with the Chief Judge to commemorate the 5th anniversary of the board, where discussion topics included the origins and mission of the board, recent board developments, and operational procedures.\nAccording to USPTO’s Patent Public Advisory Committee, this type of outreach provides a valuable two-way conduit for constructive flow of information to and from the board. In addition to these various outreach efforts, stakeholders are encouraged to provide feedback to the board, on any topic related to trial proceedings, by e-mail or telephone.\nBoard officials we interviewed told us that they review information obtained from stakeholders during roundtable meetings and other outreach events and implement changes to policies and procedures where applicable. The officials told us that stakeholder feedback has been used to inform updates to the board’s trial rules guidance, to modify rules of practice, and in updating Standard Operating Procedures. In addition, board officials told us that in response to stakeholder concerns, they conducted two extensive studies covering motions to amend and the filing of multiple petitions against a single patent. Furthermore, board officials told us that they have held training sessions for judges regarding specific areas of interest to stakeholders. Lastly, board officials also told us that the board’s website, including the frequently-asked-questions pages, is updated with information relevant to stakeholders, including stakeholder concerns. For example, written stakeholder comments submitted in response to a proposed rulemaking are posted on the USPTO website for public viewing.", "Stakeholders we interviewed generally agreed that the CBM program has reduced litigation, and many said there is value in maintaining some aspects of the program. Stakeholders generally agreed that the CBM program has contributed to a decrease in litigation involving business methods patents and that the program has had positive effects on innovation and investment. Most stakeholders also said there is value in maintaining, among other things, the ability to challenge patents on all four statutory grounds before the Patent Trial and Appeal Board.", "Stakeholders we interviewed generally agreed the CBM program has reduced litigation involving business method patents because the CBM program allows these patents to be more easily challenged than in district courts. Stakeholders told us that fewer business method patent lawsuits are filed and that existing lawsuits are often dropped after patents have been through the CBM program. However, stakeholders also noted that the Supreme Court’s 2014 decision in Alice may have also reduced the number of business method patent lawsuits. Patents that would be found invalid under Alice are often very similar to the patents that are eligible for challenge under the CBM program, and in some cases, according to stakeholders, it is cheaper and more efficient to challenge a patent’s validity in district court using Alice than it is to use the CBM program.\nStakeholders described the following additional effects of the CBM program:\nBusiness method patent assertion is riskier. The CBM program makes it riskier to assert business method patents because, compared with district court, the program offers a cheaper and more efficient way for alleged infringers to challenge a patent’s validity. District court litigation can take several years and cost several million dollars, while CBM trials are limited to 18 months and generally cost much less. In addition, technically trained board judges have greater expertise in patent law than an average district court judge and jury, and are often better able to understand complex patentability issues. Because of this, some alleged infringers are more willing to present complex arguments—such as questions about whether the patent meets standards for clarity—to the board than to a jury. As a result, the CBM program has deterred owners of financial business method patents from asserting their patents for fear those patents will be ruled unpatentable. According to stakeholders, the existence of CBM challenges has put downward pressure on settlement amounts. Patent owners may want to avoid the risk of their patent being invalidated and will demand lower settlement amounts to avoid the risk of CBM and district court proceedings. Petitioners, too, told us they use this knowledge to negotiate lower settlement fees. In addition, because challenges under the CBM program may suspend the parallel district court proceedings, it is more difficult for patent owners to expect quick settlements from alleged infringers looking to avoid the rapidly increasing court costs associated with lengthy trials. The parties can still reach settlements after the alleged infringer files a challenge under the CBM program, but the patent owners have less leverage in negotiations. On the other hand, for patent owners willing to go through a CBM challenge, their patents will emerge stronger having survived the additional review according to stakeholders we interviewed.\nBusiness method patent owners have adjusted assertion strategies to avoid the CBM program. Patent owners are focused on asserting business method patents that are higher quality and less vulnerable to challenge under the CBM program or based on the Supreme Court’s decision in Alice; in other words, those patents that describe a technological invention that is not abstract and implemented on a generic computer. In addition, a few stakeholders told us that they have abandoned some claims in certain patents to avoid the possibility of their patents being challenged under the CBM program. Stakeholders also told us that patent owners seem to be asserting more patents, and more claims, than before the CBM program was implemented, as a strategy either to ratchet up defense costs for accused infringers and secure a settlement or to at least have success with some of the infringement charges. In addition, some stakeholders said that because the board charges fees for each petition challenging a patent, asserting more patents is a strategy to increase expected costs of defending against infringement and, thus, to increase the likelihood of a settlement. However, our analysis of RPX litigation data from 2007 to 2017 did not support these assertions. Patent litigation data did not show an increase in the monthly average number of patents asserted per case among cases involving one or more business method patents.\nThe CBM program has decreased the value of business method patents. The CBM program has decreased the value of business method patents generally, even beyond those focused on financial services. Several stakeholders told us that the board’s broad initial interpretation of the CBM program’s eligibility requirements contributed to an increased risk to a wider swath of business method and software patents than was intended by Congress. Stakeholders told us that any patent tangentially related to financial business methods has been devalued because it could potentially be challenged under the CBM program. In addition, stakeholders said they believed that the threat of such challenges has decreased the value of all business method patents, including those that might ultimately survive a CBM challenge. Some stakeholders pointed to a decrease in licensing of business method patents and others suggested that patents have lost value on the secondary patent market. Available data that we reviewed, though limited, support the claims that patent values on the secondary market have fallen. A few stakeholders, however, told us that to the extent these patents have lost value, the devaluation is related to problems with patent quality.", "Stakeholders generally agreed the effects of the CBM program on innovation and investment have been minimal or mostly positive. More specifically, stakeholders told us that the CBM program is good for overall innovation and investment in financial technologies in that the program eliminates overly broad (non-specific), low-quality patents. Stakeholders told us they believe the existence and assertion of overly broad patents is bad for innovation, in part because defending against alleged infringement is expensive and time-consuming, even under the CBM program. Assertion of overly broad, unclear, or otherwise low-quality patents acts much like a tax on investment, according to stakeholders. Stakeholders also told us that removing such patents from the marketplace promotes innovation because it prevents these patents from blocking new innovation. According to stakeholders, innovation is represented by the quality of the patents issued rather than the quantity. A large number of patents in a technology space, according to stakeholders, can make it difficult to innovate within that crowded space.\nA few stakeholders had differing views, stating that the CBM program has affected some companies’ ability to protect a business model with a business method patent, although one stakeholder acknowledged that the Supreme Court’s decision in Alice has also had an effect. These types of comments were generally from stakeholders with company-specific interests, including individual patent owners and companies that have had patents invalidated under the CBM program. Other stakeholders, however, including those in the financial services industry, told us that innovation in their field is robust. For example, these companies are developing mobile-payment and blockchain technologies, and the companies have not seen any negative effects from the CBM program on their ability to innovate, patent, and invest in these financial services technologies.\nStakeholders generally agreed that the CBM program and the other post- grant programs have had a positive effect on patent quality, as patent applicants are more and more aware of what it takes to ensure a patent will survive a post-grant challenge. Several stakeholders highlighted extra steps they have taken before and during the patent application and examination stages to ensure their patents will stand up to any eventual challenges. For example, one patent owner told us how his company proactively worked to get its patent examined by a foreign patent office, in an effort to understand any quality issues with the patent, before submitting a patent application to USPTO. Another stakeholder told us about an extended back-and-forth with the USPTO examiner. This stakeholder told us that the additional effort taken during the examination process resulted in a patent that is much clearer and that will be more likely to stand up to additional scrutiny.", "Most stakeholders told us there was value in maintaining aspects of the CBM program, including the ability to challenge patents on all four statutory grounds at the Patent Trial and Appeal Board, and many told us that it would be useful to expand this capability to a broader set of patents beyond business methods. However, there was no strong consensus among stakeholders for how the AIA trials should be designed in the future.\nStakeholders generally agreed that the ability to challenge a patent’s validity on subject matter eligibility grounds remains important, although there was not broad agreement among stakeholders regarding how far that ability should extend beyond business method patents.\nStakeholders we interviewed pointed to inconsistencies in how federal courts interpret subject matter eligibility requirements and said that challenges on subject matter eligibility grounds should remain an option at the Patent Trial and Appeal Board because of the board’s expertise over the courts. Some stakeholders said subject matter eligibility challenges were important for a wider scope of patents than just business methods because concerns about subject matter eligibility that apply to business method patents extend to software-related patents in general. In addition, a few stakeholders suggested that subject matter eligibility challenges should be available for patents in all areas of technology. The continued prevalence of challenges in district courts based on the Supreme Court’s decision in Alice, for business method patents and for a wider array of patents, highlights the importance of retaining the ability to challenge patent validity at the board on subject matter eligibility grounds.\nSimilarly, stakeholders told us that patent clarity problems exist beyond business method patents. Stakeholders said that the federal courts and jurors do not necessarily have the expertise to interpret patent clarity requirements and that the technically trained Patent Trial and Appeal Board judges were better suited to make patentability determinations, including on clarity grounds. One stakeholder, for example, told us that petitioners can delve much deeper into the invalidity argument on patent clarity grounds at a CBM trials than they can as defendants in district court, mostly because the board judges have the requisite technical expertise. In addition, many stakeholders told us that challenging patents on clarity grounds was also important for a much broader array of patents than business method patents, and some suggested that these challenges should remain an option for all patents challenged at the board. In June 2016, we reported that more than 40 percent of patent examiners experience pressure to avoid rejecting a patent application because of problems with clarity and we recommended additional steps USPTO could take to improve patent clarity. This suggests there are a potentially large number of patents, beyond and including business method patents, that could benefit from a second look by the board on these grounds, and inter partes review does not allow patents to be challenged on clarity grounds.\nStakeholders discussed several other topics related to the future of the CBM program:\nPost-grant review is not an effective substitute for the CBM program for challenging patents on subject matter eligibility and patent clarity grounds. Stakeholders told us that the 9-month window, after a patent is issued, to file challenges using post-grant review is too short to make it an effective substitute for the CBM program. Post-grant review was established as a permanent mechanism at the board for challenging all patents on all statutory grounds. However, only 78 petitions have been filed for post-grant review through September 30, 2017. According to stakeholders, few companies have the resources to continuously monitor patent issuance in real time. In addition, even if companies do discover patents that are relevant to their business, companies, in general, are not willing or able to spend resources challenging patents that may never be used as the basis for an infringement lawsuit. As a result, the public essentially does not have the ability to challenge most patents on subject matter eligibility and clarity grounds, according to stakeholders.\nCBM challenges should not be limited to a specific technology.\nAlthough the CBM program was designed to address a problem caused by a narrow set of patents, some stakeholders told us they are troubled by CBM’s focus on patents for financial services and products. Stakeholders said that singling out such services and products is unfair and that the need to determine eligibility for review created uncertainty for patent owners. In addition, some stakeholders told us that the singling out of a particular subset of patents may raise questions about compliance with an international treaty.\nConcerns remain about business method and software-related patents. Some stakeholders told us the patents that the CBM program was designed to address have largely been addressed by improved examination at USPTO, reducing the need for the program. In addition, some stakeholders told us that the CBM program, which was designed to be temporary, had largely succeeded in addressing the problems with business method patents. However, other stakeholders told us that patents of questionable validity, including business method and software patents, continue to be issued by the patent office. Given these continuing concerns over software-related patents, several stakeholders suggested that one viable option for the future of the CBM program is to expand its eligibility beyond financial services patents to cover all software-related patents. In addition, in contrast to the inter partes review program, the CBM program allows any form of prior art to be used to challenge a patent on novelty or obviousness grounds. This broader allowance for prior art is important because many software and business method patents were preceded by prior art not found in existing patents or printed publications.", "In 2016, we reported on a number of patent quality challenges at USPTO and made several recommendations to help improve the quality and clarity of issued patents. In that report, we estimated that almost 70 percent of patent examiners did not have enough time to complete a thorough examination of patent applications given a typical examiner’s workload. Given these time constraints and other patent quality challenges, the Patent Trial and Appeal Board has provided a means to challenge low-quality patents after they have been issued. Stakeholders generally agreed that the CBM program has reduced lawsuits in the federal courts involving business method patents, and many stakeholders were in favor of maintaining aspects of the program.\nThe board has a track record of issuing timely decisions that have largely been upheld by the U.S. Court of Appeals for the Federal Circuit. However, the board does not have guidance, such as documented procedures, for reviewing trial decisions and the processes that led to the decisions. Without developing guidance, such as documented procedures, that outlines the steps USPTO will take to review the Patent Trial and Appeal Board’s decisions and the processes that lead to decisions, USPTO cannot fully ensure that it is meeting the objective of ensuring consistency of its decisions.", "We are making the following recommendation to USPTO:\nThe Director of USPTO should develop guidance, such as documented procedures, for judges reviewing the Patent Trial and Appeal Board’s decisions and the processes that lead to the decisions. (Recommendation 1)", "We provided a draft of this report to the Department of Commerce for review and comment. In its comments, reproduced in appendix II, the department agreed with the recommendation and stated that it has begun taking steps to address it, including drafting a formal, written charter that documents procedures for reviewing board decisions. The department further stated that it intends to address the recommendation within one year. In addition, it 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 8 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of Commerce, 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 neumannj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III.", "Our objectives were to (1) describe the extent to which the Patent Trial and Appeal Board’s Transitional Program For Covered Business Method Patents (CBM program) has been used to challenge patents, and the results of those challenges; (2) examine the extent to which USPTO ensures timeliness of trial decisions, reviews decisions for consistency, and engages with stakeholders to improve its administrative proceedings for the program; and (3) discuss stakeholder views on the effects of the CBM program and whether it should be extended past its scheduled September 2020 sunset date.\nTo describe the extent to which the CBM program has been used to challenge patents, and the results of those challenges, we obtained data on board proceedings from two companies—RPX Corporation and Unified Patents—that included information on all of the board’s proceedings from September 2012 through September 2017. RPX and Unified Patents collect, compile, and analyze data from the U.S. Patent and Trademark Office’s publicly available data system. Both companies manually review these data to verify variables and to manually code additional information from other publicly available board documents. We conducted data quality testing, interviewed relevant officials, and reviewed relevant documentation for the data. We found these data to be sufficiently reliable for the purposes of our reporting objectives.\nFor petitions filed at the board, data from RPX and Unified Patents include information on the patent in dispute, including its U.S. patent number, petition-filing dates, and trial institution and final written decision dates. RPX data include the patent claims challenged and the statutory grounds on which they were challenged. In addition, RPX data includes which patent claims were instituted for trial on which statutory grounds, and which patent claims were ruled unpatentable on which statutory grounds. RPX and Unified Patents provided the names of the petitioners and patent owners, as well as whether the patent owner is an operating company or one of several classifications of non-practicing entities. RPX also provided the names of the parties’ attorneys. We categorized which program each petition was filed under (CBM, inter partes review, or post- grant review) to enable comparisons across programs.\nWe used the data from Unified Patents on Patent Trial and Appeal Board proceedings to supplement the RPX data for outcomes of each petition. Specifically, we compared the Unified Patents’ outcome variable—which describes the final outcome of the proceeding—and the RPX outcome variable to create a new variable that reflects the full available information about each petition’s outcome. There were some—fewer than 3 percent of cases—where the two variable values were inconsistent with one another. In these cases, we reviewed trial documentation to determine the correct value for the outcome variable. The Unified Patents outcome variable sometimes had more information than the RPX variable. For example, cases that were terminated because of settlement were identified as settlements in the Unified Patents data, but not in the RPX data. We retained the additional detail for our analysis.\nTo determine trial outcomes at the patent level, we analyzed the petition in which the patent proceeded the furthest in the CBM process. For example, if a patent was challenged under the CBM program multiple times—for example, three times—and two petitions were not instituted to the trial phase and one was instituted and then settled before the board judges issued a final written decision, we used the petition that proceeded the furthest for our patent-level analysis of outcomes. In this way, we were able to report what happened to patents under the CBM program, while not double-counting those patents that were challenged more than once.\nTo examine the extent to which USPTO ensures trial timeliness, reviews past decisions for consistency, and engages with stakeholders to improve its administrative proceedings for the program, we reviewed the America Invents Act (AIA); USPTO’s strategic plan; the Patent Trial and Appeal Board’s policy and guidance documents, including the Trial Practice Guide; and we interviewed board officials on several occasions. We compared USPTO’s efforts to review decisions for consistency against USPTO’s current strategic plan as well as Standards for Internal Control in the Federal Government (commonly referred to as the “Green Book”). In addition, we reviewed publicly available information documenting the steps the board takes to engage with stakeholders, including documentation of webinars, judicial conferences, and roundtable discussions.\nTo obtain stakeholder views on the effects of the CBM program and whether it should be extended, we conducted semi-structured interviews with 38 stakeholders knowledgeable about the CBM program. To identify these stakeholders, we first identified the following sets of stakeholder groups: petitioners and patent owners who have been involved with CBM trials; attorneys who have represented clients with board proceedings; industry trade groups; academic and legal commentators; public interest groups; and venture capitalists. We identified petitioners, patent owners, and attorneys who had been involved in board proceedings using data from RPX Corporation and Unified Patents. We ranked petitioners, patent owners, and attorneys based on how many CBM cases they had been involved with, and how many inter partes review cases they had been involved with in front of the board. We then requested, via email, interviews with several stakeholders from each stakeholder group, and began our semi-structured interviews as stakeholders accepted our invitation. During our initial set of semi-structured interviews, we identified additional stakeholders through an iterative process known as a “snowball selection method,” whereby during each interview we solicited names of additional stakeholders it would be useful to interview. As we obtained the names of additional stakeholders, we requested additional interviews, conducted interviews, and solicited additional stakeholders, until we (a) had interviewed four or more stakeholders from each identified stakeholder group and (b) found that stakeholder responses were, in general, commonly describing the same broad themes and relevant points that previous stakeholders had described about the topics we were discussing. In total, the stakeholders we recruited and interviewed did not form a random, statistically representative sample of all relevant stakeholders. As such, we cannot generalize the results of the interviews. However, these stakeholder groups and the stakeholders we interviewed provide a broad spectrum of informed opinions on the CBM program.\nOf the 38 stakeholders interviewed, 14 had previously petitioned CBM against more than one patent owner, and many of those had also petitioned an inter partes review. In addition, we interviewed 6 patent owners that had been involved in multiple CBM trials. We also interviewed attorneys from 5 law firms that have represented multiple petitioners and patents owners in CBM cases. In addition, we interviewed officials from 4 trade groups, 4 venture capital firms, and 5 academics and legal commentators, all of whom had interest and expertise in the CBM program.\nDuring our semi-structured interviews, we asked stakeholders the following three broad questions:\nHow much and in what way has the existence of the CBM program affected patent assertion strategies since 2012?\nHow much has the CBM program influenced investment decisions and innovation for technologies related to financial-services business methods?\nShould the CBM program be allowed to expire in September 2020 or should it be renewed?\nFor each question, we used a consistent set of follow-up prompts to ensure that we fully covered all aspects of each topic with the stakeholders, that we received complete answers, and that we were able to accurately record the responses. While we asked every stakeholder each of the three questions, we did so keeping in mind the particular background and experience of each stakeholder because experience and expertise differed across our wide range of stakeholders. As such, during each interview, we focused on the topics where the stakeholder had the most experience, expertise, or knowledge.\nTo systematically analyze the information we collected during our semi- structured interviews, we used qualitative analysis software to group the responses into categories and themes. All information was individually coded by two analysts. We classified individual responses according to these broad themes, which generally corresponded to our main questions:\nThe effect of the CBM program on patent assertion and litigation.\nThe effect of the CBM program on innovation and investment in business methods.\nThe future of the CBM program.\nWithin each broad theme, we labeled and organized sub-themes. We established the sub-themes by identifying natural clusters of stakeholder responses.\nWe analyzed the categorized themes and sub-themes to draw inferences about the effectiveness of the CBM program by taking the following steps: We first examined the amount and nature of agreement and disagreement between responses within each theme and sub-theme. We then assessed the strength of the arguments supporting each categorized response, and considered factors including the number of stakeholders who discussed a topic, including the strength of the rationale for each viewpoint and other supporting evidence provided. We also considered the way in which stakeholders’ interests could influence their perspectives.\nIn this report, we present the themes with the strongest and most consistent support based on rationale including the prevalence of each argument, the presence of credible evidence in support of statements, and the amount of consistency and corroboration of themes across stakeholders. Because stakeholders do not make up a defined population that we could sample from, and because the stakeholders we interviewed had a wide range of experience and expertise, we did not tally up similar responses and do not present stakeholder responses based solely on how many stakeholders agreed or disagreed with a given statement.\nWe conducted this performance audit from November 2016 to March 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient and 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, the following individuals made contributions to this report: Rob Marek (Assistant Director), Kevin Bray, Mark Braza, Richard Burkard, Stephanie Gaines, Michael Krafve, Cynthia Norris, Ardith Spence, Sara Sullivan, and Sarah Williamson.", "Intellectual Property: Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity. GAO-16-490. Washington, D.C.: June 30, 2016.\nIntellectual Property: Patent Office Should Strengthen Search Capabilities and Better Monitor Examiners’ Work. GAO-16-479. Washington, D.C.: June 30, 2016.\nIntellectual Property: Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality. GAO-13-465. Washington, D.C.: August 22, 2013.\nU.S. Patent and Trademark Office: Performance Management Processes. GAO-10-946R. Washington, D.C.: September 24, 2010.\nIntellectual Property: Enhanced Planning by U.S. Personnel Overseas Could Strengthen Efforts. GAO-09-863. Washington, D.C.: September 30, 2009.\nCheck 21 Act: Most Consumers Have Accepted and Banks Are Progressing Toward Full Adoption of Check Truncation. GAO-09-8. Washington, D.C.: October 28, 2008.\nU.S. Patent and Trademark Office: Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog. GAO-08-527T. Washington, D.C.: February 27, 2008.\nU.S. Patent And Trademark Office: Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog. GAO-07-1102. Washington, D.C.: September 4, 2007.\nIntellectual Property: Improvements Needed to Better Manage Patent Office Automation and Address Workforce Challenges. GAO-05-1008T. Washington, D.C.: September 8, 2005.\nIntellectual Property: Key Processes for Managing Patent Automation Strategy Need Strengthening. GAO-05-336. Washington, D.C.: June 17, 2005.\nIntellectual Property: USPTO Has Made Progress in Hiring Examiners, but Challenges to Retention Remain. GAO-05-720. Washington, D.C.: June 17, 2005." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h2_title", "", "h2_full", "", "", "h0_full", "h0_full", "", "", "", "", "", "", "h0_title h2_title", "h0_full h2_full", "", "", "h2_full h1_full", "", "", "h0_full h3_full h2_full", "", "", "", "", "" ] }

{ "question": [ "How were CBM's patents challenged from 2012 through 2017?", "What does the CBM program provide?", "What are business method patents?", "How has the rate of filing petitions changed from 2012 through 2017?", "What has USTPO done to review its decisions?", "What does USTPO lack?", "How might lack of guidance pose an issue?", "How do patents promote innovation?", "What challenges do infringement lawsuits entail?", "How does the CBM program seek to address this issue?", "What was GAO asked to examine?", "What does this report consider?", "How did GAO collect data for this report?" ], "summary": [ "From September 2012 through September 2017, entities facing patent infringement lawsuits filed 524 petitions challenging the validity of 359 patents under the U.S. Patent and Trademark Office's (USPTO) covered business method (CBM) program, resulting in decisions against about one-third of these patents.", "The CBM program provides entities facing infringement lawsuits an opportunity to challenge the validity of a business method patent by demonstrating that it did not meet requirements for patentability.", "Business method patents focus on ways of doing business in areas such as banking or e-commerce.", "The rate of filing petitions over this period has fluctuated but has generally declined since 2015, and none were filed in August or September 2017.", "USPTO has taken several steps to review its decisions and has monitored the rate at which the Court of Appeals for the Federal Circuit affirms or reverses them.", "However, USPTO does not have guidance, such as documented procedures, for reviewing trial decisions, or the processes leading to decisions, for consistency.", "Without guidance, such as documented procedures, USPTO cannot fully ensure that it is meeting its objective of ensuring consistency of decisions.", "Patents can promote innovation by giving inventors exclusive rights to their inventions, and patent owners can bring infringement lawsuits against anyone who uses, makes, sells, offers to sell, or imports a patented invention without authorization.", "As GAO previously reported, such lawsuits can take years and cost several million dollars.", "USPTO's CBM program provides a trial proceeding to challenge a patent's validity at USPTO's board for, according to stakeholders, a fraction of the time and money that would be spent in the federal courts. The CBM program began in September 2012 and is slated to sunset in September 2020.", "GAO was asked to examine the CBM program.", "This report (1) describes the extent to which the program has been used to challenge patents, and the results of those challenges; (2) examines the extent to which USPTO ensures timeliness of trial decisions, reviews decisions for consistency, and engages with stakeholders to improve proceedings for the program; and (3) discusses stakeholder views on the effects of the program and whether it should be extended past its sunset date.", "GAO analyzed CBM trial data from September 2012 through September 2017, reviewed USPTO documents, and interviewed 38 stakeholders, such as legal and academic commentators, selected for their knowledge of or direct involvement in such trials." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 1, -1, 0, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 5, 5, 5, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Complexity of RME Reprocessing", "VHA Roles and Responsibilities for RME Reprocessing", "VHA Policies for RME Reprocessing and Related Oversight", "Reports on Issues Related to RME Reprocessing", "VHA’s Oversight Does Not Provide Reasonable Assurance that VAMCs Are Following RME Policies", "VHA Does Not Have Complete Information on Adherence to RME Policies from Inspections of VAMCs", "VHA Does Not Consistently Share Information that Could Help VAMCs Follow RME Policies", "VAMCs Report Facing Challenges Related to RME Policies and Workforce Needs, but VHA Has Not Sufficiently Addressed These Challenges", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Top VHA Reusable Medical Equipment Issues among Select Veterans Affairs Medical Centers, Fiscal Year 2017", "Appendix II: Percentage of Issue Briefs Related to Reusable Medical Equipment by Category, Fiscal Years 2015-2017", "Appendix III: Comments from the Department of Veterans Affairs", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "In providing health care services to veterans, clinicians at VAMCs use RME, such as endoscopes and surgical instruments, which must be reprocessed between uses. Reprocessing covers a wide range of instruments and has become increasingly complex. VHA has developed policies that VAMCs are required to follow to help ensure that RME is reprocessed correctly. In addition, VHA policy requires that VHA and VISNs oversee VAMCs’ reprocessing of RME and that VAMCs report incidents involving improperly reprocessed RME.", "According to reports from RME professional associations, the complexity of RME reprocessing has increased as the complexity of medical instruments has increased. While at one time reprocessing surgical and dental instruments such as scalpels and retractors might have been the bulk of a SPS program’s tasks, now SPS programs are responsible for reprocessing complex instruments such as endoscopes. Reprocessing these instruments is a detailed and time-consuming process, and their increasing complexity requires a corresponding increase in the skills and time required to safely reprocess them. (See figure 1 for an example of steps that can be required for endoscope reprocessing.)", "Within VHA, the National Program Office for Sterile Processing under the VHA Deputy Under Secretary of Health for Operations and Management is responsible for developing RME reprocessing policies. It is also responsible for ensuring that VISNs and their respective VAMCs are adhering to its policies. Each of the 18 VISNs are responsible for ensuring adherence with VHA’s RME policies at the VAMCs within its region. In turn, each of the 170 VAMCs are responsible for implementing VHA’s policies related to RME. Within each VAMC, the SPS department is primarily responsible for reprocessing RME, which is used by clinicians in the operating room and other clinical service lines such as the dental and gastroenterology service. (See fig. 2.) Additionally, the SPS department collaborates with other VAMC departments such as the Environmental Management and Engineering Services on variables that affect RME reprocessing, such as the climate where RME is reprocessed.", "In March 2016 VHA issued Directive 1116(2)—a comprehensive policy outlining requirements for SPS programs and for overseeing RME reprocessing efforts.\nSPS program operation requirements. To help ensure that VAMCs are reprocessing RME correctly, VHA policy establishes various requirements for the SPS programs in VAMCs to follow, such as a requirement that SPS staff monitor sterilizers to ensure that they are functioning properly, use personal protective equipment when performing reprocessing activities, separate dirty and clean RME, and maintain environmental controls. For example, VAMCs are required to maintain certain temperature, humidity, and air flow standards in areas where RME is reprocessed and stored. Additionally, in order to ensure that RME is reprocessed in accordance with manufacturers’ guidelines, VAMCs are required to assess staff on their competence in following the related reprocessing steps.\nOversight requirements. To help ensure that VAMCs are adhering to VHA’s RME policies, VHA requires inspections, reports on incidents of improperly reprocessed RME, and corrective action plans for both non- adherent inspection results and incidents of improperly reprocessed RME.\nInspections. VISNs are required to conduct annual inspections at each VAMC within their VISN and to report their inspection results to the VHA National Program Office for Sterile Processing. The VISN inspections are a key oversight tool for regularly assessing adherence to RME policies in the SPS, gastroenterology, and dental areas within VAMCs and use a standardized inspection checklist known as the SPS Inspection Tool. According to VHA officials, VHA developed the SPS Inspection Tool and generally updates it annually. The most recent fiscal year 2017 SPS Inspection Tool contained 148 requirements. Examples of requirements include those regarding proper storage of RME and following manufacturers’ instructions when reprocessing RME. Although VAMCs are also required to conduct annual self-inspections using the SPS Inspection Tool and report the results to VHA, the VISN annual inspections are a separate and important level of oversight. Finally, according to VHA officials, while not a formal policy, VHA’s National Program Office for Sterile Processing also inspects each VAMC at least once every 3 years. VHA requires VISNs and VAMCs to conduct their own inspections even in years when VHA also conducts inspections.\nIncident Reports. VHA collects incident reports or “issue briefs” generated by VAMCs on incidents involving RME to help determine the extent to which VAMCs are adhering to RME policies, among other things. VHA requires VAMCs to report significant clinical incidents or outcomes involving RME that negatively affect groups or a cohort of veterans in an issue brief. According to a VHA official, when VAMC staff report incidents involving RME to their facility leadership, these officials should follow VHA guidance to determine which incidents, if any, should be reported in an issue brief to the VAMC’s VISN. Similarly, VISN officials, in turn, are responsible for determining whether an incident should be reported in an issue brief to VHA.\nCorrective Action Plans. Corrective action plans—which detail an approach for addressing any areas of policy non-adherence identified in inspections or incidents identified in issue briefs—are required at both the VISN and VAMC levels. Specifically, both VISNs and VAMCs are required to develop corrective action plans for any deficiencies identified through their inspections, and VAMCs are required to develop corrective action plans for incidents identified in issue briefs. According to a VHA official, VISNs and VAMCs are not required to send corrective action plans from inspections to VHA; however, VAMCs must send their correction action plans to the VISN and also any related to issue briefs to VHA. Further, according to a VHA official, although neither the VAMC nor VISN corrective action plans from inspections are monitored by VHA, VHA does expect VISN officials to inform it of any critical issues that VISNs believe warrant VHA attention. For example, VHA officials would expect VISNs to report instances when RME issues result in the cancellation of procedures for multiple patients or when the VISN discovers a VAMC is lacking documentation of RME reprocessing competency assessments for a large number of their SPS staff.", "A number of recent reports have identified several RME-related issues at VAMCs, including non-adherence to RME policies. The issues have ranged from improperly reprocessed RME being used on patients to the cancellation of medical procedures due to lack of available RME. For example: In March 2018, the VA Office of Inspector General released a report describing problems identified at the Washington, D.C. VAMC, some of which were RME-related. For example, the office determined that ineffective sterile processing contributed to procedure delays due to unavailable RME. The report included specific recommendations, such as ensuring there are clearly defined and effective procedures for replacing missing or broken instruments and implementing a quality assurance program to verify the cleanliness, functionality, and completeness of instrument sets before they are used in clinical areas. The VAMC Director agreed with those recommendations.\nIn fiscal year 2017, the VA Office of Inspector General reviewed 29 VAMCs and issued reports for each in response to several RME- related complaints received through its reporting hotline. The office identified issues such as staff failure to perform quality control testing on endoscopes or document their competency assessments of SPS staff in employee files. Many of the reports included specific recommendations, such as performing quality control testing on all endoscopes and ensuring SPS staff are assessed for competency at orientation and annually for the types of RME they reprocess. The VAMC Directors agreed with those recommendations.\nIn 2016, the VA Office of the Medical Inspector released a report that substantiated allegations that SPS practices led to the delivery of RME with bioburden, debris, or both to the operating room. The report included specific recommendations, such as reeducating SPS staff on proper SPS standards and ensuring that all training and assessments of RME reprocessing competency of SPS staff are completed as required. The VAMC Director agreed with those recommendations.\nIn 2011, we released a report on VA RME that found issues with RME reprocessing. We found, for example, that VHA did not provide specific guidance on the types of RME that require device-specific training and that the guidance VHA did provide on RME reprocessing training was conflicting. We issued several recommendations for improvement, which VA has implemented.", "", "VHA has not ensured that it has complete information from the annual inspections VISNs conduct—a key oversight tool providing the most current VA-wide information on adherence to RME policies—and therefore does not have reasonable assurance that VAMCs are following RME policies intended to ensure veterans are receiving safe care.\nFor fiscal year 2017, we determined that VHA should have had records of 144 VISN SPS inspection reports to have assurance that all required VISN SPS inspections had been conducted. However, our review shows that as of February 2018, VHA had 105 VISN SPS inspection reports and was missing 39, or more than one quarter of the required inspection reports. We also determined that there were two VISNs from which VHA did not have any fiscal year 2017 reports. For the missing SPS inspection reports, VISN officials suggested several reasons why the inspections were either not conducted or conducted but the reports were not submitted to VHA. For example, officials from one of the VISNs from which VHA had no SPS inspection reports told us that VISN management staffing vacancies prevented it from conducting all of its inspections. An official from the other VISN from which VHA had no SPS inspection reports provided evidence that it had conducted all but one of the inspections, but the official told us the VISN did not submit reports because it has yet to receive information from VHA regarding VISN inspection outcomes, common findings, or best practices and therefore sees no value in submitting them.\nVISNs provided us with evidence showing that they conducted 27 of 39 inspections that were missing from VHA’s data. We analyzed these 27 reports to identify the information about non-adherence to RME policy requirements that VHA does not have from these missing VISN inspections. We determined the 10 requirements for which these VAMCs had the most non-adherence were related to quality, training, and environmental issues, among other things, with the extent of non- adherence ranging from 19 to 38 percent. For example, there were 19 and 26 percent non-adherence rates to the requirements that instrument and equipment levels be sufficient to meet workloads and having a process in place to ensure staff receive make-up/repeat training, respectively. (See Appendix I.)\nWe also found that variation in SPS Inspection Tools and related guidance from VHA resulted in incomplete inspection results for the gastroenterology and dental areas. VHA provided VISNs with three different SPS Inspection Tools throughout the course of fiscal year 2017. Although VHA guidance stated otherwise, only the third SPS Inspection Tool—which was used during the second half of the fiscal year—contained requirements specific to the gastroenterology and dental areas.\nA VHA Central Office official told us the office hadn’t been aware that it did not have all of the VISN inspection reports until it took steps to respond to our data request. The official told us VHA granted VISNs a 3- month extension for fiscal year 2017—meaning that VISNs had until the end of December 2017 to submit their inspection results—and had granted similar extensions for at least the past 4 fiscal years as well. For all of those years, the VHA official told us that the office didn’t have all VISN inspection reports, even after granting extensions. As a result, VHA did not have assurance that all of the inspections had been conducted. When asked why VHA hadn’t been aware that it didn’t have all VISN SPS inspection reports, a VHA official said that the office has largely relied on the VISNs to ensure complete inspection result reporting because it hasn’t had the resources to dedicate to monitoring inspections. The official told us that VHA has asked for and just recently received approval to hire a data analyst who could potentially be responsible for monitoring the VISN inspection reports. VHA’s lack of complete information from inspection results is inconsistent with standards for internal control in the federal government regarding monitoring and information that state management should establish and operate monitoring activities and use quality information to achieve the entity’s objectives. Without such controls, VHA lacks reasonable assurance that VAMCs are following RME policies designed to ensure that veterans are receiving safe care.", "We also found that VHA does not consistently share information, particularly inspection results, with VISNs and VAMCs, and that VISNs and VAMCs would like more of this information. Specifically, about two- thirds of VISN and VAMC officials told us that sharing information on the common issues identified in the inspections of other VAMCs as well as potential solutions developed to address these issues would allow VAMCs to be proactive in strengthening their adherence to RME policies and ensuring patient safety. For example, a VAMC official told us that there were problems with equipment designed to sterilize heat- and moisture sensitive devices, and seeing how other VAMCs addressed the problem was helpful for their VAMC. Further, officials from some VISNs said VHA cited their VAMCs for issues that had been found at other facilities and, had the VAMCs been aware of the issue beforehand, they could have corrected or improved their processes earlier.\nWhen asked about sharing inspection results and other information, VHA Central Office officials told us the office doesn’t analyze or share information from VISN inspections because of a lack of resources. A VHA official told us that the office does create an internal report of common issues identified through the third of VAMCs it inspects each year, but the office doesn’t share this report with VISNs and VAMCs because the office lacks the resources needed to prepare reports that are detailed enough to be understood correctly by recipients. According to this official, VHA has occasionally shared information it has identified on common inspection issues through newsletters, national calls, and trainings; however, VHA officials at close to half of the VISNs and VAMCs we spoke to said that they rarely or never get this information. For example, officials from one VISN told us they recall only one or two instances where VHA sent a summary of the top five RME-related issues found during inspections. Insufficient sharing of information is inconsistent with standards for internal control in the federal government regarding communication, which state that management should internally communicate the necessary quality information to achieve the entity’s objectives. Until this sharing becomes a regular practice, VHA is missing an opportunity to help ensure adherence to its RME policies, which are intended to ensure that veterans receive safe care.", "According to interviews with officials from all of the VISNs and selected VAMCs, the top five challenges VAMCs face in operating their SPS programs are related to meeting certain RME policies and challenges addressing SPS workforce needs. In particular, officials told us that VAMCs have challenges (1) meeting two RME policy requirements related to climate control monitoring and a reprocessing transportation deadline, and (2) addressing SPS workforce needs related to lengthy hiring timeframes, the need for consistent overtime, and limited pay and professional growth. (See Table 1.)\nRegarding the challenges VAMCs face in meeting RME policy requirements, the majority of VISN and selected VAMC officials interviewed reported experiencing challenges adhering to two requirements from 2016 VHA issued Directive 1116(2).\nClimate control monitoring requirement. Officials reported that meeting the climate control monitoring requirement related to airflow and humidity is challenging for their VAMCs. Under the requirement VAMCs must monitor the humidity and airflow in facility areas where RME is reprocessed and stored in order to ensure that humidity levels do not exceed a certain threshold and thereby allow the growth of microorganisms. According to almost all VISN officials, meeting the requirement is a challenge for some, if not all, of their VAMCs and in particular for older VAMCs that lack proper ventilation systems. We also found some instances of non-adherence on this issue in the group of VISN inspection reports we reviewed. In a September 2017 memorandum, VHA relaxed the requirement (e.g., adjusted the thresholds). Additionally, according to a VHA official, VHA wants to renovate all outdated VAMC heating, ventilation, and air conditioning systems to help VAMCs meet the requirement. Further, according to VHA officials, VHA also allows VAMCs to apply for a waiver exempting them from having to meet this requirement if they have an action plan in place that shows they are working toward meeting the requirement.\nReprocessing transportation deadline requirement. Officials reported that meeting the reprocessing transportation deadline was also challenging for their VAMCs. Under the requirement, used RME must be transported to the location where it will be reprocessed within 4 hours of use to prevent bioburden or debris from drying on the instrument and causing challenges with reprocessing. Officials reported this requirement as particularly challenging for VAMCs that must transport their RME to another facility for cleaning, such as community based outpatient clinics in rural areas that must transport their RME to their VAMC’s SPS department. We also found some instances of non-adherence on this issue in the group of VISN inspection reports we reviewed. In June 2016, VHA issued a memorandum allowing the use of a pre-cleaning spray solution that, if used, allows offsite facilities such as community based outpatient clinics to transport that RME within 12 hours instead of the required 4 hours.\nVHA has made some adjustments to these requirements, although some officials told us the requirements remain difficult to meet. Specifically, over half of the VISN officials reported that the climate control monitoring requirement continues to be a challenge for their VAMCs. Further, some of the officials told us that meeting the 12-hour reprocessing transportation requirement using the pre-cleaning spray was still challenging, due to the distance between clinics and their VAMC’s SPS department; as a result, some facilities have decided to use disposable medical equipment that does not require reprocessing to avoid this requirement completely. When we shared this information with a VHA official, the official stated that providing general information on how all facilities can meet the climate control monitoring requirement is impossible due to the uniqueness of each facility and that VHA has no further plans to adjust the reprocessing transportation deadline requirement. However, these challenges remain and some officials have expressed frustration with the limited support they’ve received from VHA. In September 2017 we recommended that VHA establish a mechanism by which program offices systematically obtain feedback from VISNs and VAMCs on national policy after implementation and take the appropriate actions. Our findings provide further evidence of the need for VA to address this recommendation.\nRegarding the challenges VAMCs face in meeting SPS workforce needs, almost all of the 18 VISN officials and officials from the three selected VAMCs reported experiencing challenges related to lengthy hiring timeframes, need for consistent overtime, and limited pay and professional growth. According to officials, these challenges result in SPS programs having difficulty maintaining sufficient staffing levels.\nLengthy hiring timeframes. Officials reported that the lengthy hiring process for SPS staff creates challenges in maintaining sufficient SPS workforce. For example, officials from one VISN estimated that on average it can take 3 to 4 months for a person to be hired. Officials from a few other VISNs noted that not only does the lengthy hiring process create challenges in recruiting qualified candidates (because they accept other positions where they can be more quickly employed), but that it also results in long periods of time when SPS programs are short-staffed.\nNeed for overtime. Officials reported that needing their SPS staff to work overtime is a challenge. Specifically, 16 of the 18 VISN officials stated that there is a need for staff at their VAMCs to work overtime either “all, most, or some of the time.” Further, officials from one VISN told us their VAMCs have used overtime to meet the increased workload required to implement VHA’s RME policies; one official noted that the overtime has led to dissatisfaction and retention issues among SPS staff.\nLimited pay and professional growth. Officials identified limited pay and professional growth associated with the current pay grade as the biggest SPS workforce challenge. Almost all officials stated that the current pay grade limits the pay and potential for professional growth for the two main SPS positions—medical supply technicians, who are responsible for reprocessing RME, and SPS Chiefs, who have supervisory responsibility. Specifically, the relatively low maximum allowable pay discourages staff from accepting or staying in positions and the current pay grade does not create a career path for SPS medical supply technicians to grow within the SPS department. Officials from one VISN told us that all VAMCs in their VISN have lost SPS staff due to the low pay grade for both positions. VHA officials said a proposed increase in the pay grade for SPS staff has been drafted; however, they do not know when or if it will be made effective.\nFurther, according to officials with knowledge of the proposed changes, the changes could still be insufficient to recruit and retain SPS staff with the necessary skills and experience.\nSome VISN and VAMC officials told us that difficulties maintaining sufficient SPS staff levels have in some instances adversely affected patients’ access to care and increased the potential for reprocessing errors that could affect patient safety. According to these officials, staffing challenges can affect access to care when facilities have to limit or delay care—such as surgeries—because there aren’t enough staff available to process all the necessary RME. An official at one VAMC told us that their SPS staff must review available RME daily to determine whether scheduled surgeries or other procedures can proceed. Further, among the 18 operating room nurse managers who responded to our inquiries, 15 indicated they have experienced operating room delays because of RME issues. In addition, some VISN and VAMC officials told us staffing challenges can potentially have an impact on patient safety, because when SPS staffing is not sufficient, mistakes are more likely to occur. For example, officials told us that if SPS staffing levels are low, particularly if they are low for an extended period of time, there is an increased chance RME will be improperly reprocessed and, if used on a patient, put that patient’s safety at risk. A 2018 VA Office of Inspector General report on the Washington D.C. VAMC found that consistent SPS understaffing was a factor in SPS staff not being available to meet providers’ need for reprocessed RME; according to the report, “veterans were put at risk because important supplies and instruments were not consistently available in patient care areas.”\nWhile VHA is aware of these workforce challenges cited by VISN and VAMC officials, it has not studied SPS staffing at VAMCs. As a result, it does not know whether or to what extent the workforce challenges VISNs and VAMCs report adversely affect VAMCs’ ability to effectively operate their SPS programs and ensure safe care for veterans. A National Program Office of Sterile Processing official indicated that while the office might have access to some of the necessary data from VAMC SPS departments, it does not have all the necessary data or staff needed to assess SPS staffing levels. Furthermore, the official added, conducting such a study would not be the responsibility of her office. Officials from the Workforce Management and Consulting Office said VHA is considering a study of SPS staffing, given the results of the VA Office of Inspector General 2018 review that identified high vacancy rates as a contributing factor to the challenges with the SPS program at the Washington D.C. VAMC. However, VHA does not have definitive plans to complete this type of study or a timeframe for when the decision will be made. Until the study is conducted and actions are taken based on the study, as appropriate, VHA will not have addressed a potential risk to its SPS programs. This is inconsistent with standards for internal control in the federal government for risk assessment, which state that management should identify, analyze, and respond to risks related to achieving defined objectives. Without examining SPS workforce needs, and taking action based on this assessment, as appropriate, VHA lacks reasonable assurance that its approach to SPS staffing helps ensure veterans’ access to care and safety.", "The proper reprocessing of surgical instruments and other RME used in medical procedures is critical for ensuring veterans’ access to safe care. We have previously found that VA had not provided enough guidance to ensure SPS staff were reprocessing RME correctly; in 2016, VA issued Directive 1116(2)—with requirements for the SPS program. While this is a good step, our current review shows that VHA needs to strengthen its oversight of VAMCs’ adherence to these requirements. VHA has not ensured that it has complete information from inspections of VAMCs, nor does VHA consistently share inspection results and other information that could help VAMCs meet the requirements. Without analysis of complete information from inspections and consistent sharing of this information, VHA does not have reasonable assurance that VAMCs are following all RME policies, and VHA is missing an opportunity to strengthen VAMCs’ adherence to RME requirements.\nFurthermore, officials from some VISNs and selected VAMCs report challenges meeting two RME policy requirements—the climate control and the reprocessing transportation deadline requirements. If VHA implements a recommendation we made in 2017 for the agency to obtain feedback from VISNs and VAMCs on their efforts to implement VHA policies and take the appropriate actions, it could help with these challenges. Additionally, while nearly all of the officials from the 18 VISNs and selected VAMCs interviewed reported challenges maintaining a sufficient SPS workforce, VHA does not know whether the current SPS workforce addresses VAMCs’ SPS workforce needs. VHA officials say that VHA is considering studying its SPS workforce; however, it has not done so or announced a timeframe for doing so. Until it conducts such a study, VHA will not know whether or to what extent reported SPS workforce challenges adversely affect the ability of VAMCs to effectively operate their SPS programs and ensure access to safe care for veterans.", "We are making the following three recommendations to VHA:\nThe Under Secretary of Health should ensure all RME inspections are being conducted and reported as required and that the inspection results VHA has are complete. (Recommendation 1)\nThe Under Secretary of Health should consistently analyze and share top common RME inspection findings and possible solutions with VISNs and VAMCs. (Recommendation 2)\nThe Under Secretary of Health should examine the SPS workforce needs and take action based on this assessment, as appropriate. (Recommendation 3)", "We provided a draft of this report to VA for comment. In its written comments, which are provided in appendix III, VA concurred with our recommendations.\nIn its comments, VA acknowledged the need for complete RME inspection information, stating that VHA will establish an oversight process for reviewing and monitoring findings from site inspections and for reporting this information to VHA leadership. Further, VA noted that VHA will analyze data from RME inspections and share findings and possible solutions with VISNs and VAMCs via a written briefing that will be published on VHA’s website and discussed during educational sessions and national calls. VA also noted that VHA has an interdisciplinary work group that has identified actions it can take to address SPS workforce needs, including implementing an enhanced market-based approach for determining pay levels and developing a staffing model so VAMCs can determine what staffing levels they need to more effectively operate their SPS programs. VA expects VHA to complete all of these actions by July 2019 or earlier.\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 and the Secretary of Veterans Affairs. 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 Sharon M. Silas at (202) 512-7114 or silass@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs can be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.", "Our review of the 27 fiscal year 2017 inspections of VAMCs conducted by Veterans Integrated Service Networks (VISN) for which VHA did not have inspection reports identified a number of common reusable medical equipment (RME) issues among the select VAMCs. The top 10 are listed in table 2 below.", "Our review of the Veterans Health Administration (VHA) summary of issue briefs for fiscal years 2015 through 2017 identified three major categories of issues related to reusable medical equipment (RME). See table 3 below for the percentage of all issue briefs that fell into each of these three categories.", "", "", "", "In addition to the contact named above, Karin Wallestad (Assistant Director), Teresa Tam (Analyst-in-Charge), Kenisha Cantrell, Michael Zose, and Krister Friday made major contributions to this report. Also contributing were Kaitlin Farquharson, Diona Martyn, and Muriel Brown." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h3_full h2_full", "", "h0_full", "h2_full", "", "h0_title h3_title", "h0_full h3_full", "", "h3_full h1_full", "h3_full", "", "h3_full", "h0_full", "", "", "", "", "" ] }

{ "question": [ "What did GAO find regarding the VAMC following RME policies?", "What is reprocessing?", "Why has VHA not ensured that VAMC conducted RME inspections?", "How did VHA justify this inadequacy?", "What issues might this inadequacy cause?", "According to GAO, what challenges do VAMCs face?", "What issues do these challenges cause?", "What steps has the VHA taken to address these challenges?", "How do these challenges threaten VAMC's operations?", "What is the VHA responsible for?", "What issues might improper reprocessing of RME cause?", "How is proper reprocessing of RME ensured?", "What was GAO asked to review?", "What does this report examine?", "What data did GAO collect to examine these issues?" ], "summary": [ "GAO found that the Department of Veterans Affairs' (VA) Veterans Health Administration (VHA) does not have reasonable assurance that VA Medical Centers (VAMC) are following policies related to reprocessing reusable medical equipment (RME).", "Reprocessing involves cleaning, sterilizing, and storing surgical instruments and other RME, such as endoscopes.", "VHA has not ensured that all VAMCs' RME inspections have been conducted because it has incomplete information from the annual inspections by Veterans Integrated Service Networks (VISN), which oversee VAMCs. For fiscal year 2017, VHA did not have 39 of the 144 VISN reports from the VISNs' inspections of their VAMCs' Sterile Processing Services departments. VISNs were able to provide GAO with evidence that they had conducted 27 of the 39 missing inspections; top areas of non-adherence in these inspections were related to quality and training, among other things.", "Although VHA has ultimate oversight responsibility, a VHA official told GAO that VHA had not been aware it lacked complete inspection results because it has largely relied on the VISNs to ensure complete inspection result reporting.", "Without analyzing and sharing complete information from inspections, VHA does not have assurance that its VAMCs are following RME policies designed to ensure that veterans receive safe care.", "GAO also found that VAMCs face challenges operating their Sterile Processing Services programs—notably, addressing workforce needs. Almost all of the officials from all 18 VISNs and selected VAMCs GAO interviewed reported Sterile Processing Services workforce challenges, such as lengthy hiring timeframes and limited pay and professional growth potential.", "According to officials, these challenges result in programs having difficulty maintaining sufficient staffing.", "VHA officials told GAO that the office is considering studying Sterile Processing Services staffing at VAMCs, although VHA does not have definitive plans to do so.", "VHA's Sterile Processing Services workforce challenges pose a potential risk to VAMCs' ability to ensure access to sterilized medical equipment, and VHA's failure to address this risk is inconsistent with standards for internal control in the federal government. Until VHA examines these workforce needs, VHA won't know whether or to what extent the reported challenges adversely affect VAMCs' ability to effectively operate their Sterile Processing Services programs and ensure access to safe care for veterans.", "VHA operates one of the largest health care delivery systems in the nation, serving over 9 million enrolled veterans. In providing health care services to veterans, VAMCs use RME which must be reprocessed—that is, cleaned, disinfected, or sterilized—between uses.", "Improper reprocessing of RME can negatively affect patient care.", "To help ensure the safety of veterans, VHA policy establishes requirements VAMCs must follow when reprocessing RME and requires a number of related oversight efforts.", "GAO was asked to review VHA's reprocessing of RME.", "This report examines (1) VHA's oversight of VAMCs' adherence to RME policies and (2) challenges VAMCs face in operating their Sterile Processing Services programs, and any efforts by VHA to address these challenges.", "GAO reviewed relevant VHA documents including RME policies and VISN inspection results for fiscal year 2017. GAO interviewed officials from VHA, all 18 VISNs, and four VAMCs, selected based on geographic variation, VAMC complexity, and data on operating room delays. GAO examined VHA's oversight in the context of federal internal control standards on communication, monitoring, and information." ], "parent_pair_index": [ -1, 0, 0, 2, 2, -1, 0, 0, 0, -1, 0, 0, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "A Data Breach Can Have Harmful Results", "Attackers Use a Variety of Tools and Techniques", "Federal Agencies Oversee CRA Activities, Including Protection of Personally Identifiable Information", "FTC Has Enforcement Authority over CRAs", "BCFP Has Enforcement and Supervisory Authorities over CRAs", "GAO Has Previously Reported on Data Protection Issues", "Attackers Exploited Vulnerabilities That Equifax Subsequently Reported Taking Actions to Address", "Attackers Identified and Exploited Vulnerabilities to Steal Data", "After Becoming Aware of the Attack, Equifax Took Steps to Block the Attackers", "Equifax Identified Several Factors That the Attacker Exploited During the Breach", "Equifax Reported Taking Steps to Strengthen its Cybersecurity Controls", "Equifax Reported Taking Steps to Identify Affected Individuals", "Equifax Notified Affected Individuals and Offered Monitoring Services", "Federal Agencies Took a Variety of Actions in Response to the Equifax Breach", "Major Federal Customers of Equifax Took Steps to Ensure Their Activities Were Not Adversely Affected by the Breach", "DHS Offered Breach Response Services to Equifax", "Oversight Agencies Opened Investigations and Provided Information and General Advice to Consumers", "Agency Comments and Third-Party Views", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Social Security Administration", "Appendix III: Comments from the United States Postal Service", "Appendix IV: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "A consumer reporting agency is a person or entity that assembles or evaluates consumer credit information or other consumer information for the purpose of furnishing consumer reports to others. This includes companies that compile and store electronic files of consumer information, which they then sell to other businesses and organizations that use the information to assess or evaluate creditworthiness.\nFurnishing of information by creditors and others to CRAs is voluntary, as federal law generally does not require such reporting, and information compiled on individual consumers can vary among the CRAs. A lender uses the information provided to determine whether to offer credit to an individual, the rate of interest to be assigned to the loan, and other terms of the contract. In addition, a growing number of entities use information provided by CRAs to help make decisions about individuals’ credit worthiness when determining eligibility for insurance, housing, or employment, among other things. Information from CRAs can also be used for other purposes, such as to identify potential customers with specific characteristics for new credit card accounts.\nCRAs may provide a variety of verification services to government and private sector organizations. For example, Equifax provides income and employment verification services using information collected from employers.\nEquifax, TransUnion, and Experian—the three major CRAs—also leverage information they collect from organizations, such as financial institutions, utilities, cell phone service providers, public records, and government sources, to offer identity verification services. Other entities, including federal agencies, use identity verification when they enroll new applicants for benefits and services. In addition, the IRS uses identity verification to ensure that individuals who want to access prior year tax returns are the legitimate filers of those returns.\nWith regard to identity verification, CRAs typically use information they collect to generate questions that federal agencies and other entities can use to test applicants’ knowledge of information in their credit file. These questions and answers are typically the basis for identity proofing—the process of comparing evidence from an individual with a trusted source of data to verify that the individual is who they claim to be. The evidence generally consists of information or documentation that only the legitimate individual should know or have access to. For example, a driver’s license, passport, knowledge of recent financial transactions, and biometric information are all considered relatively strong evidence that the individual is who they say they are.", "Although there is no commonly agreed-upon definition, the term “data breach” generally refers to an unauthorized or unintentional exposure, disclosure, or loss of an organization’s sensitive information. This information can include PII, such as Social Security numbers, or financial information, such as credit card numbers.\nA data breach can occur under many circumstances and for many reasons. It can be inadvertent, such as from the loss of an electronic device, or deliberate, such as from the theft of a device. A breach can also occur as a result of a cyber-based attack by a malicious individual or group, agency insiders, foreign nation, terrorist, or other adversary. Data breaches have occurred at all types of organizations, including private, nonprofit, and federal and state entities.\nThe loss or unauthorized disclosure of information in a data breach can lead to serious consequences and can result in substantial harm to individuals, private sector organizations, and the federal government. Examples of harmful results include: loss or theft of resources, including money and intellectual property, and identity theft; inappropriate access to and disclosure, modification, or destruction of sensitive information; harm to national security; use of computer services for unauthorized purposes or to launch an attack on other computer systems; damage to networks and equipment; loss of privacy, emotional distress, or reputational harm; loss of public confidence; and high costs to remediate the effects of the breach.", "Cyber criminals seeking access to sensitive information, such as PII, typically use a variety of readily available software tools to carry out attacks. These tools can be used to intercept and capture data as they are transmitted, exploit known vulnerabilities in commercially available software, and facilitate e-mail phishing techniques for gaining unauthorized access to systems and information.\nAttackers often use similar techniques and tools, making it difficult to distinguish one attacker from another. When custom-built tools are used, an attacker may rely on unique methods or display other telltale signs that can be used for identification; such tools are usually used when a target’s defenses justify them. Off-the-shelf tools are usually enough to conduct a successful attack that allows an attacker to steal data, bring systems down, or gain further access to systems and resources.\nAttackers often begin with network-scanning programs, which are used to map the layout of a targeted network and determine the location of data repositories that may contain information of interest. Some scanners are designed to scan only a single networked computer, extracting as much data about that system as possible. Others can scan Internet addresses across the web to identify potential targets by determining whether they are using a version of software that is vulnerable to an attack.\nOnce a target has been identified, the attacker will generally attempt to gain access to the system or network without leaving any indication of who they are or from where they launched their attack. This is commonly accomplished using tools that mask the attacker’s origin by using the Internet address of another computer from another location. While an investigator can sometimes use forensic tools to trace the original Internet address, often this leads to misleading information.\nAttackers use additional tools and techniques to gain unauthorized access to systems and data on the target network and to transfer stolen data back to the attacker’s own computer system. One such technique is to leverage the access rights gained on the originally compromised system to get further access into other servers on the network. To do this, an attacker can use standard, off-the-shelf tools for navigating systems and managing information that blend in with normal network activity. For example, encryption can be used to hide the transfer of sensitive information from one server to another or out of the network entirely. This enables the attacker to continue probing for more repositories of information and stealing copies of that information without being detected by the targeted network’s system administrators.", "CRAs have been subject to federal regulation since the passage of the Fair Credit Reporting Act in 1970. Currently, FTC and BCFP are the two federal agencies with primary oversight responsibilities for CRAs. FTC was given responsibility for administratively enforcing CRAs’ compliance with the Fair Credit Reporting Act at the time of enactment. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act), BCFP was given authority to enforce a number of federal consumer financial laws, including the Fair Credit Reporting Act. BCFP also has begun exercising supervisory authority over certain larger participants in the credit reporting market.", "FTC has authority, subject to certain exceptions, to investigate any organization that maintains consumer data and to bring enforcement actions for violations of laws that concern the protection of consumer information. FTC also exercises enforcement authority over CRAs through the Gramm-Leach-Bliley Act and the related “Safeguards” and “Privacy Rules.”\nThe Fair Credit Reporting Act promotes the accuracy, fairness, and privacy of information collected or used to help make decisions about individuals’ eligibility for credit, insurance, employment, housing, or other benefits. CRAs that compile credit histories and other personal information into consumer reports must adhere to the act’s provisions for ensuring the accuracy and permissible uses of such information.\nThe Gramm-Leach-Bliley Act requires that federal financial regulators and FTC establish standards and protections to ensure the security and confidentiality of customer information. These standards and protections must be implemented by companies of all sizes that are engaged in financial activities, including Equifax and all other CRAs. Further, the act requires financial institutions to protect the security of customers’ personal information.\nAs part of its implementation of the Gramm-Leach-Bliley Act, FTC issued the “Safeguards Rule”, which requires financial institutions develop, implement, and maintain a comprehensive information security program to keep information about a customer of a financial institution secure and confidential. In addition to developing their own safeguards, companies covered by the rule are responsible for requiring their affiliates and service providers to implement and maintain safeguards to protect customer information in their care.\nIn determining whether it should take enforcement action against a company for a violation of data security provisions, FTC considers a number of factors, including whether a company’s data security measures are commensurate with the company’s size. FTC does not have supervisory authority to examine CRAs for compliance with the Federal Trade Commission Act; therefore, the agency typically must rely on its enforcement authority after an incident has occurred.\nFinally, FTC enforces Section 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” FTC officials told us that failing to properly protect consumer data can be considered an unfair or deceptive act or practice.", "In 2010, the Dodd-Frank Act gave BCFP enforcement authority over all CRAs and certain other persons for violations of most provisions of the Fair Credit Reporting Act; certain provisions of the Gramm-Leach-Bliley Act; and for unfair, deceptive, or abusive acts or practices under sections 1031 and 1036 of the Dodd-Frank Act. BCFP has taken enforcement actions against CRAs for violations of the Fair Credit Reporting Act and for deceptive practices.\nIn 2012, BCFP also extended its supervisory authority to include larger CRAs—that is, those with more than $7 million in annual receipts from consumer reporting activities. BCFP staff review certain of these larger CRAs on an ongoing basis, and BCFP staff said that their recent examinations of CRAs have focused on compliance with Fair Credit Reporting Act requirements related to accuracy and resolving consumer disputes. BCFP has also examined CRAs subject to the BCFP’s supervisory authority for compliance with other Fair Credit Reporting Act requirements, including those related to ensuring the accuracy of information in consumer reports, furnishing information only to those with a permissible purpose, and compliance with the consumer dispute process.\nBCFP also has supervisory authority over some aspects of the Gramm- Leach-Bliley Act. For example, BCFP examines larger CRAs for whether they restrict the sharing and disclosure of nonpublic personal information to third parties. BCFP does not have supervisory or enforcement authority over the “Safeguards Rule” enacted by FTC as part of the agency’s implementation of the Gramm-Leach-Bliley Act.\nFinally, BCFP has authority to examine larger CRAs for any unfair, deceptive, or abusive acts or practices and to bring enforcement actions against CRAs of all sizes for such acts or practices. According to BCFP staff, in some cases, a CRA could commit an unfair, deceptive, or abusive act or practice or violation of other applicable law in connection with its data security practices.", "We have previously made recommendations to agencies regarding the protection of PII, and proposed Matters for Congressional Consideration in areas where laws could be enhanced. For example, in our recent report on data oversight at the Centers for Medicare and Medicaid Services (CMS), we recommended that the agency ensure that all third parties that receive CMS data have clear requirements for the protection of that data, that CMS properly oversee the implementation of those requirements, and that the agency ensure identified issues are remediated. Additionally, our recent report on the oversight of students’ PII at the Department of Education included seven recommendations for better protection of student PII and for improving department policies to meet federal privacy guidelines. All of these recommendations currently remain open while the agencies take actions to address them.\nIn addition to recommendations for agencies, we have proposed two Matters for Congressional Consideration related to data protection. In 2008, we reported that the Privacy Act and E-Government Act of 2002 may not adequately ensure that consumers are notified in the event of a breach by federal agencies and that existing laws could better ensure that consumers are aware of what PII federal agencies collect and how they use it. Based on this finding, we suggested that Congress consider amending applicable laws to ensure that all PII collected by federal agencies is protected and that its use is limited to the stated purpose of the collection.\nWith regard to data collected by private entities, in 2013, we reported that existing federal laws provide consumers with only limited protection for data that is collected and used for marketing purposes. Consequently, we asked Congress to consider strengthening the current consumer privacy framework to reflect the effects of changes in technology and the marketplace while also ensuring that any limitations on data collection and sharing do not unduly inhibit the economic and other benefits to industry and consumers that data sharing can accord.", "In March 2017, unidentified individuals discovered the presence of a known vulnerability in software running on Equifax’s online dispute portal that could be used to obtain access to the system. In May of that year, attackers exploited the vulnerability and began to extract data containing PII from Equifax’s information systems. According to Equifax, the attackers used a number of techniques to disguise their exploit of the Equifax systems and the database queries they conducted. On July 29, 2017, Equifax discovered the breach and reported that it took actions to address the factors that allowed the attackers to successfully gain access to its network. Further, the company reported that it took steps to identify, notify, and provide support to individuals who were potentially impacted by the breach.", "Equifax has stated that, on March 10, 2017, unidentified individuals scanned the company’s systems to determine if the systems were susceptible to a specific vulnerability that the United States Computer Emergency Readiness Team had publicly identified just 2 days earlier. The vulnerability involved the Apache Struts Web Framework and would allow an attacker to execute commands on affected systems.\nEquifax officials stated that, as a result of this scanning, the unidentified individuals discovered a server housing Equifax’s online dispute portal that was running a version of the software that contained the vulnerability. Using software they obtained from an unknown source and that was designed to exploit the vulnerability, the unidentified individuals subsequently gained unauthorized access to the Equifax portal and confirmed that they could run commands. No data was taken at this time.\nAccording to Equifax officials, beginning on May 13, 2017, in a separate incident following the initial unauthorized access, attackers gained access to the online dispute portal and used a number of techniques to disguise their activity. For example, the attackers leveraged existing encrypted communication channels connected to the online dispute portal to send queries and commands to other systems and to retrieve the PII residing on the systems. The use of encryption allowed the attackers to blend in their malicious actions with regular activity on the Equifax network and, thus, secretly maintain a presence on that network as they launched further attacks without being detected by Equifax’s scanning software.\nEquifax officials added that, after gaining the ability to issue system-level commands on the online dispute portal that was originally compromised, the attackers issued queries to other databases to search for sensitive data. This search led to a data repository containing PII, as well as unencrypted usernames and passwords that could provide the attackers access to several other Equifax databases. According to Equifax’s interim Chief Security Officer, the attackers were able to leverage these credentials to expand their access beyond the 3 databases associated with the online dispute portal, to include an additional 48 unrelated databases.\nAfter reviewing system log files that recorded the attackers’ actions, Equifax officials determined that the attackers then ran a series of queries in an effort to try to extract PII from the databases they had located. Altogether, the attackers ran approximately 9,000 queries, a portion of which successfully returned data containing PII. As before, Equifax officials stated that the attackers were able to disguise their presence by blending in with regular activity on the network.\nAfter successfully extracting PII from Equifax databases, the attackers removed the data in small increments, using standard encrypted web protocols to disguise the exchanges as normal network traffic. The attack lasted for about 76 days before it was discovered. Figure 1 depicts an analysis of how the attackers gained access into Equifax’s systems and exploited vulnerabilities.", "Equifax’s assessment of the data breach began with actions it took to identify that it was being attacked as well as subsequent actions to block the intrusion. Equifax officials stated that, on July 29, 2017— approximately 2.5 months after the attackers began extracting sensitive information on May 13, 2017—security personnel conducting routine checks of the operating status and configuration of IT systems detected the intrusion on the online dispute portal.\nAs reported by Equifax, a network administrator conducting routine checks of the operating status and configuration of IT systems discovered that a misconfigured piece of equipment allowed attackers to communicate with compromised servers and steal data without detection. Specifically, while Equifax had installed a device to inspect network traffic for evidence of malicious activity, a misconfiguration allowed encrypted traffic to pass through the network without being inspected. According to Equifax officials, the misconfiguration was due to an expired digital certificate. The certificate had expired about 10 months before the breach occurred, meaning that encrypted traffic was not being inspected throughout that period. As a result, during that period, the attacker was able to run commands and remove stolen data over an encrypted connection without detection.\nEquifax officials stated that, after the misconfiguration was corrected by updating the expired digital certificate and the inspection of network traffic had restarted, the administrator recognized signs of an intrusion, such as system commands being executed in ways that were not part of normal operations. Equifax then blocked several Internet addresses from which the requests were being executed to try to stop the attack.\nEquifax reported that, on July 30, 2017, after its information security department observed additional suspicious activity continuing to occur, the online dispute portal was taken offline. The next day, the Chief Security Officer, in coordination with internal stakeholders, informed the Chief Executive Officer of the attack on the portal.", "To further assess the scope of the breach and identify its causes, Equifax began an investigation to identify the vulnerabilities that had been exploited to steal PII from its systems. Concurrent with this effort, company officials stated that they also began examining the data repositories that had been accessed to try to determine how much data had been taken and how many individuals were potentially impacted. According to Equifax officials, the investigation took place between August 2 and October 2, 2017, with the help of an external cybersecurity consultant.\nEquifax officials stated that the company’s investigation was facilitated by the use of electronic logs that had not been damaged or erased by the attackers on the affected systems. These logs recorded commands that were issued by the attackers throughout the attack, such as commands to retrieve or display the contents of data repositories. By examining the logs, Equifax worked to reconstruct the sequence of specific actions that the attackers had taken and, consequently, determine what specific data had been compromised. In addition to initiating its internal investigation, on August 2, 2017, the company notified the Federal Bureau of Investigation of the breach.\nBased on its cybersecurity consultant’s analysis and recommendations following the breach, Equifax determined that several major factors had facilitated the attackers’ ability to successfully gain access to its network and extract information from databases containing PII. Specifically, Equifax officials told us that key factors that led to the breach were in the areas of identification, detection, segmentation, and data governance: Identification. According to Equifax officials, the Apache Struts vulnerability was not properly identified as being present on the online dispute portal when patches for the vulnerability were being installed throughout the company. After receiving a notice of the vulnerability from the United States Computer Emergency Readiness Team in March 2017, Equifax officials stated that they circulated the notice among their systems administrators. However, the recipient list for the notice was out-of-date and, as a result, the notice was not received by the individuals who would have been responsible for installing the necessary patch. In addition, Equifax officials stated that although the company scanned the network a week after the Apache Struts vulnerability was identified, the scan did not detect the vulnerability on the online dispute portal.\nDetection. As reported by Equifax officials, an expired digital certificate contributed to the attackers’ ability to communicate with compromised servers and steal data without detection. Specifically, while Equifax had installed a tool to inspect network traffic for evidence of malicious activity, the expired certificate prevented that tool from performing its intended function of detecting malicious traffic.\nThe certificate had expired before May 2017, meaning that traffic was not being inspected throughout the breach.\nSegmentation. Because individual databases were not isolated or “segmented” from each other, the attackers were able to access additional databases beyond the ones related to the online dispute portal, according to Equifax officials. The lack of segmentation allowed the attackers to gain access to additional databases containing PII, and, in addition to an expired certificate, allowed the attackers to successfully remove large amounts of PII without triggering an alarm.\nData Governance. Data governance includes setting limits on access to sensitive information, including credentials such as usernames and passwords. According to Equifax officials, the attackers gained access to a database that contained unencrypted credentials for accessing additional databases, such as usernames and passwords. This enabled the intruders to run queries on those additional databases.\nIn addition to these four broad categories, Equifax officials noted one other factor that also facilitated the breach. Specifically, the lack of restrictions on the frequency of database queries allowed the attackers to execute approximately 9,000 such queries—many more than would be needed for normal operations.", "According to Equifax’s public filings, including its annual 10-K filing submitted to the Securities and Exchange Commission in March 2018 and its notice of 2018 annual meeting and proxy statement, following the 2017 incident, Equifax undertook a variety of remediation efforts to address the factors identified in their investigation. Equifax officials responsible for coordinating the response to the incident stated that, once the company identified how the attackers were able to gain unauthorized access to company systems and remove sensitive data, it took measures to address the internal factors that led to the breach. The measures were intended to better protect the company’s infrastructure from future disruptions, compromises, or failures. We did not independently assess Equifax’s efforts to address the identified factors.\nSpecifically, Equifax officials stated that system-level remediation measures were implemented to address the factors that led to the breach. For example, to work toward addressing concerns about identifying vulnerable servers, Equifax reportedly is implementing a new management process to identify and patch software vulnerabilities and confirm that vulnerabilities have been addressed. Also, to help ensure that detection of malicious activity is not hindered in the future, Equifax officials said they have developed new policies to protect data and applications and implemented new tools for continuous monitoring of network traffic. Further, in an effort to improve segmentation between devices that do not need to communicate, Equifax officials stated that they have implemented additional controls to monitor communications at the external boundary of the company’s networks and added restrictions on traffic between internal servers. Finally, to help address data governance issues, the officials said they were implementing a new security controls framework and tighter controls for accessing specific systems, applications, and networks.\nIn addition to these measures, Equifax stated that they implemented a new endpoint security tool to detect misconfigurations, evaluate potential indications of compromise, and automatically notify system administrators of identified vulnerabilities. Further, Equifax officials reported that the company has implemented a new governance structure to regularly communicate risk awareness to Equifax’s board of directors and senior management. The new structure requires the company’s Chief Information Security Officer to report directly to the Chief Executive Officer. Officials said this should allow for greater visibility of cybersecurity risks at top management levels.", "Following the shutdown of its online dispute portal, Equifax took steps to identify what data had been lost and the number of individuals affected so that it could fulfill its responsibility to notify affected individuals. To develop its estimate of the number of individuals affected by the data breach, Equifax stated that it recreated the attackers’ database queries on a separate system that could run the queries at high speed, allowing Equifax to generate its estimate in a relatively short period of time. Equifax staff then worked to reconstruct queries against the data tables to identify which queries had successfully extracted data and which individuals were associated with that data.\nHowever, as is commonly experienced with large breaches, Equifax faced challenges in determining exactly how many individuals were affected. According to Equifax officials, much of the stolen data consisted of incomplete records without full sets of identifying information. Some data sets included information that could be matched to more than one known individual. Subsequently, Equifax officials stated that they compared these data sets with information in the company’s internal databases that were not impacted by the data breach to make matches with known identities.\nFor example, Equifax took partial records that did not include all fields and ran an analysis to determine whether Social Security numbers and names included in the records could be matched with those in Equifax’s core credit reporting databases. In addition, Equifax performed analyses to remove duplicates and to determine whether a person could be linked to incomplete records based on Social Security numbers. After Equifax completed its initial analysis of the datasets, it estimated that approximately 143 million U.S. consumers had been affected by the breach.\nMoreover, Equifax’s initial analysis, reported on September 7, 2017, indicated that multiple types of PII had been compromised, including individuals’ names, Social Security numbers, birth dates, addresses, and driver’s license numbers. Because many of the records were incomplete, not all of the types of PII had been compromised for all affected individuals.\nIn addition, Equifax determined that credit card numbers for approximately 209,000 consumers and certain dispute documents, which had included PII for approximately 182,000 consumers, had been accessed. These documents contained PII associated with specific items from dispute cases that were submitted to Equifax as evidence supporting disputes they filed about the accuracy of their credit reports, such as utility bills.\nEquifax made two revisions over time to its estimate of affected individuals. First, in late September 2017, Equifax determined that it had incorrectly concluded that one of the attackers’ queries had not returned any data. After additional analysis, including a determination that the query had, in fact, allowed the attackers to access PII from approximately 2.5 million additional U.S. consumers, Equifax revised the number of affected individuals from 143 million to 145.5 million on October 2, 2017.\nSecond, on March 1, 2018, Equifax stated that it had identified approximately 2.4 million U.S. consumers whose names and partial driver’s license information were stolen. The newly identified individuals were based on names and partial driver’s license information contained in a data table that Equifax had not previously identified as including individuals compromised in the breach. According to Equifax officials, Equifax’s original investigation had not identified these individuals because their names and partial driver’s license information were not stolen together with their Social Security numbers.\nTo identify as many potentially affected individuals as possible, Equifax contracted with a third-party data source that had access to a driver’s license database and mapped the partial driver’s licenses to an Equifax database containing Social Security numbers. According to Equifax officials, some of the individuals within this group of 2.4 million were already included in the previous total of 145.5 million affected individuals, while others were not. As of August 2018, Equifax had not determined exactly how many of the 2.4 million individuals were included in the previous total of 145.5 million.", "On September 7, 2017, after Equifax had determined the extent of the breach and developed a remediation plan for potentially impacted consumers, the company provided written notification to all U.S. state attorneys general regarding the approximate number of potentially affected residents in each state and its plans for consumer remediation. The notification included steps individuals could take to determine if they were affected by the breach and to help protect against misuse of their personal information. The company also issued a press release to the public providing information about the breach and the types of PII that had been compromised.\nFurther, the press release issued on September 7, 2017, stated that the company had set up a dedicated website to help individuals determine if their information might have been stolen in the breach. In addition, Equifax improved the search tool it had developed to help U.S. consumers determine if they were impacted and expanded its call center operations. However, the website experienced several technical issues, including excessive downtime and inaccurate data. Equifax officials acknowledged these shortcomings and said they took measures to address them, including improving the stability of the website and accuracy of the information it provided.\nAdditionally, Equifax reported that it would provide several services to all U.S. consumers, regardless of whether their information had been compromised, free of charge for one year. Those services included credit monitoring, individual copies of Equifax credit reports, notification of changes to credit reports, a credit “lock” allowing individuals to prevent third-parties from accessing their Equifax credit report, identity theft insurance covering certain expenses related to the process of recovering from identity theft, and a Social Security number monitoring service that would scan suspicious websites for an individual’s Social Security number.\nThese services were offered to consumers from September 7, 2017, until January 31, 2018, when Equifax announced a new service called “Lock & Alert.” This new service allows consumers to use their smartphone or computer to lock and unlock their Equifax credit report. Equifax announced that it was making this service available to all consumers at no cost.", "After Equifax announced the data breach, federal customer agencies took a variety of actions based on their responsibilities and how the breach affected their operations. Specifically, the agencies that were customers of the company’s services conducted independent assessments of the company’s security controls, revised their own identity proofing processes, and made changes to their contracts with Equifax, among other activities. Equifax did not ask the Department of Homeland Security (DHS), which is the central agency that responds to cyber incidents across the federal government, to assist in responding to the breach. Nevertheless, the department took the step of reminding federal agencies of the importance of correcting the software vulnerability that led to the breach. In addition, the oversight agencies, BCFP and FTC, began taking actions to investigate the breach and inform the public.", "IRS, SSA, and USPS—large agencies that were major customers of Equifax at the time of the breach—assessed the potential impact of the breach to their own operations as well as to the operations of their consumers. For example, these agencies assessed the technical impact of the breach on their own systems that rely on Equifax services to determine whether the breach could have compromised the integrity of their identity proofing processes. While there was no breach of agency systems or information, they also sought to determine which of their customers were directly affected by the breach, recognizing that those individuals could be at heightened risk of identity fraud. Information security officials we spoke to at IRS, SSA, USPS, and DHS expressed concern about how the breached data could be used to compromise sensitive information or fraudulently procure government services, even from agencies that are not direct customers of Equifax.\nRepresentatives of IRS, SSA, and USPS noted that they responded to the breach independently of other agencies, because they said it was unclear whether any single federal agency had responsibility for coordinating government actions in response to a breach of this type in the private sector. According to the three agencies, their actions included the following: Identified affected individuals. Due to concerns about the potential for fraud using the stolen data, IRS and SSA both obtained from Equifax a list of the individuals affected by the Equifax breach. The agencies then used these lists to identify which of their own customers were affected and to look for potential instances of identity fraud affecting those customers.\nPerformed independent assessments of Equifax security controls. According to information security officials at IRS, SSA, and USPS, the agencies independently conducted site visits at Equifax’s data center in Alpharetta, Georgia, where they reviewed the company’s security controls. According to SSA officials, their agency’s review assessed compliance with the baseline set of controls required by the National Institute of Standards and Technology for systems determined to pose a moderate level of risk. SSA officials stated that they shared the results of their assessment with IRS, the Office of Management and Budget, House Ways and Means Social Security Subcommittee, and the Senate Committee on Finance. USPS officials said they reviewed both physical security and cybersecurity controls at Equifax’s data centers in Alpharetta, Georgia and St. Louis, Missouri locations. IRS officials said they also conducted a security assessment at Equifax’s Alpharetta data center, as well as a separate review of physical security and cybersecurity controls at the company’s St. Louis, Missouri site. The officials of all three agencies said that their reviews did not uncover any major new problems, but did identify a number of lower-level technical concerns that they required Equifax to address.\nModified contracts with Equifax. IRS and SSA made changes to contracts they had with Equifax to require prompt notification of any future breach, among other things. According to officials from both agencies, Equifax did not directly notify major federal customers of the 2017 breach prior to its public announcement because its contracts with these agencies required notification only of breaches directly involving the systems that provided services to the federal government. SSA officials stated that it was important to update the agency’s contract to require Equifax to promptly notify SSA of any data breach, regardless of which of the company’s systems it may affect. IRS officials stated that a similar change was made to their contract with Equifax for credit reporting services. The contract change also required the company to notify IRS within one hour after a breach is discovered, rather than within the previous time frame of 24 hours. In addition, according to the officials, cybersecurity language in the IRS’s contract was modified to ensure better implementation and oversight of technical security controls.\nCommunicated with the public and affected individuals. IRS made public announcements about the impact of the breach, noting that the agency did not expect the breach to have any impact on taxpayers’ ability to securely file tax returns. SSA issued a public blog post reminding consumers about steps they could take to protect their Social Security numbers.\nMade changes to agency identity-proofing procedures. Following its assessment, IRS updated its internal cybersecurity contractor requirements and controls related to incident handling. Further, upon completing its assessment, USPS initiated discussions with the National Institute of Standards and Technology to determine risks associated with the knowledge-based verification questions it had been using with Equifax’s identity-proofing service. USPS subsequently changed its process, removing certain knowledge- based verification questions and adding a procedure whereby customers receive a code in the mail that they can use to verify their mailing addresses.\nCanceled a short-term contract with Equifax. Before the Equifax breach, Equifax was the incumbent contractor at IRS for taxpayer identity and verification services. In June 2017, prior to the discovery of the breach, IRS began a new acquisition for these services by issuing a request for quotations to three CRA vendors (including Equifax and Experian) holding contracts under the federal supply schedule. IRS selected Experian as offering the lowest-priced, technically acceptable quotation, for issuance of a fixed-price task order and establishment of a blanket purchase agreement. Equifax filed a bid protest on July 5, 2017 with GAO challenging the IRS’s evaluation of Experian’s quotation. As described elsewhere in this report, Equifax discovered the breach on July 29 and, after investigating it, announced the breach on September 7. On September 29, during GAO’s consideration of the protest, IRS awarded Equifax a short-term, sole-source contract for $7.25 million to cover its need for the identity and verification services during the time frame needed to resolve the protest. IRS considered these services “critical” that “cannot lapse.” However, following the completion of its breach-related security assessments, IRS issued Equifax a stop-work order to suspend its performance under the short- term, sole-source order. GAO denied Equifax’s protest on October 16, 2017 and IRS proceeded with the task order issued to Experian for the taxpayer identity and verification services.", "In its role as the center for federal information security incident prevention and response, DHS offers services to assist federal agencies in preparing for potential cyber incidents, maintaining awareness of the current threat environment, and dealing with ongoing breaches. Under a Presidential directive, DHS is also responsible for assisting public- and private- sector critical infrastructure owners and operators in preparing for, preventing, protecting against, mitigating, responding to, and recovering from a cyber incident.\nIn September 2017, shortly after the Equifax breach was publicly announced, DHS contacted the company to offer its professional services related to forensic analysis and breach response. However, according to officials at both organizations, Equifax notified DHS officials that the company had already retained professional services from a private cybersecurity consultant and, thus, declined assistance from DHS.", "According to Equifax officials, the company informed regulators about the data breach on September 7, 2017—when the general public was notified. FTC announced that it was investigating the Equifax breach, and Equifax stated in its annual report that several governmental agencies, including FTC and BCFP, were continuing to investigate events related to the breach.\nBCFP staff told us that, immediately following notification of the breach, they participated in conference calls with Equifax to learn more about the breach. According to the officials, their calls with Equifax focused on ensuring consumers were provided with accurate information about the breach and what they could do to protect themselves. Equifax officials told us that they also informed FTC, the Securities and Exchange Commission, various states’ attorneys’ general, and the Financial Services Information Sharing and Analysis Center, that it had suffered a breach.\nShortly after Equifax’s public announcement of the breach, BCFP released a blog post on the top 10 ways that consumers could protect themselves in the wake of the breach. Suggestions included regularly reviewing credit reports, checking credit card statements, and changing passwords for all financial accounts. In addition, BCFP posted on its website actions consumers could take to protect themselves against fraud or identity theft, including freezing credit and placing fraud alerts.\nBCFP staff told us that, while the agency posts information to its website, it does not provide individual legal assistance to consumers. Nevertheless, the staff said that consumers can file a complaint with BCFP if they are experiencing issues related to a CRA. BCFP staff added that they received a large volume of consumer complaints following the Equifax breach. BCFP staff said they use such complaints as one factor to prioritize future supervisory examinations, as well as investigations and enforcement actions.\nIn October 2017, BCFP also began conducting targeted data security and cybersecurity examinations. Specifically, in addition to assessing whether the CRAs’ data security practices and policies constitute violations of federal consumer financial law, BCFP began assessing risks to consumers posed by potential cybersecurity lapses and to markets for consumer financial products and services. BCFP staff said that whether BCFP continues to conduct CRA cybersecurity examinations will depend on whether they identify the issue as a priority through future examination prioritization processes.\nSimilarly, FTC released a statement to consumers with information about the breach, such as when it occurred and the types of data compromised. The statement also included guidance on steps consumers could take to help protect their information from being misused. For example, FTC encouraged individuals to visit Equifax’s website to find out whether their information may have been exposed, provided links to obtain a free credit report, and offered other information about credit freezes and fraud alerts.\nOn June 25, 2018, eight state banking regulators issued a consent order requiring Equifax to address various data security issues. The order included several areas of concern, including general information security, internal audits, and board and management oversight. More specifically, the order required Equifax, the board, or its audit committee to, among other things: provide a written risk assessment that identifies foreseeable threats and vulnerabilities to the confidentiality of PII; establish a formal and documented internal audit program that is capable of effectively evaluating information technology controls; improve the oversight of its information security program; improve oversight and documentation of its critical vendors; improve standards and controls for supporting the patch management function; and enhance oversight of IT operations as it relates to disaster recovery and business continuity functions.\nUnder the consent order, Equifax was required to submit a list of all remediation projects planned, in process, or implemented to the state regulatory agencies by July 31, 2018.", "We provided a draft of this report to BCFP, DHS, FTC, IRS, SSA, USPS, and Equifax for comment. SSA and USPS provided written responses expressing appreciation for the opportunity to review the draft report. The SSA and USPS responses are reprinted in appendices II and III, respectively. In addition, BCFP, DHS, FTC, IRS, SSA, USPS, and Equifax provided technical comments orally and via email, which we have incorporated, as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 29 days from the report date. At that time, we will send copies to the appropriate congressional committees, Equifax, and to the Acting Director of the Bureau of Consumer Financial Protection; the Chairman of the Federal Trade Commission; the Secretary of the Department of Homeland Security; the Commissioners of the Internal Revenue Service and Social Security Administration; and the Postmaster General of the United States. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.We are sending copies of this report to 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 Nick Marinos at (202) 512-9342 or marinosn@gao.gov, or Michael Clements 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 major contributions to this report are listed in appendix IV.", "Our objectives were to (1) summarize the events regarding the 2017 Equifax breach and the steps taken by the company to assess, respond to, and recover from the incident and (2) describe the actions that federal customers and oversight agencies took in response to the breach.\nTo address the first objective, we obtained and assessed documentation generated in response to the breach. Specifically, we analyzed the results of security assessments conducted by Equifax and its cybersecurity consultant following the breach, which included information about how the attacker gained access to Equifax’s systems and the specific vulnerabilities that were exploited. This documentation included the report summarizing the results of the consultant’s forensic analysis of Equifax systems and the consultant’s recommendations to Equifax to address the factors that led to the breach. We also reviewed Equifax’s relevant public filings to the Securities and Exchange Commission and statements it provided to the public and shareholders, which included information about the data breach and the company’s efforts for remediation.\nFurther, we conducted a site visit to the Equifax data center in Alpharetta, Georgia, to interview knowledgeable officials, such as the interim Chief Security Officer and other officials knowledgeable about how Equifax stores and processes data, and observed physical security measures. In addition, to clarify details of the breach and the steps that Equifax took, we interviewed officials at Equifax who were responsible for coordinating reviews conducted following the breach. Specifically, we interviewed the interim Chief Security Officer and government relations employees, who were responsible for coordinating Equifax’s interaction with federal agencies in response to the incident.\nWe did not independently assess Equifax’s information security controls or the steps the company took to address identified factors that contributed to the ineffective implementation of those controls. Specifically, the scope of our report was to report on actions taken by Equifax and agencies in response to the breach. Consequently, the information in this report is based on public filings and announcements as well as information provided to us by the company. We did not reach conclusions regarding the adequacy or efficacy of Equifax’s security measures.\nTo address the second objective, we selected three major federal agencies, Internal Revenue Service (IRS), Social Security Administration (SSA), and United States Postal Service (USPS), which were Equifax’s largest federal customers at the time of the breach. We initially identified these customer agencies by reviewing public reports following the breach that identified federal agencies that were major Equifax customers at the time. We also interviewed Equifax officials responsible for managing government accounts to confirm that these three agencies were the only large-scale federal customer agencies that interacted with Equifax following the breach. Other federal agencies also have contracts with Equifax for a variety of services; we did not conduct audit work for this engagement at any other agencies because we narrowed our selection criteria to the largest federal agencies that used Equifax’s services to conduct their identity-proofing processes.\nSubsequently, we analyzed documentation from IRS, SSA, and USPS to describe the relevant actions these agencies took in response to the breach, as well as documentation regarding oversight by BCFP and FTC, which are the federal agencies with primary oversight responsibilities over CRAs. Specifically, we reviewed relevant laws and BCFP guidance on data security examinations. In addition, we spoke with BCFP and FTC officials about their actions in response to the data breach and reviewed their websites for information provided to consumers.\nWe also selected and reviewed contracts between Equifax and each of the three selected agencies—IRS, SSA, and USPS—to determine what changes were made to services, such as identity-proofing solutions, provided by Equifax to federal agencies as a result of the breach. The contracts we reviewed were the ones identified by IRS, SSA, and USPS as contracts with Equifax for credit reporting or identity-proofing services.\nFurther, we conducted interviews with agency officials at BCFP, FTC, DHS, IRS, SSA, and USPS to determine what actions customer and oversight agencies took in response to the breach. The officials we interviewed were responsible for conducting their agencies’ security assessment of Equifax at the time of the data breach. These included officials at each agency that had a role in responding to the Equifax breach, such as investigators at the oversight agencies and information security officials at the federal customer agencies.\nTo address both objectives, and to identify how federal requirements apply to credit reporting agencies, we analyzed relevant federal laws to determine the responsibilities of agencies and their contractors. Specifically, we reviewed the following laws:\nDodd-Frank Wall Street Reform and Consumer Protection Act;\nFair Credit Reporting Act;\nPrivacy Act of 1974; and\nE-Government Act of 2002.\nWe conducted this performance audit from November 2017 to August 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.", "", "", "", "", "In addition to the individuals named above, John de Ferrari and John Forrester (assistant directors); Tina Torabi (analyst-in-charge); Bethany Benitez, Chris Businsky, Kavita Daitnarayan, Nancy Glover, Andrea Harvey, Thomas Johnson, David Plocher, Tovah Rom, Rachel Siegel, and Winnie Tsen made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 3, 3, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "h0_title h2_title", "h0_full", "", "h0_full", "h0_full", "h0_full", "h2_full", "h1_title", "h1_full", "h1_full", "", "h2_full h1_full", "h2_full h1_full", "", "", "", "", "" ] }

{ "question": [ "What did Equifax discover concerning the portal security in 2017?", "What was the scope of the breach?", "What were the four major factors of the breach?", "What did Equifax attempt to do after the breach?", "What did the company inform the public after the breach?", "Which three customer agencies conducted assessments on Equifax and what did they identify?", "What was the result of the conducted assessments?", "What other agency initiated an investigation?", "What was GAO asked to report in 2017?", "What did this report cover?", "How did GAO manage to do it and what did they do?", "What additional things did GAO have to do to complete their report and which documents did they analyze?" ], "summary": [ "In July 2017, Equifax system administrators discovered that attackers had gained unauthorized access via the Internet to the online dispute portal that maintained documents used to resolve consumer disputes (see fig.).", "The Equifax breach resulted in the attackers accessing personal information of at least 145.5 million individuals.", "Equifax's investigation of the breach identified four major factors including identification, detection, segmenting of access to databases, and data governance that allowed the attacker to successfully gain access to its network and extract information from databases containing personally identifiable information.", "Equifax reported that it took steps to mitigate these factors and attempted to identify and notify individuals whose information was accessed.", "The company's public filings since the breach occurred reiterate that the company took steps to improve security and notify affected individuals.", "The Internal Revenue Service (IRS), Social Security Administration (SSA), and U.S. Postal Service (USPS)—three of the major federal customer agencies that use Equifax's identity verification services—conducted assessments of the company's security controls, which identified a number of lower-level technical concerns that Equifax was directed to address.", "The agencies also made adjustments to their contracts with Equifax, such as modifying notification requirements for future data breaches. In the case of IRS, one of its contracts with Equifax was terminated. The Department of Homeland Security offered assistance in responding to the breach; however, Equifax reportedly declined the assistance because it had already retained professional services from an external cybersecurity consultant.", "In addition, the Bureau of Consumer Financial Protection and the Federal Trade Commission, which have regulatory and enforcement authority over consumer reporting agencies (CRAs) such as Equifax, initiated an investigation into the breach and Equifax's response in September 2017.", "GAO was asked to report on the major breach that occurred at Equifax in 2017.", "This report (1) summarizes the events regarding the breach and the steps taken by Equifax to assess, respond to, and recover from the incident and (2) describes actions by federal agencies to respond to the breach.", "To do so, GAO reviewed documents from Equifax and its cybersecurity consultant related to the breach and visited the Equifax data center in Alpharetta, Georgia, to interview officials and observe physical security measures.", "GAO also reviewed relevant public statements filed by Equifax. Further, GAO analyzed documents from the IRS, SSA, and USPS, which are Equifax's largest federal customers for identity-proofing services, and interviewed federal officials related to their oversight activities and response to the breach." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 0, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 1, 1, 1, 1 ] }

{ "title": [ "", "Part I. The Act in General", "Does HIPAA help individuals who are uninsured?", "Are employers required to offer health insurance as a benefit?", "Part II. Health Insurance Reforms", "Portability", "What is creditable coverage?", "What is a preexisting medical condition?", "What is a preexisting medical condition limitation period?", "Portability in the Group Market", "How do people take full advantage of the portability provisions of the Act?", "How long can a group health plan restrict coverage for a preexisting medical condition?", "What is late enrollment?", "What is a waiting period? How does it differ from a preexisting condition limitation period?", "Do plans and issuers have any discretion in the method of crediting prior coverage?", "Do these protections apply to an individual's spouse and children?", "Portability and Guaranteed Availability in the Individual Insurance Market", "Who is eligible for group-to-individual market portability and guaranteed availability under the Act?", "What are the limitations of the group-to-individual portability and guaranteed availability protections?", "What are the requirements for an acceptable alternative state mechanism?", "How have states implemented this provision?", "Special Enrollment Periods in the Group Market", "Non-Discrimination in the Group Market", "Can a group health plan refuse to enroll individuals with a history of illness or disability or high medical expenses? Can it drop someone from coverage who becomes sick or starts using a lot of medical care?", "Can an employer condition coverage under its health plan on passing a physical examination?", "Can a group plan refuse to enroll individuals who engage in high-risk recreational activities?", "Can a group plan exclude coverage of treatments for injuries obtained while engaging in high-risk recreational activities?", "Do these non-discrimination protections apply to an individual's spouse and children?", "Does the Act restrict the premium amounts that an employer can charge for health insurance?", "Guaranteed Issue and Guaranteed Renewability", "Can health insurance issuers drop or cancel coverage for groups because of high medical costs?", "Federally Required Benefits", "Mental Health Parity", "Newborns' and Mothers' Health Protection Act", "Women's Health and Cancer Rights Act of 1998", "Can an employer exclude coverage for specific types of illnesses, such as cancer, or acquired immune deficiency syndrome (AIDS) or treatment of injuries associated with high-risk activities?", "General Questions About the Health Insurance Reforms", "Do the requirements of the Act apply to the plans of employers that provide for dental-only coverage or vision-only coverage?", "Do the requirements of the Act apply to association-sponsored group health plans?", "Can states impose requirements on insurers selling to group health plans that are different from those in the Act?", "Do the insurance reforms apply to Federal Employees' Health Benefits Plans (FEHBP)?", "Does the Act regulate the premium amount that an issuer can charge an eligible individual?", "Implementation and Enforcement", "How are the insurance requirements of the Act enforced?", "What regulations have been promulgated to define HIPAA?", "COBRA Continuation Coverage", "How does COBRA continuation coverage29 interact with HIPAA?", "Does HIPAA make any changes in COBRA continuation of coverage requirements?", "Part III. Other Provisions", "Administrative Simplification", "Medical Savings Accounts", "Health Insurance for Self-Employed Taxpayers", "Self-Insured Plans", "Long-Term Care", "Accelerated Death Benefits", "State Insurance Pools", "Treatment of Certain Health Insurance Providers", "IRA Distributions for Medical Expenses and Insurance", "Organ and Tissue Donation Information" ], "paragraphs": [ "The Health Insurance Portability and Accountability Act of 1996 ( P.L. 104-191 , HIPAA) provided for changes in the health insurance market and imposed certain federal requirements on health insurance plans offered by public and private employers. It guaranteed the availability and renewability of health insurance coverage for certain employees and individuals, and limited the use of preexisting condition restrictions. The Act established federal standards for insurers, health maintenance organizations (HMOs), and employer plans, including those who self-insure. However, it allowed states and sometimes insurers substantial state flexibility for compliance with the federal requirements.\nHIPAA also included tax provisions relating to health insurance. It permitted a limited number of small businesses and self-employed individuals to contribute to tax-advantaged medical savings accounts (MSAs) established in conjunction with high-deductible health insurance plans. It increased the deduction for health insurance that self-employed taxpayers may claim. In addition, it allowed long-term care expenses to be treated like deductible medical expenses and clarified the tax treatment of long-term care insurance.\nHIPAA amended the Employee Retirement Income Security Act (ERISA), the Public Health Service (PHS) Act, and the Internal Revenue Code (IRC). In general, requirements on employer plans are found in the ERISA and IRC amendments; requirements on health insurance issuers, such as insurance carriers and health maintenance organizations (HMOs) are found in the PHS Act and ERISA amendments. The increased deduction for the self-employed, tax-favored MSAs, and long-term care provisions are amendments to the IRC.", "The basic intent of HIPAA's health insurance provisions is to lower the possibility that people and small employers will lose existing health plan coverage, and to make it easier for individuals to switch plans or to purchase coverage on their own if they lose employer-offered coverage. The health insurance reforms ensure that people who are moving from one job to another or from employment to unemployment are not denied health insurance because they have a preexisting medical condition (portability) and limit the waiting time before a plan covers any preexisting medical condition for participants and beneficiaries in group health plans. The reforms were also intended to guarantee that individuals and employers who choose to purchase coverage are able to find a plan (guaranteed issue) and that individuals already covered, as well as employers that offer coverage to their employees, are able to renew their coverage (guaranteed renewal). Finally, the health insurance provisions prohibit discrimination on the basis of health status (non-discrimination) and require plans to offer special enrollment periods.\nOther HIPAA provisions seek to make health insurance more affordable. The Act raised the tax deduction for health insurance premiums paid by the self-employed. MSAs coupled with qualified high deductible health insurance plans were made available on a trial basis to a limited number of individuals. New tax incentives were made available to encourage individuals and employers to purchase long-term care insurance. Finally, the Act included administrative simplification and privacy provisions instructing the Secretary of HHS to issue standards addressing the electronic transmission of health information and the privacy of personally identifiable medical information.\nAdditional federal protections have been added since the passage of HIPAA. The protections required plans that cover newborn delivery to allow for a minimum two-day hospital stay under certain conditions, required plans that offer mental health services to offer them subject to similar limitations as other health benefits, and required plans that cover mastectomy to also cover reconstructive surgery. In addition, the deduction allowed for premium costs for the self-employed was changed.", "HIPAA's insurance provisions were designed to help insured Americans who have a preexisting medical condition and have stayed in a job because they fear that they would lose coverage for such a condition if they change to a new employer or move to an individual policy. It also would help those who have been denied the option to purchase insurance as an individual or through their employer because of their health status. They do not address the larger problem of the uninsured, estimated to be 45 million people in 2003, although other HIPAA provisions, such as the tax deductibility of health insurance costs for the self-employed, may encourage some uninsured, self-employed individuals to purchase coverage for themselves.\nIt is also the case that HIPAA largely addresses the availability of insurance and does not regulate the price of health insurance coverage. Some evidence suggests that the cost of health insurance in the individual market for individuals taking advantage of HIPAA's group-to-individual portability provisions is significantly higher than the cost for individuals who could otherwise obtain insurance. This may be discouraging many \"HIPAA eligibles\" from buying insurance. Whether this experience continues over the long run remains to be seen.", "No, the Act does not require employers to offer or pay for health insurance for their employees. Also, the Act does not require employers to offer or pay for family coverage (spouses and dependents). Finally, the Act does not require employers to cover part time, seasonal, or temporary employees. However, an employer who elects to sponsor a group health plan has to comply with certain requirements of the Act. These requirements: (a) restrict the use of preexisting condition limitation periods; (b) prohibit an employer plan from discriminating on the basis of health status in determining the eligibility of an employee to enroll in a group health plan (and the employee's spouse and dependents if the plan provides family coverage); (c) prohibit an employer plan from requiring an individual to pay premiums or contributions which are greater than those charged to a similarly situated individual on the basis of health status; and (d) mandate documentation of creditable coverage.", "", "HIPAA's \"portability\" protection means that once a person obtains creditable health plan coverage, he or she can use evidence of that coverage to reduce or eliminate any preexisting medical condition exclusion period that might otherwise be imposed when moving to another health plan. The protections apply when a person moves from one group health plan to another, from a group health plan to an individual policy, or from an individual policy to a group health plan. The concept of portability is really one of being able to maintain coverage and being given credit for having been insured when changing health plans. It does not mean that an individual can take a specific health insurance policy from one job to another.", "The concept of creditable coverage is that individuals are given credit for previous insurance when applying for a new plan.\nUnder the Act, creditable coverage is coverage under any of the following: (a) a group health plan; (b) health insurance coverage , including individual health insurance coverage; (c) Medicare; (d) Medicaid; (e) military health care; (f) a medical care program of the Indian Health Service or of a tribal organization; (g) a state health benefits risk pool; (h) the Federal Employee Health Benefits Program; (i) a public health plan (as defined in regulations); (j) a health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)); or (k) the State Children's Health Insurance Program (SCHIP).", "Under the Act, a preexisting medical condition is a physical or mental condition for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the enrollment date. The enrollment date is the date of enrollment of the individual in the health plan or insurance, if earlier, the first day of the waiting period for such enrollment. Pregnancy is not considered a preexisting medical condition. Also, a preexisting medical condition limit or exclusion may not be imposed on covered benefits for newborns who are covered under creditable coverage within 30 days of birth. Finally, a preexisting medical condition limit or exclusion may not be imposed on covered benefits for newly adopted children or children newly placed for adoption, if the child becomes covered under creditable coverage within 30 days of the adoption or placement.\nFinal regulations implementing the health coverage portability provisions of HIPAA addressed other types of benefit exclusions that are not designated as preexisting condition exclusions by the plan, but are considered to be so by the regulators. Examples of these specific benefit exclusions include provisions excluding coverage of pregnancy until 12 months after the individual is eligible for benefits, or provisions excluding treatment of injuries relating to accidents that occurred prior to enrollment. Plans are required to bring those exclusions into compliance with HIPAA portability provisions by July 1, 2005.\nThe Act also prohibits the use of genetic information as a preexisting condition, unless there is a diagnosis of a preexisting medical condition related to the information. For example, evidence of a positive test for the gene that predisposes a woman to inheritable breast cancer cannot be treated as a preexisting condition, unless a diagnosis of breast cancer is made within the 6-month period described above.", "During this period, a plan may exclude or restrict coverage of a participant's or beneficiary's preexisting medical condition. Under the Act, a group health plan is prohibited from imposing more than a 12-month preexisting condition limitation period (18 months for late enrollees) on an HIPAA-eligible participant or beneficiary. As described below, that period is reduced by the amount of the individual's creditable coverage. In the individual market, HIPAA-eligible individuals also have portability protection, although the circumstances under which those protections apply are complex as described in more detail below.", "HIPAA requires group health plans (plans that are offered to an employment-based group—including both employers and employee organizations) that are covered by the Act to meet the following requirements related to portability:\nWhen a person with prior creditable coverage first enrolls in a group health plan, the plan cannot impose a limitation period on a preexisting condition that is longer than 12 months (18 months for late enrollees as defined below). The length of the allowed preexisting condition limitation period is based on any creditable coverage that an individual may have. The plan cannot apply any preexisting condition waiting period on pregnancy, a covered newborn, or on any covered child under 18 who is adopted (even if the adoption is not finalized). However, the employer may still require individuals to work for a period of time before they are allowed to participate in the health plan. This is called a \"waiting period\" and should not be confused with a \"preexisting condition limitation period.\" Employers who sponsor group health plans are required to provide enrollees with a certificate that states the amount of creditable coverage accumulated and whether or not the enrollee was subject to a waiting period under the employer's plan. Individuals can use this certificate to demonstrate prior creditable coverage when moving to a new group or individual health insurance plan. The Act does not require an employer to continue offering coverage to enrollees who have left their jobs, except under COBRA continuation provisions as described below.", "To benefit from the Act, individuals should maintain coverage under a health insurance plan without experiencing significant lapses in coverage. Since the portability protection only applies to people with \"continuous coverage\", which the statute defines as coverage with no lapses of 63 or more days, individuals should not allow their insurance coverage to lapse for 63 or more days.", "Coverage of a preexisting medical condition may be limited or excluded for up to 12 months for those who enroll in a health plan when first eligible to enroll. In the case of late enrollment, the maximum permitted limitation is 18 months.\nFor those moving from one group plan to another group plan, or from individual to group coverage, the new plan must reduce any preexisting condition limitation period by one month for every month that such individuals had creditable coverage under a previous plan, provided that they enroll when first eligible and had no break in previous coverage of 63 or more continuous days. For example, individuals with 6 months of prior creditable coverage could face a maximum preexisting condition limitation period of 6 months. Individuals with 11 months of prior creditable coverage could face a maximum limitation period of 1 month. Once a 12-month limitation period is met, no new limitation may ever be imposed as long as continuous coverage is maintained (that is, there is no break in coverage lasting longer than 62 days), even if there is a change in jobs or health plans. If there is a period of 63 consecutive days during which individuals have no creditable coverage, they may be subject to as much as a 12-month preexisting condition exclusion period (or an 18 month exclusion for late enrollees).\nIndividuals establish eligibility for a waiver of preexisting condition limitations by presenting certifications that document prior creditable coverage. Health plans and health insurance issuers must supply written certifications of: the period of creditable coverage under the plan; coverage (if any) under COBRA continuation provisions; and any waiting or affiliation periods imposed. The certification must be provided: (1) when a participant is no longer covered under the plan or otherwise becomes covered under a COBRA continuation provision; (2) after termination of COBRA coverage, if applicable; and (3) upon a request which is made not later then 24 months after coverage ends. The interim rules issued by the three agencies administering the Act provide guidance and model certification forms to streamline this process. In general, the certification must be provided in writing.", "Late enrollment occurs when an individual enrolls in a group health plan other than during: (a) the first period in which the individual is eligible to enroll under the plan, or (b) a special enrollment period. As described above, a group health plan may require a late enrollee to wait 18 months before a preexisting condition is covered.", "A waiting period is a set amount of time an employee must wait before he or she is eligible to enroll in a health plan. For example, an employer may require an employee to work for 6 months before health insurance benefits become available. The Act does not limit this type of waiting period—employers and health insurance issuers are free to determine the length of a waiting period. However, the Act requires that any waiting period be applied uniformly without regard to the health status of potential plan participants or beneficiaries. Also, days in a waiting period are not taken into account when determining whether an individual has experienced a break in coverage of 63 or more days.\nThis differs from a preexisting condition exclusion limitation period which allows plans to exclude coverage for certain preexisting health conditions for up to 12 months (or 18 months), as described above. Any waiting period required before an employee or his or family member can become a plan participant or beneficiary must run concurrently with any preexisting condition limitation period. For example, if an employer required an employee without any creditable coverage to work for 5 months before he or she could enroll in the firm's health plan, then the preexisting condition limitation period imposed on the coverage of that individual could not exceed 7 months from the date of actual enrollment in the plan. If that individual had 7 or more months of creditable coverage, then no preexisting condition limitation period could be imposed on the coverage under the new plan.", "Yes, when an individual changes plans, the new benefit package may cover some benefits that were not covered under his or her most recent prior plan, and the law allows the new plan or issuer some discretion in applying prior creditable coverage to those new benefits. Plans and issuers may choose between two alternatives when determining creditable coverage: 1) they can chose to include all periods of coverage from qualified sources and thus not look at any specific benefits; or 2) they can examine prior coverage on a benefit-specific basis, and are allowed to exclude from creditable coverage any categories or classes of benefits not covered under the most recent prior plan. The April 8, 1997 interim rule defines the categories of benefits that may be considered separately to be: (a) mental health; (b) substance abuse treatment; (c) prescription drugs; (d) dental care; or (e) vision care. Thus, for example, if a prior plan did not cover prescription drugs, and the new plan includes this benefit, the new plan may exclude coverage of prescription drugs for up to 12 months under this second method. If the second method is chosen, plans or issuers must disclose its use at the time of enrollment or sale of the plan, and apply it uniformly.", "Under a group health plan, an employer is not required to offer coverage to an individual's spouse or children. If the employer does offer family coverage, the same protections apply to a spouse and dependents. Coverage may not be denied because a family member is sick, and preexisting condition restrictions are limited as described above.", "HIPAA guarantees the availability of a plan and prohibits pre-existing condition exclusions for certain eligible individuals who are moving from group health insurance to insurance in the individual market. States have the choice of either enforcing the HIPAA individual market guarantees, referred to as the \"federal fallback\", or they may establish an \"acceptable alternative state mechanism\". In states using the federal fallback approach, HIPAA requires all health insurance issuers operating in the individual health insurance market to offer coverage to all eligible individuals and prohibits them from placing any limitations on the coverage of any preexisting medical condition.\nIssuers can comply with the Act's requirements in three ways:\nthey must offer eligible individuals access to coverage to every individual insurance policy they sell in the state; or they must offer eligible individuals access to coverage to their two most popular insurance policies (based on premium volume); or they must offer eligible individuals access to a lower-level and higher-level coverage. These two policies must include benefits that are substantially similar to other coverage offered by the issuer in the state, and must include risk adjustment, risk spreading, or financial subsidization.\nIssuers can refuse to cover individuals seeking portability from the group market if financial or provider capacity would be impaired. This means, for example, that if a network-based plan like an HMO can demonstrate that it is filled to capacity, then it would not have to accept eligible individuals. It would have to apply this exception uniformly, without regard to the health status of applicants.", "An eligible individual must have:\ncreditable health insurance coverage for 18 months or longer; most recent coverage under a traditional employer group plan, governmental plan, or church plan; exhausted any COBRA (or other continuation) coverage; no eligibility for coverage under any employment-based plan, Medicare or Medicaid; and no breaks in coverage of 63 or more days.\nIndividuals purchasing insurance on their own who do not meet these eligibility criteria, are not protected by HIPAA's portability and guaranteed availability provisions. These individuals may be protected under state laws.", "The group-to-individual portability and guaranteed availability protections apply only to individuals whose most recent coverage was provided through traditional employer-based group arrangements, governmental plans or church-sponsored plans. Group plans are defined as those meeting the ERISA definition, which is limited to those sponsored through a traditional employer-employee relationship or an employment-based association. Governmental plans are also defined in ERISA. They are plans that are established or maintained for its employees by the Government of the United States, the government of a state or a political subdivision of a state. This limitation means that people whose most recent coverage was sponsored by the military (CHAMPUS and TRICARE), many college-sponsored student plans, the Peace Corps, the Veterans Administration, the Indian Health Service, Medicare, Medicaid and SCHIP are not eligible for the federal group-to-individual portability and guaranteed availability protections. (State laws, however, may offer these individuals such protections.)", "An acceptable alternative state mechanism for coverage of eligible individuals must:\nprovide a choice of health insurance coverage to all eligible individuals; not impose any preexisting condition restrictions; and include at least one policy form of coverage that is comparable to either comprehensive health insurance coverage offered in the individual market in the state, or a standard option of coverage available under the group or individual health insurance laws in the state.\nIn addition to these requirements, a state may implement one of the following mechanisms:\ncertain National Association of Insurance Commissioners (NAIC) Model Acts ; a qualified high-risk pool that meets certain specified requirements; or other risk spreading or risk adjustment approach, or financial subsidies for participating insurers or eligible individuals; or any other mechanism under which eligible individuals are provided a choice of all individual health insurance coverage otherwise available.\nExamples of potential alternative state mechanisms include health insurance coverage pools or programs, mandatory group conversion policies, guaranteed issue of one or more plans of individual health insurance coverage, open enrollment by one or more health insurance issuers, or a combination of such mechanisms.", "Table 1 provides information on how each state has implemented the Act's group-to-individual portability provisions. As of December 2003, the District of Columbia and 10 states (Arizona, Delaware, Hawaii, Maryland, Missouri, Nevada, North Carolina, Rhode Island, Tennessee, and West Virginia) utilize the federal fallback mechanism. Missouri is also the only state that does not enforce these standards itself, and as a result CMS is responsible for enforcement in Missouri. As shown in Table 1 , many states have elected to provide group-to-individual portability through high-risk pools, while others utilize a combination of high-risk pools, existing state insurance reform laws, or other mechanisms. To obtain more information on a state's health insurance regulation of the individual market, individuals may wish to contact that state's department of insurance.", "As an adjunct to its portability requirement, the Act provides for two different special enrollment periods to ensure that people losing group health insurance coverage can more easily obtain other group coverage when it is available. The two special enrollment periods are:\n(1) Individual Losing Other Coverage . A group health plan or an issuer offering coverage in connection with a group health plan must allow an employee who is eligible, but not enrolled, to become covered under the plan if the following conditions are met:\nThe employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or dependent. For example, the employee may have been covered by a spouse's employer and declined coverage under his own employer's plan. The employee stated in writing at the time of declining enrollment that the reason for declining was that he or she was covered under another health insurance plan. This condition applies only if the plan sponsor or issuer requires such a written statement. The employee's or dependent's previous coverage was under a COBRA continuation provision that had become exhausted or was under some other coverage that had been terminated as a result of a loss of eligibility for the coverage (for reasons such as: legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment), or because the employer contribution towards such coverage was terminated.\nTo take advantage of a special enrollment period, the employee would have to request enrollment no later than 30 days after the date in which his or her prior coverage was exhausted or terminated.\n(2) Dependent Beneficiaries. This special enrollment period applies to individuals who become dependents through marriage, birth, adoption, or placement of adoption. Generally, this provision applies if a group health plan makes dependent coverage available, and the new dependent's spouse or parent is either a participant or eligible (including meeting any waiting periods) to be a participant under the plan. The newly dependent individual must be allowed to enroll as a beneficiary under the plan; however, enrollment must be sought within 30 days of the qualifying event (e.g., the marriage). Employees or spouses who are eligible, but not previously enrolled in the plan, may also enroll during this special enrollment. Coverage is effective on the date of the birth, adoption, or placement for adoption. In the case of marriage, coverage is effective no later than the first day of the month beginning after the date the request for enrollment is received.", "", "No, the Act prohibits a group health plan and an issuer offering group health coverage from establishing rules for eligibility for any individual to enroll under the plan based on health status-related factors. These factors include health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of domestic violence) and disability. Group health plans are also prohibited from failing to re-enroll a participant or beneficiary on the basis of health status-related factors. HIPAA also prohibits plans from charging differential premiums for enrollees within a group plan based on these health status-related factors.", "No, the Act prohibits employer plans and issuers of group health coverage from establishing rules of eligibility to enroll under the terms of the plan that discriminate based on one or more health-status related factors.", "No, these individuals cannot be denied enrollment in a group health plan, based on HIPAA's non-discrimination provision. Group plans or issuers offering group health coverage cannot use information about an individual's health status to either deny coverage or charge differential premiums. On January 8, 2001, the Department of Labor issued a preliminary final ruling with comment period, defining the nondiscrimination provisions of HIPAA. In this ruling, \"health status\" is defined very broadly to include \"evidence of insurability\" which in turn includes a provision that prohibits excluding coverage for individuals who participate in high-risk activities. Thus, this broad interpretation extends the nondiscrimination protections to individuals who engage in high-risk recreational activities.", "HIPAA's protection extend to enrollment policies and premiums. The protection does not address the benefits that are covered by these plans. Therefore, there is no federal requirement to cover treatments for injuries associated with high-risk activities, even if these treatments are otherwise covered under the plan. For example, a plan may exclude coverage for a broken leg if it occurs as a result of a high-risk activity.", "Under a group health plan, an employer is not required to offer coverage to an individual's spouse or children. If the employer does offer family coverage, the same non-discrimination protections apply to a spouse and any other dependents as defined under the terms of the plan. Coverage may not be denied because a family member is sick, and preexisting condition restrictions are limited as described above.", "No, the Act does not restrict premium amounts that an employer or insurer can charge. It also expressly permits an employer or group health insurer to offer premium discounts or rebates, or modify otherwise applicable copayments or deductibles, for participation in health promotion and disease prevention programs. However, the Act does prohibit a health plan from charging an individual a higher premium than the premium charged for another similarly situated individual enrolled in the plan on the basis of any health-related factor, such as a preexisting medical condition.", "The Act requires insurers, HMOs, and other issuers of health insurance selling in the small group market to accept any small employer that applies for coverage, regardless of the health status or claims history of the employer's group. This requirement is often referred to as \"guaranteed issue.\" The Act defines a small employer as one with two to 50 employees. (If, on the first day of the plan year, the plan has fewer than two participants who are current employees, it is not considered a small group and would not be covered by this \"guaranteed issue\" requirement.) Under guaranteed issue, the issuer must accept for enrollment under the policy, not just the employer's group, as a whole, but also every eligible individual in the employers' group who is eligible for and applies for timely enrollment. Exceptions to guaranteed issue are provided in the Act for network plans that might otherwise exceed capacity limits or in the event that the employer's employees do not live, work, or reside in the network plan's area.\nEmployer groups with more than 50 employees are not protected by this requirement unless otherwise required under state law. In the past, health insurance issuers usually did not examine the health status or medical history of larger employer groups when deciding whether to accept such groups for coverage. The Act requires the Secretary of Health and Human Services (HHS) and the General Accounting Office (renamed the Government Accountability Office in July 2004) to report every three years, beginning in December 2002, on access to health insurance in the large group market.", "No, the Act requires all health insurance issuers to continue coverage for any group, regardless of health status or use of services, if the group requests renewal. This requirement is known as guaranteed renewability. An issuer may drop coverage in cases of non-payment of premiums, fraud, or similar reasons not related to health status, such as violation of participation or contribution rules. But, there are no limits on amounts insurers may charge.", "As originally passed, HIPAA did not require an employer or issuer of group health insurance to offer specific benefits. Twice since its passage Congress added to HIPAA's protections by mandating specific benefits, but in each case only for plans that cover certain services. As part of the FY1997 appropriations bill for the Departments of Veterans Affairs and Housing and Urban Development (VA-HUD), Congress included provisions that (1) require plans that cover mental health services to provide limited mental health \"parity\", and (2) prohibit plans that cover newborn delivery from limiting hospital stays for newborn delivery to less than two days. The FY1999 Omnibus Appropriations Act incorporated the Women's Health and Cancer Rights Act, which requires plans that cover mastectomy as a treatment for breast cancer to also cover reconstructive surgery.", "Private health insurers often provide less coverage for the treatment of mental illnesses than they do for the treatment of other illnesses. For example, health plans may limit treatment of mental illnesses by covering fewer hospital days and outpatient office visits, and increase cost sharing for mental health care by raising deductibles and copayments. Twenty-two states have passed full-parity laws that require health plans to impose the same treatment limitations and financial requirements on their mental health coverage as they do on their medical and surgical coverage. Several other states have enacted legislation that requires health plans to provide certain specified mental health benefits (but not full parity). However, these state laws have a limited impact because they do not cover self-insured plans. ERISA exempts self-insured plans from state regulation. Nationwide, about 52% of covered workers are in a self-insured plan, according to the 2003 KFF/HRET survey of employer health benefits.\nIn 1996, Congress passed the Mental Health Parity Act (MHPA), which amended ERISA and the Public Health Service Act to establish new federal standards for mental health coverage offered by employer-sponsored plans. Identical provisions were later added to the Internal Revenue Code. The MHPA is limited in scope and does not compel insurers to provide full-parity coverage. For group plans that choose to offer mental health benefits, the MHPA requires parity only for annual and lifetime dollar limits on coverage. Plans may still impose more restrictive treatment limitations and cost sharing requirements on their mental health coverage. The MHPA includes several other limitations. Employers with 50 or fewer employees are exempt from the law. In addition, employers that experience an increase in claims costs of at least 1% as a result of MHPA compliance can apply for an exemption. The MHPA currently is authorized through December 31, 2005.\nThe 107 th Congress tried unsuccessfully to enact legislation ( S. 543 ) that would have amended and expanded the MHPA by requiring plans that choose to offer mental health benefits to provide full-parity coverage. Full-parity legislation is strongly supported by advocates of the mentally ill and enjoys broad bipartisan support among lawmakers. Employers and health insurance organizations oppose such legislation because of concerns that it will drive up health care costs. For more information, see CRS Report RL31657, Mental Health Parity: Federal and State Action and Economic Impact , by [author name scrubbed] and [author name scrubbed].", "The Newborns' and Mothers' Health Protection Act was also passed as part of P.L. 104-204 . This Act prohibits group health plans and issuers offering group coverage from restricting the hospital length of stay for childbirth for either the mother or newborn child to less than 48 hours for normal deliveries and to less than 96 hours for caesarian deliveries.", "Enacted in 1998, Title IX of the FY1999 Omnibus Appropriations Act requires group plans and health insurance issuers that provide coverage for mastectomies also to cover prosthetic devices and reconstructive surgery. The provision included a requirement that beneficiaries be notified of available coverage for prostheses and treatment of physical complications of reconstructive procedures.", "Federal law does not prohibit employers from excluding treatment of specific illnesses or conditions from their health benefit plans. On the other hand, a number of factors limit certain employers' ability to exclude specific illnesses from coverage. Most states have enacted legislation requiring that specific benefits or coverage be included in insured products. Some employers, particularly small ones, purchasing insurance products have little or no discretion in choosing or excluding specific types of services or procedures. This is because many insurance companies and HMOs have a set menu of products that do not vary considerably from one employer group to another. For self-funded plans, however, ERISA prevents state laws from applying and benefits are crafted by each individual employer plan. Thus only the few federal requirements enacted in HIPAA and its amendments (described above) place specific coverage requirements on these self-funded plans.", "", "No, such specific benefit plans do not have to comply with the requirements of the Act if they meet certain conditions spelled out in the Act. To be exempt, for example, the dental-only policy would have to be provided under a separate policy, certificate, or contract of insurance or not otherwise be an integral part of the plan.", "Yes, association plans must comply with the various requirements of the Act relating to group health coverage. For example, the sponsor of an association plan cannot drop a group from coverage because of the use of medical services by the group's members. Moreover, the association plan must comply with the restrictions on the use of preexisting medical condition limitation periods, provide for creditable coverage, and renew coverage except in limited cases. However, nothing under the Act requires that an association plan accept for coverage individuals who are not members of the association.", "Yes, states may impose their own requirements. But HIPAA ensures that state laws do not prevent the application of its consumer protections. For example, state laws regulating rating continue to apply because the Act generally does not address rating practices. On the other hand, the Act's provisions relating to portability, such as restrictions on the use of preexisting medical condition limitation periods override state laws. Exceptions include specific types of state laws that provide for greater portability , such as state laws that:\ndefine a preexisting medical condition to be one that existed for less than 6 months prior to becoming covered (instead of the 6 months required under the Act); provide for preexisting medical condition limitation periods shorter than 12 (and 18) months in the Act; and allow for breaks in continuous coverage longer than the 62-day period specified under the Act.\nThus, for example, a state may prohibit issuers selling to group health plans from imposing more than a 6-month preexisting medical condition limitation period on enrollees, instead of the 12-month limit in the Act. However, state laws that allowed such limitation periods in excess of 12 months would be overridden by the requirement of the Act.", "While there are no specific references in HIPAA or the subsequent benefits mandates that apply the requirements specifically to FEHBP, the plans provided by the FEHBP program are presumed to fall under the HIPAA definition of \"group health plan.\" As a result, the federal Office of Personnel Management, which administers the FEHBP program, complies with the HIPAA requirements.", "No, the Act does not place any restrictions on the premium amount that issuers can charge. However, some states limit insurance premiums in the individual market and more may decide to do so in the future. Such limits would then apply because the Act does not preempt or override either current or future state laws regulating the cost of insurance.", "The Secretaries of HHS, Labor, and Treasury are required to jointly enforce the provisions of the Act. The Secretary of Labor enforces the requirements on employer plans under Title I of ERISA. The Secretary of Labor is also generally given authority to promulgate regulations necessary to carry out the provisions of the Act relating to group health plans and health insurance issuers in connection with any group health plan. The Secretary of Treasury enforces requirements on all group health plans under the Internal Revenue Code. Requirements on health insurance issuers (such as insurance carriers and HMOs) are enforced by the Secretary of HHS to the extent that such requirements are not enforced by the states. The Secretaries are required to coordinate their activities to avoid duplication of effort.\nStates have the primary responsibility for enforcing HIPAA's access, portability and renewability standards applying to insurers in both the group and individual markets. If they do not pass laws that substantially enforce these standards, however, DHHS must do the enforcing itself. As of 2001, only Missouri had not enacted enabling legislation.", "Noncomplying group health plans covered under ERISA may be subject to civil money penalties, and both plans and issuers can be sued by participants and beneficiaries to recover any benefits due under the plan. The Secretary of Labor has the investigative authority to determine compliance with the law's requirements. For group health plans, generally the IRS can fine a noncomplying employer $100 per day per violation.\nRequirements on issuers will be enforced by the states. For Missouri, the Secretary of HHS enforces the provisions. The Secretary may impose a fine of $100 for each day the entity (the issuer or a nonfederal governmental plan) is out of compliance. The Act gives the Secretary of HHS the authority to promulgate regulations needed to carry out the provisions of the Act relating to requirements on issuers of coverage.", "The following table lists the regulations regarding HIPAA's insurance provisions. For regulations on HIPAA's administrative simplification and privacy provisions see CRS Report RL30620, Health information standards, privacy and security: HIPAA ' s administrative simplification regulations , by Stephen Redhead.", "", "A person's COBRA continuation coverage is considered creditable coverage in the case of an individual who moves from one group policy to another group policy or from a group policy to an individual policy. This allows an individual to move from COBRA to a new health plan without having to wait for coverage of any preexisting medical condition under the new plan, providing the individual does not have a lapse in coverage of 63 or more days.\nWith respect to HIPAA's individual market protections, the situation is somewhat more complex. One of the requirements for eligibility for guaranteed availability and portability in the individual market is that an individual must first have elected and exhausted any available COBRA or other continuation coverage. Eligible individuals who do not have access to COBRA or other continuation coverage may move directly to the individual market. Additionally, in the individual market, it is important to note that the insurer accepting the eligible individual for coverage can charge whatever rate is allowed under state law. (The Act does not limit the premiums that insurers can charge.)", "Yes, the Act makes several changes to the laws providing for COBRA continuation of coverage. It provides:\na clarification that a disabled qualified beneficiary and all other qualified family members of the beneficiary are also eligible for the additional 11 months of COBRA; that the qualifying event of disability applies in the case of a qualified beneficiary who is determined under the Social Security Act to be disabled during the first 60 days of COBRA coverage; that a qualified beneficiary for COBRA coverage includes a child who is born to, or placed for adoption with, the covered employee during the period of COBRA coverage; and that COBRA can be terminated if a qualified beneficiary becomes covered under a group health plan which does not contain any exclusion or limitation affecting a participant or his or her beneficiaries because of the requirements of the Act.\nIt should also be noted that under the Medical Savings Account (MSA) provisions of the Act (see below), individuals may withdraw funds from their MSAs without penalty to pay their COBRA premiums.", "In addition to the insurance provisions discussed above, HIPAA includes other provisions affecting health care. This section briefly summarizes these provisions and refers readers to other CRS reports where available.", "In addition to provisions relating to private health insurance, HIPAA directed the Secretary of HHS to issue standards to support and promote the electronic transmission of health care information between payers and providers. The standards specify the content and format of electronic health care claims and other common administrative and financial health care transactions (e.g., health plan enrollment, referrals). They are intended to streamline administrative operations within the health care system, which currently stores and transmits health information in numerous paper and electronic formats. In 2001 Congress enacted the Administrative Simplification Compliance Act ( P.L. 107-105 ), which enabled payers and providers to seek a one-year extension on the October 16, 2002 deadline for compliance with the electronic transactions and codes standards.\nHIPAA's administrative simplification provisions also instructed the Secretary of HHS to develop security standards and safeguards, which health plans and providers must incorporate into their operations to protect health information from unauthorized access, use, and disclosure. Health care providers and most health plans must be in compliance with the security standards by April 21, 2005. In addition, HIPAA directed the Secretary to develop standards for unique health identifiers (i.e., ID numbers) for patients, employers, health plans, and providers. CMS has issued standards for both the employer and provider identifiers, but the health plan identifier remains under development. In each fiscal year since FY1999, Congress has prevented CMS from developing a standard for the unique patient identifier by inserting language in the agency's annual appropriations bill. The language prohibits the use of funds for developing a unique patient identifier standard unless legislation is enacted specifically approving such a standard.\nThe growing use of information technology in the management, administration, and delivery of health care has led to increasing public concern over the privacy of medical information. Patients are worried about who has access to their medical records without their express authorization. They fear that their personal health information will be used against them to deny insurance, employment, and housing, or to expose them to unwanted judgment and scrutiny. Lawmakers addressed these concerns by including in HIPAA's administrative simplification provisions a timetable for developing standards to protect the privacy of health information. HIPAA gave Congress until August 21, 1999, to enact comprehensive health privacy legislation, otherwise the Secretary was instructed to develop privacy standards. Congress was unable to meet its own deadline and so the Secretary proceeded to develop a health information privacy rule. The final rule was issued on December 28, 2000, and modifications to the rule were published on August 14, 2002. For more information on the privacy rule, see CRS Report RS20500, Medical Records Privacy: Questions and Answers on the HIPAA Rule , by [author name scrubbed] . Information on the status and implementation of all the HIPAA administrative simplification standards is at http://aspe.os.dhhs.gov/admnsimp .", "HIPAA authorized tax-advantaged medical savings accounts (MSAs) under a demonstration that began in 1997. MSAs (now formally called Archer MSAs) are personal savings accounts for unreimbursed medical expenses. They can be used to pay for health care not covered by insurance, including deductibles and copayments. The legislation provided that MSAs may be established by taxpayers who have qualifying high deductible insurance (and none other, with some exceptions) and who either are self-employed or are employees covered by the high deductible plan established by their small employer.\nEmployer contributions to MSAs are not subject to either income or employment taxes, while contributions made by individuals—allowed only if the employer does not contribute—are allowed as an above-the-line deduction (not limited to itemizers). MSAs are held in trust by insurance companies, banks, and other financial institutions, and whatever earnings they have are exempt from taxes. Withdrawals are not taxed if they are for medical expenses unreimbursed by insurance or otherwise, while other distributions, being non-qualified, are included in gross income and subject with some exceptions to an additional 15% penalty.\nHIPAA set a deadline(originally December 31, 2000) for establishing new accounts and limited the total to various ceilings, eventually 750,000 accounts. In October, 2002, the IRS estimated that there would be 78,913 MSA returns filed for tax year 2001; it also determined that 20,592 taxpayers who did not make contributions in 2001 established accounts in the first six months of 2002. These numbers were far less than the 750,000 statutory ceiling. Later amendments extended the deadline for new accounts to December 31, 2003. Although no new MSAs may be created, with some exceptions, current owners can maintain their accounts and, provided they have a qualifying high-deductible insurance, can continue to make contributions. However, most MSA owners can now have HSAs, and their MSA balances can be rolled over into the new accounts.\nFor more information about MSAs and HSAs, see CRS Report RS21573, Tax-Advantaged Accounts for Health Care Expenses: Side-by-Side Comparison , by [author name scrubbed] and [author name scrubbed], and CRS Report RL32467, Health Savings Accounts , by [author name scrubbed], [author name scrubbed], and Neela K. Ranade. For current legislative activity on tax-advantaged accounts, see CRS Issue Brief IB98037, Tax Benefits for Health Insurance and Expenses: Current Legislation , also by [author name scrubbed].", "HIPAA increased the portion of premiums that self-employed taxpayers may deduct from income for the purposes of determining federal taxes owed. Under prior law, the deduction was 30% of health insurance costs; HIPAA increased it to 40% in 1997; 45% in 1998 through 2002; 50% in 2003; 60% in 2004; 70% in 2005; and 80% in 2006 and thereafter. Subsequent legislation ( P.L. 105-34 and P.L. 105-277 ) accelerated and increased the percentages set by HIPAA. Beginning in 2003, 100% of health insurance costs can be deducted. As discussed below, HIPAA also allowed self-employed taxpayers to take account of long-term care insurance premiums in making this deduction.", "HIPAA provided that payments for personal injury or sickness through an arrangement having the effect of accident or health insurance are excluded from gross income (that is, they are exempt from taxation), provided the arrangement has adequate risk shifting and is not merely a reimbursement arrangement. Thus with respect to taxes, payments from self-insured plans covering self-employed individuals are treated like payments from commercial insurance.", "HIPAA established new rules regarding the tax treatment of long-term care insurance and expenses, effective January 1, 1997. Qualified long-term care insurance is treated as accident and health insurance, and benefits are treated as amounts received for personal injuries and sickness and reimbursement for medical expenses actually incurred. As a consequence, benefits are excluded from gross income (that is, exempt from taxation). The exclusion for benefits paid on a per diem or other periodic basis is limited to the greater of (1) $240 a day (in 2005) or (2) the cost of long-term care services.\nEmployer contributions to the cost of qualified long-term care insurance premiums are excluded from the gross income of the employee. The exclusion does not apply to insurance provided through employer-sponsored cafeteria plans or flexible spending accounts.\nUnreimbursed long-term care expenses are allowed as itemized deductions to the extent they and other unreimbursed medical expenses exceed 7.5% of adjusted gross income. Long-term care insurance premiums can be counted as these expenses subject to age-adjusted limits. In 2005, these limits range from $270 for persons age 40 or less to $3,400 for persons over age 70.\nSelf-employed individuals are allowed to include long-term care insurance premiums in determining their above-the-line deduction (not limited to itemizers) for health insurance expenses. Only amounts not exceeding the age-adjusted limits can be included. So limited, 100% of the cost of the insurance may be claimed as a deduction in 2005, as described above.\nQualified long-term care insurance is defined as a contract that covers only long-term care services; does not pay or reimburse expenses covered under Medicare; is guaranteed renewable; does not provide for a cash surrender value or other money that can be paid, assigned, or pledged as collateral for a loan, or borrowed; applies all refunds of premiums and all policy holder dividends or similar amounts as a reduction in future premiums or to increase future benefits; and meets certain consumer protection standards. Policies issued before January 1, 1997, and meeting a state's long-term care insurance requirements at the time the policy was issued are considered qualified insurance for purposes of favorable tax treatment.\nQualified long-term care services are defined as necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, which are required by a chronically ill individual, and are provided according to a plan of care prescribed by a licensed health care practitioner. However, amounts paid for services provided by the spouse of a chronically ill person or by a relative directly or through a partnership, corporation, or other entity will not be considered a medical expense eligible for favorable tax treatment, unless the service is provided by a licensed professional.\nChronically ill persons are defined as those individuals:\nunable to perform without substantial assistance from another individual at least two of the following activities of daily living (ADLs)for a period of at least 90 days due to a loss of functional capacity: bathing, dressing, transferring, toileting, eating, and continence; having a level of disability similar to the level of disability specified for functional impairments (as determined by the Secretary of the Treasury in consultation with the Secretary of Health and Human Services); or requiring substantial supervision to protect them from threats to health and safety due to severe cognitive impairment.\nHIPAA required that a licensed health practitioner (physician, registered professional nurse, licensed social worker, or other individual prescribed by the Secretary of the Treasury) certify that a person meets these criteria within the preceding 12-month period.", "HIPAA clarified that accelerated death benefits (that is, benefits paid before death) received under a life insurance contract on the life of an insured terminally or chronically ill individual are excluded from gross income. Also excluded are amounts received from a viatical settlement provider for the sale or assignment of a life insurance contract. These exclusions do not apply to amounts paid to persons other than the insured if they have an insurable interest in the insured for business reasons.\nA terminally ill individual is one who has been certified by a physician as having an illness or physical condition which can reasonably be expected to result in death within 24 months of the date of certification.\nA chronically ill individual is defined the same way as for long-term care (see the previous section). In this case, the exclusion of accelerated death benefits is limited to the actual costs of long-term care incurred by the individual that are not compensated by insurance or otherwise. The exclusion for benefits paid on a per diem or other periodic basis is limited to the greater of (1) $240 a day (in 2005) or (2) the costs of long-term care services. Contracts must not pay or reimburse expenses which are reimbursable under Medicare or would be but for the application of a deductible or coinsurance amount. In addition, contracts are subject to the consumer protection provisions specified in the tax code for long-term care insurance, except for analogous standards specifically applying to chronically ill individuals that are adopted by the National Association of Insurance Commissioners or the state in which the policyholder resides.", "HIPAA added two types of organizations to the list of those expressly exempt from the federal income tax: (1) state-sponsored membership organizations that provide insurance coverage or medical care to high-risk individuals, and (2) state-sponsored workmen's compensation reinsurance organizations. Organizations in either classification must meet a number of requirements.", "HIPAA allowed health insurance providers (other than health maintenance organizations) that are organized and governed under state laws specifically and exclusively applying to not-for-profit health insurance or service organizations to deduct 25% of claims and expenses incurred during the year, less adjusted surplus. Previously this tax treatment applied only to Blue Cross and Blue Shield organizations.", "HIPAA provided that the 10% early withdrawal penalty would no longer apply to individual retirement account (IRA) distributions used to pay medical expenses in excess of 7.5% of adjusted gross income. In addition, it provided that the penalty would not apply to IRA distributions used to pay health insurance premiums after separation from employment in the case of an individual who receives 12 consecutive weeks of unemployment compensation.", "HIPAA required the Secretary of the Treasury to include organ and tissue donor information, to the extent practicable, in the mailing of individual income tax refunds from February 1, 1997 through June 30, 1997. authorized tax-advantaged medical savings accounts (MSAs) under a demonstration that began in 1997." ], "depth": [ 0, 1, 2, 2, 1, 2, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 2, 3, 3, 3, 3, 3, 3, 2, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 2, 3, 3, 2, 3, 3, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h3_title h1_full", "h3_full", "", "h0_title h2_title h3_title", "h3_title", "", "h3_full", "", "", "", "", "", "", "", "", "h0_full h3_full", "", "", "h0_full h3_full", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h1_title h3_title", "h3_full", "h1_full", "h1_full", "", "h1_full", "", "", "h0_full", "", "" ] }

{ "question": [ "What does HIPAA stand for and what was it responsible for?", "What was the purpose of HIPAA and what did it promise?", "What did the act provide?", "What did the act require on a state-level?", "What types of tax provisions did HIPAA provide?", "What did HIPAA allow small businesses to do to help improve insurance plans?", "How did that affect the self-employed?", "What was the effect of the improvement?", "What has occurred since the passage of HIPAA?", "What new provisions were made in 1996 concerning health plans and policies?", "How long was it extended for?", "What other provisions were made regarding sexual health?", "What was the result of the amendments when it came to tax?", "Will the answers be definitive?", "Why or why not?", "What is the state of the other regulations?", "What do the answers about the requirements on health insurance depend on?", "What were states allowed the choice of for some provisions?" ], "summary": [ "The Health Insurance Portability and Accountability Act (HIPAA) of 1996 (P.L. 104-191), provided for changes in the health insurance market.", "It guaranteed the availability and renewability of health insurance coverage for certain employees and individuals, and limited the use of preexisting condition restrictions.", "The Act created federal standards for insurers, health maintenance organizations (HMOs), and employer-provided health plans, including those that self-insure.", "It permitted, however, substantial state flexibility for compliance with the requirements on insurers.", "HIPAA also included tax provisions relating to health insurance.", "It permitted a limited number of small businesses and self-employed individuals to contribute to tax-advantaged medical savings accounts (MSAs) established in conjunction with high-deductible health insurance plans.", "It increased the deduction for health insurance that self-employed taxpayers may claim.", "In addition, it allowed long-term care expenses to be treated like deductible medical expenses and clarified the tax treatment of long-term care insurance.", "Since the passage of HIPAA, there have been subsequent amendments.", "In 1996, new provisions required group health plans and insurers to cover minimum hospital stays for maternity care and for a limited period, to provide parity in certain mental health benefits.", "Parity was later extended for one year.", "In 1998, a provision was passed requiring health plans that cover mastectomy to also offer reconstructive breast surgery.", "Amendments have also increased the tax deduction for premiums paid by self-employed taxpayers.", "Some of the answers provided may not be definitive.", "This is because, in some cases, final regulations have not yet been promulgated.", "Other regulations, such as those defining the administrative simplification provisions, remain under development.", "In addition, the answers to many questions about the requirements on the individual health insurance market depend upon particular state responses to the Act.", "For some provisions, states were allowed the choice of implementing the HIPAA requirements (\"the federal fallback\") or establishing acceptable alternative mechanisms." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, -1, -1, -1, 1, -1, -1, -1, 0, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 3, 3, 3, 3, 3, 5, 5, 5, 5, 5 ] }

{ "title": [ "Background", "IRS Budget Formulation and Execution Structures", "Budget Flexibility", "Information Technology", "Funding Declined for Most IRS Business Units and Tradeoffs to Manage Reductions May Affect Some Programs’ Effectiveness and Increase Risk", "Fifteen of Eighteen Business Units Decreased Spending", "Selected Business Units Scaled Back Activities, Potentially Reducing Program Effectiveness or Increasing Risk to IRS and the Federal Government", "Examples of Programs and Services Reduced or Eliminated", "Examples of Deferred Programs or Acquisitions", "IRS Is Using Its Budgeting Flexibility and Taking Steps to Improve Agency-Wide Coordination of Budget Decisions", "IRS Has Flexibility in Spending User Fee Revenue", "IRS Planning Efforts Informed the Management of $346 Million in Budget Reductions", "IRS Is Working to Increase Agency-Wide Coordination in Budget Decisions in Response to Constrained Budget Environment", "IRS Reported on Major IT Investments in Its Fiscal Year 2016 Congressional Justification, but Some Information Was Inaccurate or Unclear", "IRS Provided Inaccurate Data to the Congress", "Some IT Investment Information Was Unclear Because IRS Did Not Use Standard Definitions", "IRS Is Taking Steps to Implement GAO Recommendations, Including Those Related to Greater Use of Return on Investment Data and Improvements in the PPACA Cost Estimate", "Calculating and Using Return on Investment Data to Inform Resource Allocation Decisions Is a Long-Term Effort for IRS", "Updated PPACA Cost Estimate Showed Improvement and Met or Substantially Met Criteria in Three of Four Overall Categories, but Is Still Not Considered Reliable", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: IRS Funding and FTE Data from Fiscal Year 2009 through Fiscal Year 2016", "Appendix II: Non-interactive Version of Figure 1 - Fiscal Year 2014 Obligations by Fund Center and Percentage Change from Fiscal Year 2010", "Appendix III: Summary of Major Information Technology Investments Reported in IRS’s Fiscal Year 2016 Congressional Justification", "Appendix IV: GAO Budget-Related Recommendations to IRS That Remain Open", "Appendix V: List of Open Matters for Congressional Consideration and Recommendations to IRS That Could Result in Potential Savings or Increased Revenues", "Appendix VI: IRS Legislative Tax Proposals Related to Prior GAO Work", "Appendix VII: PPACA Cost Estimate Assessment", "Appendix VIII: Comments from the Internal Revenue Service", "Appendix IX: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "IRS formulates its budget at three levels: (1) appropriation account, (2) budget activity, and (3) program activity. IRS requests funding by appropriation accounts, which align broadly with its strategic goals, which are to (1) deliver high quality and timely service to reduce taxpayer burden and encourage voluntary compliance; and (2) effectively enforce the law to ensure compliance with tax responsibilities and combat fraud. IRS’s CJ presents funding and FTE information at the appropriation account and budget activity levels. In addition, it provides descriptions of program activities within each budget activity. IRS has four appropriation accounts (fiscal year 2015 appropriation listed in parentheses):\nEnforcement ($4.86 billion): Funds activities such as determining and collecting owed taxes, providing legal and litigation support, and conducting criminal investigations.\nOperations Support ($3.64 billion): Funds activities including rent and facilities expenses, IRS-wide administration activities, and IT maintenance and security.\nTaxpayer Services ($2.16 billion): Funds taxpayer service activities and programs, including pre-filing assistance and education, filing and account services, and taxpayer advocacy services.\nBusiness Systems Modernization ($290 million): Funds the planning and capital asset acquisition of IT to modernize IRS business systems.\nBudget activities divide appropriation accounts into additional functions. For example, the Enforcement appropriation is broken into three budget activities: Investigations, Exam and Collections, and Regulatory. Each budget activity, in turn, has multiple program activities. For example, Exam and Collections has 20 program activities, such as Tax Reporting Compliance – Field Exam; Earned Income Tax Credit Management and Administration; and Whistleblower Office. In addition to program activities, the lower levels of the budget formulation and budget execution structures include business units and other areas of interest, which are not discrete categories. For example, Wage and Investment is one division within IRS and can be referred to as a business unit, while identity theft would be considered an area of interest that crosses divisions within IRS.\nIRS’s appropriation accounts align with its organizational structure at the highest level. For example, IRS has an Operations Support appropriation account and an Operations Support commissioner-level organization. In addition, IRS’s organizational structure tracks roughly to its budget execution structure, which is made up of three types of fund centers: (1) support, (2) functional, and (3) operating. IRS executes its budget across 18 fund centers, which manage and distribute funds.", "IRS has some flexibility in how it allocates its resources. IRS may shift resources among program activities (activities within a budget activity). For example, IRS could shift resources among any of the 20 program activities within the Exam and Collection budget activity without congressional approval or notification. Additionally, IRS may reprogram funds among budget activities within certain limits.\nWhile IRS cannot transfer resources from one appropriation account to another without specific statutory authority to do so, the agency still has some flexibility because fund centers may receive funds from more than one appropriation account. Over half of IRS fund centers or business units receive funding and obligate funds from multiple appropriation accounts. IRS management allocates funds to each business unit (subject to transfer and reprogramming limitations) and has more flexibility when there are multiple accounts from which it may fund a business unit.\nIRS also has flexibility in how it allocates user fees because it determines the amount of funds transferred to each appropriation account. In fiscal year 2014, IRS transferred $416 million in user fee funds to its appropriations accounts to be spent. IRS collects user fees for various activities such as assisting taxpayers in complying with their tax liabilities, clarifying the application of the tax code to particular circumstances, and ensuring the quality of paid preparers of tax returns.", "IT comprises a significant portion of IRS’s budget and plays a critical role in enabling IRS to carry out its mission and responsibilities. The fiscal year 2015 appropriation includes about $2.5 billion for IT investments; this represents over 20 percent of the total IRS budget. IRS relies on information systems to process tax returns, account for tax revenues collected, send bills for taxes owed, issue refunds, assist in the selection of tax returns for audit, and provide telecommunications services for all business activities, including the taxpayer toll-free access to tax information, among other things.\nIT investments are funded through both the Operations Support and the Business Systems Modernization appropriation accounts as well as through user fees. The President’s fiscal year 2016 budget request includes $3.24 billion for IRS IT investments. Of that amount, $2.26 billion is for 20 major IT investments.to additional reporting requirements.", "", "IRS’s total appropriations declined from a high of $12.1 billion in fiscal year 2010 to $11.3 billion in fiscal year 2014, a reduction of about 7 percent. Reflecting IRS’s overall budget decline, spending fell in 15 of the 18 fund centers or business units from fiscal year 2010 to fiscal year 2014, and spending in 9 fund centers declined 10 percent or more. For example, SB/SE, which was the largest business unit in fiscal year 2010, experienced a 14 percent decrease in obligations—from $2.6 billion to $2.3 billion—from fiscal year 2010 to fiscal year 2014. Over half of IRS fund centers or business units receive appropriations from multiple accounts. As shown in figure 1, of the 18 fund centers, 11 obligate funds from two or more of IRS’s four appropriation accounts.fund centers obligate funds from only one account and 5 of those 7 serve in an operational support capacity, such as Agency Wide Shared Services, HCO, and Chief Financial Officer. Of the 9 fund centers that experienced a decline in obligations of at least 10 percent, 5 receive funding from only one appropriation account. Business units that receive funds from more than one appropriation account may have increased flexibility because IRS can balance reductions in one account with resources from another account, provided that any shifts in funding do not violate appropriation, transfer or reprogramming restrictions.", "Each business unit we examined—HCO, Office of Chief Counsel, and SB/SE—took actions to absorb budget reductions. One common element among each of the business units examined is that they spend 80 percent or more of their funds on labor. When IRS receives its budget, the Corporate Budget Office coordinates with business units to ensure that each business unit has sufficient funding to support FTEs already onboard. The review of FTEs aligns anticipated salary and benefit costs to available appropriated funding for each business unit. As seen in Table 1, from fiscal year 2010 to fiscal year 2014, FTEs declined through attrition in each of the business units examined.\nBecause labor comprises the majority of these business units’ expenses, unit managers are limited in how they implement budget cuts. According to business unit officials, budget reductions were often implemented by decreasing the amount or type of activity performed. One key factor that influenced business units’ decisions about how to prioritize activities was whether the activity was statutorily mandated. According to IRS officials, statutorily mandated activities—such as tax litigation in the Office of Chief Counsel—remained a priority.", "Non-filer investigations. SB/SE significantly reduced the individual and business non-filer cases it pursues. IRS detects taxpayers that failed to file—non-filers—by matching third party information with tax returns for individuals, and relying on open filing requirements and third party information for businesses. In tax year 2010, IRS started 3.5 million individual non-filer cases and 4.3 million business non-filer cases. In tax year 2014 non-filer cases dropped to 2.0 million for individuals and 1.8 million for businesses, a reduction of 43 percent and 58 percent, respectively. According to SB/SE officials, detecting and pursuing non-filers is not mandatory. By not pursing non-filers, however, IRS misses the opportunity to bring a noncompliant taxpayer into the tax system, and the government could forego potential revenue from taxes, penalties and interest payments.\nPrivate letter rulings. The Office of Chief Counsel limited the number and scope of private letter rulings—a written statement issued by IRS at the request of a taxpayer that interprets and applies tax laws to the taxpayer’s represented set of facts. Private letter rulings decreased by 30 percent—from 935 to 651—from fiscal year 2010 through 2014. The drop in private letter rulings means that fewer taxpayers receive a ruling prior to filing, causing uncertainty for them and the tax community. According to Counsel officials, one benefit of the private letter rulings is that they can alert IRS attorneys to nascent tax issues. Private letter rulings are not mandatory and IRS charges a user fee for the service to offset the cost of the service. However, since there are a limited number of FTEs, IRS decided to scale back work in the area in order to shift those FTEs to other activities, such as issuing regulations and public guidance.\nBankruptcy program. According to Counsel officials, a bankruptcy program supported by approximately 30 FTEs was eliminated. IRS attorneys supporting the program were appointed as Special Assistant United States Attorneys to represent IRS in bankruptcy court instead of Department of Justice attorneys. The program was identified as low priority because it was not required by statute.", "Software acquisitions. According to officials in the Office of the Chief Counsel, the limited budget for litigation-related information technology has prevented Counsel from acquiring modern, industry standard electronic discovery software. Such software is used to capture and preserve documents for the discovery phase of tax and other litigation. According to Counsel officials, the outcome of tax litigation cases has been impacted because IRS does not have the software. For example, parties to a lawsuit frequently request emails and other computer files related to a particular topic or keywords, and the software thoroughly and efficiently identifies the files, minimizing the need for time-intensive manual review of the files. IRS was recently sanctioned in court and ordered to reimburse a plaintiff $12,500 for the cost of depositions because it did not have the technical capability to produce appropriate documents for discovery. This issue has been raised with IRS management through the Enterprise Risk Management and budget processes. Counsel officials stated that IRS has funded other high-priority IT systems, but that there has not been sufficient funding to acquire e-discovery software or support an effective e-discovery function. IRS estimates the cost of the software is $10 million.\nBackground reinvestigations. IRS has postponed reinvestigations for moderate risk employees since fiscal year 2013. Almost half of IRS’s FTEs, approximately 38,000 employees, are identified as moderate risk, and 24,000 reinvestigations have been postponed. In November 2011, the Office of Personnel Management amended its regulations to direct that federal employees occupying positions of public trust (those designated as high or moderate risk) undergo a background reinvestigation every 5 years. Periodic reinvestigations allow agencies to determine if employees are still suitable for U.S. government employment, or still eligible to hold a sensitive position. IRS completed reinvestigations in fiscal year 2012 at a cost of approximately $3.9 million. For fiscal year 2016, the President’s Budget requests $3.5 million and 11 FTEs for IRS to implement federal investigative standards, which includes reinvestigations of employees.", "", "In fiscal year 2015, IRS plans to allocate less user fee revenue to the taxpayer services account than in previous years ($49 million, compared to around $180 million in fiscal years 2012, 2013, and 2014). IRS plans to allocate a larger amount to the operations support account ($411 million, compared to $132 million, $183 million, and $218 million in fiscal years 2012, 2013, and 2014, respectively). According to IRS officials, management decided to allocate more user fee funds to operations support in fiscal year 2015, in part because that year’s appropriation for operations support was $161 million (4.2 percent) less than fiscal year 2014, while taxpayer services was not reduced during that time frame. According to IRS officials, user fee revenue allocated to operations support will be used to meet requirements to implement PPACA and fund investment in the design, development, and deployment of mainframe and server investments which can help IRS better respond to taxpayers. IRS officials said that user fees allocated to operations support reduce system downtime, which positively affects IRS’s ability to respond to taxpayers, process returns, collect revenue and issue refunds.\nAlthough IRS services and operations are primarily funded through annual appropriations, IRS has the flexibility to supplement its appropriations with other resources, such as user fees. IRS deposits user fees that it is authorized to retain into its Miscellaneous Retained Fees Fund before transferring funds to an appropriation account to be spent. In fiscal year 2014, $677 million was available in the account. IRS transferred $416 million of that money to its appropriation accounts which accounted for 3.4 percent of IRS’s total available resources. Remaining funds are carried over to the next fiscal year. Table 2 shows user fee funds transferred to IRS’s appropriation accounts during recent fiscal years. For fiscal year 2015, IRS plans to transfer a total of $481 million.", "IRS managed reductions by strictly limiting hiring, overtime, and overhead costs. The reductions were informed by a December 2014 planning exercise. In this exercise, IRS prepared for how it would absorb a hypothetical 5 percent budget reduction. Business unit managers identified funding requirements for current activities and categorized programs as high, medium, or low priority, including how the proposed reduction would affect program spending and FTE counts. Business unit officials identified and documented legally or contractually required activities and also identified potential risks and the potential performance impact of cutting or not funding each activity. Ultimately, IRS’s budget decreased $346 million from fiscal year 2014 to fiscal year 2015, a 3.1 percent decline. IRS considered furloughing employees for up to 2 days in fiscal year 2015 to help absorb the budget cuts; it since determined that furlough days will not be necessary because it is able to absorb the reductions in other areas.\nFollowing the planning exercise, in January 2015, IRS identified the following actions to absorb this budget reduction.\nExternal hiring freeze: IRS plans to replace few employees who leave the agency. In an agency with over 80,000 FTEs, all requests for external hiring in fiscal year 2015 must be approved by a direct report to the Commissioner. Specifically, requests for new hires are reviewed by the Deputy Commissioner for Operations Support, Deputy Commissioner for Services and Enforcement, and in certain cases, the Chief of Staff.\nInternal hiring restrictions: New policies require that resources be available to cover both current year and annualized future costs for any internal hiring, permanent promotions, or reassignments. These policies ensure that employee transfers are consistent with the workflow needs of the agency.\nOvertime restrictions: Overtime was eliminated except for a small amount to support the tax filing season or for mission critical needs. IRS uses overtime frequently during the tax filing season to process tax returns and provide taxpayers service, such as by telephone or at assistance centers. All overtime requests were to be approved by the Deputy Commissioners or the Chief of Staff to the Commissioner. According to IRS officials, limitations on overtime are estimated to save approximately $75 million.\nOverhead cost reductions: Spending on travel and training, contracts, and supplies and printing is restricted and business unit heads are required to review the priorities for contract spending and identify lower cost alternatives.", "Recently, IRS launched two efforts to increase management coordination in budget formulation and execution decisions. In one effort, IRS established the Program and Budget Advisory Committee to help it improve its process for determining agency-wide priorities and for allocating resources to fund those priorities. According to IRS officials, this committee was formed in October 2014. It is intended to prevent resources from being allocated on a first come, first served basis or on some other arbitrary method. Members of the committee include executives from Strategy and Finance, Budget Execution, Systems and Analysis, and Corporate Budget; the Commissioner and Deputy Commissioners have decision-making authority. According to IRS, the committee will be responsible for overseeing and reviewing IRS’s budget execution and making recommendations on all matters relating to its financial operations. These include making recommendations for allocating funds, prioritizing mission critical needs, and assessing and reporting risk with regard to expending resources. IRS expects the outcomes to include a detailed decision-making process for prioritizing IRS-wide requirements that are aligned with its strategy and resource needs, open communication and transparency, and identification of risk and requirements in excess of available funds.\nIn another effort, responding in part to our June 2014 recommendation, IRS established the Planning, Programming, and Audit Coordination (PPAC) office in 2014 to improve coordination of (1) current and completed audits of IRS activities and (2) resource decision making and strategic planning. According to IRS, PPAC is to facilitate coordination among business units and operating divisions to improve resource allocation and planning as part of the budget formulation process. PPAC is to drive long-term planning for resource allocation to be seen first in the fiscal year 2017 budget. As envisioned, the new strategic approach is to include consideration of short-term trade-offs with long-term investments along with post-evaluation of investments.", "", "In its fiscal year 2016 CJ, IRS provided detailed information about its major IT investments, as it did in the 2014 and 2015 CJs; however, the information provided on actual obligations to date was inaccurate, due to potential deficiencies in some internal controls over the preparation of the CJ. IT is a significant portion—about 23 percent—of the total IRS budget request for fiscal year 2016. The request includes approximately $2.26 billion to fund 20 major IT investments and approximately $976 million for other IT investments. In the fiscal year 2016 CJ, IRS defines “actual obligations to date” as the actual obligations through fiscal year 2014 specific to each asset. However, despite this definition, the numbers reported for most investments only include obligations through fiscal year 2013. Because the CJ reports inaccurate information about amounts obligated to date for most of the 20 listed major IT investments, Congress does not have accurate, reliable, and current data to inform its budget decisions or aid in its oversight.\nIRS increased the amount of information it reported on major IT investments in recent years’ CJs, and the fiscal year 2015 and 2016 CJs included information under the label “actual obligations to date” for each investment. Beginning with the fiscal year 2014 CJ, IRS reported detailed and precise quantitative and qualitative information on the cost and duration of its major IT investments. Information reported included life- cycle costs, projected useful life of the current asset, and anticipated benefits for each investment. In the fiscal year 2015 CJ, IRS added information on actual obligations to date for each of the major IT investments listed in the CJ. IRS provided this additional information in response to a recommendation we made in September 2013 for all major IT investments.\nIRS reported inaccurate information on actual obligations to date for many of the major IT investments in the fiscal year 2016 CJ. The CJ states that these amounts represent obligations through fiscal year 2014. However, for all of the major IT investments listed in the CJ, with the exception of one newly added major investment, the amounts reported for actual obligations to date through fiscal year 2014 were the same as the amounts reported in the previous year’s CJ as actual obligations through fiscal year 2013. Data obtained separately from IRS show that amounts were obligated for all of these investments in fiscal year 2014, which indicates that the data were not updated in the CJ.\nOfficials in IRS’s Corporate Budget office stated that the data may not have been updated since they used last year’s information as a starting point in preparing the fiscal year 2016 CJ. According to the officials, staff in the Information Technology office prepare this section of the CJ and send it to Corporate Budget for inclusion in the final submission. Corporate Budget officials relied on data provided by the Information Technology staff without using any internal control procedure, such as checking the data against a reliable source, to confirm that these data were correct before including them in the CJ.\nStandards for Internal Control in the Federal Government calls for agencies to ensure that ongoing monitoring occurs during the course of normal operations. Monitoring should be performed continually and be ingrained in the agency’s operations; it includes regular management and supervisory activities, comparisons, reconciliations, and other actions people take in performing their duties. Without such controls, IRS risks continued errors in the information on IT investments reported in its CJ. Such errors could negatively affect Congress’ ability to obtain accurate information on major IT investments needed to inform future budget decisions and oversight.", "IRS reported information on “life-cycle cost” and “projected useful life of the current asset” for each major IT investment in the fiscal year 2016 CJ, but did not use standard definitions for these terms or define or explain the terms in such a way that they could be understood and used. Agencies are required to use standard terms established by the Comptroller General, in consultation with OMB, in providing fiscal, budget, and program information to Congress. The Comptroller General has established the following definition of life-cycle cost: “The overall estimated cost, both government and contractor, for a particular program alternative over the time period corresponding to the life of the program, including direct and indirect initial costs plus any periodic or continuing costs of operation and maintenance.” OMB’s Capital Programming Guide applies this definition to capital assets: “The cost of a capital asset is its full life-cycle cost, including all direct and indirect costs for planning, procurement (purchase price and all other costs incurred to bring it to a form and location suitable for its intended use), operations and maintenance (including service contracts), and disposal.”\nIRS did not report data that are consistent with the required definition of “life-cycle cost” or offer an alternative definition. IRS Information Technology officials told us that the reported amounts represent estimates of full life-cycle costs for some major IT investments. For other investments, these amounts represent estimated costs for the current fiscal year and 2 future fiscal years. According to IRS officials responsible for preparing this portion of the CJ, they did not consider how long the investment was expected to last when deciding which estimates to report. Instead, they reported full life-cycle cost estimates when such estimates were available. When such estimates were not available, the officials reported 3-year estimates. However, the CJ identifies all investments’ reported life-cycle costs as representing full life-cycle costs.\nIn addition, IRS did not explain the meaning of the term “projected useful life of the current asset” in the CJ. In the Financial Services and General Government Appropriations Act, 2015, Congress directed IRS to include in its fiscal year 2016 CJ a summary of cost and schedule performance information for its major IT systems. In order for this performance information to be useful to Congress, the metrics reported in the CJ need to have the basic attributes of successful performance measures. As we previously reported, one of these attributes is clarity: a measure of performance has clarity when it is clearly stated and the name and definition are consistent with the methodology used for calculating it. IRS officials told us the dates reported under “projected useful life of the current asset” are not based on a projection about the date at which the current assets will no longer be useful, but are instead arbitrary dates several years in the future and do not represent projections of the useful According to IRS officials, the years reported for life of IT investments.most investments represent an arbitrary number of years, such as 3 or 5, after the current year. In some cases, the reported year may represent a projection of the useful life of the investment. However, according to an official in IRS’s Information Technology office, different people are responsible for reporting on different investments, and they may report information according to different understandings of the meaning of the term “projected useful life of the current asset.” The years reported in the CJ under “projected useful life of the current asset” for the 20 listed major IT investments are the following: 2017 (1 investment), 2018 (2 investments), 2019 (10 investments), 2020 (5 investments), 2021 (1 investment), and 2034 (1 investment).\nAs a result of this arbitrary process for reporting projected useful life, some of the information reported in the CJ is inconsistent with IRS’s plans for its major IT investments. For example, according to IRS Information Technology officials, they plan to continue using the Return Review Program after the Electronic Fraud Detection System is no longer in use. However, the fiscal year 2016 CJ reports a “projected useful life of the current asset” of 2020 for the Return Review Program and a later date, 2021, for the Electronic Fraud Detection System. This sequence of dates is inconsistent with the plan to stop using the Electronic Fraud Detection System while continuing to use the Return Review Program. For another major IT investment, the Affordable Care Act Administration investment, IRS’s Estimation Program Office has estimated costs for the investment through fiscal year 2026. This estimate indicates that IRS plans to use the Affordable Care Act Administration investment through fiscal year 2026. However, the CJ reports that the “projected useful life of the current asset” for the Affordable Care Act Administration investment is 2018.\nWithout clear and consistent definitions of these terms, the information IRS is reporting is of limited usefulness. As a result, Congress and other stakeholders do not have reliable information to make budget decisions about IT investments.", "As of February 2015, we have 88 open recommendations and 8 matters for congressional consideration that could have financial implications if implemented. Since we last reviewed open recommendations to IRS and matters for congressional consideration during the fiscal year 2015 budget review, 19 recommendations to IRS were closed as implemented. For more information on open recommendations, see appendixes IV and V.\nAdditionally, we have conducted work related to 17 of the 35 legislative tax proposals included in the fiscal year 2016 CJ for IRS. For information about legislative proposals related to our open recommendations, see appendix VI.", "In June 2014, we recommended that IRS use actual return on investment (ROI) calculations as part of resource allocation decisions. IRS has made progress in response to this recommendation. Specifically, IRS’s Research, Analysis, and Statistics Division has begun to estimate marginal direct revenue and marginal cost—the two key elements used to calculate return on investment data—attributable to specific compliance projects within its correspondence exam program. It plans to incorporate these estimates for use by SB/SE and Wage and Investment business unit managers for exam selection into the Exam Planning Scenario Tool, which is being developed by the Office of Compliance Analytics. That tool is intended ultimately to enable exam planners and business unit management to explore a wide range of potential exam plan scenarios and to compare the alternative effects on various enforcement objectives, including revenues collected and reduced taxpayer burden. Considerable work remains to be done on the multiple components of this long-term effort.\nWe also recommended that IRS calculate actual ROI for implemented initiatives. However, IRS noted that determining the impact of an initiative will always rely on estimates, as the results of an initiative are the difference between actual results and what would have occurred in the absence of the initiative, which cannot be measured. Given that IRS is unable to attribute revenues to specific employees hired under an initiative, officials believe that any feasible estimate would need to be based on numerous assumptions and, therefore would be too uncertain to be useful. For this reason, IRS does not consider this additional analysis an effective use of its scarce research resources. However, we believe that IRS should be able to provide some information to Congress, such as whether funds that were requested for initiatives were used in the manner that IRS originally proposed.\nIRS agreed that having this information would be useful.\nSee GAO-14-605.", "IRS’s PPACA cost estimate identifies the costs of planning, developing and implementing the IT systems needed to support its role in implementing PPACA. In February 2015, IRS released version 3 of the PPACA cost estimate as part of its ongoing practice to refine its cost estimate and address our prior recommendation. The cost estimate totals $2.72 billion (adjusted for inflation) from mid-fiscal year 2014 through fiscal year 2026; when prior years are included, the estimate increases to $3.43 billion from fiscal years 2010 through 2026 (adjusted for inflation). This updated cost estimate is a significant increase from the previous total of $1.89 billion (not adjusted for inflation) from fiscal years 2010 through 2026. According to IRS officials, this increase is due to a change in the scope of PPACA implementation activities which resulted in additional releases. For example, the new releases respond to regulatory changes in the requirements for the Small Business Health Options Program, add in the cost of sending preliminary notices to employers not offering employee coverage, and take into account the implementation of the excise tax on high-cost health plans that will begin in 2018. However, IRS has not finalized the scope of work for Release 7.1 and beyond, which raises questions about IRS’s ability to estimate costs for these releases.\nAccording to the GAO Cost Guide, a reliable cost estimate must be comprehensive, well documented, accurate, and credible. In September 2013, we reported that version 1 of IRS’s cost estimate for PPACA did not fully meet best practices for a reliable cost estimate and recommended actions IRS should take to improve its cost estimate.estimate–version 3—reflects best practices to a greater extent, as shown in table 3. The cost estimate met or substantially met the criteria in three of four overall categories; however, a cost estimate must meet or substantially meet the criteria in all four overall categories to be considered reliable. From our assessment of version 1 of the cost estimate, of 20 sub-scores, 12 increased, 3 decreased, and 5 were constant. See appendix VII for a table of the sub-scores. Notably, IRS has improved documentation of how cost drivers for its sensitivity analysis The updated cost were selected with the score improving from partially meets to meets. As outlined below, there are several areas related to our open recommendation where IRS could continue to improve the cost estimate to better meet best practices outlined in the GAO Cost Guide.\nEarned value management: We previously recommended that IRS use earned value management—a process for capturing actual costs and comparing them to estimated costs—to capture actual costs and use them as a basis for future updates. According to IRS officials, earned value management is not being used to track costs. Because of this, actual costs are not regularly being used to update the estimate and to determine where and why variances are occurring when there is still time to mitigate their effect on the program’s cost and/or schedule in a manner that is consistent with best practices. This issue affects multiple elements of the accuracy of the cost estimate assessment.\nVariance from prior estimate: The estimate includes a general discussion of cost and schedule variance and gives an overview of how staffing and cost estimates have changed from the previous cost estimate; however, it does not offer a detailed discussion of the reasons why. A proper risk and uncertainty analysis is necessary to correctly assess the variability in the cost estimate due to program risks. In this area, the cost estimate improved from “minimally meets” to “partially meets.”\nRisk and uncertainty analysis: IRS conducted a risk and uncertainty analysis but did not provide evidence that showed all of the steps they took to conduct the risk analysis, so we cannot verify that they followed best practices. Our assessment scored this element as “partially meets”—which is the same as our assessment of the earlier version of the cost estimate.\nValidating the estimate: IRS did not obtain a second cost estimate and there is no program office estimate to use for comparison. The GAO Cost Guide specifies that producing two cost estimates that are independent of one another is a best practice because the second cost estimate can validate the first and provide an unbiased test of whether the original cost estimate is reasonable. Our assessment scored this element as “minimally meets”—which is the same as our assessment of the earlier version of the cost estimate.", "Over the last 5 years, IRS took steps to manage budget reductions; however, many were short-term actions, such as strictly limiting hiring and curtailing overtime. Some of these actions could result in future disruptions in taxpayer services and diminished administration of our tax system. IRS has some flexibility in how it allocates resources—including user fee revenue—within and across business units to achieve its mission and goals. IRS reprioritized many activities since fiscal year 2010 to address budget reductions. Activities and services that were scaled back remain important and may have benefits, including a positive return on investment or enhanced compliance with the tax system. IRS tradeoffs could lead to negative outcomes such as reduced program effectiveness and increased risk to IRS and the federal government. This highlights the importance of Congress and IRS working together to reexamine IRS’s mission and priorities. To improve transparency and inform decision- making, accurate information on IT investments in the CJ is imperative.", "To enhance the budget process and to improve transparency, we recommend the Commissioner of Internal Revenue take the following actions: Implement internal controls to ensure the accuracy of information on major information technology investments reported in the annual congressional justification, such as obligations data.\nTo the extent possible, report information about major information technology investments in the congressional justification in accordance with the standard terms published by the Comptroller General in the Budget Glossary (GAO-05-734SP).\nWhen using key terms that are not defined in the Budget Glossary or in OMB guidance, or when using a modification of these terms, provide definitions of key terms used to report information about major information technology investments in the congressional justification.", "We provided a draft of this report to the Commissioner of Internal Revenue for comment. In written comments reproduced in appendix VIII, IRS agreed with our recommendations. IRS plans to conduct a comprehensive review of its capital planning and investment control activities, with particular emphasis on investment controls. As part of this review, IRS plans to identify any gaps in the use of standard terms, make recommendations for changes to standard terms, and define terms not included in the Budget Glossary. We agree that identifying gaps and implementing changes to enhance the budget will improve data quality. IRS also provided technical comments on our draft report, 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 Chairman and Ranking Members of Senate and House committees and subcommittees that have appropriation, authorization, and oversight responsibilities for IRS. We will also send copies to the Commissioner of Internal Revenue, the Secretary of 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 have any questions about this report, please contact me at (202) 512-9110 or mctiguej@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 IX.", "", "This table does not include obligations less than $1 million. In fiscal year 2014, 4 fund centers obligated less than $1 million from additional accounts: Counsel ($222,000 from Operations Support); Communications & Liaison ($92,000 from Taxpayer Services and $6,000 from Enforcement); Criminal Investigations ($38,000 from Operations Support); and Privacy, Governmental Liaison and Disclosure ($29,000 from Enforcement).", "Appendix III: Summary of Major Information Technology Investments Reported in IRS’s Fiscal Year 2016 Congressional Justification Description Enhances customer support by providing applications that enable IRS employees to access, validate, and update individual taxpayer accounts on demand.\nEncompasses the planning, development, and implementation of IT systems needed to support IRS’s tax administration responsibilities associated with the Patient Protection and Affordable Care Act.\nProvides timely access to authoritative individual taxpayer account information and enhances IRS’s ability to address security, financial material weaknesses, and long-term architectural planning and viability.\nDetects fraud at the time that tax returns are filed in order to eliminate the issuance of fraudulent tax refunds.\nComprises several web-based self-assisted services that are intended to allow authorized individuals to do business with the IRS electronically.\nIntended to implement provisions of the Foreign Account Tax Compliance Act regarding financial institutions reporting to IRS information about financial accounts held by U.S. taxpayers, or foreign entities in which U.S. taxpayers hold a substantial ownership interest.\nRepresents the authoritative data source for individual tax account data, supporting other IRS information systems and providing a critical component of IRS’s ability to process tax returns.\nIntended to establish a new business information matching program in order to increase voluntary compliance and accurate income reporting.\nIncludes several projects that are intended to simplify voluntary compliance using telephone applications, Internet, and other computer technology.\nIntended to provide systemic review, improve consistency in case control, alleviate staffing needs, issue notices to taxpayers, and allow taxpayers to see status of refunds.\nDescription Provides budget, payroll, accounts payable/receivable, general ledger functions, and financial reporting; also used to manage budgets by fiscal year.\nProcesses paper tax returns, and updates tax forms to comply with tax law changes.\nSupports products and services necessary for daily functions for IRS employees at headquarters and field sites.\nSupports the design, development, and deployment of server storage infrastructures, software, databases, and operating systems.\nSupports IRS’s broad and local network infrastructure such as servers, and switches for voice, data, and video servicing of IRS sites.\nProvides web-based services to internal and external users, such as IRS employees and other government agencies, taxpayers, and business partners.\nProvides a secure web-based platform for electronic tax filing of individual and business tax and information returns by registered Electronic Return Originators.\nAims to maximize detection of fraud, including identity theft fraud, at the time that tax returns are filed, to eliminate issuance of questionable refunds.\nUsed as a data capture, management, and image storage system using high-speed scanning and digital imaging to convert data from the 940, 941, K-1, and paper returns from Information Returns Processing into an electronic format.\nProvides online tools for taxpayers, such as Where’s My Refund and Get Transcript; supports search function and design of IRS.gov.", "Report GAO-12-603 Conduct cost-effectiveness analyses Ensure cost-effectiveness analyses are conducted for future significant investments when there are alternative approaches for achieving a given benefit, such as for any new significant Patient Protection and Affordable Care Act (PPACA) projects.\nBenefit Without cost- effectiveness analyses, budget decision makers do not have information to compare alternatives and it may be difficult to determine the best use of resources.\nStatus As of February 2015, IRS officials reported that for the fiscal year 2017 budget formulation process, they have developed new instructions and procedures for conducting cost-effectiveness analyses, which include considering trade-offs and alternatives of proposed investments. Also, they plan to conduct cost-effectiveness analyses for future significant nonenforcement initiatives when there are alternative approaches to achieving a given benefit and there is sufficient time to conduct the analyses, according to officials. IRS actions are consistent with what we recommended in June 2012; however, we cannot obtain documentation for the fiscal year 2017 budget formulation process because it is considered pre-decisional. When the data is available we will assess it.\nGAO-12-603 Develop a quantitative measure of scope At a minimum, develop a quantitative measure of scope for its major IT investments, in order to have complete information on the performance of these investments.\nA quantitative measure of scope is a good practice as it provides an objective measure of whether an investment delivered the functionality that was paid for.\nNo executive action taken. IRS officials stated that they agreed with the recommendation when we made it in June 2012. However, in October 2013, IRS said it did not plan to develop a quantitative measure of scope for its major information technology investments. In June 2014 and again in March 2015, IRS reported that it has practices and processes in place that provide performance information on its investments, including quarterly reports to Congress and a baseline change request process. However, neither approach includes a quantitative measure. For this reason, we maintain that the recommendation is still warranted.\nImprove budget formulation guidance Improve guidance given to business units for the pre-selection budget formulation process, emphasizing the importance of information on the estimated impact—qualitative or quantitative—of proposed budget initiatives.\nExpanding internal guidance for pre- selection budget formulation templates facilitates more complete information for internal budget decision-making.\nIRS updated budget formulation guidance for the fiscal year 2016 budget formulation process. Guidance instructed business units to identify the expected benefit of the proposed budget initiative. We requested examples of completed templates to confirm the guidance was implemented by business units; however, as of mid-May, 2015 we have not received them. Once we receive the data, we will assess it.\nBenefit Developing a cost estimate that meets additional best practices, will foster accountability, improve insight, and provide objective information.\nStatus In February 2015, IRS released version 3 of the PPACA cost estimate, which reflects best practices to a greater extent, as shown in appendix VII; however, IRS has taken action on only 2 of 5 elements of the recommendation. IRS has improved documentation of how cost drivers for its sensitivity analysis were selected with the score improving from “partially meets” to “meets.” While the score for variance from prior estimate improved, it went from “minimally meets” to “partially meets.” IRS has not improved its practices related to the use of earned value management, risk and uncertainty analysis, or validating the estimate. uncertainty analyses consistent with best practices, and develop and document plans to address risks. Validate the original cost estimate by preparing a second, independent cost estimate.\nDevelop a long-term strategy to address operations amidst an uncertain budget environment. As part of the strategy, IRS should take steps to improve its efficiency, including\nReexamine programs, related processes, and organizational structures to determine whether they are effectively and efficiently achieving the IRS mission. Streamline or consolidate management or operational processes and functions to make them more cost-effective.\nDeveloping a long-term strategy will enhance budget planning and improve decision making and accountability.\nIn June 2014, IRS established the Planning, Programming, and Audit Coordination office to, in part, improve long-term planning for resource allocation and decision making, and strategic planning. The Planning, Programming, and Audit Coordination office efforts will inform the fiscal year 2017 budget formulation process. We will continue to monitor IRS’s progress and will assess a strategy once it is developed.\nBenefit Enhanced calculation of ROI provides greater insight on the productivity of a program and can inform decision making. implemented initiatives, compare the actual ROI to projected ROI, and provide the comparison to budget decision makers for initiatives where IRS allocated resources.\nUse actual ROI calculations as part of resource allocation decisions.\nStatus IRS’s Research, Analysis, and Statistics Division has begun to estimate marginal direct revenues and marginal costs attributable to specific compliance projects within its correspondence exam program. It plans to use these estimates to inform potential exams, but considerable work remains in this long-term effort. Additionally, while IRS agreed that having actual ROI data would be useful, it did not believe it could determine a feasible estimate. We believe that IRS should be able to provide some information such as whether funds requested were used in the manner originally proposed. We will continue to monitor IRS’s progress.", "The 44 GAO products listed below contain 88 recommendations and 8 matters for congressional consideration that could have a financial impact if implemented.", "We conducted work related to 17 of the 35 legislative tax proposals included in the fiscal year 2016 congressional justification for IRS.", "The updated PPACA cost estimate–version 3—reflects best practices to a greater extent, as shown below. The cost estimate met or substantially met the criteria in three of four overall categories; however, a cost estimate must meet or substantially meet the criteria in all four overall categories to be considered reliable. Of 20 subscores, 12 increased, 3 decreased, and 5 were constant from our assessment of version 1 of the cost estimate.", "", "", "", "In addition to the individual named above, the following staff made key contributions to this report: Libby Mixon, Assistant Director; Theodore Alexander; Amy Bowser; John E. Dicken; Jennifer K. Echard; Emile Ettedgui; Charles Fox; Robert Gebhart; Carol Henn; Melissa King; Edward Nannenhorn; Sabine Paul; Karen Richey; Bradley Roach; Robert Robinson; Erinn L. Sauer; Cynthia M. Saunders; Robyn Trotter; and Jim Wozny." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 3, 3, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h4_title", "h4_full", "", "", "h0_title", "h0_full", "h0_full", "", "", "h1_title", "h1_full", "h1_full", "h1_full", "h2_title h4_title", "h4_full h2_full", "h2_full", "h3_title", "h3_full", "h3_full", "h0_full", "", "", "", "", "h2_full", "h4_full h1_full", "h3_full", "", "", "", "", "", "" ] }

{ "question": [ "What was the worth of IRS before and after the reduction in 2010 and 2014?", "What were the types of businesses that GAO chose?", "Which business units did GAO review to absorb budget cuts?", "What type od programs did they prioritize?", "How did IRS's budget change between 2014 and 2015?", "How did IRS use its flexibility during the allocation of monetary resources?", "What did IRS add to help with budget decisions?", "How much did IRS request for (IT) investments?", "How much did it account for the budget?", "Where did IRS make a mistake and how?", "What was the result of this mistake?", "What would the scope of the effect of implementation be?", "What did IRS make progress it?", "What was the first thing IRS did to implement their plan?", "What was the second thing they did?", "What did GAO have to review and what was it a result of?", "What were the four things that the report analyzed?", "What did GAO have to do to conduct this work?" ], "summary": [ "Internal Revenue Service (IRS) total appropriations declined from a high of $12.1 billion in fiscal year 2010 to $11.3 billion in fiscal year 2014, a reduction of about 7 percent.", "GAO selected business units with large declines in obligations—both dollar amount and percent—from fiscal year 2010 to fiscal year 2014, the most current spending data available.", "To absorb budget cuts, the business units GAO reviewed—Human Capital Office, Office of Chief Counsel, and Small Business/Self-Employed Division—each reduced staff (full-time equivalents or FTEs) by 16 to 30 percent.", "According to officials, they also prioritized legally required programs, such as tax litigation, and reduced some programs or services, such as limiting non-filer investigations, postponing software acquisitions, and delaying approximately 24,000 employee background reinvestigations.", "IRS's budget decreased by an additional $346 million from fiscal year 2014 to fiscal year 2015.", "IRS used its flexibility to absorb this reduction by allocating user fee revenue, which comprised 3.4 percent of its budget, or $416 million, in fiscal year 2014.", "Additionally, to increase agency-wide coordination of budget decisions, IRS formed a new office and committee to inform budget formulation and execution decisions.", "IRS requested $3.2 billion for information technology (IT) investments.", "This accounted for 23 percent of IRS's budget request for fiscal year 2016.", "However, IRS provided inaccurate data on actual obligations to date for major IT investments in its congressional justification (CJ) for fiscal year 2016.", "As a result, Congress does not have accurate, reliable, and complete data on IT investments to inform its budget decisions or aid in its oversight.", "Eighty-eight recommendations and eight matters for congressional consideration could have financial implications if implemented.", "IRS made progress implementing many recommendations, including two particularly important ones.", "First, IRS has begun to estimate return on investment for specific compliance projects within its correspondence exam program.", "Second, IRS's updated cost estimate for the Patient Protection and Affordable Care Act improved from previous versions and met or substantially met the criteria in three of four overall categories, but is still not reliable because it only partially met the criteria in the overall credibility category.", "Because of the size of IRS's budget and the importance of its service and compliance programs for all taxpayers, GAO was asked to review the fiscal year 2016 budget request for IRS and the effects of recent budget constraints.", "In February 2015, GAO reported interim information on IRS's budget. This report (1) analyzes select IRS business units' budget and staffing; (2) describes how IRS is managing in a constrained budget environment; (3) assesses key data for IT investments; and (4) describes IRS progress in implementing selected GAO open recommendations.", "To conduct this work, GAO reviewed the fiscal year 2016 CJ, IRS and Office of Management and Budget guidance, and IRS data from fiscal years 2010 to 2014, and interviewed IRS officials." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 1, -1, 0, 0, 0, -1, -1, 1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5, 5, 1, 1, 1 ] }

{ "title": [ "Background", "Eighty Federal Programs Fund Transportation Services for the Transportation Disadvantaged and Total Spending Is Unknown", "Federal Programs", "Federal Spending", "Federal Coordination Efforts Are Led by an Interagency Council, but Key Challenges Remain", "Coordinating Council", "State and Local Efforts Include Transportation Planning and Service Coordination, but Challenges Continue", "State and Local Transportation Coordination Efforts", "Challenges to State and Local Efforts", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Inventory of Federal Programs Providing Transportation Services to the Transportation Disadvantaged", "Appendix III: Comments from the Department of Education", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Transportation-disadvantaged populations, including those that cannot provide their own transportation due to age, disability, or income constraints, may face challenges in accessing transportation, such as lack of access to public transportation or a private vehicle. For example, according to a 2011 report by the National Council on Disability, people with disabilities are more likely than people without disabilities to report that they have inadequate transportation (34 percent versus 16 percent, respectively). We have previously reported that people in need of transportation often benefit from greater and higher quality services when transportation providers coordinate their operations. In addition, we have reported that coordination has the potential to reduce federal transportation program costs by clustering passengers; using fewer one- way trips; and sharing the use of personnel, equipment, and facilities.\nFederal agencies, including USDA, Education, HHS, HUD, Interior, DOL, DOT, and VA, play an important role in helping transportation- disadvantaged populations access federal programs by providing funds to state and local grantees. Federal programs that provide funding for transportation cover a variety of services, including education, job training, employment, nutrition, health, medical care, or other human services. As we have previously reported, many federally funded programs purchase transportation services from existing private or public providers. This includes contracting for services with private transportation providers or providing transit passes, taxi vouchers, or mileage reimbursement to program participants, or some combination of these methods. Some programs may use federal funds to purchase and operate their own vehicles.\nDOT and HHS formed the Coordinating Council on Human Services Transportation (Coordinating Council) in 1986 to improve the efficiency and effectiveness of human service transportation by coordinating related programs at the federal level and promoting the maximum feasible coordination at the state and local levels. In 2003, we reported that coordination efforts at the federal, state, and local levels varied greatly, and while some coordination efforts showed promising results, obstacles continued to impede coordination. As a result, we recommended that, among other things, the Coordinating Council be expanded to include additional federal agencies. The Coordinating Council was expanded to 11 federal agencies in 2004 by Executive Order 13330 and renamed the Interagency Transportation Coordinating Council on Access and Mobility. The expanded Coordinating Council was charged with, among other things, promoting interagency cooperation and establishing appropriate mechanisms to minimize duplication and overlap of federal programs and services so that transportation-disadvantaged persons have access to improved transportation services.\nMore recently, in 2011, we reported that reducing or eliminating duplication, overlap, and fragmentation among government programs and activities could save tax dollars and help agencies to provide more efficient and effective services. With regard to transportation services for the transportation disadvantaged, we found that, while some federal agencies were developing guidance and technical assistance for transportation coordination, federal departments still had more work to do in identifying and assessing their transportation programs, working with other departments to identify opportunities for additional coordination, and developing and disseminating policies and grantee guidance for coordinating transportation services. As we have previously reported, many federal efforts transcend more than one agency, yet agencies face a range of challenges and barriers when they attempt to work collaboratively. Both Congress and the executive branch have recognized this, and in January 2011, the GPRA Modernization Act of 2010 was enacted, updating the almost two-decades-old Government Performance and Results Act (GPRA). This act establishes a new framework aimed at taking a more crosscutting and integrated approach to focusing on results and improving government performance. As we reported in February 2012, effective implementation of this act could play an important role in clarifying desired outcomes; addressing program performance spanning multiple organizations; and facilitating future actions to reduce unnecessary duplication, overlap, and fragmentation.\nIn recent years, Congress has supported increased transportation coordination, as reflected in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Enacted in 2005, SAFETEA-LU amended several human services transportation coordination provisions sharpening the focus on transportation services for persons with disabilities, older adults, and individuals with lower incomes. Currently, the law requires the establishment of a locally developed, coordinated, public transit-human services transportation plan for all of DOT’s human service transportation programs administered by the Federal Transit Administration (FTA). Further, it requires the plan to be developed by a process that includes representatives of public, private, and nonprofit transportation and human services communities, including the public. Federal law also has promoted coordinated funding for non-DOT programs to be used as matching funds for specific transportation programs. More recently, FTA’s fiscal year 2013 budget request proposed consolidating some existing programs to give communities more flexibility in designing and coordinating FTA-sponsored human service programs.", "", "We identified 80 federal programs that fund a variety of transportation services for transportation-disadvantaged populations (see fig. 1). Thirty- one of these programs are administered by HHS. The Departments of Education and HUD each administer 12 programs; DOT administers 7 programs; and DOL, VA, Interior, and USDA administer 18 programs combined. Out of the 80 federal programs identified, 4 programs focus expressly on supporting transportation services for transportation- disadvantaged populations, including DOT’s Capital Assistance Program for Elderly Persons and Persons with Disabilities, Job Access and Reverse Commute Program, Capital and Training Assistance Program for Over-the-Road Bus Accessibility, and the New Freedom Program. A full list of programs is in appendix II.\nTransportation is not the primary mission for the vast majority of the programs we identified. Except for the 7 DOT programs, where all funds are used to support public transportation, the remaining 73 programs we identified primarily provide a variety of human services, such as job training, employment, education, medical care, or other services, which incorporate transportation as an eligible program expense to ensure participants can access a service. In addition, the types of transportation services provided to the transportation-disadvantaged population through these federal programs vary, and may include capital investments (e.g., purchasing vehicles), reimbursement of transportation costs (e.g., transit fares, gas, bus passes), or direct provision of transportation service to program clients (e.g., operating vehicles). Examples of transportation services authorized for funding include the following:\nHHS’s Medicaid program reimburses states that provide Medicaid beneficiaries with bus passes to access eligible medical services, among other transportation options.\nDOL’s Workforce Investment Act-funded programs can provide funding for transportation services so that recipients can access employment and participate in required work activities. Types of transportation services include bus passes and cab fare.\nDOT’s Job Access and Reverse Commute Program allows for grantee agencies to purchase vehicles such as vans to improve access to transportation for employment-related services.\nVA’s Beneficiary Travel Program, as part of Veterans Medical Care Benefits, can provide mileage reimbursement to low-income or disabled veterans for travel to receive medical services at their VA hospital.", "Total spending on transportation services for the transportation disadvantaged remains unknown because, in many cases, federal departments do not separately track spending for these services. Of the 80 programs we identified, roughly two-thirds of the programs were unable to provide spending information for eligible transportation services. However, total expenditures and obligations for the 28 programs that do track or estimate transportation spending were at least $11.8 billion in fiscal year 2010 (see table 1). DOT’s 7 programs accounted for about $9.5 billion of this total amount. Of the non-DOT programs, HHS’s Medicaid program and VA’s Veterans Medical Care Benefits program each reported spending over $700 million in fiscal year 2010.\nMost of the programs we identified do not separately track transportation spending. According to federal officials, transportation spending may not be tracked for several reasons, including the following:\nSome programs allow for transportation spending as an optional service, but it is not required so they do not ask grantees to provide spending information. For example, HHS’s Head Start program, which provides comprehensive child development services to low-income children and their families, reported that many of its grantees may provide transportation, but the agency does not collect specific data on transportation spending.\nSome federal programs give states and localities broad flexibility to administer program funds, and the program structure may not lend itself to tracking transportation expenses. For example, Education provides grants to states under the Individuals with Disabilities Education Act (IDEA) for special education and related services to children with disabilities. State education agencies allocate most of these grant funds to local education agencies, usually school systems, to provide these services.on the amount of funds expended by local education agencies for specific services, including transportation services.\nEducation does not collect data\nSome agencies may consider transportation services to be an administrative expense, and may include transportation spending with other eligible administrative expenses. As a result, transportation- specific spending is not fully known. For example, HHS’s Medicaid program has two allowable methods for states to report the costs of transportation services to the program—as expenditures for nonemergency medical transportation benefits or as an administrative expense, which is combined with other nontransportation expenses.As a result, HHS does not fully capture the total transportation costs provided under its Medicaid program.\nResources necessary to track this information in some federal departments may outweigh the potential benefits, according to HUD officials who told us that for some HUD programs, requiring grantees to report transportation expenses would require a new reporting effort and that the resulting information may not be analyzed due to resource constraints.", "", "The interagency Coordinating Council, chaired by DOT, has been charged with leading governmentwide transportation coordination efforts since 2003. The Coordinating Council launched the “United We Ride” initiative in fall 2003, designed to establish an interagency forum for communication and help states and communities overcome obstacles to coordination. The Coordinating Council undertook a number of activities through its United We Ride initiative, largely between 2003 and 2007.\nCoordinating Council actions included issuing publications such as policy statements and progress reports on efforts taken, providing funding through FTA to help states and localities promote coordinated services and planning, and supporting technical assistance efforts (see table 2). For example, the Coordinating Council’s 2005 Report to the President outlined the council’s action plan for implementing the 2004 executive order, reported on the council’s accomplishments, and made specific recommendations to improve human services transportation coordination. The Coordinating Council is structured in several levels, including the Secretary-level members, an Executive Council consisting of senior-level appointees from each member agency, and interagency working groups (seven in fiscal year 2011) that cut across issue areas at the programmatic level. The Coordinating Council is staffed by officials from FTA. The Secretary-level members of the Coordinating Council last met in 2008.Council efforts have taken place at the working group level.\nHowever, according to DOT officials, more recent Coordinating identifies agency roles and responsibilities, measurable outcomes, or required follow-up. According to agency officials, the Coordinating Council is drafting a strategic plan, but officials were unable to provide an estimate for when the plan might be finalized. As previously discussed, the executive order contained reporting and recommendation requirements, resulting in the 2005 Report to the President and the 2007 Progress Report. However, since those reports, no other guidance document has been created, or is required, to report on actions taken or to plan additional actions. We have previously reported that defining and articulating a common outcome, agreeing on agency roles and responsibilities, and reinforcing agency accountability through agency plans and reports are important elements for agencies to enhance and sustain collaborative efforts. Further, we have reported that federal agencies engaged in collaborative efforts need to create the means to monitor, evaluate, and report on their efforts to enable them to identify areas for improvement. There are several practices involved in strategic planning that could be useful to help the Council determine and communicate its long-term goals and objectives. However, without a plan to help reinforce agency goals and responsibilities, the Coordinating Council may be hampered in articulating a strategy to help strengthen interagency collaboration and lack the elements needed to remain a viable interagency effort.\nCost-sharing policy: A joint cost-sharing policy has not been endorsed by all Coordinating Council members, even though development of a cost allocation policy was one of the recommendations of the Coordinating Council in its 2005 Report to the President. According to the 2005 report, a major obstacle to sharing transportation resources has been the difficulty of reaching agreements at the local level about the appropriate allocation of costs to each agency. Federal, state, and local agency officials that we spoke with noted that this continues to be a significant impediment. Further, as part of a discussion hosted by the National Academy of Public Administration in 2009, which brought together key stakeholders to discuss ways to improve access to reliable transportation for the transportation disadvantaged, explicit and clear guidance for cost sharing was said to be needed in order to address significant federal policy barriers to coordination.\nCoordinated transportation planning: Coordinating Council members pledged to take actions to accomplish federal program grantee participation in locally developed, coordinated planning processes as part of their 2006 Coordinated Human Service Transportation Planning Policy Statement, but it is unclear if the Coordinating Council’s members have consistently followed through on their 2006 pledge. According to the Coordinating Council’s 2006 policy statement, federal grantees’ participation in their local human services transportation planning process is necessary to reduce duplication of services, increase service efficiency, and expand access for transportation-disadvantaged populations. However, the discussion hosted by the National Academy of Public Administration in 2009 indicated that the process for creating coordinated transportation plans continues to need improvement and recommended that Coordinating Council members with grant programs create incentives for their grantees to participate in coordinated planning at the state and local levels. According to participants, while the Coordinating Council has issued a joint policy on coordinated planning, challenges remain to fully engage agencies that are not funded by DOT in the planning process at the local levels. DOT’s FTA is the only agency that has adopted a coordinated human services transportation planning requirement, which has resulted in broadened participation in the transportation planning processes.\nCoordination of services is also challenging due to differences in federal program requirements and perceived regulatory or statutory barriers, according to officials. For example, coordinated planning is generally only a requirement for FTA-funded human service transportation programs, and while a handful of programs may encourage coordination, other federal program rules are unclear about coordination of transportation services between programs. Also, programs may have perceived or actual statutory or regulatory barriers related to sharing costs, or have differences in service requirements and eligibility. For example, HHS’s Medicaid program is the largest source of federal funds for nonemergency medical transportation for qualified low-income beneficiaries; however, the Centers for Medicare & Medicaid Services (CMS) officials expressed concern about coordinating transportation services due to concerns about commingling federal program funds and the potential for fraud. CMS has issued rules that allow states to contract with one or more transportation brokers to manage their Medicaid transportation to, among other things, reduce costs. However, these rules could result in fragmented transportation services at the state and local levels because some brokers transport only Medicaid-eligible beneficiaries, and may not coordinate their transportation services with other programs. In another example, VA officials explained that VA only has the authority to provide transportation at the agency’s expense to certain qualifying veterans and nonveterans in relation to VA health care, but has no legal authority to transport nonbeneficiaries.", "", "State and local officials in the five states we selected used a variety of coordinated planning and service efforts to serve the transportation disadvantaged. One way that states facilitate coordination efforts is through statewide coordinating bodies—some created by legislative actions and others by executive order or initiative—to oversee the implementation of coordinated transportation for transportation- disadvantaged populations in their states. State coordinating bodies can help to facilitate collaboration between federal, state, and local agencies by providing a venue for agencies to discuss and resolve transportation issues to better coordinate transportation activities related to the provision of human services and enhance services for transportation- disadvantaged populations. Three of the five states we selected had state coordinating bodies in 2010. In addition to state coordinating councils, efforts include regional and local planning, one-call centers, mobility managers, and vehicle sharing (see table 3).\nSeveral state and local agency officials said that federal requirements for the establishment of locally developed, coordinated public transit-human services transportation plans for FTA’s human service transportation programs have had a positive impact on transportation coordination in their state. According to officials, these planning efforts help to bring relevant stakeholders to the table to discuss needs for the transportation disadvantaged and to resolve problems. For example, in Virginia, the Department of Rail and Public Transportation has taken the lead in implementing this requirement, assisting 21 planning district commissions to formulate human services transportation coordination plans for their districts, and formulating a statewide plan which draws from these local plans. According to officials of a regional planning commission in Virginia, transportation coordination in the state would not be at the same point it is currently without these requirements. These officials said that the federal requirements created one place for people to come together to learn what programs are available, raise awareness, and avoid duplication. Also, a Virginia Regional Transit official told us that the increased communication among agencies due to coordinated planning efforts made it possible for providers to transport more people, including those who were not currently being served, thus opening access to larger and broader groups of people.", "State and local entities’ efforts to coordinate services for the transportation disadvantaged are not without challenges. According to officials, challenges include insufficient federal leadership, changes to state legislation and policies, and limited financial resources in the face of growing unmet needs.\nSeveral state and local officials told us that there is not sufficient federal leadership and guidance on how to coordinate transportation services for the transportation disadvantaged and that varying federal program requirements may hinder coordination of transportation services. State and local officials in four out of the five states we selected said that with the exception of DOT, other federal agencies were not actively encouraging transportation coordination. For example, Texas Department of Transportation officials told us there is a disconnect between human services and transportation agencies and that the general perception is that other human services programs, such as some of those funded by HHS, are exempt from coordination. These officials also said that federal leadership is needed to promote buy-in for transportation coordination among human services agencies and transportation agencies at the state level.\nOfficials in each of the five states that we selected said that the federal government could provide state and local entities with improved guidance on transportation coordination—especially as it relates to instructions on how to share costs across programs (i.e., determining what portion of a trip should be paid by whom). State and local officials in Virginia, Texas, and Washington identified a fear of losing federal funding if they improperly shared funding with other federal programs. These officials said that federal cost-sharing guidance would help facilitate transportation coordination between programs. Further, state Medicaid officials said that their main priority is to make sure they are following Medicaid requirements, and some officials expressed concerns about their ability to ensure Medicaid funds are being appropriately spent and properly accounted for if they coordinated with other programs. For example, Medicaid officials in one state said that they would need to obtain approval from CMS before adopting any cost-sharing strategies with other programs to ensure the appropriateness of their state program’s expenditures. When we spoke with CMS officials, they told us that CMS is not opposed to coordinating transportation services; however, the agency does have concerns that coordination would result in Medicaid funds being improperly commingled with other federal program funds.\nSeveral state and local officials said that varying federal government program requirements may hinder the provision of transportation services and act as barriers to coordination. A regional planning official in Washington told us that varying program requirements may discourage transportation coordination as one program’s requirements may not be suitable for another program’s clients. For example, if two different program clients were to share school vehicles for special needs populations, each program might have a separate set of rules and requirements. Determining whether drivers meet drug and alcohol testing requirements for both programs could be a challenge, according to this official. Similarly, an official from the Florida Department of Transportation told us that the federal government could do more to identify standards and requirements that act as barriers to coordination. In Wisconsin, a Department of Transportation study found that key challenges to coordinating transportation services in the state include program regulations or requirements that impede coordination, including different guidance and restrictions on how federal funding could be spent.\nOfficials we interviewed in four states identified recent changes in state legislation or state policies as potential challenges to coordinating services for the transportation disadvantaged in their states. According to these officials, such changes have caused some uncertainty in their efforts to coordinate human services transportation in the future. For example, some state coordinating bodies’ authority has not been renewed or is about to expire:\nExecutive order not renewed: In Wisconsin, the governor charged a group of individuals from a number of state agencies to form a state coordinating council in 2005—the Interagency Council on Transportation Coordination (ICTC). In addition to sponsoring a statewide coordination conference in 2007, ICTC contracted with a national consultant to develop a Wisconsin Model of Coordination with implementation strategies. Intended outcomes of this model included increasing the quantity and quality of existing transportation resources, supporting and encouraging local coordination efforts, and improving transportation service for users. However, due to a downturn in the economy and a change in the state’s administration after the model’s completion, its findings were not implemented.\nBecause the new administration did not renew the executive order establishing ICTC’s authority, ICTC has been inactive since January 2011.\nEnabling legislation to expire: In Washington, the state legislature created the Agency Council on Coordinated Transportation (ACCT) in 1998 to coordinate with state and local agencies and organizations to provide affordable and accessible transportation choices for the transportation disadvantaged. Over the years, ACCT has facilitated coordination by helping to form transportation coalitions that include human services representatives, transit services, and community transportation providers. These coalitions plan regional public transportation, evaluate and prioritize project proposals, and implement local coordination strategies. However, enabling legislation for ACCT expires in June 2012 and officials do not expect the legislation to be renewed.\nIn some states, officials were uncertain about how recent developments may affect their state Medicaid program’s participation in state and local efforts to coordinate transportation services for the transportation disadvantaged. For example, in an effort to control program costs, state legislation was signed into law in Florida in June 2011 that moves the responsibility for Medicaid nonemergency medical transportation from the coordinated transportation system run by the Florida Commission for the Transportation Disadvantaged to a private managed care system. An official with the Florida Commission for the Transportation Disadvantaged said that it is not known whether the managed care system will choose to operate within the state’s coordinated transportation system or contract with private transportation brokers outside of the coordinated system, which could result in duplication of transportation services. Similarly, officials in Texas and Wisconsin told us that, in an effort to control costs, their state Medicaid program is moving to a transportation brokerage system. According to some state and local officials, these brokers typically only transport Medicaid-eligible clients and do not often coordinate their transportation services with other federally funded programs. CMS maintains that their brokerage rule does not preclude state Medicaid agencies from coordinating transportation services, as long as they comply with all applicable Medicaid policies and rules and ensure that Medicaid funds are only used for Medicaid services provided to eligible beneficiaries.\nA number of state and local officials in our five selected states told us that limited financial resources and growing unmet needs were challenges for them. In Texas, state and local officials told us that although it is believed that coordination will save costs in the mid- to long-term, state budgets are being reduced in transit and social services agencies, as well as in municipal programs and nonprofit organizations. According to these officials, some agencies and their potential partners find it difficult to come up with funding, even when it is a modest local match for grants. Similarly, state and local officials in Virginia told us that state and local match requirements may preclude some entities from applying for federal funds. State and local officials also mentioned that limited financial resources often promote turf battles—or a mistrust and unwillingness to share resources for fear of losing control of them. Conversely, some officials told us that limited resources were an incentive to coordinate because coordination made the best use of limited resources.\nIn the face of limited financial resources, state and local officials are also concerned about growing disadvantaged populations and unmet needs— both now and in the future. As part of the discussion hosted by the National Academy of Public Administration in 2009, participants identified continuing transportation gaps in programs across the federal government. Several state and local officials that we spoke with also expressed concern about their ability to adequately address expected growth in elderly, disabled, low-income, and rural populations. A local transit agency official in Virginia, for example, told us that there is a great need for transportation services for the elderly and disabled and that the need is increasing. This agency official questioned whether transportation providers will have adequate funding and resources to meet this growing demand. In a presentation before the state Senate in 2011, Florida’s Commission for the Transportation Disadvantaged reported that, statewide, 3.75 million trips had been denied to passengers in the coordinated transportation system during the past 5 years due to a lack of funding or for other reasons. Nevertheless, the commission expects the state’s transportation-disadvantaged population to undergo steady growth over the next decade. In addition, a number of state and local entities were concerned about populations in rural areas—primarily because public transportation availability was limited in these areas.", "The Coordinating Council was created to, among other things, promote interagency cooperation and minimize duplication and overlap of federal programs providing transportation services to transportation- disadvantaged populations. While some member agencies, including DOT, have remained active in pursuing these goals, sustained interagency activity through the Coordinating Council has lost momentum in recent years. The 11 Coordinating Council members have not met since 2008 and the Executive Council designees have not met since 2007. According to some federal officials, this lack of leadership at the Coordinating Council poses challenges to federal-, state-, and local-level coordination efforts.\nFurther, the Coordinating Council has been operating without a strategic plan to help determine and communicate its long-term goals and objectives. While Executive Order 13330 spurred Coordinating Council activity beginning in 2004, sustained agency commitment has proved challenging. We have previously reported that articulating a common outcome, agreeing on agency roles and responsibilities, and reinforcing agency accountability through agency plans and reports are important elements for agencies to sustain and improve collaborative efforts. A collaborative interagency strategic planning effort could help to provide the direction and momentum the Coordinating Council needs at this time.\nFinally, we have previously reported that federal agencies engaged in collaborative efforts need to create the means to monitor, evaluate, and report on their efforts to enable them to identify areas for improvement. It is difficult to fully assess activities of the Coordinating Council, in part, because the council has not reported on its activities or reported on progress implementing its own recommendations since 2007. At that time, the Coordinating Council reported that it was working to establish cost-sharing principles for transportation coordination that federal human service and transportation agencies could endorse; however, we found that the council had not accomplished this goal as of June 2012. Also in 2007, the council reported it had issued a policy statement encouraging federally assisted grantees involved in human services transportation to participate in local coordination planning processes. As part of that policy statement, members of the Coordinating Council agreed to take action to implement the policy within 6 months of council adoption; however, it is unclear what implementation actions agencies have taken to date. Despite recent actions that some agencies have taken to encourage coordination and provide technical assistance, without any means to monitor, evaluate, or report on interagency efforts, the Coordinating Council may face barriers to identifying areas for improvement and pursuing its goal of improving transportation services for transportation- disadvantaged populations.", "To promote and enhance federal, state, and local coordination activities, we recommend that the Secretary of Transportation, as the chair of the Coordinating Council on Access and Mobility, and the Secretaries of the Departments of Agriculture, Education, Health and Human Services, Housing and Urban Development, Interior, Labor, and Veterans Affairs, as member agencies of the Coordinating Council, should meet and take the following actions:\nComplete and publish a strategic plan for the Coordinating Council, which should, among other things, clearly outline agency roles and responsibilities and articulate a strategy to help strengthen interagency collaboration and communication.\nReport on the progress of Coordinating Council recommendations made as part of its 2005 Report to the President on Implementation of Executive Order 13330 and develop a plan to address any outstanding recommendations, including the development of a cost- sharing policy endorsed by the Coordinating Council and the actions taken by member agencies to increase federal program grantee participation in locally developed, coordinated planning processes.", "We provided USDA, Education, HHS, HUD, Interior, DOL, DOT, and VA with a draft of this report for their review and comment. In commenting on a draft of this report, Education and VA generally agreed with our conclusions and recommendations. Education also provided technical and written comments, which appear in appendix III. HHS, HUD, and DOT neither agreed nor disagreed with the report and provided technical comments. In their technical comments, DOT officials stated that, as chair of the Coordinating Council, they have been working with the council to refocus its efforts away from policy discussions to the coordination of on- the-ground services, such as through the Veterans Transportation and Community Living Initiative Grant Program, which is discussed in this report. USDA, Interior, and DOL did not comment on our report. We incorporated the technical and clarifying comments that we received from the agencies, as appropriate.\nWe are sending copies of this report to interested congressional committees and the Secretaries of Agriculture, Education, Health and Human Services, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs. We also will make copies available to others upon request. In addition, this 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 David Wise at 202-512-2834 or WiseD@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.", "To identify federal programs that provide funding for transportation services for the transportation disadvantaged, we examined prior GAO work on the topic, conducted an online search of the Catalog of Federal Domestic Assistance, and requested program information from federal agency officials for the programs identified. We included only federal programs that provide nonemergency, nonmilitary, surface transportation services of any kind, targeted to transportation-disadvantaged populations. We then asked program administrators to review and verify the programs identified and the program information collected, including the general target population, types of transportation services and trips typically provided, and program spending on transportation services in fiscal year 2010. We supplemented and modified the inventory based on this information. In addition, we reviewed the relevant federal laws governing these programs including their popular title or original source of program legislation and U.S. Code or other provision cited as authorizing transportation.\nTo determine what federal coordination efforts have taken place since we last fully reported on this issue in 2003 and what challenges remain, we conducted interviews with program officials from eight federal agencies— the Departments of Agriculture, Education, Health and Human Services, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs—and reviewed relevant documentation provided by agency officials. We chose these agencies because they administered programs that were authorized to provide funding for transportation services for the transportation disadvantaged in fiscal year 2010 and were identified by executive order to participate in coordination. We also interviewed officials from the National Resource Center for Human Service Transportation Coordination and interviewed or corresponded with transportation researchers and representatives from relevant industry and advocacy groups, including the following:\nAmerican Public Transportation Association\nAssociation of Metropolitan Planning Organizations\nEaster Seals Project ACTION\nNational Conference of State Legislatures To identify the types of coordination that have occurred at the state and local levels, we conducted interviews with state and local officials from five states—Florida, Texas, Virginia, Washington, and Wisconsin. We based our selection of these states on a variety of characteristics, including size of target populations per state, geographic diversity, existence of a state coordinating body, and states deemed notable for their transportation coordination efforts. As part of our state and local interviews, we spoke with officials from state and local human services and transportation agencies, metropolitan planning organizations, transportation providers, interest and advocacy groups, and others and reviewed relevant documentation. Because we used a nongeneralizable sample of states, our findings cannot be used to make inferences about other states. However, we determined that the selection of these states was appropriate for our design and objectives and that the selection would generate valid and reliable evidence to support our work. Table 4 provides more detailed information about the state and local entities we interviewed.\nWe also interviewed the appropriate United We Ride Regional Ambassadors for each state. In addition, we reviewed relevant literature and prior GAO and Congressional Research Service reports, as appropriate.\nWe conducted this performance audit from June 2011 to June 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.", "Food Stamp Act of 1977 7 U.S.C. § 2015(d)(4)(I)(i) (I)\nRoutine medical appointments, shopping, entertainment, etc.\nIndividuals with Disabilities Education Act 20 U.S.C. §§ 1411(a)(1) and 1401(26)\nNo actual data or estimate available from the federal agency 29 U.S.C. § 723(a)(8)\nTo access vocational rehabilitation services $81,000,000(estimate)\n29 U.S.C. §§ 796f-4(b)(2) and 705(18)(xi)\nFiscal year 2010 federal spending on transportation 29 U.S.C. §§ 796e-2(1) and 705(18)(xi)\nIndividuals with Disabilities Education Act 20 U.S.C. §§1419(a) and 1401(26)\nNo actual data or estimate available from the federal agency 29 U.S.C. § 796k(e)(5)\nIndividuals with Disabilities Education Act 20 U.S.C. §§1433 and 1432(4)(E)(xiv)\nNo actual data or estimate available from the federal agency 29 U.S.C. §§ 795g and 705(36)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 11433(d)(5)\nFiscal year 2010 federal spending on transportation 29 U.S.C. §§ 741(a) and (b)(1)(B) and 723(a)(8)\nElementary and Secondary Education Act of 1965 20 U.S.C. § 7173(a)(10)\nElementary and Secondary Education Act of 1965 20 U.S.C. § 7225a(a)\nDepartment of Health and Human Services Older Americans Act of 1965 42 U.S.C. § 3030d(a)(2)\nAdults age 60 and older $73,585,717(expended)\nOlder Americans Act of 1965 42 U.S.C. §§ 3057, 3030d(a)(2)\nPublic transportation, mileage reimbursement, GSA lease, etc. $7,318 (estimate)\nTo access health care services $26,300,000(expended)\nIndian Health Care Improvement Act: Balanced Budget Act of 1997 42 U.S.C. § 254c-3 Public transportation, mileage reimbursement, etc.\nTo access diabetes prevention and cardiovascular disease services $419,247 (estimate)\nPersons with substance use or mental disorders $3,800 (estimate)\nPersonal Responsibility and Work Opportunity Reconciliation Act of 1996 42 U.S.C. § 604(a), (k)\nTo access work, employment training, and child care providers $445,118,725 (expended)\n8 U.S.C. §§ 1522(b)(7)(D), 1522(c)\nFiscal year 2010 federal spending on transportation 8 U.S.C. §§ 1522(b)(7)(D), 1522(c)\nNo actual data or estimate available from the federal agency 8 U.S.C. §§ 1522(b)(7)(D), 1522(c)\nNo actual data or estimate available from the federal agency 8 U.S.C. §§ 1522(b)(7)(D), 1522(c)\nFiscal year 2010 federal spending on transportation No actual data or estimate available from the federal agency 42 USCA § 9835(a)(5)(B)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 1397a(a)(2)(A)\nAccess services, or obtain medical care or employment $22,863,512(estimate)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 1397jj(a)(26), (27) (partial)\nTarget population as defined by program officials 42 U.S.C. §§ 1396a, 1396n(e)(1)(A)\nFiscal year 2010 federal spending on transportation $786,966,682(partial)\nPersons with HIV or AIDS $10,750,025(estimate)\nRyan White Comprehensive AIDS Resources Emergency Act of 1990 42 U.S.C. §§ 300ff-21, 300ff- 23(a)(2)(B)\nPersons with HIV or AIDS $5,598,234(estimate)\nADAMHA Reorganization Act of 1992 42 U.S.C. § 300x-1(b)(1)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 701(a)\nDepartment of Housing and Urban Development 12 U.S.C. 1701g(g)(1)\nTo access supportive services, such as medical treatment, employment, or job training, etc.\nAccessible taxis, local transportation programs, buses, etc.\nHousing and Community Development Act of 1974 42 U.S.C. § 5305(a)(8) social services, medical services, jobs, etc.\nLow- and moderate-income persons, mobility-impaired persons, and jobseekers (expended)\nHousing and Community Development Act of 1974 42 U.S.C. § 5305(a)(8) social services, medical services, jobs, etc.\nLow- and moderate-income persons, mobility-impaired persons, and jobseekers $0 (expended)\nHousing and Community Development Act of 1974 42 U.S.C. § 5305(a)(8) social services, medical services, jobs, etc.\nLow- and moderate-income persons, mobility-impaired persons, and jobseekers $19,211 (expended)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 12907(a)(3)\nTo access supportive services, such as medical treatment, employment, job training, etc.\nLow to extremely low- income persons living with HIV/AIDS $1,530,187 (expended)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 1437v(d)(1)(L), (i)(3)\nNative American Housing Assistance and Self Determination Act of 1996 25 U.S.C. § 4132(3)\nNo actual data or estimate available from the federal agency 42 U.S.C. § 1437v(d)(1)(L), (i)(3)\nNo Child Left Behind Act of 2001 25 U.S.C. § 2001(b)(8)(C)(v)\nTo access school and educational activities $373,368 (estimate)\nNo Child Left Behind Act of 2001 25 U.S.C. § 2001(b)(8)(C)(v)\nTo access school, educational activities, and for use in emergency situations $52,637,635 (obligated)\nWorkforce Investment Act of 1998 29 U.S.C. § 2864(d)(2)\nAt-risk youth, ages 16-24, who meet low- income criteria $24,100,000 (estimate)\nOlder Americans Act of 1965 42 U.S.C. § 3056(c)(6)(A) (iv)\nFiscal year 2010 federal spending on transportation 19 U.S.C. § 2296(b)\nWorkforce Investment Act of 1998 29 U.S.C. § 2864(d)(2)\nWorkforce Investment Act of 1998 29 U.S.C. § 2854(a)(4)\nWorkforce Investment Act of 1998 29 U.S.C. § 774 (3)(A), 29 U.S.C. § 2912 (d)\nWorkforce Investment Act of 1998 29 U.S.C. § 2911(d)(2)\nWorkforce Investment Act of 1998 29 U.S.C. §§ 2801(46)\nFunding for bus and bus facilities, new fixed guideway and modernization, and other capital expenses $3,566,689,946(obligated)\nGeneral public in urbanized areas $4,849,410,834 (obligated)\nGeneral public and federally recognized tribes $624,837,418(obligated)\nElderly individuals and persons with disabilities $176,237,261 (obligated)\nLow-income individuals and reverse commuters $163,976,876 (obligated)\nGeneral public and individuals with disabilities $544,261 (obligated)\nTo enhance transportation systems and access to those systems $90,140,813 (obligated)\nMileage reimbursement; special mode (ambulance, wheelchair van); common carrier (air, bus, train, boat, taxi)\nTo access VA or VA- authorized non-VA health care $745,315,000(obligated)\nHomeless Veterans Comprehensive Service Programs Act of 1992 38 U.S.C. §§ 2011(b)(1)(B), 7721 Note and transportation of homeless veterans by community- based providers (obligated)\nNo actual data or estimate available from the federal agency Spending was reported by program officials, and we did not verify the information. Amounts obligated or expended on transportation are given, depending upon the information available. When actual information was not available, agency officials provided estimates.\nFigure was amount obligated in fiscal year 2010 for 32 van grants, and grantees have 5 years to spend these funds, according to program officials.", "", "", "", "In addition to the individual named above, other key contributors to this report were Heather MacLeod, Assistant Director; Rebekah Boone; Brian Chung; Jennifer Clayborne; Jean Cook; Bert Japikse; Delwen Jones; and Sara Ann Moessbauer." ], "depth": [ 1, 1, 2, 2, 1, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_title", "h0_full", "h0_full", "h1_title", "h1_full", "h2_title", "h2_full", "h2_full", "h1_full", "h4_full", "h4_full", "h0_full h3_full", "", "", "", "", "" ] }

{ "question": [ "How many federal programs are authorized to fund transportation services for the transportation disadvantaged?", "Of these, how many programs support public transportation?", "What types of services do the other programs provide?", "Why does total federal spending on transportation services for the transportation disadvantaged remain unknown?", "What is the interagency Coordinating Council on Access and Mobility's role?", "What is the aim of \"United We Ride\"?", "What are some examples of the results of this?", "What are some of the key challenges to federal interagency?", "How do state and local officials try to help the disadvantaged when it comes to transportation?", "What do these efforts include?", "What are some examples of the implementation of this?", "What are some other examples?", "How do Americans struggle with transportation?", "Who is affected the most?", "Which agencies try to improve this aspect for these individuals?", "What has GAO done as a result?", "What should the Secretary of Transportation and the Coordinating Council do to promote and enhance federal, state, and local coordination activities?", "What do HHS, DOL, DOT, and other federal agencies think of the report?", "What was the general opinion on technical comments?" ], "summary": [ "Eighty federal programs are authorized to fund transportation services for the transportation disadvantaged, but transportation is not the primary mission of most of the programs GAO identified.", "Of these, the Department of Transportation administers 7 programs that support public transportation.", "The remaining 73 programs are administered by 7 other federal agencies and provide a variety of human services, such as job training, education, or medical care, which incorporate transportation as an eligible expense in support of program goals.", "Total federal spending on transportation services for the transportation disadvantaged remains unknown because, in many cases, federal departments do not separately track spending for these services.", "The interagency Coordinating Council on Access and Mobility, which the Secretary of Transportation chairs, has led governmentwide transportation coordination efforts since 2003.", "The Coordinating Council has undertaken a number of activities through its “United We Ride” initiative aimed at improving coordination at the federal level and providing assistance for state and local coordination.", "For example, its 2005 Report to the President on Human Service Transportation Coordination outlined collective and individual department actions and recommendations to decrease duplication, enhance efficiencies, and simplify access for consumers.", "Key challenges to federal interagency coordination efforts include a lack of activity at the leadership level of the Coordinating Council in recent years—the Coordinating Council leadership has not met since 2008—and the absence of key guidance documents for furthering agency coordination efforts.", "State and local officials GAO interviewed use a variety of planning and service coordination efforts to serve the transportation disadvantaged.", "Efforts include state coordinating councils, regional and local planning, one-call centers, mobility managers, and vehicle sharing.", "For example, state coordinating councils provide a forum for federal, state, and local agencies to discuss and resolve problems related to the provision of transportation services to the transportation disadvantaged.", "In other examples, one-call centers can provide clients with transportation program information and referrals for appropriate service providers and mobility managers may serve many functions—as policy coordinators, operations service brokers, and customer travel navigators.", "Millions of Americans are unable to provide their own transportation or have difficulty accessing public transportation.", "Such transportation-disadvantaged individuals may include those who are elderly, have disabilities, or have low incomes.", "The Departments of Education, Health and Human Services (HHS), Labor (DOL), Transportation (DOT), Veterans Affairs (VA), and other federal agencies may provide funds to state and local entities to help these individuals access human service programs.", "As requested, GAO examined (1) federal programs that may fund transportation services for the transportation disadvantaged; (2) federal coordination efforts undertaken since 2003; and (3) coordination at the state and local levels.", "To promote and enhance federal, state, and local coordination activities, the Secretary of Transportation and the Coordinating Council should meet to (1) complete and publish a strategic plan; and (2) report on progress of recommendations made by the Council in its 2005 Report to the President and develop a plan to address outstanding recommendations. Education and VA agreed with GAO’s recommendations.", "HHS, DOL, DOT, and other federal agencies neither agreed nor disagreed with the report.", "Technical comments were incorporated as appropriate." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, 1, -1, -1, 0, 0, 0, -1, 0, -1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Underlying Technology", "Asymmetric Key Encryption", "Hash Values", "Merkle Trees", "Peer-to-Peer Networks", "Blockchain in Use", "Transactions in a Blockchain", "Blockchain Governance", "Applications", "Cryptocurrencies", "Cybersecurity", "Healthcare", "Identity Management", "Provenance", "Smart Contracts", "Supply Chain Management", "Concerns", "Data Portability", "Ill-Defined Requirements", "Key Security", "User Collusion and Control", "User Savviness and Safety", "Potential Considerations for Congress", "Conclusion" ], "paragraphs": [ "", "Blockchain has garnered attention as a novel technology with potential to improve how we conduct business. Initially popularized by Bitcoin and other cryptocurrency uses, companies are seeking novel ways of applying the technology. But despite public intrigue and excitement around the technology, questions still surround what it is, what it does, how it can be used, and its tradeoffs.\nThis report explains the technologies which underpin blockchain, how blockchain works, potential applications for blockchain, concerns with it, and potential considerations for Congress.\nBlockchain is not a new technology; rather it is an innovative way of using existing technologies. It enables parties who may not have reason to trust each other to agree on the current distribution of assets and who has those assets, so that they may conduct new business. But, despite the hype surrounding the technology, it has certain pitfalls which can inhibit its utility.\nA blockchain is a digital ledger that allows parties to transact without the use of a central authority to validate those transactions. These transactions are not limited to financial ones, but may include item tracking, identity logging, verifying the completion of an action, or others. The use of a central, validating authority (i.e., a third party) can be avoided because in a blockchain, as transactions are added, the identities of the parties conducting those transactions are verified, and the transactions are verified as they are added to the ledger as a block of transactions. The ledger is auditable because each block of transactions is dependent upon the previous block in such a way that any change would alert other users of a change to the history of transactions. The strong relationships between identities, transactions, and the ledger enable parties to verify with a high degree of confidence the state of resources as logged in the ledger. With an agreement on that history, parties may then conduct a new transaction with a shared understanding of who has which resource and of their ability to trade that resource.", "Blockchain is not a new, stand-alone technology; rather it is an innovative use of existing technologies. Four particular technologies are used to enable blockchain: asymmetric key encryption; hashes; Merkle trees; and peer-to-peer networks.", "Asymmetric key encryption, also known as a public-private key cryptosystem, serves to create identities on a blockchain. A user creates two elements, a public key which helps identify their transactions on the blockchain, and a private key which is necessary to conduct a transaction with the public key. Asymmetric encryption allows for the authentication of users because only those with the private key can decrypt data encrypted with the public key or encrypt the data for public key decryption, thereby creating a signature.\nThe public key may be broadcast on the blockchain itself, or may be tied to an address which is broadcast instead. In some blockchain systems, the real-world identity of each address or public key is logged so that individual users may be tracked. In others, a user may be able to generate public and private keys independently and broadcast the public key or address without identifying themselves, creating a pseudonymous identity on the blockchain.\nIn a blockchain, the public key is used to identify a user on the blockchain and verify the resources (e.g., assets or records) tied to that user's public key or address. The resource could not be used unless the holder of the public key to which the resource is tied unlocks (or decrypts) the resource with their private key, allowing it to be transferred to another identity on the blockchain (a public key or address) and locked with that second user's private key. This transaction would be logged on the blockchain, so that other users could verify the resource has changed possession.\nAn example of how asymmetric key encryption is used daily is when a user connects to a website via Hypertext Transfer Protocol-Secure (HTTPS). To enable the secure connection to the website, a user starts the process by sending a request to the site. The site then sends its public key to the user, and the user's computer then generates a new, secure key (to be used in the HTTPS connection), encrypts it with the website's public key, and sends that back. The user knows that only the website that has the private key can decrypt the information the user just sent. With the new, user-generated key, the website creates the secure connection with the user, indicated to the user by the HTTPS icon (frequently a lock symbol) in the browser window.", "A hash uses similar mathematical functions as an encryption method to produce a string of characters as an output given some data as input. This is a one-way function, meaning a hash value may be created from an input, but the input cannot be recreated from the hash. In blockchains, a number of transactions are tranched together to make a single block, which is then hashed.\nHash values are used to validate the block's integrity. Any alterations to the transactions that make up a block will change the hash value of the block as a whole. If a block's hash value stays the same over time, users can have a high degree of confidence that the transactions in that block have not been tampered with. This allows users on the blockchain to determine whether or not they can trust the history of transactions on the blockchain.", "Databases and ledgers are large and are constantly being edited as new entries are added and data is modified or deleted. If one wanted to have a hash value for the database, one would have to constantly hash it, and maintain a way of ensuring they have the right hash value to align with the current state of the system in order to judge its integrity. Additionally, the larger the database becomes, the more computationally intensive hashing it becomes. A Merkle tree is a cryptographic concept introduced by Ralph Merkle in 1980 as a way around this problem.\nIn a Merkle tree, data is segmented apart from a single whole data file. There is a root block of data with a hash value, then subsequent blocks of data (sometimes referred to as child, branch, or leaf blocks) that have their own hash value. Each subsequent block of data takes the hash value of their previous block (sometimes referred to as a parent block) as an input in the creation of the hash value of the new block. This creates a chain or tree of hash values, cryptographically tying new blocks of data to previous ones in a way that prohibits altering previous data. If data in a previous block were to be added, modified, or deleted, the hash value of the subsequent blocks of data would not compute to what they would need to be, alerting users that a change was made. This also allows hash values to be created for smaller, more discrete blocks of data. Hashing these smaller blocks is computationally less resource intensive than rehashing an entire set of data each time an edit is made.\nBlockchains borrow the concept of Merkle trees to make hash chains. In a blockchain, a first block is created and a hash value is computed for it. This is the root block. Subsequent blocks then use the hash value of the previous block in the chain as one of the inputs to create that next block. This chaining of hash values creates a strong relationship between blocks on the chain, and an auditable and immutable record of the transactions on the blockchain.", "A peer-to-peer (P2P) network allows a disparate system of computers to connect directly with each other without the reference, instruction, or routing of a central authority. P2P networks allow for the sharing of files, computational resources, and network bandwidth among those in the network.\nIn a blockchain, a P2P network allows the users of the blockchain to broadcast directly to and among each other the current state of the blockchain (so that users may agree on the history of transactions), and when a new block is added. This also allows for redundancy of the data in the blockchain, as any user may download a complete copy of the current ledger of transactions and add a new block, so that there will not be a single point of failure for the blockchain if a node on the network goes down.\nIn some blockchain implementations, users do not host copies of the ledger among themselves. Instead, users use a cloud service provider (CSP) to maintain active and back-up copies of the blockchain, and compute the transactions and blocks as they happen. In these cases, peer-to-peer networking is necessary to run the blockchain. While the CSP is not a central validating authority in this example, it does become a third party to the transaction.", "Blockchain uses asymmetric encryption, hash values, Merkle trees, and P2P networks to build a ledger. The transactions captured in that ledger are not limited to financial ones (e.g., trading currency for goods and services). Those participating on a blockchain have a common understanding of how transactions are added and build upon one another, who can participate on the network, and how conflicts are resolved.", "Blockchains consist of a series of blocks of transactions. A transaction is an event in which a resource or asset changes possession from one party to another. These individual transactions are signed by the users engaging in those transactions through the use of public-private key encryption. Because the private key is necessary to release and accept a resource in a transaction on the blockchain, the users transacting on the blockchain are, in effect, signing the transaction to ensure its security. Transactions are grouped together and made into a block. In some blockchain implementations, these are validated upon its creation through the act of mining for the creation of blocks (mining is further explained below). The integrity of the entire ledger is ensured by each block having a hash value which is dependent on the previous block's own hash value. Each of these three steps relies on strong cryptography which ensures the ledger's validity.\nTransactions may not post immediately to a blockchain. If a lot of transactions are occurring in a short amount of time, the blockchain platform may create a pool of pending transactions which are processed in accordance with rules of that blockchain—which may allow for fees, user priority, or some other method to post certain transactions into a block before others.", "A blockchain can be public or private. In a public blockchain, anyone can create a public-private key pair and download a copy of the blockchain. This is usually accomplished through a software package which governs transactions on the blockchain. In a private blockchain, the membership of users on the blockchain is controlled. In private blockchains, the users authorized to participate may be bound by contractual relationships with each other, their blockchain addresses may be closely tied to their real-world identities, or participation on that blockchain may be agreed upon by other members in the blockchain. In any case, members of a private blockchain may be more trusting of each other than in a public blockchain.\nA blockchain can be permissioned or permissionless, which is independent of whether the blockchain is public or private. A permissioned blockchain is one in which the permission of a user is assigned to them. Some users may only be able to view a whole or portion of the blockchain; others may be able to add new blocks. In this system, the administrator(s) do not serve as a central authority, since they do not govern the creation of blocks on the blockchain, just the rights of users on the blockchain. In a permissionless blockchain, all users have equal rights, with any one able to download the full blockchain and have an opportunity to potentially add additional blocks.\nDiscussing a blockchain as public or private refers to the level of freedom users have to create identities on that blockchain. Discussing a blockchain as permissioned or permissionless refers to the level of access the user would have on that blockchain. Users on the blockchain must reach consensus on the rules for creating and publishing new blocks and resolving disagreements.\nBlockchains have users and nodes on the blockchain platform. The users on a blockchain could be the individuals, businesses, or other identities which have a public-private key pair and conduct transactions. A node is a computing system on that blockchain. A user may have a node (e.g., an individual's computer or a business's computing network), or a group of users could pool resources to create a single node (e.g., users who share their computing power to mine for new blocks on the blockchain). In a blockchain platform that uses a CSP, the CSP is a node on the blockchain, but may also be a user.\nThe creation and publication of a new block in the blockchain is called mining. In mining blocks, users seek to add the next block to the chain. Mining is incentivized by improving the user's standing in that blockchain, through either a monetary, reputational, or stake award for adding new blocks. New blocks may be added to a blockchain through a variety of methods. Three such methods are proof of work, proof of stake, and round robin.\nIn a proof of work scheme, those seeking to add a block to the blockchain are presented a difficult computational problem. By solving the problem, they win the opportunity to post the next block and possibly a reward for doing so. Their solution is broadcast to others users who can validate it immediately without going through the same resource intensive computation required to solve the problem. In this scheme, the problem is frequently a direction that the hash value contains certain elements (e.g., the value begins with four zeros). In order to produce a hash value with those elements, additional information is added as an input (along with the previous block's hash value, the transactions in the block, data and time information, etc.). This additional information is called a nonce, and could be as simple as a number which would alter the hash value. Finding the nonce value that solves the problem wins for that miner the right to publish the next block.\nIn a proof of stake scheme, the next block may be awarded to the user who has an appropriate stake in that block. This may be because the block contains transactions regarding that user. Or, the user has an X percentage of stake in that blockchain, so they are awarded the right to publish X percent of blocks to that blockchain. Proof of stake schemes are computationally less resource intensive than proof of work. In the round robin scheme, users on the network take turns adding new blocks. Because some level of trust is necessary for round robin schemes to work, they are used in permissioned blockchains.\nIf there is a disagreement in the blockchain, most users on the node will consider the longest chain on the block to be the valid ledger and use that one as the basis for future transactions. In the event that two different miners publish blocks at the same time, and those blocks contain different information, blockchains may allow both blocks to be published for that round, then allow the system to resolve itself upon the publication of the next block, which would then create the largest chain of transactions, and therefore, the most trusted ledger. Another way of resolving disagreements is through using byzantine fault tolerance, whereby users on the blockchain platform will vote on which block they choose to accept and the plurality of votes determines the next block to be published.", "Blockchain is not a panacea technology. A blockchain records events as transactions when they happen, in the order they happen, in an add-on only manner. Previous data on the blockchain cannot be altered, and users of the blockchain have access to the data on the blockchain in order to validate the distribution of resources. However, if an entity has critical data that it wants to share (e,g,, sensitive corporate information from one facility to another), then a combination of current database, cloud, and identity management technologies will likely be adequate for its needs. But if the entity seeks to have its data be immutable and auditable, then a blockchain may be appropriate. While an entity may find immutable and auditable transactions enticing, the inability to edit those transactions (even in cases of error, when an additional invalidating transaction will be necessary) may make blockchain a suboptimal record keeping technology. Examples of blockchain uses that are in use, are being piloted, or have been discussed are listed below, in alphabetical order.", "Bitcoin is the most popular cryptocurrency, garnering the largest market share, and arguably initiated the interest in blockchain technology. Cryptocurrencies, like Bitcoin, are built to allow the exchange of some digital asset of value (the cryptocurrency) for a good or service. They are frequently permissionless and use a proof of work model to add blocks. In these systems, anyone can create a wallet which includes their private key, their public key, and an address which is derived from their public key. They then acquire (through mining, or purchase) the cryptocurrency, and add that as a transaction to the blockchain, so that their address is linked to their value. If they purchase something, they will then unlock the cryptocurrency with their private key, transfer it to the seller who then locks it with their private key. This transaction is published to the blockchain so all users are able to validate that the buying user has that much less of the cryptocurrency and the selling user has that much more of it. Bitcoin and other cryptocurrencies each have their own blockchain.", "Because of its popularity and the digital nature of blockchain, it has been suggested as a solution to cybersecurity challenges. However, proposed uses of blockchain to solve cybersecurity challenges have relied less on the combination of blockchain's underlying technologies. Rather, specific technologies that enable blockchain can be applied today to solve cybersecurity challenges. Asymmetric encryption can be used to enable identities, whether for users or devices, to increase confidence in trusted communications. Hash values can be used to improve confidence in the integrity of data. Indeed, Merkle trees were first proposed as a data integrity check for large data sets. Another area where blockchain has been proposed is for cyber supply chain risk management—the use of blockchain to ensure the integrity of hardware and software as it moves from development to end-user. This application is an example of blockchain's applicability for provenance and supply-chain management, both described further below.", "There have been a variety of proposals for using blockchain in the healthcare sector, many of which involve the management of patient information maintained in electronic health records (EHRs). One such proposal is to authenticate patients and health providers on a blockchain in order to enable the sharing of electronic health information. In this proposal, the EHR is held on a system hosted by the provider, but the record's existence is published to the blockchain and the patient may use the blockchain to authorize access to that record. However, applications of blockchain for healthcare implicate both federal laws (i.e., the Health Insurance Portability and Accountability Act of 1996, HIPAA, P.L. 104-191 , and the Health Information Technology for Economic and Clinical Health Act, HITECH, Title XIII of Division A of P.L. 111-5 ) and state health record privacy laws, which may inhibit its use.", "Some have argued that blockchain technology could be used in identity management because its use of asymmetric encryption and immutable transactions provides for a secure computing environment for the authentication of identities. In this use, a user has a private key to validate transactions made with their public key, which are then published (or data about the transaction are published) to the blockchain. This is designed to ensure that only the user with the private key is able to conduct transactions and to resolve the double-spend problem because the transaction is published so other users can validate the distribution of resources to that public key or address. However, this form of identity management requires both a computing device and an internet connection to work. Private entities may be able to require users to maintain a compatible device for their blockchains and the internet connection required to execute a transaction on the blockchain, but other entities (like the public sector) may face difficulty in moving to a blockchain-only identity management model because some of their customers may lack the computing elements necessary to conduct the transaction—creating a cost-sharing problem.", "Because asymmetric encryption allows for the authentication of users, blockchain has been suggested as a solution to the provenance of items. Provenance refers to the ability to know the history of an item; so that users can be assured that they may be legitimate consumers of the item. By using blockchain, proponents seek to enable the transfer of property, rights, or goods without the clearance of a third-party intermediary, thereby reducing costs. In this model, a user would publish to the blockchain that they have the right to an asset—the user's claim to that right would still need to be verified, which may be governed by the rules of the blockchain—and others may purchase or license that asset, which would then be published to the blockchain for other users to verify.\nThere are examples of using blockchain for both physical and digital item provenance. Cook County, IL, has investigated using blockchain to track the transfer of land. In its pilot, it sought to track the conveyance of real property on a blockchain. This could have the potential to affect the titling industry as anyone could verify that a seller is legally in possession of the property they seek to sell and are in a position to conduct a valid sale. For digital items, Kodak has announced that it will endorse blockchain technology to track the rights of digital images and provide a way for content users to pay for the license to use an image. However, implementation concerns have generated significant criticism of Kodak's plans among industry analysts.", "Blockchain's digital nature has led to it being associated with smart contracts. A contract in the physical world is an agreement among parties that, upon execution of certain conditions, a transfer of assets will occur. A smart contact codifies these attributes in code, so that machines can validate that conditions are met, and initiate the transfer of assets. In addition to the parties engaging in the transaction, other users of the blockchain platform may provide computational resources necessary to process or validate the contractual transaction, thereby gaining a stake in the transaction or contributing to the verification of the transaction on the ledger.\nFor example, Ethereum (an open-source, public, blockchain-enabled computing platform) allows users to build smart contracts. In Ethereum, users build their smart contract and pay fees so that other users contribute computational resources to enable the smart contracts and validate the transactions.", "Supply chain management of physical and digital goods on blockchain is similar to the smart contract application. In this application, goods are tagged with a digital value (e.g., a scannable code for physical goods, or a tracker for digital goods) and as it passes from one entity to the next, that entity accepts it and then transfers it to another using its public-private key. These transactions are added to the blockchain to enable participants to track the disposition of the good from creation through distribution, to retail, and potentially to the end user. However, this system only indicates which party had control of the real-world item at which point. As the item itself does not contain traceable code, it must be affixed with a tracker, such as a scannable code or a sensor which enables its tracking. Someone in this chain may still manipulate the item, alter trackers, or otherwise adulterate items in the supply chain which may not be logged on the blockchain.\nAn example of supply chain management on a blockchain platform is tracking of minerals from the Democratic Republic of the Congo that will be used to build batteries. As in this example, blockchain can only provide assurance of a product's purported disposition in the supply chain (such as acceptance by a ship's captain of the good on their vessel). The blockchain does not address other supply chain issues, such as the security and stability of the operation, or nefarious actors who may tamper with the trackers or goods themselves.", "Blockchain's cryptographic attributes may present a compelling reason for its use over other technologies. But there are pitfalls and unsolved challenges which may inhibit its wide use. Some of these concerns are discussed below.", "As with other record keeping systems, once data is logged in one system, transferring that data to a new system may be problematic. This issue impacts many blockchain applications. Once a user chooses to use one blockchain, they are unable to remove their previous records of transactions and transfer them to a new system as those transactions are part of the blockchain and any alteration to the chain would result in users being unable to generate legitimate hash values for new blocks. The existence of that data is permanent on the blockchain. Additionally, if a user seeks to copy their data from one blockchain to another, there are no standards for data construction from one blockchain to the next, so all the elements of data from one blockchain may not be imbedded in another, nor will how they process public-private keys or hash values. The lack of standards in blockchain technologies extends beyond how data is stored to how public-private keys are generated, how hash values are generated, and how data is broadcast across peers. The lack of standards effectively means that once a user chooses one blockchain for their use, they may be unable to transfer to another blockchain. While they may be able to recreate their current allotment of resources on a new chain and conduct transactions from that point, their history will be encapsulated on the previous chain.", "As with adopting any technology, adopters must examine the business, legal, and technical aspects of adopting blockchain. Because blockchain is in the early stages of its development and adoption, users are likely to face a set of questions that do not have clear answers. What is the business case for the technology? Do customers demand attributes that the new technology provides? Will employees benefit from the use of the technology? What are the legal implications for using the new technology? Will adhering to compliance regimes be easier or more difficult? Will data held in the new technology be accessible to auditors for review? Will it inhibit regulated transparency? Finally, what particular technology will be adopted? What are the attributes to that technology (e.g., using one hashing algorithm instead of another)? How will it affect current business or management practices, and how might it adapt over time?", "As with other forms of encryption, the creation, storage, and loss of control of the private key creates problems. If a user were to have the device that stores their private key compromised, an attacker would have access to their private key and be able to transfer resources from their public key to another public key or address controlled by the attacker. If the user's hard drive fails, or they forget or otherwise lose their private key, they effectively lock the resource tied to their public key forever, inhibiting any other transaction with that asset.", "Groups of users on the blockchain may combine computing resources and collude to mine blocks. In some blockchain implementations this is allowed and encouraged. However, it does present a situation where groups of users may wield unintended influence over which transactions make it into a block, and the blocks that are posted. Additionally, a user, or group of users (the attacker) with sufficient computational power may be able to recreate the blockchain, thereby altering previous transactions and broadcasting to blockchain users that the attacker's chain is valid. As it would be the longest chain, other users may automatically accept it, even though it was illegitimate. This is called the 51% attack. While it is computationally difficult to carry out against established blockchains, it may allow an opportunity for nefarious users to corrupt a new blockchain platform, which has a shorter ledger, thereby ensconcing the attackers as controllers of block creation.", "Another issue that affects other technologies, and one that applies to blockchain, is the level of comfort and knowledge a user must have with the technology in order to properly and safely use it. For instance, many drivers do not know how a car works but can still safely drive a car. Or, many users do not know how computers and networking work, but can still type out and send an email. Safe and efficient lay-user participation is possible because certain design and implementation decisions were made by government (e.g., seatbelt requirements and the need for a driver's license) and engineers (e.g., simple user interfaces) that enable users to use those technologies. As blockchain technology is developed, adopted, and used, similar design requirements or standards may be necessary to ensure proper use and safe adoption of the technology.\nAs with any new technology, users may also need to be aware of its pitfalls and tradeoffs before adopting it. For instance, stories have circulated that users who own Bitcoin have lost access to their private keys, thereby prohibiting the use of that asset in the future—they effectively lost the asset and, without a central authority, have no recourse to restore that asset.", "Although blockchain is already being used to execute financial transactions, it is relatively nascent in other sectors of the economy. Because of its novelty, blockchain is being piloted by industry, but at this time does not appear to be a replacement for existing systems. Given these conditions, the technology does not contain the same level of adoption that previous technology had when facing potential legislative action. However, in addition to examining legislative options concerning the technology's use, Congress may, if it chooses to do so, provide oversight of federal agencies seeking to (1) use it for government business, and/or (2) regulate its use in the private sector.\nFor example, the General Services Administration and the Department of Homeland Security are examining blockchain as a way to achieve efficiencies in the current business of government. They are seeking ways to better manage identities, assets, data, and contracts.\nAdditionally, federal agencies are creating test beds for blockchain technology. The National Institute of Standards and Technology (NIST) has established a \"workbench\" to test blockchain. The workbench is a virtual environment within NIST that is being used as a platform for research and testing. Test beds like this one can serve as a model or shared service for other federal agencies to examine blockchain applications and uses, providing those agencies first-hand experience with the technology as well as information concerning its limitations. This experience can better inform program managers so that they can determine if they seek to use the technology and it can also help them in their interactions with the private sector concerning the technology.\nAgencies such as the Securities and Exchange Commission and the Commodities Futures Trading Commission are issuing advisories to industry concerning blockchain technology. In some cases, these actions are to positively declare that the current legal framework governing other transactions also apply to transactions on a blockchain.\nIn these areas, Congress may evaluate whether agencies are achieving Congress's policy goals. These goals may be technology agnostic and thus already established, or Congress may develop new policy goals for the adoption of emerging technology across a variety of sectors.\nAnother potential issue of congressional interest is where the concentration of federal authority over blockchain expertise, research, and authority should reside. Issues such as this typically arise at the onset of a new technology. One option is to place authority for a technology within a single agency (e.g., nuclear energy in the Department of Energy). Historically, this option has been used when a technology is advanced and in relatively wide use, or is targeted at a specific industry or has a very specific application. When a technology has a broad application (e.g., information communication technologies) Congress has historically opted to have several federal agencies oversee the technology, charging different agencies with overseeing the different applications of that technology (e.g., DHS for federal agency security of information communication technology and the Department of Commerce for the development of guidelines for its use).", "Interest in blockchain technology continues to grow in both the public and private sectors. However, it is helpful to remember it is not a single technology, but a novel way of using existing technologies already to enable transactions. Those transactions can also occur through using a combination of commercial off-the-shelf technologies without using blockchain. But, because of the cryptography involved in blockchain implementations, those transactions can occur among parties that might not otherwise have an established means to carry out a trusted transaction or do not mutually trust each other. As the public and private sectors consider blockchain use, awareness of both its advantages and limitations will better inform decisions concerning its adoption or avoidance.\nCongress is aware of the growing interest in blockchain technology and has held several hearings on the technology and its potential implications for the economy and government use. Congressional interest in blockchain technology is likely to continue to grow as the technology becomes more established and especially if its application becomes more widespread." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "", "", "", "h0_full", "", "", "h2_full", "", "", "", "", "", "", "", "h2_full", "", "h2_full", "", "", "h2_full", "", "" ] }

{ "question": [ "What is Blockchain?", "What are the technologies behind blockchain?", "What is the purpose of Blockchain?", "Are there any downfalls of blockchain?", "What is verifiable in blockchain?", "What enables parties that may not trust each other or an individual computing platform to agree on the state of resources as logged in the ledger?", "What type of new transaction can now be conducted?", "What is Blockchain?", "How does blockchain record events?", "Are there any downfalls to blockchain?", "What are some of the downfalls of blockchain?" ], "summary": [ "Blockchain is not a new technology; rather it is an innovative way of using existing technologies.", "The technologies underpinning blockchain are asymmetric key encryption, hash values, Merkle trees, and peer-to-peer networks.", "Blockchain allows parties who may not trust each other to agree on the current distribution of assets and who has those assets, so that they may conduct new business.", "But, while there has been a great deal of hype concerning blockchain's benefits, it also has certain pitfalls that may inhibit its utility.", "With blockchain, as transactions are added, the identities of the parties conducting those transactions are verified, and the transactions themselves are verifiable by other users.", "The strong relationship between identities, transactions, and the ledger enables parties that may not trust each other or an individual computing platform to agree on the state of resources as logged in the ledger.", "With that agreement, they may conduct a new transaction with a common understanding of who has which resource and their ability to trade that resource.", "Blockchain is not a panacea technology.", "A blockchain records events as transactions when they happen, in the order they happen, and in an add-on only manner.", "Though there are benefits to blockchain, there are also pitfalls and unsolved conditions which may inhibit blockchain use.", "Some of those concerns are data portability, ill-defined requirements, key security, user collusion, and user safety. As with adopting any technology, users must examine the business, legal, and technical aspects of that technology." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Background", "Deteriorating Economic Conditions in Post-Revolution Egypt", "Egypt-IMF Negotiations", "Tentative Deal #1: June 2011", "Tentative Deal #2: November 2012", "Current Status", "Egyptian Politics and IMF Assistance", "Egypt, the IMF, and U.S. Foreign Policy Goals", "Issues and Options for Congress", "Considering U.S. Policy Toward Egypt at the IMF", "Using the IMF as a Benchmark for U.S. Assistance to Egypt", "Outlook" ], "paragraphs": [ "", "After more than two years of social unrest and economic stagnation following the 2011 popular uprising, the government of Egypt is facing serious economic pressures that, if not remedied, could lead to economic collapse and possibly new levels of violence. The International Monetary Fund (IMF) has been in negotiation with the government of Egypt for at least $4.8 billion in loans in exchange for structural economic reforms, such as subsidy reduction. Egyptian acceptance of an IMF loan could also pave the way for billions more in financial assistance from other bilateral and multilateral donors, potentially providing Egypt with time to stabilize its political system and economy. The Obama Administration is encouraging President Mohammed Morsi to reach out to the opposition and the public in order to gain the political support to quickly reach a deal with the IMF in order to stave off further economic uncertainty. Egyptian leaders are concerned about the political ramifications of required IMF reforms, which could be politically unpopular.\nCongress, which annually oversees and appropriates $1.55 billion in bilateral foreign aid to Egypt, is following the situation in Egypt closely, including the Islamist-led government's stated commitment to, among other things, pursuing democratic principles and continued peace with Israel. Some Members of Congress are also closely monitoring Egypt-IMF negotiations. U.S. funds to provide bilateral debt relief to Egypt have been tied to Egypt committing to an economic program in conjunction with the IMF. Legislative language also has been proposed that would tie U.S. bilateral economic assistance to Egypt to, among other things, an IMF program and implementation of reforms under the program. Congress could also pass legislation to shape U.S. policy toward Egypt at the IMF. More generally, in the 113 th Congress, lawmakers have proposed a number of bills that would prohibit, restrict, or rescind bilateral U.S. assistance and/or arms sales to Egypt.\nThis report provides an overview of the economic situation in post-revolution Egypt and negotiations between Egypt and the IMF. It also analyzes why an IMF program is controversial in Egypt and the relationship between an IMF program for Egypt and U.S. foreign policy goals in the region. It discusses the IMF program from a congressional perspective, including how debt relief for Egypt has been tied to an IMF program and legislation that would condition U.S. bilateral economic assistance to Egypt on an IMF program.\nFor more information on the political situation in Egypt, see CRS Report RL33003, Egypt: Background and U.S. Relations , by [author name scrubbed]. For more information on the IMF, see CRS Report R42019, International Monetary Fund: Background and Issues for Congress , by [author name scrubbed].", "", "Economic conditions in Egypt have gradually deteriorated since the 2011 revolution, potentially exacerbating an already polarized Egyptian political climate. Neither military nor civilian authorities have been able to restore confidence in the economy. Continued insecurity stemming from deterioration in law and order has hampered investment. The Islamist-led government and the opposition have blamed each other for worsening economic conditions, and while Egypt has not reached a crisis \"tipping point,\" there is some concern that economic shocks, such as a dramatic currency devaluation or sudden steep rise in the cost of living, could lead to street violence.\nBefore the political changes began taking shape, Egypt's economy was strong in many respects. The economy was growing at a fairly rapid pace, averaging 5% a year between 2000 and 2010. Starting in 2004, the government pursued wide-ranging structural reforms, including tariff reductions, privatization of state-owned enterprises, and reductions in regulation of the private sector, among other policy measures, that aimed to improve the business environment and make Egypt's economy more competitive. The 2008 World Bank Doing Business report ranked Egypt as the top worldwide economic reformer. In general, reforms helped attract foreign capital, and foreign direct investment (FDI) in Egypt surged from 1.2% of GDP in 2000 to 9.3% of GDP in 2006. The global financial crisis of 2008-2009 had limited impact on Egypt's economy, due to low exposure to the types of structured financial products at the heart of the financial crisis and the government's accommodating fiscal and monetary policies following the onset of the crisis.\nBehind strong growth and capital inflows during the 2000s, however, Egypt's economy faced a number of vulnerabilities. Average Egyptians saw little immediate benefit from the economic reforms praised by outside observers and investors. Growth had done little to lower persistently high unemployment, which averaged 9.9% during the 2000s (and was reportedly much higher among youth), or substantially reduce poverty. Fifteen percent of the population, or about one in seven Egyptians, were living on less than $2 per day in 2008. The government was also running relatively large budget deficits, averaging 8.2% of GDP between 2002 and 2010. In its 2010 annual review of Egypt's economy, the IMF cautioned about the need for fiscal consolidation and recommended a value-added tax (VAT), energy subsidy reform, and measures to contain the fiscal cost of pension and health reforms. Persistent budget deficits also left public debt at 73% of GDP in 2010, above the 60% threshold that some economists believe is stable and conducive to growth. The IMF also warned about the need to continue reform \"momentum\" to further improve the business environment and build the private sector. Finally, inflation had steadily increased through the decade, from 2.8% in 2000 to 11.7% in 2008.\nThe revolution in Egypt unraveled the conditions underpinning growth in the 2000s and brought potential vulnerabilities to the forefront. The revolution and ensuing political uncertainty eroded investor confidence, triggering a sharp reduction in capital inflows and an abrupt decline in tourism revenue, on which many jobs depend. Economic growth fell to 1.8% in 2011 and 2.2% in 2012. Unemployment rose from 9.2% in 2010 to 12.3% in 2012. The new Egyptian authorities, brought to power in elections in mid-2012 as the military regime that took power in early 2011 formally stepped aside, retreated from previous pledges for fiscal consolidation, and the budget deficit widened from 7.8% of GDP in 2010 to 11.2% in 2012. General economic trends in Egypt before and after the revolution are depicted below, in Figure 1 .\nThe Morsi government has been reluctant to reduce fuel subsidies, and has continued to earmark a large proportion of fiscal expenditures for social spending, seemingly as a means for securing continued political support. The government has also increasingly relied on domestic markets to finance the deficit, which is more expensive than borrowing on international markets and has further strained government finances. Public debt rose from 73% of GDP in 2010 to 80% in 2012.\nPolitical uncertainty and capital outflows have also reduced demand for Egypt's currency, the Egyptian pound, resulting in pressure on the Egyptian pound to depreciate. The Egyptian central bank generally does not allow its currency to be determined entirely by market forces (i.e., to float freely, like the U.S. dollar), and has been selling foreign exchange reserves in an attempt to manage a gradual depreciation. The central bank's holdings of foreign exchange reserves fell from $34 billion in the fourth quarter of 2010 to $12 billion in 2012, a level that many economists fear puts the central bank at risk of running out of reserves and triggering a currency crisis. The central bank has also increased interest rates to stem pressure on the pound, which some economists fear undermines the government's growth objectives in the short term. A depreciated local currency means that Egyptian households' wealth and wages are worth less in terms of purchasing power, as imported goods become more expensive.", "With slowing growth, rising unemployment, dwindling foreign exchange reserves, and a growing budget deficit, many economists argue that Egypt faces two broad economic challenges: (1) sustaining macroeconomic stability in the short term; and (2) implementing economic reforms in the medium term to deliver growth to broad segments of society (\"inclusive growth\"), foster private sector development, and create jobs.\nThe IMF is in a position to help stabilize Egypt's economy and, potentially, advance reform efforts. The IMF provides loans to countries facing economic crises, and its short-term loans (typically disbursed over one to three years) can ensure continuous access to affordable financing, providing the government with breathing space to implement needed economic reforms. IMF loans are disbursed in phases (\"tranches\"), contingent upon the implementation of economic reforms, which have been negotiated between the government and the IMF at the onset of the program (\"conditionality\"). Targets may be revisited, however, over the course of the program in response to changing economic conditions. Other Arab countries in \"transition\" are facing similar pressures, and the IMF has negotiated and started programs in Jordan, Morocco, Tunisia, and Yemen.\nEgyptian authorities and the IMF have been in on-again, off-again negotiations essentially since political changes started taking shape in Egypt. Two tentative (\"staff-level\") agreements were reached, in June 2011 and November 2012, but no agreement has been finalized or implemented. Egyptian authorities have been reluctant to commit to economic reforms that may be politically unpopular and ultimately saddle the economy with more debt. A particular source of concern are fuel subsidies, which many economists view as inefficient and regressive but constitute a financial safety net for many Egyptian households. In turn, the IMF's lending policies prevent it from pursuing a program that does not have adequate conditionality commitments in place. Continuing political concerns and uncertainty in Egypt have also contributed to the delay. In the absence of an IMF deal, Egyptian authorities are increasingly turning to other countries in the region for financial assistance, such as Libya and Qatar (described in greater detail below). However, funds from other governments may only provide a bridging mechanism and could fail to ensure that Egyptian authorities address underlying structural challenges.", "At the time of the first staff-level agreement, in June 2011, the military-controlled Supreme Council of the Armed Forces (SCAF), led by Field Marshal Mohamed Hussein Tantawi, was exercising executive authority in Egypt and therefore negotiating with the IMF. Tantawi rejected the proposed $3.2 billion IMF loan, reportedly because he was hesitant to burden Egypt with what he considered was too much foreign debt and perhaps believing that Egypt could receive short-term loans or grants from Gulf Arab countries instead. Many economists have since suggested that the terms of the June 2011 staff-level agreement would have been far less onerous in terms of conditionality than subsequent proposals; as economic conditions in Egypt continued to deteriorate in coming months, the size of the IMF program for Egypt, and the reforms attached to it, have become more ambitious.\nThe June 2011 staff-level deal was reached before the Muslim Brotherhood began to wield real political power in post-Mubarak Egypt, but the party generally applauded the SCAF's rejection of IMF assistance as an assertion of Egyptian sovereignty, while being careful not to rule out any future multilateral lending. According to one Muslim Brotherhood communiqué published after the SCAF's rejection of the $3.2 billion IMF loan:\nThe Egyptian government has adopted a new policy to strike a balance when dealing with international financing institutions. It has recently refused to finance the deficit through loans loaded with political and economic conditions. The importance of this policy is that it signals that the authorities are reconsidering ensuring the independence of the state, which is consistent with the aspirations of the revolution, to get rid of the inherited dependency of the old regime. Regardless of the methods of handling the issue and covering the budget deficit, this step would recast the Egyptian relationship with the IMF and the World Bank, which would require a great deal of effort directed at achieving stability, development, production, self-reliance and the development of our local resources. This approach also delivers a clear message to international financial institutions regarding the need to move from an era of political loans that have supported many authoritarian governments, and shifting towards taking into account more balanced relations in the new era, which would be based on the interests of the states and safeguarding their economic development.", "Following the 2011-2012 parliamentary elections that enabled the Muslim Brotherhood's Freedom and Justice Party to form a majority coalition, Islamists assumed partial control over governance amidst a worsening economic crisis. Though the SCAF still maintained executive authority in the first half of 2012, the Brotherhood insisted that it would not support any new IMF deal unless a new, more broadly based government was formed of which it would presumably be a part. In March 2012, Saudi Arabia reportedly deposited $1 billion in Egypt's central bank, which eased some of the immediate pressure on the Egyptian government to secure financing from the IMF quickly. Egypt also reportedly received financial assistance from Qatar.\nMonths later, former Brotherhood leader Mohammed Morsi became president and wrested most day-to-day executive authority from the SCAF. Islamists also controlled the upper house of parliament (the lower house having been dissolved by the courts pending new elections). A second staff-level agreement was reached between Egypt and the IMF in November 2012, to provide a 22-month, $4.8 billion loan program. Reaching an agreement with the IMF was also expected to unlock funds from other bilateral and multilateral donors. It is not uncommon for other donors to wait until an IMF program is in place, which can serve as a seal of approval for the government's economic policies and provide greater assurance that assistance would be used by the government wisely. The total financing package, including funds from the IMF, was reportedly $14.5 billion in loans and deposits on relatively favorable terms (compared to borrowing on the private debt market).\nAt the time, the government was planning on reducing spending, primarily by cutting energy subsidies, and boosting revenue, including through reforms to move from a general sales tax to a value-added tax. Possibly to demonstrate good will, the government lifted subsidies on 95-octane petrol in line with the plan in November 2012. The program likely included other policy measures as well; specifics would have been released publicly when the program was finalized. One analyst expected the IMF \"to ask Egypt to do all the things that the IMF always asks a country to do, which is to get its fiscal house in order; increase taxes, reduce the budget deficit, get rid of subsidies so that it can bring down inflation, do other things that will boost growth, and then get Egypt back on some kind of path toward recovery.\"\nIn December 2012, public outcry erupted over the proposed tax increases, causing the government to reverse course. The Egyptian finance minister requested a delay in the program, and eventually the government postponed the program until after the parliamentary elections, which were to end in June 2013.", "By the spring of 2013, with the economic situation still unstable, it appeared that the government would not be able to wait on IMF assistance until parliamentary elections were completed. The elections have been put on hold, possibly until the fall of 2013, due to judicial review of the electoral law. In the meantime, President Morsi has attempted to replace hundreds of judges who he believes are obstructing his agenda. Moreover, ensuring broad Egyptian public support for an IMF loan, a goal sought by many IMF members, seemed distant at best, as trust between President Morsi and his opponents had deteriorated significantly in prior months.\nIn March 2013, the IMF suggested that Egypt could qualify for emergency short-term financing from the IMF to stave off imminent economic collapse. Assistance would have taken the form of a bridge loan, smaller and shorter-term than the programs previously negotiated between the IMF and Egypt. It would have provided about $700 million, substantially smaller than the $4.8 billion previously on the table, but would have not come with the same conditions attached to more standard (non-emergency) loan facilities. This support could have provided Egypt with much-needed short-term cash to get through the elections, while providing the government with time to negotiate a more traditional, longer-term IMF program. However, the Morsi government eventually ruled out such emergency assistance. One Western diplomat reportedly said that the rejection of emergency financing by the government was an attempt to \"bully the Fund to giving Egypt the loan.\" Likewise, Steven Cook of the Council on Foreign Relations has cautioned that \"Egypt will likely get the aid it needs to keep the country afloat, but the way they have gone about securing this assistance suggests a misplaced arrogance.... the Egyptians should dispense with their implicit 'give it to us or else' approach. Whether they like it or not, donors are not going to hand over cash without any terms.\"\nIn contrast, President Morsi reportedly argued that Egypt had \"done what was required\" for a longer-term IMF program and had prepared a program of reforms. Reforms announced in early 2013 include, for example, elimination of energy subsidies for industrial firms over a three-year period, increases in the price of wheat, and implementation of a progressive property tax on large properties. Reforms were also announced to protect the most vulnerable segments of society, including plans to implement universal health care and, for low-income families, raising the minimum tax exemption and increase social security pensions. The reforms have not been without political costs. For example, the government's plans for bread subsidy reforms resulted in bakeries across Egypt threatening to shut down.\nMeanwhile, the Obama Administration has stressed the urgency facing Egypt with regard to an IMF program, and regarding economic and political conditions more broadly. On April 2, 2013, Secretary of State John Kerry remarked, \"We share a very real concern in the Obama Administration about the direction that Egypt is apparently moving in.... We have been working very, very hard in the last weeks to try to get the government of Egypt to reach out to the opposition, to deal with the IMF, to come to an agreement which will allow Egypt to begin to transform its economy and improve the lives of its citizens.\"\nWhile negotiations with the IMF continued, the Egyptian government reportedly received pledges for financial support in April 2013 from Libya ($2 billion deposit to the central bank) and Qatar ($3 billion purchase of government bonds). A list of selected bilateral financial assistance to Egypt is provided in Table 1 . Some analysts believe that financial support from neighboring countries could again delay an IMF program, while others argue that this assistance could be the start of a broader financial assistance program, which includes IMF funding.\nBy mid-April, Egypt's latest round of talks with the IMF ended without an agreement. Reportedly, the IMF stated that Egypt has taken \"valuable first steps\" to address energy subsidies, and that the Egyptian authorities \"intend to build on these steps with further actions to address, in a socially balanced way, the country's fiscal and balance of payments deficits, and create conditions for sustained recovery of the economy.\" It is not clear when talks will resume. Meanwhile, spending on fuel subsidies has increased by 40% from the previous fiscal year, largely due to a steady decline in the Egyptian pound.\nStopgap funding from Qatar and Libya may allow Egypt to \"muddle through\" until later in the year, perhaps after parliamentary elections. By late April 2013, some economists began predicting that Egypt could avoid a fiscal crisis until late 2013. According to former finance minister Samir Radwan, \"They [the Morsi government] go through the motions of pretending they are serious about an IMF deal, but actually they are not.\" U.S. officials continue to emphasize the importance of an IMF deal, but may be frustrated by Egypt's inability to reach a deal. In recent testimony before the Senate Appropriations Subcommittee on State, Foreign Operations and Related Programs, Secretary Kerry remarked that:\nEgypt is more of a question mark right now. I mean, I'll just tell you, there are a lot of ifs about Egypt at this moment. And we've been working very, very hard with the Egyptian government to try to bring them to a point where they're prepared to embrace important reforms that are key to the IMF money, to be more inclusive with the opposition, to build out civil society, to live up to their promises regarding democracy, and it's a question mark whether they're going to make the right choices. And I can't frame it any other way for you now.", "Many Egyptians view the history of modern Egypt as characterized by a long and painful legacy of the state being beholden to foreign powers, including the Ottoman Empire, European colonizers, and the United States. The narrative of colonialism and anti-imperialism permeates Egyptian political discourse and is particularly potent on issues of foreign lending and assistance. The IMF in particular is a controversial institution in Egypt, largely due to the popular association of IMF programs with autocratic rule under the Mubarak regime, and a common belief that IMF programs directly led to the rise of unemployment, poverty, inequality, and corruption (see text box ).\nOlder Egyptians from the middle and lower classes may have particularly high disregard for the IMF, as many associate reductions in their standard of living and political freedoms with IMF-mandated reductions in government spending and privatization. The IMF's lack of credibility with large segments of Egyptians has contributed to the reluctance of new leaders in Egypt to pursue a program. One historian notes how former President Mubarak's government was acutely aware of the popular opposition to Egyptian acceptance of IMF reforms in the early 1990s:\nIn the eyes of the regime, the economic reforms were a potential source of trouble not only because they led, or could lead, to material losses for a large part of the population; they were also potentially dangerous in that a considerable part of 'public opinion,' influenced by the dominant discourse of the past, considered them irreconcilable with the social and political achievements of the [1952] revolution and with their own interests.\nAt present, it is difficult to gauge the extent of anti-IMF sentiment in Egypt. Although opposition to any Egyptian dealings with the IMF exists, most Egyptians are not necessarily blaming foreign lenders for their poor economy—yet. To date, small-scale protests have occurred outside the Egyptian stock exchange with protestors chanting that IMF support is akin to \"economic colonialism.\" Islamists, including hard-line Salafists, at times also have expressed reservations over accepting IMF support, arguing that Islamic law bans the payment of interest on loans. Egyptian leftists—who currently constitute the backbone of political opposition to Morsi—have been the most vocal opponents of IMF credit. They are led by third-place finisher in the 2012 presidential election Hamdeen Sabahi, who has denounced the IMF loan on his Facebook page. Some analysts believe that there is widespread public apathy toward the IMF, with a poll conducted in August 2012 showing that only two-thirds of Egyptians were aware of the IMF loan under discussion.\nDuring an IMF delegation visit to Egypt in mid-April 2013, fund representatives held meetings with various opposition figures and political parties, including Amr Moussa, Amr Hamzawy, Mohamed ElBaradei, the Wafd party, and Hamdeen Sabahi. Reportedly, these political figures voiced various demands, including calls for greater transparency in government-IMF negotiations, and concerns, such as the burden IMF-mandated reforms would pose for the average citizen.", "The Obama Administration has supported IMF involvement in Egypt, arguing that it promotes economic reforms in Egypt and would stabilize the economy and facilitate democratic transition. The Administration has encouraged President Morsi to reach out to the opposition and the public in order to garner political support to quickly reach a deal with the IMF. In April 2013, Treasury Secretary Jacob Lew expressed support for an IMF loan to Egypt, and explicitly stated that \"It would be very much in the United States' best interests for Egypt to be on a more sustainable course.\" Likewise, in a March 2013 visit to Cairo, Secretary of State John Kerry remarked that:\nIn all my meetings, I conveyed a simple but serious message: The brave Egyptians who stood vigil in Tahrir Square did not risk their lives to see that opportunity for a brighter future squandered. The Egyptian people must come together to address their economic challenge. I encouraged President Morsi to implement the homegrown reforms that will help his country secure an IMF agreement, put Egypt on the path to establishing a firm economic foundation and allow it to chart its own course. He agreed and said that he plans to move quickly to do so.... The United States can and wants to do more. Reaching an agreement with the IMF will require further effort on the part of the Egyptian government and broad support for reform by all Egyptians. When Egypt takes the difficult steps to strengthen its economy and build political unity and justice, we will work with our Congress at home on additional support. These steps will also unlock much-needed private-sector investment and broader financial assistance.\nMore broadly, however, there is debate within Washington over whether an IMF deal (among other things) is an opportunity, or not, for the United States to exert influence over the Islamist-led government of Egypt to pursue policies in line with U.S. interests and values. Some argue that Egypt's need for external assistance presents the United States, which has the largest financial stake and voting power in the IMF, with an opportunity to condition U.S. support for Egypt at the IMF on the government's commitment to, among other things, pursuing democratic principles and continued peace with Israel. Some analysts are especially concerned that President Morsi, a former Muslim Brotherhood leader, appears to be consolidating power at the expense of non-Islamist political forces—behavior that they believe the Obama Administration should signal is unacceptable. These advocates suggest that U.S. support for an IMF deal amidst perceived rising Islamist autocracy would be a setback for democracy in post-Mubarak Egypt. According to Egypt experts Robert Kagan (Brookings) and Michele Dunne (Atlantic Council):\nThe United States made a strategic error for years by coddling Mubarak, and his refusal to carry out reforms produced the revolution of Tahrir Square. We repeat the error by coddling Morsi at this critical moment. The United States needs to use all its options—military aid, economic aid and U.S. influence with the IMF and other international lenders—to persuade Morsi to compromise with secular politicians and civil-society leaders on political and human rights issues to rebuild security and get the economy on track.\nOn the other hand, some observers suggest that the United States should not push Egypt too hard in its negotiations with the IMF, arguing that Egypt is \"too big to fail\"—from a political and an economic standpoint (Egypt has the largest population of any country in the Middle East and North Africa [about 83 million]). Proponents of an IMF deal assert that if economic collapse were to occur there, the consequences for global, regional, and U.S. national security would be severe. Examples of U.S. security interests in Egypt could include access to the Suez Canal for global commerce and U.S. naval vessels; Egypt's 35-year-old peace treaty with Israel; and U.S.-Egyptian and Egyptian-Israeli military and intelligence cooperation.\nMoreover, opponents of stringent conditionality assert that any Egyptian government acceptance of IMF-mandated reforms would be politically painful enough; additional behind-the-scenes U.S. political pressure on President Morsi could unintentionally push him to seek financial aid from other, non-Western sources. Egyptian authorities have already received financial support from Saudi Arabia, Libya, and Qatar. It is unclear whether the Gulf countries support an IMF program for Egypt, and whether they are willing to commit to similar funding levels. It is also unclear what implicit or explicit political or economic conditions would be attached to financial assistance from neighboring countries in the absence of IMF involvement, and whether these conditions would be in line with U.S. interests.", "", "Congress may reflect the bifurcated views identified above over the optimal U.S. policy toward Egypt at the IMF. Some lawmakers who oppose ongoing U.S. bilateral assistance to Egypt may oppose any existing or future IMF support of Egypt. For other lawmakers who may support existing aid to Egypt, the prospect of additional support to Egypt, either through the IMF, bilateral aid, or both, poses several potential concerns. First, some may be concerned that in the rush to stabilize Egypt, the Administration could be too lenient in terms of the reforms it seeks from the Egyptian government. Second, other lawmakers may not want the Administration to push for tough conditions on an IMF loan, fearing that onerous conditions could risk the Egyptian government avoiding an IMF loan and risking economic collapse, and/or risk pushing the Egyptian government to other sources of financing that may not be aligned with U.S. interests.\nIf Congress wants to influence U.S. policy toward Egypt at the IMF, it has legislative tools at its disposal to do so. The executive branch, through the Treasury Department, manages day-to-day participation of the United States in the IMF, but Congress over the years has passed a number of \"legislative mandates\" that impact actions of the U.S. Executive Director at the IMF. Often, but not exclusively, included in appropriations bills, legislative mandates can direct U.S. representatives at the IMF to advocate certain policies, direct the U.S. Executive Director to vote for or against certain types of programs or policies, and/or require the Treasury Department to submit reports to Congress on IMF issues or activities. Existing legislative mandates focused on specific countries direct the U.S. representatives at international financial institutions (IFIs) to, for example, oppose non-humanitarian assistance to a specific country (as in the case of Belarus); advocate assistance to help a government improve its economic system and accelerate development (as in the case of Mongolia); or oppose any non-humanitarian financial assistance to a specific country until certain political conditions have been met (as in the case of Zimbabwe). Congress could pass similar legislation directing the \"voice and vote\" of the U.S. Executive Director at the IMF with regard to IMF programs and policies toward Egypt. It could also pass resolutions laying out congressional views on IMF engagement with Egypt.", "Some lawmakers may seek to use the terms of IMF conditions as \"financial benchmarks\" for the provision of existing or any new bilateral economic aid to Egypt. One potential concern, however, is how stringent the conditionality attached to the IMF program would be. According to Egyptian economist Ashraf Swelam, \"[a]t a time when the economic situation in Egypt is going from bad to worse, every new draft of the reform program submitted to the IMF—in the endless rounds of negotiations dating all the way back to February 2011—has been a watered down version of its predecessor.\"\nU.S. debt relief has already been tied to an IMF program (see text box below), and legislation has been introduced in the 113 th Congress to require an IMF agreement as a condition for U.S. bilateral assistance. Specifically, during Senate debate in March 2013 over the full-year continuing resolution ( H.R. 933 , passed into law as P.L. 113-6 ), a proposed amendment ( S.Amdt. 44 ) would have, if adopted, conditioned the obligation of U.S. economic assistance to Egypt on the President's certification, among other things, that the government of Egypt has \"signed and submitted to the International Monetary Fund a Letter of Intent and Memorandum of Economic and Financial Policies designed to promote critical economic reforms and has begun to implement such measures.\" This amendment was not included in the final legislation as enacted.", "Financial assistance from neighboring countries may reduce the immediate fiscal pressures on Egypt, but it does not address deeper structural problems in Egypt's economy. If Egypt ultimately fails to reach an agreement with the IMF, it could signal a temporary setback for the Obama Administration, or it may be indicative of an oncoming period characterized by less U.S.-Egyptian cooperation on economic matters. In testimony before the House Appropriations Subcommittee on State, Foreign Operations, and Related Programs, Secretary of State Kerry questioned whether the United States should be doing more to influence Egypt, when he remarked that:\nI can't give you assurances about what this current [Morsi] administration is going to do, because I think they're still sorting through that. And the die is not cast yet. That was the purpose of my visit [to Egypt] and the purpose of the money which I am grateful to you for releasing. Qatar has put another $2 billion at the availability of Egypt just in the last week or so. Before that, they put about $4 billion or $5 billion. Libya has loaned them $2 billion in the last week or so. And the IMF is in negotiating for $4.8 billion. We promised $1 billion and until I took the 190 [$190 million] that you kindly helped us to be able to provide, we didn't provide them with a dime, not a dime. We gave them a promise and a year later, we've given them zero. Now, you know, you don't buy your interests and you don't buy your—that's not what foreign aid is about. But I'll tell you, if you're not helpful to people in their time of need, if you're not there, part of the process, it's very, very difficult to have the kind of leverage to say, a diverse pluralistic politics is critical to us when they say, what's it matter to you? You don't really care. You're not helping us. The other guys are helping us. Thank you, we'll, you know, do what we want to do.\nOn the other hand, though U.S. officials may not entirely embrace aid from non-IMF sources for Egypt such as Qatar, the Administration may feel that it must deal cautiously with Morsi's government so that the United States does not alienate friendly elements of the Egyptian opposition. Some policymakers may feel that non-IMF lending for Egypt may keep Egypt's financial situation in shaky, but workable order, and help to stave off a worst case scenario. However, it remains uncertain whether President Morsi's government can receive non-IMF stop-gap lending indefinitely, and on what terms." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h1_full", "h0_title h2_title h1_title h3_title", "h0_full h2_full", "h2_full h1_full", "h1_full", "h1_full", "h2_full", "h2_full", "h3_full", "h4_title h3_title", "h3_full", "h4_full", "" ] }

{ "question": [ "How much does Congress supply to Egypt each year?", "What are the economic conditions in Egypt?", "How has unemployment changed after the revolution?", "Why do policymakers and analysts fear the economic condition of Egypt?", "What types of negotiations have Egyptian authorities and the International Monetary Fund (IMF) been trying to make?", "When were tentative agreements with first the military-controlled Supreme Council of the Armed Forces (SCAF) reached and who was involved?", "What type of aid was promised to be provided?", "Are there any final agreements?", "What type of economic reforms have Egyptian authorities been reluctant to commit?", "What is one of the issues?", "What do Egyptians associate the IMF with?", "What type of program has the IMF resisted?", "What would some lawmakers oppose in the future?", "What are some of the concerns?", "What are some other concerns?", "What are some of the fears concerning the application?", "How do lawmakers want to use the terms of IMF conditions?", "Why are there concerns about bilateral debt?", "What would have been the effect of the proposed legislative language?" ], "summary": [ "Congress, which annually oversees and appropriates $1.55 billion in bilateral foreign aid to Egypt, is following the political and economic situation in Egypt closely.", "Economic conditions in Egypt have deteriorated rapidly since the 2011 \"revolution.\"", "Political uncertainty abruptly reduced foreign capital flows into Egypt; growth, while still positive, has slowed substantially; the central bank is at risk of running out of foreign exchange reserves; and unemployment has increased from 9.2% before the revolution to 12.3% in 2012.", "Many policymakers and analysts fear that the fragile economic conditions in Egypt jeopardize the country's political transition and broader stability in the region.", "Egyptian authorities and the International Monetary Fund (IMF) have been in negotiations for more than two years over an IMF loan to Egypt in exchange for policy reforms that, if successful, could stave off economic collapse and create more \"inclusive\" growth.", "The IMF reached tentative agreements with first the military-controlled Supreme Council of the Armed Forces (SCAF) in June 2011 and later with Egyptian President Mohammed Morsi in November 2012.", "The November 2012 program would have provided $4.8 billion in assistance, and other donors pledged about $9.7 billion in additional financing once the IMF program was in place.", "No agreement has been finalized or implemented to date.", "Egyptian authorities have been reluctant to commit to economic reforms that may be politically unpopular and increase the country's debt.", "Pressure to cut fuel subsidies is a particular issue.", "More broadly, many Egyptians associate the IMF programs in the late 1980s and 1990s with adverse social outcomes.", "On its part, the IMF has resisted a program that does not have sufficient conditionality consistent with its lending policies.", "Some lawmakers who oppose ongoing U.S. bilateral assistance to Egypt may oppose any existing or future IMF support of Egypt, on several potential grounds.", "Some may be concerned that in the rush to stabilize Egypt, the Administration could be too lenient in terms of the reforms it seeks from the Egyptian government.", "Others may not want the Administration to overly politicize an IMF loan.", "They fear that the application of too much pressure on the Morsi government could make accepting a possibly unpopular IMF deal too politically controversial to pursue and that the lack of IMF involvement in Egypt could undermine U.S. interests in the region.", "Lawmakers may also want to use the terms of IMF conditions as \"benchmarks\" for the provision of existing or new bilateral economic aid to Egypt.", "Concerns about bilateral debt relief are, in part, related to the absence of an IMF agreement.", "Additionally, legislative language (S.Amdt. 44) proposed in March 2013, but not adopted, would have tied U.S. bilateral economic assistance to Egypt to, among other things, an IMF program." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, -1, 0, -1, -1, -1, 0, 0, 0, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 4, 4, 4, 4, 6, 6, 6 ] }

{ "title": [ "", "Introduction", "United States v. Jones: A Property-Based Approach to the Fourth Amendment", "The Implications of Jones and Technology", "Justice Alito's Concurrence: A Katz-Based Approach", "Justice Sotomayor's Concurrence: The Broadest Reading of the Fourth Amendment", "Warrant Requirement after Jones", "Conclusion" ], "paragraphs": [ "", "There is little doubt that technology is fast becoming intertwined with our jobs, our social life, and even our most private interactions with each other. This phenomenon creates friction among many compelling interests. The first is a clash between two contrasting values: the desire for privacy and the longing to be connected through the newest and most advanced technology. To a certain extent, as one advances, the other must necessarily recede. Meanwhile, courts are tasked with determining the balance between government's law enforcement needs and the people's privacy. The Fourth Amendment to the U.S. Constitution provides the measuring stick to determine this balance. The amendment ensures \"[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.\" Its primary function is to prohibit government intrusion upon the privacy and property rights of the people. When new technology is involved, achieving this balance is not an easy undertaking.\nUnited States v. Jones presented such a challenge to the Supreme Court. The question posed was whether the installation and month-long monitoring of a GPS device attached to Jones's car constituted a violation of the Fourth Amendment's prohibition against \"unreasonable searches and seizures.\" This usage of the Global Positioning System (GPS) is not unusual in criminal investigations, but up to that point longer-term monitoring had not been directly tested by the Court. Thus, many observers awaited the Jones ruling for its potential impact not only on government monitoring programs, but also on general Fourth Amendment cases involving prolonged government surveillance.\nIn prior government tracking cases, the Court applied the test from Katz v. United States , which addresses whether the individual had a reasonable expectation of privacy in the area to be searched. Because the police in Jones physically invaded his property to attach the GPS device—whereas in the previous cases they had not—the Court declined to apply Katz , but instead based its decision on a trespass theory. The trespass theory asks whether there was a physical intrusion onto a constitutionally protected area coupled with an attempt to obtain information. In Jones , there was, so the Court applied this more limited test and held that a search occurred. Though the majority bypassed the Katz approach, Justice Alito, concurring with Justices Breyer, Ginsburg, and Kagan, would have applied Kat z . Long-term surveillance, Justice Alito wrote, violated Jones's reasonable expectation of privacy under Katz . Justice Sotomayor agreed with both the majority and Alito's concurrence, but called for additional protection by questioning the viability of the third-party doctrine, which holds that any information voluntarily given to a third party loses all privacy protections.\nThis report will analyze all three opinions in an attempt to determine how Jones might affect future use of GPS tracking and other government surveillance techniques. First, it will briefly recount the facts that led to Jones's prosecution, his appeal, and the Supreme Court's review. Next, it will analyze the majority's property-based test, evaluating it against similar Fourth Amendment case law. Additionally, this section will raise issues concerning the possible impact of this approach on similar search and seizure cases. Next, the report will examine both Justice Alito's and Justice Sotomayor's concurrences and their potential impact on cases involving technology. Because the Court did not express whether a warrant is required, the report will posit several theories on how this issue may be resolved in the future.", "In 2004, a Joint Task Force of the FBI and the District of Columbia Metropolitan Police Department suspected Antoine Jones was part of a drug distribution ring. Based on information obtained from wiretaps, a pen register, and video surveillance, the task force obtained a warrant to monitor Jones's Jeep with a GPS tracking device. According to the terms of the warrant, the officers had 10 days to install it and were required to do it in the District of Columbia. The officers installed the device on the 11 th day in Maryland while the Jeep was parked in a public parking lot. For the next four weeks the device tracked Jones's every movement, creating 2,000 pages of monitoring data. During this time, the device tracked Jones's movements to and from a known stash house.\nJones was indicted for conspiracy to distribute and possession with intent to distribute cocaine. At trial, the prosecution relied heavily on Jones's movements derived from the GPS to connect him with a larger drug ring. He moved to dismiss this information as a warrantless search under the Fourth Amendment. The United States District Court for the District of Columbia excluded the data derived when his car was parked in his garage but allowed into evidence all of his public movements. Jones was ultimately convicted and sentenced to life imprisonment. The United States Court of Appeals for the District of Columbia Circuit reversed, holding that the GPS data were derived in violation of Jones's reasonable expectation of privacy under the Fourth Amendment. The Supreme Court then granted a writ of certiorari, agreeing to review Jones's case.\nMost observers assumed the Supreme Court would, like the D.C. Circuit Court of Appeals, apply the reasonable expectation of privacy test developed in Katz v. United States to determine if the tracking was a Fourth Amendment search. Under the Katz test, a search in the constitutional sense has occurred if the individual had an actual expectation of privacy in the area to be searched that society would deem reasonable. Since 1967, when Katz was handed down, the Court had developed a body of case law applying this privacy-based formulation of the Fourth Amendment.\nThe Jones majority, led by Justice Scalia, took a different route. It held that the attachment of the GPS device, coupled with its use to monitor Jones's movements, was a constitutional search. The Fourth Amendment ensures that \"[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.\" Because Jones's vehicle is an effect —listed in the text of the Fourth Amendment—the police's physical intrusion by attaching the GPS for tracking purposes constituted a search . This theory hinges on common law trespass as it was known in 1791 (when the Fourth Amendment was adopted). It does not rely on Katz , nor any subjective conception of privacy. The majority contended that Jones's rights should not strictly depend on whether his reasonably expected zone of privacy was pierced. Rather, the majority asserted, property rights also define an individual's right to be free from government intrusion.\nJustice Alito, in concurrence, contended that the majority's reliance on \"18 th -century tort law\" which \"might have provided grounds in 1791 for a suit based on trespass to chattels,\" \"strains the language of the Fourth Amendment; it has little if any support in current Fourth Amendment case law; and it is highly artificial.\" Justice Alito would have instead applied the Katz formulation. This criticism prompts two central questions: (1) Does the majority's property-based approach enjoy textual, historical, or jurisprudential support?; and (2) What effect will this approach have on other areas of government investigations?\nThe seeds for the property-based approach were planted in England in Entick v. Carrington , a case considered by many as an ancestor of the Fourth Amendment. There, the English court forbade government agents from searching through Entick's home, looking for papers intended to prove his seditious writing. The agents had a general warrant to search the home, but the warrant lacked a specific description of the area to be searched and the items to be seized. Lord Camden declared that no government agent nor any other person may enter the property of another without permission, even if no harm is done. This theory carried over to the colonies and prompted the framers to include a prohibition against unreasonable searches and seizures when drafting the Bill of Rights. Under this common law trespass approach, the key inquiry is not necessarily the content of the information obtained by the police, but rather their method of retrieving it. The Jones Court had no doubts that the attachment of the GPS device (which required a trespass of Jones's car) would have been a search when the Fourth Amendment was adopted—when Entick was fresh in the framers' minds.\nAlthough property certainly controlled Fourth Amendment thinking during the infancy of the Fourth Amendment, its control waned in later years. Olmstead v. United States provides an example. There, federal agents installed several wiretaps on the telephone wires coming from Olmstead's house. In upholding this electronic eavesdropping, the Court ruled that the Fourth Amendment applied only when there was an official search or seizure of a person, his tangible papers and effects, and an \"actual physical invasion\" of the individual's home. Because the installation of the wiretap did not require the agents to trespass onto Olmstead's property, the Court held that it was not a search or seizure under the Fourth Amendment.\nForty years later, the Court began its shift away from this property-centric approach. In Warden v. Hayden , the Court noted the property-based approach had been discredited over the years, and that privacy should be the focus of the inquiry under the Fourth Amendment. Subsequently, the Court decided K atz v. United States , where it held an electronic surveillance of Katz's conversations while he was in a public telephone booth was impermissible, despite the fact that no property rights were involved. The \"Fourth Amendment protects people, not places,\" the Court declared, and any search that invaded a person's \"reasonable expectation of privacy\" should be considered a search in the constitutional sense.\nThis seemingly conflicting line of cases left many wondering whether property and privacy could coexist under the Fourth Amendment. The Court attempted to reconcile these two lines in Soldal v. County of Cook . There, while under the supervision of local police, a landlord had his tenant's trailer home towed from the rented lot. The tenant sued the police under Section 1983, a civil rights statute, for a violation of his Fourth Amendment right to be free from unreasonable seizure. The Seventh Circuit Court of Appeals denied the tenant's claim, holding that any Fourth Amendment violation must be supported by some invasion of privacy. The police did not invade the tenant's privacy, but only his possessory interest in the property, enough for the court to hold the Fourth Amendment inapplicable. Instead, the panel noted that the due process clause was the proper avenue of relief for a \"pure deprivation of property.\"\nThe Supreme Court disagreed, ruling that the police action was a seizure notwithstanding the lack of a privacy interest at stake. The Court took pains to note that privacy-based cases like Katz and Warden had not \"snuffed out the previously recognized protection for property under the Fourth Amendment,\" but instead had \"demonstrated that property is not the sole measure of Fourth Amendment violations.\" The Court noted that the amendment does not protect possessory interests in all kinds of property, such as an open field not closely connected with a person's home, but certainly covers things specifically listed in the constitutional text—persons, houses, papers, and effects.\nThis idea that the Fourth Amendment protects both privacy and property independently is infused throughout the majority opinion in Jones . As Justice Scalia noted, Katz did not supplant the common law trespass approach, but merely supplemented it. But is a simple trespass alone enough to constitute a violation? The Court answered no: in addition to the physical intrusion, there must be \"an attempt to find something or to obtain information.\" Also, not every police trespass will be a constitutional search. The government must intrude upon an area enumerated in the text of the amendment (person, houses, papers, and effects). This leaves several questions. If a car is an effect, what other personal property may be covered under this approach? Will computer data constitute an effect ? Will an e-mail constitute an electronic paper ? If a police officer walks onto one's porch, is that an invasion of his house ? There are no easy answers to these questions.\nAdditionally, because the Court focused on the attachment of the device and the property interests involved, there remain questions of whether prolonged tracking with a device is permissible under the Fourth Amendment if there is no trespass. As the majority noted, \"[s]ituations involving merely transmission of electronic signals without trespass would remain subject to Katz analysis.\" Justice Alito's and Sotomayor's concurrences in Jones may be scrutinized for how the Court might handle these scenarios under Katz .", "As more cell phones and cars are outfitted with GPS tracking technologies, police need not physically attach a device to track its movements. Because the Jones majority opinion is based on a physical trespass into a constitutionally protected area, it seemingly will not apply where GPS is preinstalled. Justices Alito, and his four-Justice concurrence, and Sotomayor, concurring separately, provide insight into how a future court may apply the Fourth Amendment to evolving technologies. These opinions rely, to a certain extent, on the mosaic theory first discussed in the D.C. Circuit opinion, which says that tracking a person's public movements over a long duration is constitutionally unacceptable even if tracking each of the movements individually may be permitted. Whether this approach will garner a majority on the Court is unclear. However, at a minimum, these concurrences have engendered discussion in the lower courts, with several courts citing the mosaic theory as a viable alternative.\nThe question then becomes how much weight should the Alito and Sotomayor concurring opinions be accorded? There is no one rule to answer this question. Generally, there are two types of concurrences in Supreme Court opinions. The first is the true concurrence, in which the Justice concurs in the judgment, but disagrees with the reasoning. Justice Alito's opinion exemplifies that type of concurrence; he agreed that the surveillance constituted a Fourth Amendment search, but would have decided the case under the traditional reasonable expectation of privacy test instead of the trespass test. The second category is the simple concurrence, where the Justice agrees with the judgment and the reasoning of the majority, but also poses possible new theories that may not be directly relevant to that particular case, but can be used later to move the law in a particular direction. Justice Sotomayor's opinion seems to fit this latter category. Although these two concurrences chart somewhat different courses in their strategy and reasoning, when combined they appear to command five votes on the Court—a potential majority.", "Justice Alito spends most of his concurrence attempting to counter the majority's common law trespass theory. He argued that Scalia's reversion to the law as it stood in 1791 was unwise, and a return to the much-criticized property approach. The focus of this report, however, is Justice Alito's discussion of long-term GPS tracking under Katz 's reasonable expectation of privacy test.\nBefore coming up on appeal, the D.C. Circuit below examined whether Jones's whereabouts over the month-long period of tracking were exposed to the public. A person's movements are not actually exposed, the court answered, because the likelihood that anyone could actually follow someone for a month is highly improbable. Further, the movements are not constructively exposed because in many instances the whole is greater than the sum of the parts. This last proposition is premised on the mosaic theory. The mosaic theory supposes that tracking the whole of one's movements over an extended period of time reveals significantly more about that person than each individual trip does in isolation. For instance, police cannot infer much about a person from one trip to the liquor store. However, a daily trip to the same liquor store would provide greater insight into the person's habits. The government has employed this theory in the national security context for protecting intelligence sources and methods of obtaining information. The thrust of the argument is that unless a person has a broad view of the situation in question, he will not understand the importance of a single piece of evidence. Thus, with GPS tracking, following someone for one trip may not say much about a person, but following his every movement for an extended period presumably reveals considerably more.\nUnited States v. Knotts created an obstacle to the panel's adoption of the mosaic theory. In Knotts , the Supreme Court held that a person has no reasonable expectation of privacy in his movements on public streets. The Court, however, did not foreclose the argument that, even if traveling on public roadways, pervasive or intrusive police activity may violate the Fourth Amendment. The Court suggested it would revisit the issue if police were to use \"dragnet-type law enforcement practices.\" Although the purport of this phrase is somewhat obscure, the D.C. Circuit understood it to mean that 24-hour surveillance of a single individual was sufficient for it to apply. As such, the panel ruled that the previous tracking cases were not controlling, allowing it to apply the mosaic theory. Based on this application, the court granted Jones's motion to dismiss all location evidence obtained from the GPS device.\nAs noted earlier, Justice Scalia and the majority did not apply the mosaic theory. Instead they grounded their decision in a common law trespass theory. Justice Alito, on the other hand, wanted to confront directly this question of how technology affected a society's expectations of privacy. He first posited that the ubiquity of cell phones, video monitoring, and other technologies in modern life shapes the average person's expectation of privacy—presumably reducing that expectation. Based on his understanding of Katz , Alito would have asked whether the use of GPS tracking involved an intrusion a reasonable person would not have expected. Under his approach, \"relatively short-term monitoring of a person's movements on public streets accords with expectations of privacy that our society has recognized as reasonable.\" However, the use of \"longer term\" GPS monitoring will in most instances violate the Fourth Amendment. Justice Alito declined to create a rule for determining at what point police tracking crosses this constitutional line. He concluded that four weeks of tracking was a search.\nBecause of the limited nature of Justice Alito's discussion, it is difficult to discern precisely which theory he employed. It is arguable that he and the three other Justices implicitly support the mosaic theory. To say that short-term monitoring is permissible, but longer-term monitoring is not, indicates there is something about the aggregation of a person's movements that prompted these Justices to deem it a Fourth Amendment search. It could also be argued that Justice Alito's concurrence did not accept the mosaic theory, but instead applied the probabilistic model of Fourth Amendment theory. This theory supposes that when government conducts an investigation in a way that would surprise an individual, or \"interferes with customs and social expectations,\" it violates a reasonable expectation of privacy. Justice Alito categorizes the Katz test as looking at the \"privacy expectations of the hypothetical reasonable person\"—a hypothetical person who has \"a well-developed and stable set of privacy expectations.\" Justice Alito notes that in precomputer days, the police had the time and resources to track only persons of exceptional interest to the police. He seems to accord much importance in the belief that the hypothetical reasonable person would be surprised to learn that the police would be tracking their every movement for a month-long period—an act beyond society's expectations.", "As far as Fourth Amendment rights are concerned, Justice Sotomayor provided the broadest interpretation in Jones by joining the majority's trespass approach, openly supporting Justice Alito's privacy-based approach, and putting into question the continuing viability of the third-party doctrine—a theory many believe creates the largest gap in privacy protection, especially in the realm of technology.\nWhereas it is unclear whether Justices Alito, Breyer, Kagan, and Ginsburg support the mosaic theory, Justice Sotomayor maintained that this theory should directly guide the Court's determination of a person's privacy expectations in their public movements. She noted that \"GPS monitoring generates a precise, comprehensive record of a person's public movements that reflects a wealth of detail about her familial, political, professional, religious, and sexual associations.\" As part and parcel of the mosaic theory, she contended that an individual's awareness that the government may be constantly watching can chill one's freedom of speech and association under the First Amendment. Although the police might obtain the same evidence through traditional surveillance, there is something about the technology that troubled Justice Sotomayor. She seemed concerned that there will no longer be a logistical barrier between the government and the people. Police now have access to a cheap technology that can produce a significant amount of data. The Court must consider this a search—presumably requiring a warrant—to provide adequate oversight over the executive branch. This idea seems to coincide with Justice Jackson's well-worn saying that courts prefer that searches be overseen by a \"neutral and detached magistrate instead of being judged by the officer engaged in the often competitive enterprise of ferreting out crime.\"\nAdditionally, Justice Sotomayor called for a reexamination of the third-party doctrine. This doctrine supposes that any information a person voluntarily conveys to a third party is no longer entitled to Fourth Amendment protection, as the person cannot have a reasonable expectation that the third party will guard the privacy in that information. This rule has been used to justify access to bank records, the telephone numbers a person dials, electric billing records, and cell phone billing records. Some argue that when individuals give documents to a third party, usually in a commercial transaction, they consent to the release of such information to the government, or at a minimum assume the risk that the person trusted with the information would hand it over. Justice Sotomayor suggests that perhaps this theory should not be permitted to reach its logical extent in the digital age, in which people convey a wealth of personal information to third parties. She contends that the Fourth Amendment rules should not require a person to keep secret any information the person does not want the government to obtain. In the end, she leaves it to another day to reevaluate the third-party doctrine in an age where most private information is handed over in the course of commercial transactions. In the meantime, Justice Sotomayor believed the physical intrusion theory was enough to resolve the case.", "All nine Justices agreed that tracking a person for four months is a constitutional search. Where there is little agreement among Court observers, though, is what level of suspicion is required to conduct GPS monitoring or whether a warrant is required. Because the government failed to argue that a warrant was not required or that something less than probable cause would be enough to conduct this surveillance, the Court considered the arguments forfeited. Thus, to determine if a warrant or something less will be required in future cases, general Fourth Amendment principles must suffice until the courts provide further guidance.\nThe \"ultimate touchstone\" of the Fourth Amendment is reasonableness, as required by the history and text of the prohibition against \"unreasonable searches and seizures.\" That is to say, once a court determines a search has occurred, it must then inquiry whether it was reasonable. In most instances, the Supreme Court has required the government to obtain a warrant based upon probable cause for a search to be considered reasonable. A review of the cases, however, shows that this rule is not ironclad, and that the exceptions are commonplace.\nSome commentators argue that the automobile exception could apply to the use of a GPS tracking device. The automobile exception—one of the warrantless search exceptions—evolved from the exigency requirement. It was first formulated in the 1925 case of Carroll v. United States , in which the Court permitted the police, who had probable cause to suspect that the defendant's car was carrying bootlegged liquor, to conduct a warrantless vehicle search. The Court noted that it was not practicable to obtain a warrant for evidence secreted on a \"ship, motor boat, wagon or automobile\" because the vehicle can be \"quickly moved out of the locality or jurisdiction.\" In later cases, the Court developed a second rationale for the automobile exception, reasoning that drivers have a diminished expectation of privacy when in their vehicles. This is based on the notion that cars travel on public thoroughfares where the driver and occupants are in plain view of the public. Further, cars and drivers alike are subject to extensive government regulation, and vehicles must undergo periodic inspections.\nAs noted in Carroll , because a vehicle can be moved quickly from the jurisdiction, requiring a warrant to attach a GPS device may not be feasible. Also, tracking someone's public movements may not be as invasive as searching through a person's belongings as is currently permitted under the traditional automobile exception. On the reverse side, police will generally know in advance when they intend to use a GPS device, thereby negating the presumed exigency that is linked with cars. A court could hold that warrants are generally required for GPS devices, unless a true exigency existed beyond that presumed in general automobile cases, for example, in a case of kidnapping or a fleeing suspect.\nAdditionally, some commentators believe that the general reasonableness standard may apply, vitiating a need for a warrant. These theories suppose that the intrusion on the individual is minimal and the government interest significant. In line with this reasoning, one observer posited that a Terry -type standard would be sufficient—that is, that the police must have reasonable suspicion to conduct a search, but need neither probable cause nor a warrant. A court would review the reasonableness after the fact, unlike warrants, where the review comes before the search.", "Nine Justices are seemingly in agreement that, based on the facts of Jones , the attachment of a GPS device to the bottom of Jones's car and tracking him for a month-long period was a constitutional search. Presented with a different set of facts, the Court's unanimity may disintegrate. For instance, if the police need not attach the device, but it is preinstalled, for example, in a cell phone or a navigation system in a car, the outcome may differ. Further, even though this surveillance was considered a search, the Court gave no guidance on whether a warrant is required or what quantum of suspicion is enough to use GPS monitoring.\nThat said, it is within the power of Congress or state legislatures to propose their own requirements. The federal Constitution sets the minimum constitutional standard. Legislatures (state or federal) may create more protection of privacy and property. Congress has done this on several occasions, most notably in the field of communications with the wiretap statutes. When technology is in flux, one may argue that the institutional capabilities of a legislature may be the better venue to develop these rules. Justice Alito suggested this approach in his Jones concurrence: \"In circumstances involving dramatic technological change, the best solution to privacy concerns may be legislative. A legislative body is well situated to gauge changing public attitudes, to draw detailed lines, and to balance privacy and public safety in a comprehensive way.\"\nThere has been legislative activity in recent Congresses to update privacy laws to cover new technologies such as GPS. Senator Leahy has introduced the Electronic Communications Privacy Act Amendments Act of 2011 ( S. 1011 ), which would prohibit the government from accessing or using a device to acquire geolocation information, unless it obtains a warrant based upon probable cause or a court order under Title I or Title IV of the Foreign Intelligence Surveillance Act (FISA) of 1978. Similarly, Senator Ron Wyden and Representative Jason Chaffetz have introduced identical legislation, S. 1212 and H.R. 2168 , entitled the Geolocational Privacy and Surveillance Act, or GPS bill, which would make it unlawful for law enforcement to intercept or use a person's location unless they obtained a warrant based upon probable cause or one of the limited exceptions applied.\nWith each advance in technology, the courts and Congress are asked to balance a host of competing interests including privacy, property, technology, and the needs of law enforcement. It will take future cases and statutes to better delineate a proper balance." ], "depth": [ 0, 1, 1, 1, 2, 2, 1, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h1_full", "h0_full", "h0_full", "h0_full", "h0_full h1_full", "h1_full" ] }

{ "question": [ "What is the Katz privacy formulation?", "What are the rules regarding privacy protections on information provided to a third party?", "What is the current modus operandi for instances in which cell phones or preinstalled GPS devices are being utilized?", "How did Justices Alito and Sotomayor differ on their opinions on preinstalled GPS surveillance?", "What are the concerns regarding attaching a GPS unit to a target for monitoring?", "What bills have been filed in Congress to address these concerns?", "How has the government formally responded to GPS monitoring lawsuits?" ], "summary": [ "Justice Alito, writing for a four-member concurrence, would have applied the Katz privacy formulation, asserting that longer-term monitoring constitutes an invasion of privacy, whereas short-term monitoring does not.", "She also questioned the rule that any information provided to a third party, which occurs in many commercial transactions like banking or computing, should lose all privacy protections.", "The majority's test, however, provides little guidance in instances where the government need not physically install a device to conduct surveillance, for instance, by using cell phones or preinstalled GPS devices in vehicles.", "Justice Alito, writing for a four-member concurrence, would have applied the Katz privacy formulation, asserting that longer-term monitoring constitutes an invasion of privacy, whereas short-term monitoring does not. He left it to future courts to distinguish between the two. Justice Sotomayor's concurrence appears to provide the most protection, finding that both the trespass approach and the privacy-based approach should be utilized. She also questioned the rule that any information provided to a third party, which occurs in many commercial transactions like banking or computing, should lose all privacy protections.", "Further, there is no clear indication of the level of suspicion—probable cause, reasonable suspicion, or something less—that is required to attach a GPS unit and monitor the target's movements.", "Additionally, there have been several bills filed in the 112th Congress, including Senator Patrick J. Leahy's Electronic Communications Privacy Act Amendment Act of 2011 (S. 1011) and Senator Ron Wyden's and Representative Jason Chaffetz's identical legislation, S. 1212 and H.R. 2168, the Geolocational Privacy and Surveillance Act (GPS bill), that would require a warrant based upon probable cause to access geolocation information.", "Although all three opinions concluded that the government's action in Jones was a search, none expressly required that police get a warrant in future GPS tracking cases." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Background", "Automation, Artificial Intelligence, and Advanced Technologies", "Projected Workforce Effects of Advanced Technologies", "Workforce Effects of Advanced Technologies in Broader Context", "No Comprehensive Data Exist to Link Employment Trends to Advanced Technology Adoption, but Analyses Suggest Relationships", "Employment Trends and Characteristics of Workers in Jobs Susceptible to Automation", "Examples of Other Researchers’ Analyses that Attempt to Measure Workforce Effects Due to Advanced Technology Adoption", "Commerce and DOL Have Some Efforts to Track Adoption and Workforce Effects of Advanced Technologies Commerce Has Started Tracking Technology Adoption and Resulting Workforce Effects, but Data Will Not Be Available until Late 2019", "DOL’s Current Efforts Provide Limited Information for Tracking the Workforce Effects of Advanced Technologies", "Employment Projections", "Commerce and DOL Face Challenges Tracking the Workforce Effects of Advanced Technologies", "White House Office of Science and Technology Policy Coordinates Policy and Research Activities Related to Advanced Technologies", "Cost Savings and Other Considerations Motivated Selected Firms to Adopt Advanced Technologies, Despite Facing Risks Such As the Reliability of Technologies", "Selected Firms Identified Cost Savings and Job Quality Among Key Motivations for Adopting Advanced Technologies", "Cost Savings", "Job Quality and Worker Safety", "Recruitment and Retention", "Product-Related Motivations", "Selected Firms Cited Various Risks with Adopting Advanced Technologies, Such as the Reliability of Technology, and Working with New Tech Developers", "Reliability of Technology", "Working with New Tech Developers", "Other Risks", "Adopting Advanced Technologies Has Had Varied Effects on the Workforces of Selected Firms, Including Declines in Some Types of Work and Gains in Others Officials Said Advanced Technologies Have Replaced Positions at Some Selected Firms, and Most Firms Relied on Redeployment of Workers and Attrition Rather than Direct Layoffs", "Advanced Technologies Helped Increase Competitiveness and Enabled Employment Growth Despite Positions Being Replaced, According to Officials at Some Selected Firms", "Officials Said Workers’ Roles, Tasks, and Skills Have Been Changing Due to Advanced Technologies at Selected Firms", "Training", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Section 1: Analyses Using Data from the American Community Survey", "Analyses of Employment Trend Correlations", "Analyses of Worker Characteristics and Earnings", "Section 2: Analyses Using Data from the Current Population Survey’s Displaced Worker Supplement", "Analyses of Relative Job Displacement Rates", "Section 3: Analyses Using Data from the Occupational Employment Statistics survey", "Analyses of Geographic Reliance on Occupations Susceptible to Automation", "Appendix II: Comments from the Department of Labor", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Throughout history, new technologies have transformed societies. Many technological advances, ranging from the steam engine to electricity and personal computers, have enhanced productivity and improved societal standards of living. At the same time, many technological advancements have led to increases in automation—modifying processes to become more automatic by reducing human involvement—and corresponding changes in the workforce. For example, researchers have noted that automation has replaced tasks performed by workers and also increased production, creating a greater demand for other types of workers.\nAlthough automation has historically been a labor disrupter in manufacturing and physical work, various researchers have observed that recent progress in fields such as artificial intelligence (AI) and robotics are enabling machines to perform cognitive tasks currently performed by humans. Artificial intelligence refers to machines and computers that attempt to mimic various aspects of human intelligence, as we have reported. The field of AI can be traced back to the 1950s. Early AI often consisted of expert systems programmed by humans to perform predefined tasks. This form of AI resulted in some degree of productivity gains and remains an active area of development. However, numerous factors, primarily the trends underlying big data (i.e., increased data availability, storage, and processing power), have contributed to rapid innovation and accomplishments in AI in recent years. Present-day AI innovation centers more on machine learning, including deep neural network architectures, in which systems are trained against observational or simulated outcomes—applications include language translation and machine vision (i.e., systems that use cameras, radar, or lasers to observe their surroundings or recognize content). Industrial robots and robotic machinery are often more comparable to expert systems that are programmed to perform predefined tasks, but they can also incorporate machine learning, such as having machine vision capabilities (e.g., object recognition). Below are some examples of expert system and machine learning applications of artificial intelligence.\nExamples of expert system applications of AI: software programs that prepare tax filings or schedule logistics; and industrial robots that perform predefined or routine tasks, such as lifting, placing, and welding pieces of metal together.\nExamples of machine learning applications of AI: software that uses a training dataset to “learn” how to read information from a form filled out by a person; collaborative robots that can sense when they touch a physical obstruction and shut down to safely work alongside humans; industrial robots with machine vision incorporated to identify and pick up specific parts from a collection of randomly strewn pieces; and automated guided vehicles that transport materials around a production plant and use cameras and radar to navigate independently and re-route around obstacles.\nAdvanced technologies, including AI and other technological drivers of workforce changes, are continually progressing and new developments emerge regularly. For example, automated vehicles have varying levels of autonomy. Similarly, while robots have existed for decades, today’s generation of robots may be equipped with machine vision and learning capabilities that enable them to perform a more expansive array of tasks. How, when, or whether technologies progress from development to commercialization (i.e., readiness for adoption), and how, when, or whether firms adopt the technologies is generally dependent on context- specific considerations, which are difficult to predict. To better understand these developments and how they affect the economy, the National Academies report recommended developing three indexes (technology progress index; AI progress index; and organizational change and technology diffusion index) to measure technology progress and the extent of adoption. The study suggested that indexes could be valuable for identifying what fields are advancing rapidly and what benchmarks might indicate the imminence of significant economic impact, as well as tracking and predicting the types of human tasks that can be automated and the impacts of technology adoption by industry. Stanford University’s AI Index project is another initiative that aims to track, collate, and visualize data related to artificial intelligence. The data collected by the AI index measure, among other things, volume of AI activity (e.g., published papers, course enrollment, AI-related startups, job openings) and technical performance (e.g., object detection and speech recognition). However, the potential uses and limitations of the data being compiled are yet to be seen, as this initiative is still in its early stages.", "While national employment data measure jobs and workers by occupation and industry, the adoption of advanced technologies generally affects specific work tasks, and can materialize in a variety of ways. As shown in figure 1, industries are made up of various occupations, which in turn are formed by a group of jobs. Underlying all, jobs are comprised of a collection of varied work tasks.\nBy analyzing tasks within jobs or occupations to determine their susceptibility to automation, a number of studies have developed models to estimate the future workforce effects of advanced technology adoption. The three example studies below each developed similar models, though differences in methods and data sources produced varying conclusions about the number of jobs that may be automated in the future.\nIn a 2016 article, researchers Frey and Osborne estimate that 47 percent of total U.S. employment is in occupations that are at high risk of automation over the next decade or two (i.e., by 2030). For example, the authors observe both that industrial robots will be able to perform a wider scope of non-routine manual tasks and that a substantial share of employment in services, sales, and construction occupations exhibit high probabilities of automation.\nA 2017 report by the McKinsey Global Institute estimates that 23 percent of total U.S. work hours could be automated by 2030 or as high as 44 percent under other assumptions. The report predicts that while labor demand will enable some re-employment of displaced workers, up to one-third of the workforce may need to change occupational categories.\nIn a 2016 paper, researchers Arntz, Gregory, and Zierahn estimate that 9 percent of all U.S. workers hold jobs that are at high risk of automation. The authors observe that susceptibility to automation is lower for jobs that require cooperating or influencing others.\nStudies by Autor and others also develop theoretical models exploring the effects of automation. For example, they noted that while automation can substitute for some tasks, it can also complement others. This can lead to increasing value for tasks that require other attributes like creativity and intuitive judgement. These models hypothesize that automation may have a net positive effect on employment, or at least on employment in certain sectors, which is consistent with historical employment trends. However, researchers have also noted that machine learning may affect different tasks than earlier forms of automation and may be less likely to automate low-wage jobs—though low-wage workers may be affected in other ways.", "Although the models discussed above represent ways of identifying jobs that may be affected by the adoption of advanced technologies, they do not provide a model for tracking the current or to-date workforce effects of technology adoption. As the recent National Academies report states, “making forecasts about social phenomena is perilous… doing so with respect to the fast-changing and dynamic area of technology is even more challenging.” According to a different project by some of these same experts, several factors unrelated to whether a task or job could be automated contribute to these challenges. For example, technologies may substitute for human labor in some tasks, but: may also complement human labor in other tasks—increasing the demand for, or value of, human labor (e.g., the automation of calculation tasks leading to increased demand for human programmers); prices and demand for products may counteract this human labor substitution (e.g., technology reducing the price of air travel, and thus leading to increased demand for flights, and thus increased employment in the aviation industry); and firms may redesign operations in response to the substitution in ways that lead to employment increases or decreases that are greater than the direct substitution.\nAs discussed in the National Academies report and elsewhere, researchers have tried to disentangle workforce effects in various ways, such as analyzing productivity data to examine workforce trends in the context of other economic factors, such as globalization.\nAs the National Academies report observes, “Predictions that new technologies will make workers largely or almost entirely redundant are as old as technological change itself…. However, predictions of widespread, technologically induced unemployment have not come to pass, at least so far.” Since recovering from the recession of 2007-2009, the economy has recently experienced low unemployment rates—4.0 percent in January 2019—despite continued strides in advanced technologies. However, other indicators have not recovered. For example, the labor force participation rate—the percentage of the population that is either employed or seeking work—declined significantly through the recession and has generally remained at this lower level. This may indicate that the post-recession decline in the unemployment rate may over-represent the health of the labor market, according to BLS. Advanced technologies and automation may also affect workers in other ways, beyond potential changes in the workplace, such as by reducing production costs and thus lowering the prices of consumer goods.", "There are currently no comprehensive data on firms’ adoption and use of advanced technologies. As a result, researchers have difficulty determining whether changes in the U.S. workforce observed in existing employment data are related to advanced technologies. The National Academies report states that federal household and employer surveys, such as the CPS, ACS, and OES, provide useful information about changes to the occupational mix of the U.S. workforce over time. However, these data cannot identify the causes of employment shifts. For example, these data do not identify whether an employment decline in one occupation is due to jobs being replaced as a result of automation, or to other factors unrelated to automation. Other federal data, such as the Job Openings and Labor Turnover Survey, provide useful information on employment turnover and opportunities. However, although these data are available by industry sector and firm size, the data do not capture reasons for layoffs and discharges, and thus cannot be linked to advanced technologies.", "In the absence of comprehensive data that definitively link employment trends to technology adoption, we analyzed occupations that researchers Frey and Osborne identified as being susceptible to automation (see sidebar) to determine whether changes due to advanced technologies are appearing in employment data. By exploring concentrations of these occupations in industries, job displacements in these occupations, and the characteristics of workers in these occupations, we found minor indications that advanced technologies are changing the workforce and could affect some worker populations. However, the conclusions that can be drawn from these analyses are limited by the unpredictability of when, if, or how automation materializes—e.g., whether worker positions are eliminated or shifted to other non-automated tasks.\nIndustries with higher concentrations of jobs susceptible to automation were more likely than others to have experienced significant growth in their concentration of tech jobs from 2010 to 2016, according to our analysis of employment data from the American Community Survey. For example, as shown in figure 2, the plastics product manufacturing industry has a relatively high concentration of jobs susceptible to automation. Many of these jobs are in production occupations. From 2010 through 2016, this industry experienced about 11 percent annual growth in tech jobs (i.e., jobs in the fields of computing, engineering, and mathematics). More than half of this growth was the result of increases in industrial engineers, engineering technicians, and miscellaneous engineers. As we observed at some firms we visited, some of these engineers may have been hired to program or maintain newly installed robots. However, the data do not provide this level of information about job tasks. Similar dynamics could also be occurring in other industries. Across all 69 industries that had statistically significant changes in the concentration of tech jobs, we found a positive, though weak, correlation with the concentration of jobs susceptible to automation (see fig. 2). This suggests that growth in tech jobs may be an indicator of industries’ preparation for, or adoption of advanced technologies. However, given the complex causes of employment changes, there could be other reasons for tech job growth in these industries that are unrelated to firms’ adoption of advanced technologies.\nThe growth in tech jobs in certain industries suggests firms in these industries may be using more advanced technologies, which could also signal that jobs susceptible to automation are being replaced. However, our analysis of ACS data showed no correlation between an industry having a higher concentration of jobs susceptible to automation and employment changes in that industry (i.e., total employment increases or decreases). We also found no meaningful differences in job losses, according to our analysis of employment data from the Current Population Survey’s Displaced Worker Supplement. Specifically, the relative rate at which workers in occupations susceptible to automation lost a job because their position or shift was abolished or there was insufficient work for them to do was not meaningfully different than workers in other occupations. There could be a number of reasons we did not find a relationship between susceptibility to automation and employment changes in both of these analyses, including: a relationship does not exist; such a relationship is too complex to measure in this way (e.g., automation may lead to decreases in employment in some industries, while also leading to increases in employment in other industries due to improved competitiveness, productivity, and profitability); it is too soon to observe the employment effects of automation (e.g., growth in tech jobs in an industry may be a leading indicator of employment disruption); or our analysis covered a period of overall economic growth, which could obscure or overwhelm other employment trends.\nExisting data cannot predict with certainty when or if automation will materialize in the workforce, as suggested by our analyses. However, the tendency of particular worker groups to hold jobs susceptible to automation suggests that some communities may be disproportionately affected by changes if they occur. For example, according to our analysis of 2016 ACS data, workers with lower levels of education are more likely than those with higher levels to hold jobs in occupations that the Frey and Osborne study identify as susceptible to automation. Specifically, 60.7 percent of workers with a high school degree or less hold these types of jobs, as compared to 46.7 percent of workers with some college, 26.9 percent of workers with a bachelor’s degree, and 11.3 percent of workers with a graduate degree. In addition, 54.1 percent of Hispanic workers hold jobs in occupations susceptible to automation, as compared to 46.4 percent of Black workers, 40.0 percent of White workers, and 35.9 percent of Asian workers.\nCertain geographic areas also rely more heavily than others on occupations identified as susceptible to automation, according to OES data. We identified areas where the proportion of jobs susceptible to automation is at least 5 percentage points greater than the national average (see fig. 3). These occupations are comprised of a diverse set of jobs that may experience automation in different ways and at different times, if at all. However, if employment disruptions are regionally concentrated, groups of workers with similar skills in the same labor market may need to adapt to changes simultaneously, which could strain the availability of local job opportunities and support resources.\nWorkers in occupations that the Frey and Osborne study identify as susceptible to automation earn less on average than other workers. For example, the median hourly wage for workers in occupations susceptible to automation is $14.26, compared to $22.06 for other workers, according to our analysis of 2016 ACS data. After controlling for factors that may affect wages, such as age, education, and industry, we found that workers in jobs susceptible to automation earn about 17.2 percent less, on average, than similar workers in other occupations. These results show that, on average, workers in jobs susceptible to automation are already in more vulnerable economic circumstances than other workers. When or if changes brought on by automation materialize, these workers may face additional hardships in adapting to changing workforce demands.", "In the absence of comprehensive data, researchers have taken differing approaches to exploring the relationships between technology adoption and workforce trends. We identified some examples of recent and ongoing work that attempt to measure workforce effects directly attributable to technology adoption. These examples illustrate types of data that may be useful for better understanding and measuring the use of specific technologies (e.g., robot sales), the spread of technologies generally (e.g., automation patents), and how specific work tasks are changed by technology use (e.g., firm-level operations data).\nSome researchers have used data on industrial robot sales collected by the International Federation of Robotics (IFR) to approximate robotics adoption worldwide and in the United States and to model its direct effects on employment. Analysis by Furman and Seamans (2018) shows that annual sales of industrial robots in the United States increased substantially between 2010 and 2016. The analysis attributes this growth to a combination of factors, including lower robot prices, improved robot functionality, and greater awareness of the benefits of robots. They also observe that the automotive sector was the largest customer for industrial robot sales in the United States from 2004 through 2016, though robot sales to the consumer electronics sector grew the most over that period.\nStudies by Acemoglu and Restrepo (2017) and by Graetz and Michaels (2017) both use IFR data through 2007 to model the workforce effects of robot adoption in the United States, though their methods, results, and conclusions differ.\nAcemoglu and Restrepo estimate that each additional robot used in a geographic area reduces employment by about six workers in that area. They observe that their estimated employment effects are greatest in manufacturing and other industries most exposed to robots, in routine manual work-related occupations, and for workers with less than a college education. They do not find corresponding employment gains in any other occupation or education groups. They also estimate that one more robot used per thousand workers reduces wages by about 0.5 percent. They conclude by noting that, so far, relatively few robots have been used in the U.S. economy and thus the effect on jobs has been limited; however, they state that if robot usage continues to grow as researchers expect, these effects could be more substantial.\nGraetz and Michaels estimate that increased robot use did not significantly affect total hours worked across the 17 developed countries in their analysis, but that work shifted from low-skilled workers to middle-skilled and high-skilled workers. They also estimate that increased robot use increases productivity and average wages. While their analysis covers 17 developed countries, they note that robot use in the United States was marginally lower than the average across all countries. They also observe that while their results differ from Acemoglu and Restrepo, it is possible that the effects of robot usage are different in the United States than across the 17 countries they analyze.\nOther researchers have used U.S. patent data as an alternative way to approximate the spread of advanced technologies and to examine the resulting workforce effects. Mann and Püttman (2017) use machine learning algorithms to identify patents related to automation technology. They find that automation patents grew substantially from 1976 through 2014. After linking the patents to industries where they may be used, they estimate that automation causes manufacturing employment to fall, though it increases employment in the service sector, as well as overall employment. They observe that their results depict a more positive picture of the employment effects of new technology use than the studies that used industrial robot sales data (discussed above). Lee Branstetter, a researcher at Carnegie Mellon University, and his colleagues have a similar ongoing project that uses a machine learning algorithm to identify patents related to AI technologies. According to these researchers, their initial results suggest a rapid rise in AI patents over the past decade and also that AI patents are emerging in a variety of application areas. They are also in the early stages of work linking AI patents to industries to explore how new technology use affects the workforce.\nResearchers have also identified how important micro-level data could be for understanding the workforce effects of advanced technology adoption.\nFor example, reports by the National Academies and others highlight the potential for firm-level information to augment traditional survey data to enable analyses of the conditions under which advanced technologies complement or substitute for workers, and what types of firms invest in advanced technologies. Other researchers have emphasized the importance of focusing on work tasks to analyze the effects of technological change at workplaces. Erica Fuchs, a researcher at Carnegie Mellon University, and her colleagues Christophe Combemale, Katie Whitefoot, and Laurence Ales use a combined firm-level, task- based approach by collecting and analyzing production floor data from four semiconductor firms with different levels of process automation and parts consolidation. They map out detailed versions of firms’ production processes and then use existing data and technical knowledge to simulate each step to analyze the effects of technology changes. Their preliminary results estimate that automation replaces some routine tasks, leading to estimated declines in the number of production floor jobs requiring medium skill levels. According to the authors, this firm-level, task-based approach may be applicable to other manufacturing industries and could provide insight on how the adoption of different technologies may produce different labor outcomes. However, they note that the approach requires detailed production process data, which may be difficult to collect for many firms or industries.", "Commerce’s Census Bureau has begun administering surveys with questions that focus specifically on firms’ adoption of advanced technologies and resulting workforce changes. According to Census, this data collection is part of a long-standing, coordinated effort to measure the impact of technology. In addition, consistent with Commerce’s strategic plan, these represent new efforts to provide a timely, in-depth, and accurate picture of the economy amidst the economic shifts and technological advances of the 21st century. However, none of the survey results will be available until late 2019 and later.\nThe new Annual Business Survey (ABS) is a joint effort by Commerce and the National Science Foundation that has the potential to provide insight on the spread of advanced technologies in the economy and could be used to examine the workforce effects of technology adoption, but the first ABS results are not expected until late 2019. Census administered the 2017 ABS in June 2018 to collect information on firms’ use of advanced technologies, such as automated guided vehicles, machine learning, machine vision, and robotics, among other things (see example in sidebar). The survey asks whether firms are testing a given technology or using it for either less than 5 percent, 5 to 25 percent, or more than 25 percent of their production or service. Census officials said this question should provide information about the extent of technology adoption nationwide, including whether there are any industry concentrations of advanced technologies.\nCensus plans to add questions on the workforce effects of advanced technologies when it administers the 2018 ABS during July through December 2019, pending final approval by the Office of Management and Budget. Census plans to release these survey results in December 2020. Specifically, Census plans to include new questions that ask firms about: (1) their use of advanced technologies such as AI, cloud computing, robotics, and specialized software and equipment; (2) their motivation for adopting and using artificial intelligence and advanced technologies; (3) the impact these technologies might have on the number and skill level of workers; and (4) the factors that could adversely affect the adoption or production of these technologies. The new questions also ask about changes in the number of production workers, non-production workers, supervisors, and non-supervisors. These new questions could be used to characterize the prevalence of workforce changes in the economy caused by advanced technology adoption (e.g., declines in production workers, or increases in supervisory workers) and whether this differs by industry sector. However, these planned questions are not intended to provide information to quantify the magnitude of workforce changes, in part to minimize respondent burden and potential survey error, according to Census. In addition, until the ABS data are available and evaluated, it remains unclear what limitations, if any, the data may have.\nCensus also plans to expand other surveys to track the spread of advanced technologies in the economy, including its Annual Survey of Manufactures (ASM) and Annual Capital Expenditures Survey (ACES).\nCensus plans to administer the 2018 ASM in May 2019, pending final approval by the Office of Management and Budget. The survey will collect capital expenditures data for industrial robotics at approximately 50,000 manufacturing plants, as well as the number of industrial robots purchased by and in use at these plants. Census officials stated these two measures might be useful in understanding the impact that industrial robots could have on productivity as well as the impact robots could have on the manufacturing labor force once the survey results are available in the spring of 2020.\nCensus plans to administer the 2018 ACES during March through May 2019 and to have the survey results available in February 2020.The survey will include questions on robotics expenditures, similar to those in the 2018 ASM. However, the ACES collects expenditure data from 50,000 employer firms across all non-farm sectors of the economy—instead of just manufacturers—and will also ask about firms’ use of both industrial and service robots.\nSome Commerce offices also track issues related to the adoption and workforce effects of advanced technologies on a limited or intermittent basis. For example, National Institute of Standards and Technology officials stated that the Hollings Manufacturing Extension Partnership collects limited information about the number of jobs gained and retained by small and medium businesses adopting new technologies. National Telecommunications and Information Administration officials said they monitor developments in AI on an intermittent basis and also direct a project that examines new applications of small and large internet devices.", "DOL has a role in collecting data that track changes occurring in the U.S. economy and workforce, including developing new ways to track emerging economic trends, though as we previously discussed, currently available federal data do not link shifts in the workforce to technological changes. BLS is the principal federal statistical agency responsible for measuring labor market activity. According to DOL’s strategic plan, BLS is to support public and private decision-making and meet the needs of its many stakeholders, including the general public, educational institutions, and the public workforce system. This includes regularly identifying structural shifts in the economy and developing new data products that reflect economic changes. In addition, DOL’s Employment and Training Administration (ETA) is to assist workers’ entry and reentry into in- demand industries and occupations. This assistance includes providing job seekers with accurate labor market data and guidance about opportunities, aligning training services to industry needs, and helping connect businesses with properly skilled workers. Internal control standards state that agencies should use quality information to identify, analyze, and respond to significant changes, including external conditions such as economic and technological changes that may affect an agency’s ability to achieve its objectives. DOL collects workforce data through various surveys, including the Current Population Survey’s Displaced Worker Supplement, and produces other data products such as the occupational employment projections and Occupational Information Network database that include information related to advanced technologies. However, these data are limited, and according to BLS, provide some, but not all, of the information required to assess the impact of automation on the workforce.", "BLS’s Employment Projections program identifies and provides limited information about occupations expected to experience declines in their share of employment in an industry or group of industries as a result of the adoption of advanced technologies. On a biennial basis, this program analyzes changes in the economy to project how employment by occupation may change over 10 years, including which occupations may be affected by advanced technologies. Factors that can affect occupational employment include but are not limited to technological innovation; changes in business practices or production methods; organizational restructuring of work; changes to the size of business establishments; and offshore and domestic outsourcing, according to BLS. As part of this program, BLS develops a table of occupations that are projected to have direct employment changes due to some identified reason. This table identifies projected staffing pattern changes and BLS’s qualitative judgment of the most significant factor or factors projected to affect the occupation. The table also indicates whether an occupation’s share of employment is expected to change within a single industry or within multiple or all industries. For example, the table includes the following selected entries:\nLibrarians: Employment share is projected to decline in the information services industry as internet-based research continues to displace library-based research.\nStock clerks and order fillers: Employment share is projected to decline in two industries (the warehousing and storage industry and the grocery and merchant wholesalers industry) as firms increasingly adopt automated storage-and-retrieval systems.\nAircraft structure and systems assemblers: Employment share is projected to decline in all industries as collaborative robotics increase efficiency, producing more output with the same amount of labor.\nWe identified 100 occupations in BLS’s table that are projected to experience declines in their shares of employment in an industry or group of industries as a result of the adoption of advanced technologies. Similar to the examples above, reasons could be related to automation, the increased use of robots or artificial intelligence, advances in machine or software technologies, or other changes resulting from the adoption of advanced technologies. As shown in figure 4, most of these occupations are production occupations (40 of 100) or office and administrative support occupations (30 of 100). BLS officials told us they do not currently track groups of occupations projected to experience employment share declines due to specific reasons, such as advanced technology adoption. Officials also said they do not aggregate total projected employment effects stemming from similar causes because they are unable to identify ripple effects in all occupations—e.g., automation in one occupation affecting employment in a different occupation.\nInformation contained in ETA’s Occupational Information Network (O*NET) database includes, among other things, information about work activities, tools and technologies used, and required skills associated with over 1,000 occupations. According to ETA officials, the primary purpose of O*NET is to assist job seekers in making employment decisions. However, the O*NET database can be used to identify occupations that use certain types of advanced technologies. For example, we identified 15 occupations in which workers monitor, install, develop, troubleshoot, debug, or perform other tasks with robots as part of their daily work activities and 63 occupations in which workers use robots as a tool or technology in their daily work activities (see table 1). In addition, states, federal officials including at BLS, and academic researchers use these data to inform, among other things, worker support programs. DOL officials told us they do not use O*NET data to analyze changes in occupations over time, such as robots being used in additional occupations, because the methodology is not currently structured to capture these kinds of changes systematically. For example, data are collected from a selection of occupations at varying frequencies, rather than at the same time, which could make it challenging to track changes in certain occupations over time.\nWithout comprehensive data linking employment shifts and technological changes, policymakers and DOL may not be prepared to design and implement programs that both encourage economic growth and provide support for workers affected by changes. DOL-funded programs rely on accurate information to guide job seekers to employment opportunities and to help align training services with local industry needs. For example, the O*NET database identifies high-growth, high-demand occupations for job seekers based largely on BLS employment projections data. While these employment projections provide valuable information, they are not designed to identify the full extent of occupational shifts due to advanced technology adoption. Similarly, other workforce surveys, such as the Current Population Survey’s Displaced Worker Supplement and the Job Openings and Labor Turnover Survey, do not collect information about the causes of job losses and gains. This information could be a valuable tool for designing programmatic or policy supports for workers. For example, data on whether advanced technologies have resulted in worker displacements, work hour reductions, or substantial adjustments to work tasks could better position BLS to meet stakeholder needs.\nCongress has expressed concern that there continues to be insufficient data on the effects advanced technologies are having on the U.S. workforce. On January 2, 2019, BLS reported to Congress that it plans to work with a contractor during fiscal year 2019 to study the interaction between labor and capital in the workplace and how it is affected by new technologies; identify ways to supplement BLS data with additional information on automation; and produce a report that recommends data collection options to fill those gaps. In fiscal year 2020, BLS also plans to identify pilot projects to test the feasibility of new data collection based on the recommendations in its final report, resources permitting. However, these plans are still in their early stages, according to BLS officials.", "Officials at Commerce and DOL stated that collecting data on the adoption and workforce effects of advanced technologies is challenging because it is difficult to identify which new and emerging technologies to track; employment trends generally occur at the occupation and industry levels but the effects of advanced technologies typically occur at the task or job level; and employment trends have a complex and diverse set of causes. Specifically: Identifying which new and emerging technologies to track. Census officials said there is uncertainty about how an emerging technology might affect the economy and thus whether it should be tracked systematically. For example, self-service technology appeared at grocery stores in 1916, other self-service technology appeared at gas stations later, and more recently self-service technologies are being adopted by some restaurants, according to researchers. Periodically, Census has included questions in its firm surveys about the use of these technologies. Past surveys asked questions about the use of self-service at gas stations until the technology became ubiquitous and was dropped from the survey. As self-service technologies have expanded to other areas of the economy such as restaurants, Census has again added questions about self-service to recent surveys because information is lacking on the growth of this phenomenon.\nTrends and effects appear at different levels. BLS officials said employment changes due to technology typically occur at the individual task or job level and employment trend data are at the industry and occupation levels. Officials also said that identifying technology-related effects in occupations, such as changes related to uses of machine learning algorithms, is difficult because some workers within an occupation might be affected by the technology while others might not. For example, some computer scientists and engineers might be involved in the development or application of machine learning algorithms while others are not.\nCauses of trends are complex and diverse. BLS officials said that employment trends’ complex and diverse causes make it difficult to identify occupations that are changing because of advanced technologies. Changes in one occupation may have ripple effects in other occupations. Partly as a result of this complexity, BLS’s Employment Projections program identifies examples of technology- impacted occupations, but it does not attempt to identify all instances where technology impacts occupations nor does it attempt to quantify an overall projected employment effect of advanced technologies.", "The White House Office of Science and Technology Policy (OSTP) is responsible for coordinating AI related policy across government agencies and for overseeing the National Science and Technology Council’s subcommittees and their ongoing activities. For example, the Subcommittee on Machine Learning and Artificial Intelligence was originally chartered in 2016 to monitor machine learning and artificial intelligence and to watch for the arrival of important technology milestones in the development of AI, among other things. OSTP officials told us that the Subcommittee has been re-chartered, now receives direction from OSTP’s Select Committee on Artificial Intelligence, and is presently focused on federal resources related to AI research and development.", "Selected firms generally adopted advanced technologies through a phased process of innovation and technology adoption (see fig. 5). We met with officials representing 16 firms that are using advanced technologies and a systems integrator who spoke for a number of his customer firms. Many firm officials described the path to integrating technology into operations as lengthy, complex, and iterative. For example, some firms we visited have had to build and test different mechanical “grippers” attached to robot arms to pick up and handle particular objects; one firm had high school participants at a local training center develop a gripper solution for one of the firm’s robots. Some of the large firms we visited had their own internal teams that identified, tested, and integrated advanced technologies. Other firms we visited used third- party integrator companies to help with incorporating technologies into their operations. We spoke with firm officials about their motivations for adopting advanced technologies, as well as challenges they faced throughout the process, and they identified a number of similar issues.", "", "Most selected firms cited cost savings as a primary consideration for adopting advanced technologies. Firm officials discussed cost-related motivations in various forms, such as remaining competitive in a global economy, increasing productivity (i.e., lower cost per unit), decreasing labor costs, and saving on physical space.\nFirms said they adopted advanced technologies as a way of reducing operational costs—including labor costs—to increase competitiveness and profitability. Some officials also specifically identified the pressure of large low-cost competitors, both in the United States and globally, as a major motivation to reduce costs and product prices.\nOfficials at a medium-sized door manufacturer told us that increased use of advanced technologies, such as robots, enabled the firm to increase efficiency, reduce labor costs, and re-focus its product line on custom doors to survive the entry of manufacturers in China that could sell mass-produced doors for lower prices.\nThe original motivation for adopting robots at a medium-sized automotive parts manufacturer was a customer’s price demand that the firm could not meet and still remain profitable, according to officials. Integrating more robots enabled the firm to reduce production costs by using fewer workers.\nAt a large manufacturing corporation of household and personal care goods, officials told us the company had a goal of reducing its workforce size by 1,500 full-time positions per year for 5 years (across its subsidiaries), and specifically using robotic automation to accomplish 40 percent of its reduction goal.\nThe constant pressure to keep costs low in the health care sector motivated a university-affiliated medical center we visited to explore adopting more advanced technologies, such as autonomous mobile robots that could decrease expenses by reducing the number of positions in some departments.\nFirm officials also told us about other, non-labor-related cost savings considerations that led to the adoption of advanced technologies.\nOfficials at a large automotive manufacturer told us they recently upgraded a laser welding system to use fewer, more advanced robots to save production line space—which is a valuable commodity in manufacturing. They also pursued this change to increase overall production capacity because the physical space they saved could be used to install more robots for other production steps.\nThe integration of autonomous mobile robots to deliver prescription drugs to patient wards at a university-affiliated medical center was intended, in part, to save costs related to medicines that go missing when delivered and processed manually, according to officials.", "According to officials at selected firms, the desire to improve jobs led firms to adopt advanced technologies. The firms wanted to automate tasks that are dangerous, difficult, dull, or dirty in large part to improve worker safety, and to optimize the value added by workers. For example:\nDangerous work: Two robots were installed to pick up doors weighing between 90 and 300 pounds, and place them on a paint line at a medium-sized door manufacturer we visited. Prior to the robots, workers who performed this dangerous task experienced work related injuries, and the firm paid large amounts of money in workers’ compensation claims, according to officials. Once the robots were installed, the firm experienced a decrease in the number of worker compensation claims.\nDull work: A small automotive parts manufacturer we visited installed an industrial robot to perform a machine-to-machine transfer of a heavy part. Prior to the robot, the firm had three workers performing this task—even though the task only required two—because workers would eventually quit due to the tedium of the job and new workers would require time to be trained, according to officials.\nValue-added work: Some officials told us they adopted advanced technologies because they wanted to maximize human labor that provided value to the firm and reduce labor that did not. Officials at a warehouse for a regional grocery store chain and a university- affiliated medical center said they wanted to minimize time workers spent traveling between tasks (as opposed to performing tasks). Warehouse officials said their workers spend up to 60 percent of their time traveling back and forth between shelves and products, which is time that could be spent selecting and sorting items. Thus, at the time of our visit, the warehouse was in the early stages of adopting automated guided vehicles to eliminate the need for workers to travel between points. Similarly, officials at a university-affiliated medical center that adopted autonomous mobile robots to transport, among other things, prescription drugs, said nurses and pharmacy technicians used to walk back and forth between the patient ward and the pharmacy to pick up and deliver these drugs, which diverted them from performing other tasks. They said that the medical center wanted them to have more time to provide valuable work, especially for employees who are highly-paid.", "Officials at many firms said that adopting advanced technologies can help them deal with the challenges of recruiting and retaining skilled workers. They explained that worker shortages and high turnover can result from skill gaps in the local or national workforce, low unemployment, and certain work being viewed as unappealing, among other reasons. For example, officials at a warehouse for a regional grocery store chain we visited told us they struggle with high worker turnover and the constant need to hire new workers. In addition, low unemployment can make it difficult to retain workers with the right skills to operate machinery according to officials at a small automotive parts manufacturer. Similarly, at the university-affiliated medical center, an official said that positions for pharmacy and other types of medical technicians can be difficult to fill. By using autonomous mobile robots to automate some tasks, the medical center can streamline its operations to more efficiently use the technicians it already has.\nRecruitment in Manufacturing Officials at some manufacturing firms we visited said they have had trouble attracting new workers into the sector, and officials at two firms said that adopting advanced technologies is one way they have sought to make manufacturing more attractive and to appeal to more and younger workers. One younger worker at a small automotive parts manufacturer talked about how appealing his workplace was due to the firm’s use of advanced technologies, specifically robots. Officials at a large automotive manufacturer viewed their tech development facility, which includes spaces to tinker with virtual reality, augmented reality (i.e., technology that superimposes images on a user’s view of the real world; for example, by wearing augmented reality glasses), and other emerging technologies, as an asset to recruit young talent.", "Improving product quality, expanding product offerings, and supply chain reliability were primary motivations for adopting advanced technologies, according to officials at some firms.\nProduct quality: Quality is paramount in the automotive industry, where mistakes are costly and can have implications for a firm’s reputation, according to officials at a medium-sized automotive parts manufacturer we visited. For this reason, they decided to use robots rather than workers for welding in order to standardize the processes, reduce errors, and improve product consistency and quality. Officials at a large automotive manufacturer similarly said that the firm has pursued machine learning technologies to ensure fewer defects and problems in vehicles. Engineers at the firm are developing a smart watch for workers who connect wires that will provide feedback to these workers if a proper connection is not made, based on the sound of the connection. The firm is already using machine vision technology that inspects vehicles as they pass through a section of the production line to ensure the correct pieces have been used for each vehicle model.\nExpanding product offerings: At a medium-sized fruit processing plant, an official said that integrating robots, an advanced conveyer system, and machine vision inspection technologies, among other advanced technologies, enabled the firm to begin producing applesauce in a highly automated and safe way. Had manual production been the only option, officials said they would not have considered producing applesauce due, in part, to safety issues.\nSupply chain reliability: One small manufacturer of rubber stamps and embossing seals (hereafter referred to as a small stamp manufacturer) used to rely on a single supplier for pre-cut materials, which was not always reliable. The firm adopted a collaborative robot, in part, so it could purchase raw materials directly and then have the robot cut the materials as part of the production process (see fig. 6).", "In addition to the capital cost of advanced technologies, which some firms told us can be substantial, firms face a number of risks that can affect their return on investment, such as the reliability of technology and working with new tech developers. While the firms we met with had already adopted advanced technologies, officials had to consider and overcome various risks during the adoption process. Some of these firms decided against adopting other advanced technologies upon evaluating these risks.", "Being an early adopter of a technology is risky because the new technology may not yet be sufficiently reliable for firms’ operations. Officials at a large appliance manufacturer we visited showed us technology that was supposed to use machine vision to autonomously inspect the wire connections for clothes dryers. They told us that the vision technology had been ineffective, so they took it off the production line for engineers to continue working with it in the lab; they planned to bring the technology back onto the line a few weeks after our visit. Officials at this firm said that the vision technology was still relatively immature, as it had a limited field of vision and yielded numerous false readings. Similarly, a warehouse we visited that invested in automated guided vehicles used them to move pallets for a short time, but then put them into storage because these vehicles did not have mature enough machine learning and vision capabilities for the firm’s purposes. Eventually, officials from this warehouse began working closely with the developer firm to improve the vehicle technology, which advanced enough that it could be used. For instance, officials from the warehouse suggested adding turn signals to the vehicles to alert nearby workers of intended movements and improving the vehicles’ ability to travel over spills without triggering the system’s sensors to shut down.\nFirm Size Might Affect Risk Tolerance An official at one small manufacturing firm stated that larger firms may be more willing to be early adopters of technology, as they may be able to absorb the high risks of experimenting with expensive technologies, while smaller firms tend to wait until a technology has been optimized before deciding to adopt it. Accordingly, his firm only purchases industrial robots from an established manufacturer, although it would like to experiment with newer technologies in the future, such as augmented reality. Officials at a large manufacturing firm told us they have purchased a number of advanced technologies to experiment with, even though they do not know yet how the technologies may ultimately be used in their production process. This firm also has teams of technicians and engineers who can adapt the technology for operations. During our visit, we met with engineers who demonstrated different potential applications of technologies that are still being tested, including using virtual reality to test new part design and augmented reality glasses to provide interactive training to workers.\nOfficials at some firms explained that installing advanced technologies at times necessitated building manual redundancies into their operations due to reliability concerns. Officials at a construction consulting company and a municipal township that adopted a machine learning technology to inspect roads said the technology would miscategorize road quality at times, such as identifying tree branch shadows on the road as pavement cracks. While working with the developer to improve the technology, officials said they continued to conduct redundant manual inspections to ensure they were making road repair decisions based on accurate information. During our visit to a large appliance manufacturer, we saw multiple collaborative robots that were not working properly. As a result, workers were performing these tasks manually while the robots were down; officials told us that each of the firm’s automated processes has workers trained to perform the tasks in case a technology was not working properly.\nTechnologies Viewed Differently by Firms Some firms find a technology to be useful while others find little practical application for that technology, as illustrated by the various opinions firm officials had about collaborative robots. Officials at one small manufacturer we visited said that a collaborative robot was well suited for the firm’s production process and environment because, among other reasons: (1) the firm produces small durable goods that require dexterity rather than speed, which the collaborative robot could provide; (2) the collaborative robot would be safe around workers and could be trained by non-technical staff, so the firm’s small workforce could adapt to its use; and (3) the collaborative robot could fit in the firm’s limited floor space, as it would not require a cage. On the other hand, officials at other manufacturing firms we visited told us that collaborative robots were less useful in their settings because they have significant weight and speed limitations in order to be safe enough to operate outside of a cage, limiting their usefulness for their firms.", "Some firm officials told us it could be risky to work with tech developers with limited experience. Officials at a large appliance manufacturer said that newer developers may go out of business or be bought out by a larger firm, which could render the technology acquired from them obsolete (especially in terms of future servicing of parts and software updates). The officials stated that emerging technologies, both hardware and software, tend to not be standardized, so investing in a developer likely means investing in a type of technology that may not be supported by other developers if issues arise. We heard from some firms that they purchased technology from developers who already had established reputations and longevity. For example, a small manufacturer of durable goods selected a robotics company because of the founder’s reputation and track record, among other reasons.", "Operational slowdowns: The time period between initial adoption and optimization of a technology varies widely and can sometimes be a lengthy and ongoing process, according to officials.\nOne small stamp manufacturer experienced a lengthy and iterative implementation process for an off-the-shelf collaborative robot they purchased. For example, they had to construct a customized environment for the robot to function in, make parts by hand, purchase a 3-D printer to develop tools for the robot, and build additional parts to take care of increased byproducts like sawdust.\nOfficials at a large automotive manufacturer told us that new technology, such as machine vision technology used for automated inspections, is often integrated on the weekends or during off-shifts. Then, on the first day of production after the new technology is integrated, the production line starts slowly and speeds up as worker comfort and experience increases.\nOutside of manufacturing, a consultant that helps facilitate the adoption of advanced technologies at firms said that firms’ existing, or legacy, computer infrastructure can be a barrier to integrating machine learning technology, increasing complexity and causing an extended implementation process as his firm integrates the new technology platform with the legacy infrastructure.\nWorker concerns: Officials at some manufacturing firms said they have encountered worker concerns with advanced technologies, and have employed various tactics to mitigate this, such as introducing workers to the technology in offsite demonstrations and involving them during the decision-making and planning before the technology was integrated. In one case, workers were able to ask questions about a collaborative robot as it was being installed and were provided with orientation training. The robot was then phased into operations—used initially for short periods of time so workers would become accustomed to its physical presence and proximity to their workstations.\nDeciding Not to Adopt Advanced Technologies Officials at the firms we visited identified instances in which they chose not to adopt certain advanced technologies, or not to use advanced technologies that were working well in other processes. Reasons we heard included: a product line had too much variation to benefit from advanced technologies (i.e., that some advanced technologies work better for standardized products and processes); a certain manufacturing process was too low-volume to invest time and resources into automation; and human dexterity is difficult to replicate.\nOfficials from a large appliance manufacturer showed us an instance where using automation would not make sense. We observed a worker performing a simple, single task: grabbing a metal heat shield and plastic dishwasher spinner from separate bins and clipping one on to the other. Because of the shape of the pieces and because they were lying unorganized in boxes, the task requires human dexterity, making the process difficult to automate, according to officials.", "Officials at many of the firms we visited said they needed fewer workers in certain positions after adopting advanced technologies to perform tasks previously done by workers. Officials at these firms generally told us they adjusted by redeploying workers to other responsibilities and, in certain instances, reducing the firm’s workforce size through attrition. We also heard examples of direct layoffs due to the adoption of technologies. There may also be other types of adjustments firms can make that we did not observe or discuss with these officials. The complexity of these workforce adjustments makes it difficult to determine or measure the effects of technology adoption on workers. For example, although workers may not have lost their jobs due to an adopted technology taking over specified work tasks—either because of redeployments or attrition— fewer job opportunities might be available in the future for workers with similar skills. In addition, the iterative and sometimes lengthy process of incorporating advanced technologies can delay workforce effects. Thus, the absence of short-term effects of technology adoption does not necessarily preclude long-term implications, such as reductions or slower growth rates in workforce size over time (see text box below). As discussed in the prior section, one reason firm officials are motivated to use advanced technologies is to decrease labor costs.\nSlower Workforce Growth than Revenue Growth An official from a small automotive parts manufacturer told us that advanced technologies and automation resulted in revenue increasing by more than 400 percent over the last 12 years while the workforce increased about 15 percent. Production workers now make up a smaller percentage of the overall firm workforce than prior to automation, and sales and support staff now make up a greater percentage. The firm official described this change as an increase in higher-skilled jobs and a decrease in lower-skilled jobs. Similarly, according to firm officials at a different medium-sized automotive parts manufacturer, revenue has grown six times in the past 15 years while the workforce has grown four times, largely as a result of adopting robotics technology.\nRedeployments without job loss: When advanced technologies replaced positions, firms we visited often shifted, or redeployed, workers to different responsibilities. For example, officials at a medium-sized automotive parts manufacturer we visited told us they had nine workers who smoothed sharp edges and removed burrs on hydraulic cylinders prior to installing two robots to perform these tasks. Now, with the robots in these positions, three workers load the robots and then inspect and de- burr any parts of the cylinders the robots missed. The other six workers were redeployed to other tasks, according to a firm official. At a large appliance manufacturer we visited, officials told us that two workers used to move large parts from one line to another line to be painted. Now, as we observed, a collaborative robot performs this function alone; a worker monitors the operation to ensure it is running smoothly, and the original workers were moved to different tasks on the production line, according to officials. Although the size of these firms’ workforces did not decrease as a result of the technology adoption, the numbers of certain positions were adjusted—for example, production positions decreased while monitoring positions increased. Differences in skills required for these positions may also affect the ability of current workers to transition and could have implications for individual workers even though the number of jobs at the firm does not change. These sorts of changes may or may not appear in firms’ reported employment data, depending on whether redeployed workers change occupations or what other workforce changes may be occurring simultaneously (e.g., if other production workers are hired for reasons unrelated to the technology adoption).\nRedeployments with job loss through attrition: Officials at some of the selected firms that redeployed workers said they also reduced their overall workforce size through attrition, as a result of adopting advanced technologies.\nAutonomous mobile robots independently transported biohazardous waste, linens, meals, and prescription drugs throughout the university- affiliated medical center we visited. Officials told us they eliminated 17 positions after they deployed the robots. No workers were laid off; instead, they relied on high staff turnover rates and moved workers to vacant positions elsewhere.\nAt a medium-sized fruit processing plant, firm officials told us they replaced 150 to 200 jobs with various advanced technologies over the past 3 to 4 years. However, they relied on attrition rather than layoffs. For example, the plant adopted a robot to pack food into boxes. Prior to using the robot, officials told us there were 26 workers per shift performing this job; as of our visit, there were 13 workers per shift.\nA medium-sized door manufacturer reduced its workforce from 650 employees to less than 500 over approximately the last 20 years due to, among other things, their adoption of robots, according to firm officials. For example, we observed industrial robots that load steel sheets into a cutting machine, reading a barcode on each sheet that tells them what size sheet is being lifted and how it should be placed in the cutting machine. This process only requires a single worker to monitor the robots during each of two shifts, where previously three workers per shift were on this production step (i.e., a change from six to two workers total).\nHow quickly workforce reductions materialize for firms using attrition can vary greatly. We visited firms with low employee turnover rates and firms with high turnover rates. High worker turnover rates allowed some firms to more quickly adjust their workforces when deploying advanced technologies and may be a reason we were told about job loss through attrition rather than layoffs at these firms.\nJob loss through layoffs: An official from a systems integrator firm (“integrator”) provided examples of significant layoffs as a direct result of advanced technologies. This integrator provides machine learning technology and other similar products to automate office and administrative processes, among other things. One of the integrator’s customers—a U.S. automotive parts firm facing competition from online retailers—adopted machine learning technology to take over its accounts payable and distribution system. As a result, according to the integrator’s official, this firm reduced the number of employees in one of its U.S. offices from 500 to 200. Another of this same integrator’s customers—a firm that sells telecommunication circuits—adopted machine learning technology to automate product returns processing. As a result, the firm experienced a 30 percent reduction in customer care calls, and replaced about 150 jobs in a U.S. call center with 110 jobs at a call center in a different country (i.e., about 150 U.S. jobs lost; and an overall workforce reduction), according to the integrator’s official.", "According to officials at some selected firms, greater competitiveness and productivity due to the adoption of advanced technologies (see sidebar) has helped firms grow their workforces. For example, some hired additional production workers due to increased production (despite some production tasks being taken on by the adopted technologies), or new types of workers, such as technicians to maintain the technologies. Some officials also said that although they may not have grown their workforces, adopting advanced technologies helped them stay in business by allowing them to compete effectively, and thus to preserve jobs and retain workers. For example, officials at a medium-sized door manufacturer, where we observed numerous robots in the production facility, told us that their firm “could not survive” global competition without the use of advanced technologies.\nProductivity and Efficiency Gains Adopting advanced technologies has helped some firms improve their product quality and increase their production efficiency. For example, according to officials at a medium-sized fruit processing plant, after the firm began using an automated fruit grading technology, the process took significantly less time and resulted in far fewer complaints from farmers about the grading. Farmers thought the automated grading technology was fairer and more accurate than having workers manually and subjectively grade the fruit. A large appliance manufacturer that began using a collaborative robot to apply sealant to an appliance door observed improved consistency, which led to fewer service calls from retailers and customers about excessive, insufficient, or incorrect seals. One medium-sized door manufacturer said that automation technologies enabled them to produce and ship doors in 3 days, as opposed to 4 to 6 weeks. An official from a warehouse for a regional chain of grocery stores said that using automated guided vehicles allowed the firm to save time moving pallets from one end of the warehouse to the other, and also save worker hours. The warehouse saves just over $2 per pallet moved by an automated guided vehicle rather than a worker, and up to $3,500 a day based on volume, according to the official.\nAdvanced technologies enabled some selected firms to increase production or produce a larger range of goods, and thus to hire additional production workers. This also led to workforce increases for suppliers and other firms, according to officials.\nOne large appliance manufacturer increased its use of robots and other advanced technologies to produce more of its own component parts internally instead of relying on suppliers. As a result, the firm was also able to increase the number of production jobs, according to firm officials.\nDue to advanced technologies, a small automotive parts manufacturer was able to bid on a contract to produce a new and more intricate part for a major automotive manufacturer. An official described how the part was so intricate that it could not have been produced manually with the required level of consistency and speed. Although the firm adopted six robots to produce this part, winning the contract also created nine new jobs. While the robots are completing much of the production, the volume of parts demanded and the existence of some tasks that only workers can complete has led to this job growth.\nA developer of autonomous mobile robots said that, as a result of increased business, his firm has created jobs among its eight local suppliers where he buys parts, such as motherboards for the robots.\nGrowth of Developer and Integrator Firms Selected developer firms we met with said they grew their technical and non-technical staff as a result of increasing demand for their technologies.\nA firm that develops and produces robots had tripled its workforce size, to about 130 employees, in the last year alone, according to officials. An official at another developer firm that makes inspection robots said they had grown from three workers to about 20 and envisions expanding to 100 in the near future. The official said that the firm’s first years were spent on technology development, but that once the technology was deployable to customers, the firm grew its workforce size.\nIntegrator firms that help companies adopt advanced technologies have also grown in size, and new types have emerged, according to integrators we visited. For example, with the development of smarter robots, one integrator firm we visited entered the industry to recondition and sell old robots; the firm also adds newer technology to these robots if requested. This integrator has grown from 35 to 45 employees in the last 10 years, according to officials, with the new positions being primarily robot technician jobs.\nAs a result of technology adoption, some firms hired more workers with technical skills, and in other instances lower-skilled workers, according to firm officials.\nAn official from a warehouse for a regional chain of grocery stores said that adopting an advanced automation system created a need for three additional workers to provide preventive maintenance on the machines. These additional positions pay about 25 percent more than the standard warehouse positions, according to officials.\nAt a large automotive manufacturer, officials told us the firm increased its number of lower-skilled cleaning jobs when robots began producing large amounts of byproduct.", "At the firms we visited, workers changed roles and tasks as a result of advanced technology adoption, such as focusing more on interactive, cognitive, higher-skilled, and monitoring tasks, and in other cases focusing more on lower-skilled tasks. Workers who can adapt and be flexible to task changes may experience positive effects, including work that is less physically taxing, safer, more ergonomic, less monotonous, or higher paying. On the other hand, workers who are unable to adjust to changing tasks may be negatively affected. Officials at some of the firms told us that their firms provided internal training or leveraged external resources to develop workers’ skills to help them move into new positions. During our visits to selected firms, we saw a variety of ways in which tasks for workers are changing.\nInteractive work: The use of autonomous mobile robots to deliver prescription drugs for patients enabled nurses at the university-affiliated medical center we visited to focus more of their time on patient interaction, according to officials. The small stamp manufacturer we visited would like to continue to automate its ordering process and focus more on providing customer service. Officials there said for future hires, they plan to recruit for data and people skills, rather than production skills.\nCognitive work: A federal statistical agency adopted machine learning technology to automatically interpret text narratives on forms and assign codes to the data. As a result, staff who previously entered this information manually are able to spend more time on analytical tasks such as reviewing the accuracy of the auto-coding, correcting issues, obtaining clarifications about information submitted on the forms, and following up with non-respondents, according to officials.\nHigher-skilled work: At a large automotive manufacturer, due to increased use of advanced technologies, workers who are hired today need to have greater technical proficiencies than workers hired in the past. For example, to adapt to their changing roles working with robotic equipment, non-technical production staff need machine maintenance and technical skills, rather than only manual dexterity skills. Officials at a large appliance manufacturer that adopted an automated machine to stamp metal said that the resulting process required a single worker to monitor the machine and provide basic maintenance. This worker needed technical skills and at least 6 months of training to effectively perform these duties. In contrast, at another one of this firm’s global plants, four separate pressers are used and each requires workers to load and unload metal.\nMonitoring work: Officials at the large appliance manufacturer mentioned above showed us a step in their production process in which two small pieces of plastic and metal need to be attached. Three workers used to perform this task by hand, which caused ergonomic challenges, and inconsistencies in both quality and production cycle times. Now, the firm uses three robots to perform this work and a single worker loads the pieces for all three robots and monitors their performance. At a small automotive parts manufacturer, production operators who work in cells with robots monitor multiple machines and sometimes also monitor multiple work cells, so a greater aptitude level is needed. As a result, these operators earn $3 per hour more than operators in work cells without robots, according to a firm official.\nLess physically taxing work: Staff at some firms also told us how advanced technologies have made worker tasks less physically demanding. For example, we talked with one warehouse worker who used to lift heavy boxes, but who now operates a forklift after his old task was automated with a conveyer belt and sorting system. He described his new position as having ergonomic benefits, including experiencing less back pain. At a large automotive manufacturer, officials said the firm installed six robots to paint vehicle interiors. This production step was a major ergonomic hazard and workers who did this painting had a relatively high injury rate, according to officials. Officials told us that adopting the robots lowered the injury rate among these workers and resulted in faster vehicle painting.\nSimplified work: At a small stamp manufacturer that adopted a collaborative robot, officials told us that as the firm continues to redesign and optimize operations, the robot will take on more complex tasks. As a result, the remaining production work performed by the firm’s production worker will be simpler (see fig. 7). Officials said that in the future, after the firm’s current production worker retires, the firm may rely on contingent workers to perform any needed production work not completed by the robot because the tasks will be simpler and easier to train a new, temporary worker to complete. Officials said the firm may also hire a worker with a different and more varied skillset who can perform the few remaining production tasks along with other types of tasks.\nLower-skilled work: Officials at a medium-sized door manufacturer installed a robot to facilitate the firm’s redesigned door sealant system and production process. The original process of manually applying door sealant was physically-intensive, ergonomically challenging, and required significant skill and experience to precisely apply the sealant. With the new design, a robot applies the sealant autonomously. As a result, workers perform lower-skilled tasks in this process, including placing a piece on a platform, visually inspecting the robot’s work, cleaning and setting up the robot’s work station, and confirming the correct program is entered in the computer.\nAdaptability to changing daily work demands: Officials from selected firms told us that due to advanced technology adoption, workers need to change tasks depending on the day and circumstances. For example, at a large appliance manufacturer some workers serve in different capacities depending if the robots are functioning properly and depending on the production needs of that day. On the day we visited the plant, several of the robots were malfunctioning and workers were performing the robots’ tasks. Firm officials said that some of their workers serve in swing roles and move around to different production processes and assist as needed.", "Training Centers for Advanced Tech Skills We met with officials at a training center that re-trains adults and teaches high school students to work with advanced technologies used in manufacturing. We visited two firms in the area that told us that this training center helps fill a local shortage in maintenance technician skills, and that they have hired workers who graduated from the center. Officials at the training center said that there is a high demand in the area for maintenance technicians. For example, they said that a large automotive manufacturer in the area is planning to hire 800 maintenance technicians over the next 3 years, and that the firm is worried about how it will fill these positions. Officials at the training center also said that some firms have such a high demand for maintenance technicians that they hire high school students who complete the training program before they graduate high school. The training center is piloting its adult training program. The program recruits adults who are underemployed and have some mechanical aptitude, then trains them in advanced technologies used in manufacturing. Most of the students who participated in an early pilot obtained higher paying jobs than those they held before the program, according to officials at the training center.\nMany firms we visited offered training for workers to adapt to their changing roles and tasks, particularly when the tasks or roles became more technical. Some firms used internal training resources and some leveraged local training centers (see sidebar). Some technology developers also offered training to firms that adopted their technologies. Officials at some firms told us that training current workers for more technical positions was easier than finding workers with the appropriate skills. For example, officials at one medium-sized door manufacturer said they needed highly specialized engineers, but could not find any in the region. As a result, this firm offered tuition reimbursement for workers who were willing to go back to school to become engineers. They also partnered with local community colleges to train students to become future maintenance technicians. Officials at a large automotive manufacturer said that due to increases in the firm’s use of advanced technologies, the plant has needed to hire more technicians. As a result, this firm added programs to its on-site training center to train workers for these roles.", "The complex job changes we observed at the selected firms we visited are not currently captured in federal data, though they may have significant implications for broader employment shifts. As the primary agencies responsible for monitoring the U.S. economy and workforce, the Departments of Commerce and Labor are aware of the importance of advanced technologies as major drivers of changes. For example, Census’ newly administered Annual Business Survey may provide valuable information in the future about the adoption and use of advanced technologies nationwide and the prevalence of resulting workforce effects. However, comprehensive data on firms’ adoption and use of advanced technologies do not currently exist, which prevents federal agencies and others from fully monitoring the spread of advanced technologies throughout the economy and linking their use to changes in employment levels or structural shifts in the tasks and skills associated with jobs.\nObservations from our visits to selected firms illustrate the complex and varied workforce effects that result from firms’ adoption of advanced technologies. In some circumstances, technology adoption will lead to increases in different types of jobs and in other cases technology adoption will lead to workforce reductions—either over time or immediately. Regardless of the firm-level workforce effects, worker roles and responsibilities are likely to change as advanced technologies take over tasks that workers previously performed. These changes could positively affect some workers, but could also have negative consequences for other workers, especially those who are unable to adapt to changes. For example, workers whose previous work tasks are automated and who are unable to perform new tasks required of them may need to seek new employment. If these changes occur occupation- wide, across many firms, workers may need to re-train or seek new employment in entirely different occupations or industries. To the extent that these changes are concentrated among occupations susceptible to automation, certain groups of workers (e.g., those with lower education levels) may be disproportionately affected and may lack the opportunity to develop skills needed to enter growing occupations. These workers will be in greater need of programmatic or policy supports, and federal workforce programs will need to be aligned with in-demand skills for the changing economy.\nWithout comprehensive data that can measure the magnitude and variety of these firm-level changes, the workforce effects of the adoption of advanced technologies will remain unclear, job seekers may not be fully informed about their best future career prospects, and federally funded programs to support workers may be misaligned with labor market realities. DOL’s ability to collect information regularly on jobs and workers may enable the agency to fill these information gaps. Specifically, better data could be used by policymakers and DOL to proactively design and fund worker training programs that meet the job needs of the future.", "The Secretary of Labor should direct the Bureau of Labor Statistics (BLS) and the Employment and Training Administration (ETA) to develop ways to use existing or new data collection efforts to identify and systematically track the workforce effects of advanced technologies. For example, the Secretary could select any of the following possibilities, or could identify others.\nBLS could expand existing worker or firm surveys to ask respondents whether advanced technologies have resulted in worker displacements, work hour reductions, or substantial adjustments to work tasks.\nBLS could expand its employment projections work to regularly identify occupations projected to change over time due to advanced technologies.\nETA could expand the O*NET data system to identify changes to skills, tasks, and tools associated with occupations, as the information is updated on its rotational basis, and consider how this could be used to track the spread of advanced technologies. (Recommendation 1)", "We provided a draft of this report to DOL, Commerce, NSF, and OSTP for review and comment. We received written comments from DOL that are reprinted in appendix II and summarized below. DOL and Commerce provided technical comments, which we incorporated as appropriate. NSF and OSTP told us that they had no comments on the draft report.\nDOL agreed with our recommendation to develop ways to identify and track the workforce effects of advanced technologies. DOL stated that it will continue coordinating with the Census Bureau on research activities in this area, and that it plans to identify and recommend data collection options to fill gaps in existing information about how the workplace is affected by new technologies, automation, and AI. DOL also stated that it plans to release employment projections annually instead of every 2 years, beginning in 2019.\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, the Secretary of Labor, the Secretary of Commerce, the Director of the National Science Foundation, the Director of the White House Office of Science and Technology Policy, 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) 512-7215 or brownbarnesc@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 objectives of this review were to examine (1) what is known about how the adoption of advanced technologies affects the U.S. workforce; (2) selected federal agency efforts to track and monitor the adoption and workforce effects of advanced technologies; (3) considerations that led selected firms to adopt advanced technologies and the risks they faced; and (4) ways technology adoption has affected the workforce at selected firms.\nThroughout the report, we use “advanced technologies” as a broad term to describe technological drivers of workforce changes, including but not limited to those identified in the National Academies study: artificial intelligence; machine learning; robotics; autonomous transport; advanced manufacturing; 3D printing; advanced materials; computing power; and internet and cloud technology. The technologies we observed at work sites could generally be categorized as applications of robotics, machine learning (e.g., machine vision or autonomous navigation), or both. However, not all technologies that may affect the U.S. workforce in the future—through automation or in other substantial ways—fall into these categories. Our use of the broad term “advanced technologies” leaves open the possibility that new technologies and other areas of focus are likely to emerge.\nTo examine what is known about how the adoption of advanced technologies affects the U.S. workforce, we explored the extent to which available federal data could identify and measure these effects, and we identified limitations with available data. Because there was no comprehensive data that link employment trends to technology adoption, we used a study by Frey and Osborne to identify a group of occupations susceptible to automation. We then analyzed whether the concentration of these occupations in industries is correlated with growth in tech jobs or employment declines in those industries, whether job displacements are more common in these occupations than in others, the characteristics of workers who hold jobs in these occupations, and the geographic concentration of jobs in these occupations. We analyzed employment data from the Census Bureau (Census) and the Bureau of Labor Statistics (BLS); specifically, the American Community Survey (ACS), the Current Population Survey’s (CPS) Displaced Worker Supplement, and the Occupational Employment Statistics (OES) survey. For more information, see detailed discussions of our data analyses in sections 1-3 below.\nIdentifying occupations susceptible to automation: Using a model that evaluates tasks within an occupation, Frey and Osborne estimate a probability of automation for 702 occupations. They identify occupations with a probability greater than 0.7 as being at high risk of automation. In our analyses, we thus consider this collection of occupations as those susceptible to automation. While there are different studies that attempt to predict what occupations or jobs may be automated in the future, we use the work by Frey and Osborne because it is widely cited and because its results are structured to allow us to identify a broadly inclusive collection of occupations susceptible to automation. The results of our analyses could be affected by using other studies to the extent that they identify different occupations as susceptible to automation. The accuracy of any collection of occupations is limited by the unpredictability of when or if jobs are automated, as well as the fact that occupations are comprised of a variety of jobs, which may experience automation to varying degrees or in different ways.\nWe also reviewed examples of recent and ongoing studies that attempt to measure workforce effects directly attributable to technology adoption. We identified examples of research through interviews with knowledgeable individuals and from among those included in a recent review of the state of empirical work. Our review of studies was not meant to be comprehensive of the research in this area.\nTo identify selected federal agencies’ current and planned efforts to collect data on, and monitor the prevalence and effects of advanced technologies in the economy, we met with the Departments of Labor (DOL) and Commerce (Commerce), as the principal federal agencies responsible for collecting data on the U.S. economy and workforce; the White House Office of Science and Technology Policy (OSTP), which leads interagency science and technology policy-coordination efforts across federal agencies; and the National Science Foundation (NSF), which was involved in the development of the Annual Business Survey. We interviewed officials and reviewed data and information collected by these agencies. We also reviewed the Annual Business Survey’s questionnaire to consider the potential uses of data being collected by the survey, and analyzed data from DOL’s Employment Projections program and Occupational Information Network (O*NET) database to identify information related to the adoption and workforce effects of advanced technologies.\nAnnual Business Survey: The Annual Business Survey was administered for the first time in summer 2018, and collects information from firms about various topics, including innovation and technology use. The survey is a joint effort by the Census Bureau and the National Center for Science and Engineering Statistics within the National Science Foundation and Census plans to administer the survey annually for 5 years. The Annual Business Survey replaces the 5-year Survey of Business Owners, the Annual Survey of Entrepreneurs, the Business R&D and Innovation for Microbusinesses survey, and the innovation section of the Business R&D and Innovation Survey.\nEmployment Projections program: BLS’s Employment Projections program analyzes changes in the economy, among other things, to project how employment by occupation may change over the next 10 years, including which occupations may be affected by advanced technologies. BLS’s projections are for the most part structured around the Occupational Employment Statistics, which produces employment and wage estimates for over 800 occupations. As part of this program, BLS develops a table of occupations that are projected to have direct employment changes due to some identified reason. According to BLS officials, the specific reason listed for each occupation is based on BLS’s judgment of the most significant factor or factors affecting the occupation (i.e., based on a qualitative assessment). We examined the reasons listed in this table and identified those related to the adoption of advanced technologies in an occupation, such as through automation, the increased use of robots or artificial intelligence, advances in machine or software technologies, or other similar changes. We then counted the number of unique occupations projected to experience declines in their shares of employment in an industry or group of industries due to one of these reasons. We also counted these occupations according to their major occupation group. BLS projected that some of these occupations would experience employment share declines in all industries and some would experience employment share declines in a single industry only. We counted unique occupations regardless of what industries or how many were noted (e.g., all industries or only one). We chose to do this to capture an inclusive list of occupations projected to be affected by advanced technologies, and because we are not using the list to quantify total projected employment changes. Of the 247 unique occupations BLS includes in its table as projected to have direct employment changes due to some identified reason, BLS projects that 163 will experience employment share declines— 100 of those occupations are projected to change broadly as a result of the adoption of advanced technologies. An employment share decline indicates that employment in an occupation will decline relative to others in a given industry or group of industries, not that the occupation will necessarily experience a decrease in employment in absolute terms.\nOccupational Information Network (O*NET) database: The O*NET database contains information about the skills, tasks, and tools (i.e., use of technology) associated with specific occupations. We downloaded two components of the database that (1) list the various work tasks associated with each occupation, and (2) list the various tools and technologies used by each occupation. In each database component, we searched for and identified tasks, tools, and technologies that involved robots in some way—e.g., tasks such as working with robots, robotic systems, or robotic applications, and tools such as welding robots, loading robots, or robot automation tools. We then counted the number of unique occupations that (1) had an associated work task related to robots, or (2) used a robot-related tool in the occupation.\nTo understand firms’ adoption of advanced technologies and any resulting workforce effects, we met with officials representing 16 different firms that are using advanced technologies in their operations, as well as a systems integrator who provided detailed information about how several customer firms are using advanced technologies. Most of the meetings with firms were in-person site visits; three of the meetings with firms and the meeting with the systems integrator were by phone. Throughout this report, we use the term “firm” for simplicity, although the “firms” we met with included production plants of large manufacturers, single-location firms, public sector agencies, and other entities (see below). We also identify the manufacturing firms we visited as falling into one of three different size groups to describe their relative size differences from each other. The manufacturing firms we visited ranged from eight employees to thousands, according to firm officials. For the purposes of our study, we define small as fewer than 200 employees; medium as 200 employees to 1,000; and large as over 1,000 employees.\nAmong the 16 firms we met with that are using advanced technologies, 10 are manufacturing firms: a small manufacturer of rubber stamps and embossing seals (also referred to as a small stamp manufacturer); two medium-sized door manufacturers; a small automotive parts manufacturer; a medium-sized automotive parts manufacturer; two large appliance manufacturers; a large automotive manufacturer; a large manufacturing corporation of household and personal care a medium-sized fruit processing plant.\nSix are non-manufacturing firms of various types: a construction consulting company; a federal statistical agency; a food retail corporation; a municipal township; a university-affiliated medical center; and a warehouse for a regional grocery store chain.\nThe firms about which we received information from the systems integrator were business, administrative, and customer relations offices of various firm types.\nTo identify firms to meet with, we consulted and sought referrals from a variety of knowledgeable sources, including academic researchers, technology developer firms, technology integrator firms, state economic development associations, and our own research. We selected firms that varied in size, industry sector, types of advanced technology used, and geography. We limited our focus to firms that had adopted advanced technologies and had experienced workforce effects. Our selection of firms is not a generalizable sample, but does provide illustrative examples of the adoption and workforce effects of advanced technologies.\nDuring our site visits at firms, we met with one or more management officials and, at times, with workers. We were also able to view the advanced technologies being used in operations. Our discussions with officials included topics such as motivations for adopting advanced technologies, the integration process, and any workforce effects that resulted from the technologies, including positions lost or gained and how workers’ tasks and skills may have changed. Our site visits and interviews with firm officials ranged from hour-long conversations to full-day visits, so some site visits yielded more detailed information than others.\nIn addition to the firms that use advanced technologies, we interviewed seven technology developer firms and two robotics integrator firms (in addition to the systems integrator mentioned above). We met with these firms to learn more about some of the technologies being used and the adoption process, as well as about workforce effects at these firms. We identified these developer and integrator firms from various sources, including our conversations with academic researchers and our own research.\nWe conducted additional interviews to obtain background and context for our work. We met with individuals knowledgeable about issues related to the adoption and workforce effects of advanced technologies, such as academic researchers and economists, officials from two unions representing manufacturing workers, officials at three industry-based organizations, officials from two state economic development associations, and officials at two worker training centers. For all objectives, we also reviewed relevant federal laws and regulations.\nThe remainder of this appendix provides detailed information about the data and quantitative analysis methods we used to examine what is known about the workforce effects of automation and the adoption of advanced technologies (objective 1), as follows:\nSection 1: Analyses using data from the ACS\nSection 2: Analyses using data from the CPS’s Displaced Worker\nSection 3: Analyses using data from the OES survey For each of the datasets described below, we conducted a data reliability assessment of variables included in our analyses. We reviewed technical documentation and related publications and websites with information about the data. We spoke with BLS and Census officials who maintain the datasets to gain an understanding of and provide context for the various data that we analyzed, as well as to resolve any questions about the data and to identify any known limitations. We also tested the data, as applicable, to check for logical consistency, missing data, and consistency with data reported in technical documentation. We determined that the variables we used from the data we reviewed were sufficiently reliable for the purposes of this report.", "This section describes the quantitative analysis methods we used to examine employment trend correlations and the characteristics and earnings of workers in occupations susceptible to automation (as identified by Frey and Osborne; see above). We used ACS data for these analyses.\nThe ACS is administered by the Census Bureau and is an ongoing national survey that uses a series of monthly samples to produce annually updated estimates for the same areas surveyed via the decennial census. The ACS collects a range of information about individuals from a large sample of households—over 2.2 million respondent households in 2016—including employment information such as occupation, industry, and earnings, and demographic information such as age, gender, race, ethnicity, and educational attainment. We limited our analysis to workers who were classified as current employees, and who had earned positive wage and salary income in the prior 12 months. In 2016, this resulted in observations representing 136 million workers, close to the number reported by BLS for that same period using a different survey. This report primarily used ACS data from 2010 through 2016—specifically, we relied on the Census Bureau’s Public Use Microdata Sample of the ACS for the single years 2010, 2011, 2012, 2013, 2014, 2015, and 2016.", "To test whether industries with higher concentrations of individuals in occupations susceptible to automation (as identified by Frey and Osborne) have experienced employment changes, we examined their correlation with changes in tech job concentration and changes in overall employment from 2010 through 2016. We limited the analysis to this period both because the ACS occupation codes changed in 2010 and because it allowed our results to post-date the economic recession of 2007-2009. We used industry definitions set by the ACS data, which groups some industries together—e.g., residential and nonresidential construction industries are combined in a single construction industry grouping. We defined tech jobs as those in computing, engineering, and mathematics occupations, consistent with previous GAO work on the tech field. We also examined an alternative definition of tech jobs in which we included those with “computer” in the occupation title. For both definitions, we estimated the number of tech jobs in each industry in each year, 2010-2016. We then calculated the growth rate in the number of tech jobs in each industry, and correlated that growth rate with the percentage of workers in that industry in occupations susceptible to automation (as identified by Frey and Osborne). We also estimated the number of workers overall in each industry in each year (2010-2016) and correlated the trend in total employment with the percentage of workers in that industry in occupations susceptible to automation (as identified by Frey and Osborne). We restricted our correlation analyses to those industries where the tech job growth rate or the overall employment trend was statistically significant.\nWe performed two correlation tests. The Spearman test measures correlation between the rank of the two sets of values. The Pearson test measures correlation between the values themselves. As shown in table 2, we found a positive but weak correlation between industries with higher concentrations of jobs susceptible to automation and their concentration of tech jobs, based on both correlation tests and both definitions of tech jobs, and we found no meaningful correlation with change in overall employment in either test.\nTo explore an example industry—the plastics product manufacturing industry—in further detail, we identified the number of jobs susceptible to automation within that industry, by occupation and groups of occupations. We also examined the growth in tech jobs within the industry, by tech occupation. We approximated each occupation’s contribution to the overall growth of tech jobs in the industry by multiplying their individual growth rates over the period 2010-2016 by their employment in 2010. The growth rates for the three engineering occupations, which when combined, account for more than half of the industry’s growth in tech jobs, were each significant at the 85 percent confidence level.", "To analyze the characteristics of workers in occupations susceptible to automation (as identified by Frey and Osborne), as well as the characteristics of workers with tech jobs, we used 2016 ACS data. We examined data on the workers’ gender, level of education, age, race and ethnicity, and hourly wage, and compared distributions of workers in occupations susceptible to automation and workers in all other occupations (see table 3). For race and ethnicity categories, we included only non-Hispanic members of White, Black, Asian, and Other categories, and the Hispanic category included Hispanics of all races. The “Other” category included American Indian or Alaskan Native, Native Hawaiian or Pacific Islander, two or more races, and other race. To analyze education level, we combined all attainment levels from a high school degree or less. To estimate the hourly wage of workers, we divided the wage and salary earnings of the worker by their usual hours worked and weeks worked. To test the reliability of this measure, we compared our results to average hourly wages reported by other BLS surveys; we found that the average values were sufficiently close to determine that this method was sufficiently reliable for our purposes.\nTo investigate whether differences in hourly wage might be due to other factors, we estimated multiple regression models that enabled us to control for additional variables. Specifically, we estimated wage differences between workers in occupations susceptible to automation and workers in other occupations—i.e., whether a worker was in an occupation susceptible to automation (as identified by Frey and Osborne) was our primary independent variable (a binary, yes/no variable). Because we used the natural log of the hourly wage as the dependent variable, the standard interpretation of the regression coefficient of this variable is that it represents the average log point difference in hourly wages between occupations susceptible to automation and all other occupations. This coefficient can be made to more closely approximate a percentage difference in hourly wages or an earnings gap by taking the exponent and subtracting 1. As noted previously, we limited our analysis to workers who earned positive wage and salary income in the prior 12 months. We also removed observations with outlier values for wages (e.g., wage rates above $140 per hour); this represented about 1 percent of the sample in 2016.\nWe ran five regression models with different sets of independent variable controls.\nRegression (1) estimates the earnings gap without any controls (the uncorrected earnings gap).\nRegression (2) estimates the earnings gap with a set of independent variables that control for characteristics of the individual; these variables included age, race and ethnicity, gender, marital status, state of residence, and education level.\nRegression (3) estimates the earnings gap with independent dummy variables for 2-digit industry codes added; this corrects for any differences between industries at the 2-digit level.\nRegression (4) estimates the earnings gap with independent dummy variables for 2-digit occupation codes added; this corrects for any differences between occupations at the 2-digit level.\nRegression (5) includes both 2-digit industry and 2-digit occupation code dummy variables.\nAs table 4 shows, we found a significant difference in hourly wages between workers in occupations susceptible to automation compared to workers in other occupations, even after independent variables to control for worker characteristics, industry, and occupation codes were included. Including the additional independent variables caused the earnings gap to fall from just over -34 percent to just over -10 percent. Regression model 3, which estimated an earnings gap of about -17.2 percent, is our preferred model, as it controls for individual worker characteristics and for any differences between industries at the 2- digit level, but does not include occupation as an independent variable. Including occupation variables controls for any differences between occupations at the 2- digit level. However, because we identify workers in jobs susceptible to automation based on their occupations, these occupation control variables are likely highly predictive of Frey and Osborne’s estimated probability of automation, which is used to categorize workers in jobs susceptible to automation. We also ran these regression models for other years from 2010 to 2016 and we found substantively similar results.", "This section discusses the quantitative analysis methods we used to compare relative job displacement rates between workers in occupations susceptible to automation (as identified by Frey and Osborne; see above) and workers in other occupations. We used data from the CPS’s Displaced Worker Supplement for these analyses.\nThe CPS is sponsored jointly by Census and BLS and is the source of official government statistics on employment and unemployment in the United States. The basic monthly survey is used to collect information on employment, such as employment status, occupation, and industry, as well as demographic information, among other things. The survey is based on a sample of the civilian, non-institutionalized population of the United States. Using a multistage stratified sample design, about 56,000 households are interviewed monthly based on area of residence to represent the country as a whole and individual states; the total sample also includes additional households, some of which are not interviewed in a given month for various reasons, such as not being reachable. The CPS Displaced Worker Supplement has been administered every other year since 1984, and provides supplemental data on persons age 20 years or older who lost a job involuntarily in the prior 3 years, including data on reasons for job displacement, as well as industry and occupation of the former job. This report used data from the January 2016 Displaced Worker Supplement.", "To analyze whether workers in occupations susceptible to automation (as identified by Frey and Osborne) experience job displacement at differing rates than workers in other occupations, we used data from the CPS’s January 2016 Displaced Worker Supplement. We identified workers who lost or left a job involuntarily during the 3 calendar years prior to the survey (i.e., January 2013 through December 2015) because their position or shift was abolished or because there was insufficient work for them to do. We focused on these reasons for displacement as those that most closely approximate how advanced technologies could replace workers at a given firm. We also limited our analysis to those workers who did not expect to be recalled to their jobs within the next 6 months. We categorized these displaced workers according to the occupations from which they were displaced (e.g., workers displaced from occupations susceptible to automation and workers displaced from all other occupations).\nWe calculated relative job displacement rates as the number of displacements over the period 2013-2015 reported by a given population (e.g., workers in occupations susceptible to automation), over that population’s total current employment in January 2016. Although this measure does not represent the total number of jobs that existed annually that could have resulted in displacements, it allows us to control for population size and to approximate a relative displacement rate. We examined various populations, including occupations identified as susceptible to automation by Frey and Osborne, occupations BLS projects will experience declines in their share of employment due to advanced technologies (see above), and production occupations. To categorize occupations, Frey and Osborne and BLS use Standard Occupational Classification (SOC) codes, whereas the Displaced Worker Supplement uses Census occupation codes. We used a crosswalk provided by Census to match these occupation classifications. SOC codes have a hierarchical structure—e.g., a “broad” occupation group contains a subset of “detailed” occupations. For example, SOC code 13- 1031 is the detailed occupation “claims adjusters, examiners, and investigators” within the broad group SOC 13-1030 (“claims adjusters, appraisers, examiners, and investigators”). When a direct crosswalk between SOC and Census occupation codes was not available at the detailed level, we used the associated broad SOC group to identify a Census occupation code. There were some respondents in the Displaced Worker Supplement who did not report the occupation from which they were displaced, and these were dropped from our analysis.\nTo estimate the sampling errors for each estimate, we used strata defined by state because the Displaced Worker Supplement data did not provide replicate weights or the sampling strata necessary to obtain standard errors. When estimating the number of job displacements over the period 2013-2015 reported by a given population (e.g., workers in occupations susceptible to automation), we used the supplement weight for respondents. When estimating the population’s total current employment in January 2016, we used the CPS 2016 weight for respondents. We used a Taylor series linearization to estimate the sampling error of the ratio of estimated number of job displacements over the period 2013- 2015 to the estimated number of current employment in 2016.\nWhile our primary analysis examined relative displacement rates for workers in occupations susceptible to automation, we also conducted sensitivity analyses by considering other groups of occupations. Specifically, we examined the relative displacement rates of the following groups: Jobs susceptible to automation had a relative displacement rate of 3.4 percent +/- 0.3, and all other jobs combined had a relative displacement rate of 2.9 percent, +/- 0.2.\nJobs in occupations BLS projects will experience relative declines in employment due to advanced technologies (see above) had a relative displacement rate of 3.7 percent, +/- 0.5, and all other jobs combined had a relative displacement rate of 3.6 percent, +/- 0.2.\nJobs in production occupations had a relative displacement rate of 3.7 percent +/- 0.8, and all other jobs combined had a relative displacement rate of 3.1 percent, +/- 0.2.", "This section discusses the quantitative analysis methods we used to analyze geographic reliance on occupations susceptible to automation (as identified by Frey and Osborne; see above). We used OES data for these analyses.\nThe OES survey is a federal-state cooperative effort between BLS and state workforce agencies, which collects information on occupational employment and wage rates for wage and salary workers in nonfarm establishments. The survey is based on a sample drawn from about 7.6 million in-scope nonfarm establishments in the United States that file unemployment insurance reports to the state workforce agencies. Using a stratified sample design, about 200,000 establishments are surveyed semiannually and employment estimates are based on six panels of data collected over a 3-year cycle. The final in-scope sample size when six panels are combined is approximately 1.2 million establishments. The OES survey includes all full- and part-time wage and salary workers in nonfarm industries, but excludes self-employed workers, owners and partners in unincorporated firms, household workers, and unpaid family workers. OES data provide occupational employment estimates by industry for the country as a whole, for individual states, and for more local geographic areas (e.g., metropolitan and nonmetropolitan areas). This report used data from the May 2017 Occupational Employment Statistics.", "To analyze what U.S. geographic areas rely more heavily on employment in occupations susceptible to automation, we used data from the May 2017 OES. For each local geographic area, we estimated how many jobs were in occupations identified as susceptible to automation by Frey and Osborne (see above) and how many jobs were in all other occupations. We also estimated how many jobs were in each group of occupations nationwide (using national-level data). We then calculated a location quotient for each local geographic area, which measures the proportion of each area’s jobs that were in occupations susceptible to automation compared to the national proportion of employment in these occupations. This measure depicts the extent to which a local geographic area relies on certain jobs for the employment of its population, relative to other areas.\nBased on their location quotients, we categorized and mapped 589 local geographic areas in the following three groups:\nRelatively High Concentration: Areas where the proportion of jobs susceptible to automation is at least 5 percentage points greater than the national average, and the difference is statistically significant at the 95 percent confidence level. This translates to an estimated location quotient of at least 1.1.\nAverage or Relatively Low Concentration: Areas where the proportion of jobs susceptible to automation is within 5 percentage points above the national average or lower.\nUndetermined Reliance: Areas where the proportion of jobs susceptible to automation is undetermined. We classify an area’s proportion as “undetermined” if the estimated margin of error at the 95 percent confidence level is larger than 5 percentage points.\nWe conducted one sided z-tests at the 95 percent confidence level to analyze each area’s estimated location quotient. The null hypothesis is that the area location quotient is less than or equal to 1.1 (i.e., the proportion of employment in the group of occupations in an area is 1.1 times the national proportion). The alternative hypothesis is that the area location quotient is greater than 1.1. Because estimated area employment proportions are based on a sample, we also restricted our tests to those areas that were reliable for our purposes by requiring that areas had sampling errors of no greater than 5 percentage points for a 95 percent confidence interval.\nAccording to BLS, employment estimates for individual occupations in individual local geographic areas may not be available in the public data for a variety of reasons, including for example, failure to meet BLS quality standards or to ensure the confidentiality of survey respondents. Because we aggregate data across multiple occupations, our methodology treats these cases as if employment in the given occupation in the given area was zero, which is not the case and which introduces imprecision into our analysis and the resulting location quotients. However, because ensuring confidentiality is a primary concern, we assume that most of these cases where data are suppressed would have relatively small numbers of jobs, and thus have minimal effects on our results. To test this assumption and to ensure the appropriateness of our methods, we compared the total number of jobs we analyzed across all local geographic areas to the total number of jobs reported at the national level (which do not have data suppressed). The total number of jobs analyzed across our local geographic areas was 5.5 percent lower than the total number of jobs reported at the national level, which we concluded was within an acceptable threshold to determine that the data were sufficiently reliable for our purposes and our analysis. In addition, according to BLS, because occupational employment estimates are rounded to the nearest 10 before publication, estimates of location quotients calculated from the public data will be subject to some rounding error, compared with location quotients calculated from the unrounded pre-publication data.", "", "", "", "In addition to the contact named above, Blake Ainsworth (Assistant Director), Michael Kniss (Analyst-in-Charge), Shilpa Grover, and John Lack made key contributions to this report. Also contributing to this report were James Bennett, Benjamin Bolitzer, Melinda Cordero, Holly Dye, Jonathan Felbinger, Sheila R. McCoy, Jean McSween, James Rebbe, Krishana Routt-Jackson, Benjamin Sinoff, Almeta Spencer, and Sonya Vartivarian." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 2, 3, 2, 2, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 2, 2, 2, 3, 1, 1, 1, 1, 2, 3, 3, 2, 3, 2, 3, 1, 1, 2, 2 ], "alignment": [ "h5_title h0_title", "h0_full h5_full", "", "", "h0_full h2_title h5_title h1_title", "", "", "h2_full", "h5_title h1_full", "h5_full h1_full", "", "", "h4_title h3_title", "h3_title", "h3_full", "h3_full", "", "h3_full", "h3_full", "", "", "h3_full", "h4_full", "h4_full", "h4_full", "", "h1_full", "", "h7_full h6_full", "h5_full h4_full h6_full h0_title", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How effective is existing federal data on identifying causes for shifts in employment?", "What potential factors have been identified as probable causes for employment shift?", "How has GAO approached this issue in spite of the lack of data?", "What is the role of the Department of Labor (DOL)?", "What are the limitations of the DOL's Bureau of Labor Statistics?", "What are the limitations of the DOL's Occupational Information Network program?", "What does the DOL require to ensure the programs it funds are aligned with local labor market realities?", "What was the intent of the first survey conducted in 2018?", "What edits are being made to the 2019 survey?", "How will this information be used?", "What were the reasons for adopting advanced technologies according to firms interviewed by the GAO?", "What are the benefits of adopting robots over human workers?", "What are the risks with adopting advanced technologies in businesses?", "How does technology contribution to attrition and workplace size reduction?", "What is a given example of autonomous robots replacing human workers?", "What effects does advanced technologies have apart from increasing competitiveness?", "How does the inclusion of advanced technologies affect the skill sets of workers?", "What capabilities are modern robots equipped with?", "How will advanced technologies affect the US workforce?", "What remaining questions are there about the inclusion of advanced technologies in the workplace?", "How did the GAO gather information on advanced technologies?", "What criteria were used to select the interviewed firms?", "What other resources did the GAO pursue?", "What does the GAO recommend for the DOL?", "How did the DOL respond to the GAO's recommendation?", "How will the DOL continue research in this area?" ], "summary": [ "Although existing federal data provide useful information on the U.S. workforce, they do not identify the causes of shifts in employment.", "As a result, it is difficult to determine whether changes are due to firms adopting advanced technologies, such as artificial intelligence and robots (see photo), or other unrelated factors.", "In lieu of such data, GAO analyzed employment trends and characteristics of jobs that selected researchers identified as susceptible to automation, and found that:", "The Department of Labor (DOL) has a role in tracking changes in the U.S. workforce, but the data it collects related to the workforce effects of advanced technologies are limited.", "DOL's Bureau of Labor Statistics (BLS) identifies occupations projected to experience staffing pattern changes and the most significant causes, such as use of robotics, but its efforts are not designed to capture all instances of changes due to advanced technologies.", "DOL's Occupational Information Network program also collects data on tasks and technologies in occupations, such as robotics, but it was not designed to track changes over time.", "Without comprehensive data that link technological changes to shifts in the workforce, DOL lacks a valuable tool for ensuring that programs it funds to support workers are aligned with local labor market realities, and employers and job seekers need to rely on other sources of information to decide what training to offer or seek.", "The Department of Commerce's Census Bureau (Census) has started tracking technology adoption and resulting workforce effects in the new Annual Business Survey, which was administered for the first time in June 2018 with significant support from the National Science Foundation. This first survey asked firms about their use of advanced technologies and initial results will be available in late 2019.", "When the survey is next administered in summer 2019, Census plans to ask additional questions about firms' motivations for adopting technologies and effects the technologies might have on workers.", "This survey could provide information about the prevalence of technology adoption and workforce changes (e.g., declines in production workers or increases in supervisory workers), but it is not intended to provide information on the magnitude of workforce changes. Also, it remains unclear what limitations, if any, the survey data may have.", "According to officials from the 16 firms GAO interviewed, cost savings and other considerations led them to adopt advanced technologies, despite facing certain risks with the new technologies.", "For example, an automotive parts manufacturer said the firm adopted robots to reduce costs by using fewer workers. A door manufacturer said the firm installed two robots to lift heavy doors onto a paint line to reduce the number of worker injuries. A rubber stamp manufacturer said acquiring a robot (pictured above) allowed it to purchase and process raw materials instead of buying precut materials.", "Firm officials also identified risks related to adopting advanced technologies that could affect their return on investment, such as risks related to the reliability of technology and working with new tech developers.", "Among the firms GAO met with, officials described various ways technology adoption has affected their workforces. On one hand, officials at many firms said they needed fewer workers in certain positions after adopting technologies. The firms generally redeployed workers to other tasks, and in some cases, reduced the size of their workforces, typically through attrition.", "For example, a medical center GAO visited adopted autonomous mobile robots to transport linens and waste, among other things, which officials said eliminated 17 positions and shifted workers to other positions.", "On the other hand, officials at some firms said advanced technologies helped them increase competitiveness and add positions. An appliance manufacturer used advanced technologies to produce more of its own parts instead of relying on suppliers and, as a result, increased the number of production jobs, according to officials.", "Firm officials also noted that workers' tasks and skills have been changing due to advanced technologies (see figure). Workers who can adapt to new roles may experience positive effects, such as work that is safer, while those who cannot adapt may be negatively affected.", "While robots have existed for decades, modern robots may be equipped with learning capabilities that enable them to perform an expansive array of tasks.", "Advanced technologies are likely to affect the U.S. workforce by enabling firms to automate certain work tasks.", "Questions exist about how prepared federal agencies are to monitor workforce changes, promote economic growth, and support workers who may be negatively affected by automation.", "GAO met with 16 firms that are using advanced technologies in their operations and seven firms that develop advanced technologies, and interviewed managers and workers, and observed firms' use of technologies.", "The selected firms varied in size, industry sector, types of technologies used, and geographic location. Findings from discussions with the fims are not generalizable, but provide illustrative examples about the adoption of advanced technologies.", "GAO interviewed officials from federal agencies, including Commerce and DOL, academic researchers, economists, labor union officials, industry association officials, officials from state economic development associations, and other knowledgeable individuals. GAO also reviewed relevant academic work.", "GAO recommends that DOL develop ways to use existing or new data collection efforts to identify and systematically track the workforce effects of advanced technologies.", "DOL agreed with GAO's recommendation, and plans to identify and recommend data collection options to fill gaps in existing information about how the workplace is affected by new technologies, automation, and artificial intelligence.", "DOL also stated that it will continue coordinating with the Census Bureau on research activities in this area." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 2, -1, -1, 1, -1, 0, 0, -1, 0, -1, -1, -1, -1, -1, -1, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 4, 8, 8, 8, 8, 9, 9, 9, 10, 10, 10, 11, 11, 11, 11, 0, 0, 0, 3, 3, 3, 12, 12, 12 ] }

{ "title": [ "", "Introduction", "Origin of the Majority Leader Position", "Institutional", "Scheduling Floor Business", "Manage Floor Decision Making", "Public Spokesperson", "Confer with the White House", "Facilitate the Conduct of Business", "Party", "Assist Colleagues' Reelection Campaigns", "Promote the Party's Agenda", "Encourage Party Cohesion", "Final Observations", "Appendix. House Majority Leaders, 1899-2009" ], "paragraphs": [ "", "The majority leader in the contemporary House is second-in-command behind the Speaker of the majority party. Typically, the majority leader functions as the Speaker's chief lieutenant or \"field commander\" for day-to-day management of the floor. \"I'm the Speaker's agent,\" stated a recent majority leader. Another majority leader said: \"I see it that [the Speaker] is the chairman of the board and I am the chief executive officer.\" Or as one Speaker put it, the majority leader's \"job is to run the floor and keep monitoring committees and legislation.\"\nElected every two years by secret ballot of the party caucus or conference, the majority leader is usually an experienced legislator. For example, Representative Richard Armey of Texas became the GOP's first majority leader in 40 years when Republicans won control of the 104 th House in the November 1994 elections. Armey began his House service in 1985, became GOP Conference chairman during the 103 rd Congress, and was one of the principal authors of the Republican \"Contract with America.\" When Richard Gephardt, D-MO, became majority leader in June 1989, he had been in the House for more than a decade, had served as chairman of the Democratic Caucus for four years, and had been a 1988 presidential candidate.\nTwo fundamental and often interlocking responsibilities orient the work of the majority leader: institutional and party. From an institutional perspective, the majority leader is principally responsible for exercising overall supervision of the order of business on the floor, especially as it affects the party's program. As Lewis Deschler, the late House parliamentarian (1928-1974), wrote:\nA party's floor leader, in conjunction with other party leaders, plays an influential role in the formulation of party policy and programs. He is instrumental in guiding legislation favored by his party through the House, or in resisting those programs of the other party that are considered undesirable by his own party. He is instrumental in devising and implementing his party's strategy on the floor with respect to promoting or opposing legislation. He is kept constantly informed as to the status of legislative business and as to the sentiment of his party respecting particular legislation under consideration. Such information is derived in part from the floor leader's contacts with his party's members serving on House committees, and with the members of the party's whip organization.\nFrom a partisan perspective, the majority leader's paramount assignment is to employ his or her talents, energy, and knowledge of procedural rules and political circumstances to insure that the party maintains majority control of the House. Each of these major responsibilities gives rise to a wide range of leadership activities. Before discussing the primary duties of the majority leader, it is worth highlighting the historical origins of this party position.", "Congressional scholars assert that in 1899 Speaker David Henderson, R-Iowa, appointed Sereno E. Payne, R-NY, as the first officially designated majority leader. Prior to this date, there is neither an accurate nor complete compilation of House majority leaders. Two factors seem to account for the absence of a compilation. First, it took many decades before anything like our modern party structure emerged in the House. As a result, not until nearly the end of the 19 th century did the position of \"majority leader\" become a recognized party office. Second, neither official congressional sources nor party records of this early period identify a lawmaker as the majority floor leader.\nSeveral historians of the House suggest that from the chamber's early beginnings various lawmakers informally assumed the role of \"floor leader.\" Usually, but not always, these informal party leaders were the chairs of either the Committee on Ways and Means (established in 1795) or the Committee on Appropriations (following its creation in 1865). Speakers often appointed either their allies or their principal rivals for the speakership to head these panels. Explained the late Floyd M. Riddick, a political scientist who served as parliamentarian of the Senate from 1951 to 1975:\nIn the House, the early titular floor leaders were at the same time the chairmen of the Ways and Means Committee. Before the division of the work of that committee, the duties of its chairmen were so numerous that they automatically became the actual leaders, since as chairmen of that committee they had to direct the consideration of most of the legislation presented to the House. From 1865 until 1896 the burden of handling most of the legislation was shifted to the chairman of the Appropriations Committee, who then was designated most frequently as the leader. From 1896 until 1910 once again the chairmen of the Ways and Means Committee were usually sought as the floor leaders. During all of these years before the \"Cannon revolution\" of 1910, the Speaker, who appointed all members to committees, saw to it that his party opponent for Speakership, some Representative with a large following, or one of his faithful lieutenants was made the floor leader.\nThus, these early titular floor leaders were appointed by the Speaker rather than chosen separately, as occurs today, by vote of the majority party caucus. ( Appendix contains a list of House majority leaders since 1899.)\nWhen the House \"revolted\" in 1910 against the autocratic leadership of Speaker Joseph Cannon, R-Ill., the power to designate the floor leader was taken away from the Speaker. In 1911, with Democrats in charge of the House, Oscar Underwood of Alabama became the first elected (by the party caucus) majority leader in the House's history. (Subsequently, all Democratic floor leaders have been selected in this manner.) Underwood also chaired the Ways and Means Committee and his party's committee assignment panel. The political reality was that Majority Leader Underwood's influence in the House exceeded that of the Speaker, Champ Clark of Missouri. \"For the first time the leader of the House was not at the rostrum, but was on the floor.\" Probably no majority leader ever has matched Underwood's party power and institutional influence. (Underwood left the House for the Senate in 1915.)\nWhen Republicans reclaimed majority control of the House in 1919, Franklin Mondell of Wyoming, a high ranking member of the Appropriations Committee, became majority leader upon nomination by the GOP committee assignment panel. (Four years later the GOP Conference began the practice of electing their majority leader.) Mondell set the contemporary practice of majority leaders usually relinquishing their committee positions, and always any committee chairmanships, upon assuming this important and busy post. To be sure, there have been exceptions to the practice of majority leaders not serving on standing committees.\nApril 15, 1929, the start of the 71 st Congress, witnessed a first-ever event that remains the practice to this day: the official announcement in the House of the selection of the majority leader. Representative Willis Hawley of Oregon, the chairman of the majority Republican caucus addressed the presiding officer: \"Mr. Speaker, the Republican caucus of the House has reelected Hon. John Q. Tilson, of Connecticut, majority leader for the Seventy-first Congress.\" As House precedents state, \"this was the first occasion of the official announcement of the selection of party leaders in the House.\"\nSeparate election of the majority leader by the party caucus elevated the status and influence of the person who held this position. The majority leader soon became the \"heir apparent\" to the speakership. In the modern House, no Democrat has been elected Speaker without having been the majority leader immediately prior to his or her elevation. Republicans, the minority party for 40 consecutive years until the mid-1990s, do not have as well-defined a leadership succession ladder. When Speaker Newt Gingrich, R-GA., retired from the House at the end of the 105 th Congress, Appropriations Chairman Bob Livingston, R-LA., moved quickly and lined up the necessary votes to be the next Speaker. However, when Livingston announced that he planned to resign from the House for personal reasons soon after the 106 th Congress began, Republicans chose their chief deputy whip, Dennis J. Hastert of Illinois, to be the next Speaker.\nUnfortunately, there is scant scholarly commentary about the duties and functions that devolved upon the informal floor leaders of the pre-20 th century period. Nor are the duties and functions of today's majority leaders spelled out in any detail in the House rulebook or in party rules, although those sources make brief reference to the position. As a recent majority leader stated, \"[E]ach leadership position is defined by the person who holds it. It's not defined by a job description.\" In short, factors such as tradition, custom, context, and personality have largely defined the fundamental institutional and party roles and responsibilities of the majority leader. Several of the most important of these two overlapping categories merit mention. However, it bears repeating that the scope of the majority leader's role in carrying out these assignments is shaped significantly by the Speaker and the sentiments of the majority party caucus or conference.", "The style and role of any majority leader is influenced by a plethora of elements, including personality and contextual factors, such as the closeness of his relationship with the Speaker, the size and cohesion of the majority party, whether the party controls the White House, the general political environment in the House, and the controversial nature of the legislative agenda. Despite the variability of these factors, a number of institutional assignments are now associated with the majority leader, and Members of each party expect him or her to perform them. To be sure, the majority leader is provided with extra staff resources beyond those accorded him or her as a House member to assist in carrying out these diverse leadership functions. Majority Leader Armey even established a new leadership post—\"assistant majority leader\"—at the start of the 106 th Congress and named two Republican colleagues as assistant majority leaders. Their assignment was to assist him on \"floor scheduling, legislative and communications strategy, the policy agenda, and leadership decisions.\"", "Although scheduling is a collective activity of the majority party, the majority leader has a large say in shaping the chamber's overall agenda and in determining when, whether, how, and in what order legislation is taken up. Everything from setting policy priorities; drafting the schedule; consulting with Members, committee chairs, and the minority party in making up the schedule; and announcing the schedule on the floor are within the purview of the majority leader. Scheduling is a complex process and the majority leader must juggle a wide range of considerations and pressures. Five concerns illustrate the scheduling role of the majority leader.\nFirst, the majority leader commonly lays out the daily, weekly, monthly, and annual agenda of the House. For example, when the majority leader laid out the planned schedule for the 2009 legislative session, it indicated that the House would \"hold votes on 137 days.\" It also specified that there would be \"11 weeks where the House will be in session for five days. This is in keeping with a pledge by Democratic leaders who, after taking control of Congress in 2006, vowed to extend the typical workweek of three days to five days.\"\nOf course, scheduling and agenda-setting are responsibilities done in close consultation with the Speaker, majority whip, and others. The majority leader may specify in advance that certain priority bills are to be taken up prior to a congressional recess; he or she may even designate theme weeks (\"reform,\" \"high tech,\" \"families first,\" and so on) for the consideration of related bills. Typically, on Thursday after the House's business for the day and week is winding down, the majority leader will announce the projected agenda for each day of the next business week, identify when votes are expected to occur, and respond to inquiries from Members about the House's program of activities.\nSecond, a host of strategic considerations influence scheduling. For instance, with an eye toward upcoming elections, the majority leader may schedule legislation that better defines his or her party for the upcoming presidential and congressional campaigns. He or she may not schedule a bill unless there is reasonable certainty that the Senate will take floor action on it. The majority leader may also coordinate strategy on measures with the Senate party counterpart. He or she may schedule floor action at specific times—for instance, a constitutional amendment to ban flag desecration just before July 4—to maximize public attention on the issue. The majority leader may use \"deadline lawmaking,\" indicating to Members that floor action on certain legislation must occur before the House will adjourn for a district work period. Or he or she may suggest general themes, messages, or strategies that unify party colleagues around a set of domestic and international policies. A majority leader may even propose his or her own annual legislative agenda—even if the White House is controlled by the same party—and present it to the Speaker and the party's caucus or conference.\nThird, majority leaders try to balance the House's workload requirements with Members' family or personal obligations. \"Family friendly\" scheduling aims to achieve better balance in the public and private lives of lawmakers. Fourth, majority leaders advance or delay action on measures for a variety of reasons, including whether they have the votes to achieve their objectives. To be sure, there are occasions when measures are brought to the floor, and it is unclear whether they will pass. Asked if a bill would pass, a majority leader replied: \"Who knows? We're writing the bill on the floor.\"\nFifth, majority leaders recognize that timing considerations suffuse the lawmaking process. There are timetables to meet, pressures associated with the end-of-session rush to adjourn, the electoral needs of individual Members, and a multitude of other considerations that the majority leader must address as he strives to accommodate the rank-and-file, committee chairs, the minority party, the president, and his own extended party leadership. As one majority leader put it: \"You have to find that elusive grail of harmony among this most heterogeneous mix of opinionated individualists.\"", "Majority leaders are active in constructing winning coalitions for their legislative priorities. To this end, a majority leader will consult with the chair of the Rules Committee to discuss procedures for considering legislation on the floor. For example, an open or restricted amendment process might be options for discussion. Or, the majority leader might decide to call up a bill under suspension of the rules procedure, which limits debate and bars any amendments. To limit policy riders on appropriations bills, the majority leader might invoke House Rule XXI, clause 2 (d). This rule grants preference to the majority leader to end consideration of an appropriations bill in the Committee of the Whole by offering a successful \"motion to rise.\"\nMajority leaders engage in many other activities to promote policy success on the floor. They may, for instance, meet weekly or biweekly (more frequently, if needed) with committee chairs, ad hoc groups, or individual lawmakers to persuade them to support priority measures; woo lawmakers through the provision of various legislative services or rewards; coordinate vote counts with the party whip organization; propose changes in bills to attract support from wavering Members; reach out to lawmakers on the other side of the aisle to draft compromise legislation; craft \"leadership amendments\"designed to attract majority support; synchronize strategic activities with majority floor managers; and rally outside support for the party's legislative issues and political messages.\nMajority leaders may also take on other functions relevant to floor action. To forge winning coalitions, for instance, they engage in deal-making, appeal to Members' party loyalty, enlist allies to overcome resistance to policy-party objectives, devote considerable time and energy in promoting consensus among colleagues, and work behind-the-scenes to get things done. Majority leaders might also encourage party colleagues to deliver one-minute, morning hour, or special order speeches that spotlight the party's program and defend it against criticism from the other party.", "There are two interconnected dimensions associated with this role: external and internal. Externally, especially in this \"24/7\" news cycle and Internet era, majority leaders are national newsmakers. When he became majority leader in 1973, Thomas P. \"Tip\" O'Neill Jr., D-MA., said, \"the media couldn't stay away ... I was interviewed constantly.\" Majority leaders are expected to explain and defend the actions and decisions of the House and their party to the general public. \"The role of the majority leader puts you in a spokesman role,\" noted a recent majority leader. Accordingly, these leaders appear on the major network and cable television programs, the Sunday morning news shows, talk radio, or Internet chat rooms. Periodically, they deliver major addresses in diverse forums, and write articles or \"op ed\" pieces on the major issues before the House. They meet with journalists and newspaper editors. Regularly, they give news briefings (so-called pen and pad sessions) to reporters on the schedule and agenda of the House, the priorities of the majority party, legislative-executive relations, and sundry other topics.\nInternally, majority leaders are ready on the floor to defend their party, program, or President from criticism by the opposition. They participate in debate on measures and may make the closing argument on legislation. Majority leaders rise to defend the prerogatives of individual Members; offer critiques and rebuttals to minority party initiatives; work with committee chairmen and others to coordinate and integrate the party's communication strategy; employ floor speeches \"to set the tone on a newsworthy issue or provide the proscribed leadership perspective before a major vote\"; and may establish websites to provide information to House members and others. In brief, majority leaders generally function as their party's chief spokesperson on the floor and in other forums as well.\nSometimes the internal and external roles coincide when majority leaders introduce legislation, monitor executive branch actions, or champion proposals nationally. For example, Majority Leader Armey and another GOP colleague traveled the country in a \"Scrap the Code Tour,\" a \"national campaign to take the tax reform debate directly to the American people.\" Armey also attracted national attention with respect to his legislative efforts to monitor executive branch implementation of a 1993 law designed to measure the performance of government programs.", "Majority leaders regularly attend meetings at the White House—especially when the President is of the same party—to discuss issues before Congress, the Administrations's agenda, and political events generally. For example, the joint bipartisan congressional leadership, including the House majority leader, may meet at the White House to discuss agenda priorities for the year. There are occasions, too, when the President will journey to Capitol Hill to meet with the top leaders of Congress. There are instances as well where majority leaders can be sharp critics of the President. Majority leaders consult with executive branch officials plus scores of other individuals (foreign dignitaries, governors, mayors, and so on.)\nMajority leaders may also be active on international issues: brokering foreign policy compromises with the White House, championing the interests of certain nations, or criticizing some foreign governments. In general, anyone who occupies the House's number two leadership post has strengthened leverage with the White House and greater public prominence on international issues. \"People are now listening to what I've been saying because I'm majority leader,\" declared a former holder of the post.\nStrategically, the role of majority leaders will be different depending on whether the President is of the same party. In general, majority leaders will strive to advance the goals and aspirations of their party's President in the Congress. If the President is of the opposite party, then the procedural and political situation is more complicated. When should the majority leader cooperate with the President? When should he or she urge the House to reject Administration policies? When should he or she propose alternatives to the President's priorities? In brief, the majority leader, the Speaker, and their other party colleagues need to determine when to function as the \"governing\" party in the House and when to act as the \"loyal opposition.\"", "To expedite the work of the House, a wide range of other responsibilities is typically performed by the majority leader. For example, the majority leader may ask unanimous consent that when the House adjourns that it meet again at a specific date and time. The majority leader may either appoint people to certain boards or commissions or be self-named to various commissions or boards. He or she may lead congressional delegations to different parts of the world. The majority leader may act as Speaker pro tempore; offer resolutions affecting the operations of the House, such as establishing the hour of daily meeting of the House; perform various ceremonial duties; and support initiatives to revamp or reform the internal procedures and structures of the House. In brief, the majority leader is responsible, along with other Members of the leadership, for insuring the orderly conduct of House business.", "The majority leader, former Speaker \"Tip\" O'Neill once said, \"helps set policy and carries out the duties assigned to him by the Speaker.\" One of the most important duties of the majority leader is to try to ensure that his or her party remains in control of the House. After all, legislative organization is party organization. The majority party sets the agenda of the House and controls all committee and subcommittee chairmanships. Thus, along with other party leaders and Members, the majority leader works in numerous ways to help elect and reelect rank-and-file partisan colleagues, to forge unity on priority legislation, and to promote a favorable public image of the majority party. Three activities of the majority leader illustrate these points.", "Majority leaders are typically energetic campaigners on behalf of their partisan colleagues. They assist incumbents and challengers in raising campaign funds, and they travel to scores of House districts to campaign with either incumbents or challengers of their party. Majority leaders develop computer-based campaign donor lists, so they can funnel campaign funds quickly to electoral contests; establish their own \"leadership PACs\" to raise money and then donate money from their political action committee to candidates of their party; help to raise large sums of money so campaign ads can be run on television and elsewhere in the months leading up to the November election; and coordinate their campaign activities with congressional, national, and state party campaign organizations and encourage outside groups and allies to raise money for the party. Majority leaders assist in recruiting qualified challengers to take on incumbents. They promote get-out-the-vote drives, in part by devising strategies to energize their party's grassroots supporters. In short, majority leaders are heavily engaged in the electoral campaigns of many party candidates. Their ultimate goals: to retain their majority status and, if possible, to increase the number in their ranks.", "Majority leaders may undertake a variety of actions to accomplish this goal. They develop legislative agendas and themes (e.g., an \"innovation agenda,\") that address issues important to the country and to core supporters and swing voters in the electorate. These agendas may be posted on their Web sites. A key aim of this form of \"message sending\" is to animate and activate their electoral base to turn out on election day. Another objective is to develop electorally attractive ideas and proposals that may enable their party to retain or retake the House, the Senate, or even the presidency. Still another is to advance policies that strengthen the nation, such as its global competitiveness in science, engineering, or other fields.\nThe majority leader may help to organize \"town meetings\" in Members' districts, which publicize and promote the party's agenda or a specific priority, such as health care or tax cuts. He or she may sponsor party \"retreats\" to discuss issues and to evaluate the party's public image. The majority leader may also distribute reports, memorandums, briefing books, and Web videos that highlight partisan campaign issues; conduct surveys of party colleagues to discern their priorities; organize \"issue teams\" or \"task forces\" composed of junior and senior lawmakers to formulate specific party programs; and form \"message groups\" or \"theme teams\" to map media strategies to foster favorable press coverage of party initiatives and negative views of the opposition party.\nSometimes the majority leader will attend partisan luncheons with Senators to better coordinate inter-chamber action on the party's legislative and message agenda. \"We're having more bicameral meetings,\" remarked a majority leader, \"so that ... we understand what each other is doing ... and what can and can't be done.\" Majority leaders are also named as conferees on major bills \"to represent the overall interests of the [majority] leadership.\" In brief, the majority leader is a key strategist in promoting the party's agenda, in outlining ways to neutralize the opposition's arguments and proposals, and in determining when it is better to compromise with the other party on policy priorities or have no agreement.", "If a party is to maintain its majority, it is generally a good idea to minimize internal factional feuds or disagreements that may undermine its ability to govern the House. One majority leader explained this job as a \"combination of evangelist, parish priest, and part-time prophet. You have to be a peacemaker in the family.\" To forge party cohesion means, in part, that majority leaders will consult widely with the diverse factions within their party; they will argue the need for party loyalty on crucial procedural and substantive votes; they will try to offer persuasive arguments that \"educate\" colleagues on a measure's policy and political benefits; and they will schedule breakfasts, lunches, or dinners to keep in touch with party members and to listen to their concerns. Aiding the majority leader in these efforts is his membership on various party units, such as policy committees or the committee-on-committees.\nMajority leaders may also enlist the support of outsiders, such as lobbyists, to assist in building party cohesion. In fact, majority leaders may develop an external network of contacts in universities, think tanks, or consulting firms to function as an informal \"brain trust\" in policy development and in strategic analysis, suggesting how the majority party might mobilize the support required to enact their ideas into law. Majority leaders, then, work to boost their party's fortunes internally and externally by acting as a political cheerleader, negotiator, consensus-builder, and peacemaker.", "The majority leader's duties and functions, although not well-defined and contingent in part on his or her relationship with the Speaker, have evolved to the point where it is possible to highlight the customary institutional and party responsibilities. As one majority leader said about his institutional duties: \"The Majority Leader has prime responsibility for the day-to-day working of the House, the schedule, working with the committees to keep an eye out for what bills are coming, getting them scheduled, getting the work of the House done, making the place function correctly.\" On the party side, the majority leader added: \"[Y]ou are also compelled to try to articulate to the outside world what [your party stands] for, what [your party is] fighting for, what [your party is] doing.\"", "" ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "h0_title", "h0_full", "", "", "h0_full", "", "h1_full", "h1_full", "", "h1_full", "", "" ] }

{ "question": [ "What is the prime responsibility of the majority leader?", "How does the majority leader determine legislation?", "How does the majority leader communicate with the White House?", "How does the majority leader assist in reelection?", "How does the majority leader promote the party's agenda?", "How does the majority leader encourage party cohesion?" ], "summary": [ "Scheduling floor business is a prime responsibility of the majority leader.", "Although scheduling the House's business is a collective activity of the majority party, the majority leader has a large say in shaping the chamber's overall agenda and in determining when, whether, how, or in what order legislation is taken up.", "In addition, the majority leader is active in constructing winning coalitions for the party's legislative priorities; acting as a public spokesman—defending and explaining the party's program and agenda; serving as an emissary to the White House, especially when the President is of the same party; and facilitating the orderly conduct of the House's business.", "First, the majority leader assists in the reelection campaigns of party incumbents by, for example, raising campaign funds and traveling to scores of House districts to campaign either with incumbents or challengers of the party.", "Second, the majority leader promotes the party's agenda by developing themes and issues important to core supporters in the electorate.", "Third, the majority leader encourages party cohesion by, for instance, working to minimize internal factional disagreements that may undermine the majority party's ability to govern the House." ], "parent_pair_index": [ -1, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Traditional IRAs", "Eligibility", "Contributions", "Investment Options", "Deductibility of Contributions", "Withdrawals", "Early Distributions", "Rollovers", "Rollovers Limited to One Per Year", "Inherited IRAs", "Roth IRAs", "Eligibility and Contribution Limits", "Investment Options", "Conversions and Rollovers", "Withdrawals", "Return of Regular Contributions", "Qualified Distributions", "Nonqualified Distributions", "Distributions After Roth IRA Owner's Death", "Retirement Savings Contribution Credit", "Data on IRA Assets, Sources of Funds, and Ownership", "Appendix. Qualified Distributions Related to Natural Disasters" ], "paragraphs": [ "", "Individual Retirement Accounts (IRAs) are tax-advantaged accounts that individuals (or married couples) can establish to accumulate funds for retirement. Depending on the type of IRA, contributions may be made on a pretax or post-tax basis, and investment earnings are either tax-deferred or tax-free.\nIRAs were first authorized by the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93 - 406 ). Originally limited to workers without pension coverage, all workers and spouses were made eligible for IRAs by the Economic Recovery Act of 1981 ( P.L. 97 - 34 ). The Tax Reform Act of 1986 ( P.L. 99 - 514 ) limited the eligibility for tax-deductible contributions to individuals whose employers do not sponsor plans and to those whose employers sponsor plans but who have earnings below certain thresholds. The Taxpayer Relief Act of 1997 ( P.L. 105 - 34 ) allowed for certain penalty-free withdrawals and authorized the Roth IRA, which provides tax-free growth from after-tax contributions.\nThe Economic Growth and Tax Relief Reconciliation Act of 2001 ( P.L. 107 - 16 ) significantly affected the contribution limits in these plans in three ways: (1) it increased the limits, (2) it indexed the limits to inflation, and (3) it allowed for individuals aged 50 and older to make additional \"catch-up\" contributions. Among other provisions, the Pension Protection Act of 2006 ( P.L. 109 - 280 ) temporarily allowed for tax-free distributions for charitable contributions; made permanent the indexing of contribution limits to inflation; and allowed taxpayers to direct the Internal Revenue Service (IRS) to deposit tax refunds directly into an IRA.\nThis report describes the two kinds of IRAs that individual workers can establish: traditional IRAs and Roth IRAs. It describes the rules regarding eligibility, contributions, and withdrawals. It also describes a tax credit for retirement savings contributions. An Appendix explains rules related to penalty-free distributions for those affected by the 2005 Gulf of Mexico hurricanes and the 2008 Midwestern floods. The Appendix also describes relief provided by the IRS to those affected by Hurricane Sandy in 2012 and Hurricanes Harvey, Irma, and Maria in 2017.", "Traditional IRAs are funded by workers' contributions, which may be tax-deductible. The contributions accrue investment earnings in an account, and these earnings are used as a basis for retirement income. Among the benefits of traditional IRAs, two are (1) pretax contributions, which provide larger bases for accumulating investment earnings and, thus, provide larger account balances at retirement than if the money had been placed in taxable accounts; and (2) taxes are paid when funds are distributed. Since income tax rates in retirement are often lower than during working life, traditional IRA holders are likely to pay less in taxes when contributions are withdrawn than when the income was earned.", "Individuals under 70½ years old in a year and who receive taxable compensation can set up and contribute to IRAs. Examples of compensation include wages, salaries, tips, commissions, self-employment income, nontaxable combat pay, and alimony (which is treated as compensation for IRA purposes). Individuals who receive income only from noncompensation sources cannot contribute to IRAs.", "Individuals may contribute either their gross compensation or the contribution limit, whichever is lower. In 2018, the annual contribution limit is $5,500, unchanged from 2017. Since 2009, the contribution limit has been subject to cost of living adjustments, but the change was insufficient to necessitate a change in 2018. Individuals aged 50 and older may make additional annual $1,000 catch-up contributions. For households that file a joint return, spouses may contribute an amount equal to the couple's total compensation (reduced by the spouse's IRA contributions) or the contribution limit ($5,500 each, if younger than the age of 50, and $6,500 each, if 50 years or older), whichever is lower. Contributions that exceed the contribution limit and are not withdrawn by the due date for the tax return for that year are considered excess contributions and are subject to a 6% \"excess contribution\" tax. Contributions made between January 1 and April 15 may be designated for either the current year or the previous year.\nBecause IRAs were intended for workers without an employer-sponsored pension to save for retirement, contributions to an IRA may only come from work income, such as wages and tips. The following noncompensation sources of income cannot be used for IRA contributions:\nearnings from property, interest, or dividends; pension or annuity income; deferred compensation; income from partnerships for which an individual does not provide services that are a material income-producing factor; and foreign earned income.", "IRAs can be set up through many financial institutions, such as banks, credit unions, mutual funds, life insurance companies, or stock brokerages. Individuals have an array of investment choices offered by the financial institutions and can transfer their accounts to other financial institutions at will.\nSeveral transactions could result in additional taxes or the loss of IRA status. These transactions include borrowing from IRAs; using IRAs as collateral for loans; selling property to IRAs; and investing in collectibles like artwork, antiques, metals, gems, stamps, alcoholic beverages, and most coins.", "IRA contributions may be non-tax-deductible, partially tax-deductible, or fully tax-deductible, depending on whether the individual or spouse is covered by a pension plan at work and their level of adjusted gross income (AGI). Individuals are covered by a retirement plan if (1) the individuals or their employers have made contributions to a defined contribution pension plan or (2) the individuals are eligible for a defined benefit pension plan (even if they refuse participation).\nFor individuals and households not covered by a pension plan at work, Table 1 contains the income levels at which they may deduct all, some, or none of their IRA contributions, depending on the spouse's pension coverage and the household's AGI. Individuals without employer-sponsored pensions and, if married, whose spouse also does not have pension coverage may deduct up to the contribution limit from their income taxes regardless of their AGI.\nFor individuals and households who are covered by a pension plan at work, Table 2 contains the income levels at which they may deduct all, some, or none of their IRA contributions, depending on the individual's or household's AGI.\nIndividuals may still contribute to IRAs up to the contribution limit even if the contribution is nondeductible. Nondeductible contributions come from post-tax income, not pretax income. One advantage to placing post-tax income in traditional IRAs is that investment earnings on nondeductible contributions are not taxed until distributed. Only contributions greater than the contribution limits as described above are considered excess contributions. Worksheets for computing partial deductions are included in \"IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).\"", "Withdrawals from IRAs are subject to income tax in the year that they are received. Early distributions are withdrawals made before the age of 59½. Early distributions may be subject to an additional 10% penalty.\nTo ensure that IRAs are used for retirement income and not for bequests, IRA holders must begin making withdrawals by April 1 of the year after reaching the age of 70½ (i.e., the required beginning date). The minimum amount that must be withdrawn (i.e., the required minimum distribution) is calculated by dividing the account balance on December 31 of the year preceding the distribution by the IRA owner's life expectancy as found in IRS Publication 590-B. Although females live longer on average than males, the IRS does not separate life expectancy tables for males and females for this purpose. Required minimum distributions must be received by December 31 of each year. Failure to take the required minimum distribution results in a 50% excise tax on the amount not distributed as required. Congress suspended the Required Minimum Distribution (RMD) provision for 2009.\nBeginning in 2007, distributions from IRAs after the age of 70½ could be made directly to qualified charities and excluded from gross income. This provision for Qualified Charitable Distributions was made permanent in P.L. 114-113 .", "Early distributions are withdrawals made before the age of 59½. Early distributions—just like distributions after the age of 59½—are subject to federal income tax. To discourage the use of IRA funds for preretirement uses, most early distributions are subject to a 10% tax penalty. The early withdrawal penalty does not apply to distributions before the age of 59½ if they\noccur if the individual is a beneficiary of a deceased IRA owner; occur if the individual is disabled; are in substantially equal payments over the account holder's life expectancy; are received after separation from employment after the age of 55; are for unreimbursed medical expenses in excess of 7.5% of AGI; are for medical insurance premiums in the case of unemployment; are used for higher education expenses; are used to build, buy, or rebuild a first home up to a $10,000 withdrawal limit; occur if the individual is a reservist called to active duty after September 11, 2001; were distributions to residents in areas affected by Hurricanes Katrina, Rita, and Wilma from around the storms' landfalls to January 1, 2007; were distributions to residents in areas affected by the Midwestern floods in 2008 from after the applicable disaster date and before January 1, 2010; or were distributions in areas affected by Hurricanes Harvey, Irma, and Maria from around the storms' landfalls to January 1, 2019.\nAlthough individuals may make early withdrawals from IRAs without a reason, they will be subject to the 10% tax penalty unless they meet one of the conditions above. There are no other general \"hardship\" exceptions for penalty-free distributions from IRAs.", "Rollovers are transfers of assets from one retirement plan to another upon separation from the original employer. Rollovers are not subject to the 59½ rule, the 10% penalty, or the contribution limit. Rollovers can come from traditional IRAs, employers' qualified retirement plans (e.g., 401(k) plans), deferred compensation plans of state or local governments (Section 457 plans), tax-sheltered annuities (Section 403(b) plans), or the Thrift Savings Plan for federal employees.\nRollovers can be either direct trustee-to-trustee transfers or issued directly to individuals who then deposit the rollovers into traditional IRAs. Individuals have 60 days from the date of the distribution to make rollover contributions. Rollovers not completed within 60 days are considered taxable distributions and may be subject to the 10% early withdrawal penalty. In addition, in cases where individuals directly receive a rollover, 20% of the rollover is withheld for tax purposes. Direct trustee-to-trustee transfers are not subject to withholding taxes. In cases where individuals directly receive a rollover, they must have an amount equal to the 20% withheld available from other sources to place in the new IRA. If the entire distribution is rolled over within 60 days, the amount withheld is applied to individuals' income taxes paid for the year.", "A January 2014 U.S. Tax Court decision required that, in certain circumstances, individuals are limited to a total of one rollover per year for their IRAs. Rollovers subject to this rule are those between two IRAs in which an individual receives funds from an IRA and deposits the funds into a different IRA within 60 days. The one-rollover-per-year limit applies to rollovers between two traditional IRAs or two Roth IRAs. It does not apply to rollovers from a traditional IRA to a Roth IRA. The limitation does not apply to trustee-to-trustee transfers (directly from one financial institution to another) or rollovers from qualified pension plans (such as from 401(k) plans).", "When the owner of an IRA dies, ownership passes to the account's designated beneficiary or, if no beneficiary has been named, to the decedent's estate. Federal law has different distribution requirements depending on whether the new owner is a\ndesignated beneficiary who is the former owner's spouse; designated beneficiary who is not the former owner's spouse; or nondesignated beneficiary.\nThe distribution rules are summarized in Table 3 . The distribution rules also depend on whether the IRA owner died prior to the required beginning date, the date on which distributions from the account must begin. This is April 1 of the year following the year in which the owner of an IRA reaches the age of 70½. Distributions from inherited IRAs are taxable income but are not subject to the 10% early withdrawal penalty. Failure to take the RMD results in a 50% excise tax on the amount not distributed as required.\nDesignated spouse beneficiaries who treat inherited IRAs as their own can roll over inherited IRAs into traditional IRAs or, to the extent that the inherited IRAs are taxable, into qualified employer plans (such as 401(k), 403(b), or 457 plans). Nonspouse beneficiaries cannot roll over any amount into or out of inherited IRAs.\nIn some cases, IRAs have beneficiaries' distributions requirements that are more stringent than those summarized in Table 3 . For example, an IRA's plan documents could require that a designated spouse or designated nonspouse beneficiary distribute all assets in the IRA by the end of the fifth year of the year following the IRA owner's death. In such a case, the beneficiary would not have the option to take distributions over a longer period of time. Unless the IRA plan documents specify otherwise, it is possible to take distributions faster than required in Table 3 . For example, a beneficiary may elect to distribute all assets in a single year. In such a case, the entire amount distributed is taxable income for that year.", "Roth IRAs were authorized by the Taxpayer Relief Act of 1997 ( P.L. 105 - 34 ). The key differences between traditional and Roth IRAs are that contributions to Roth IRAs are made with after-tax funds and qualified distributions are not included in taxable income; investment earnings accrue free of taxes.", "In contrast to traditional IRAs, Roth IRAs have income limits for eligibility. Table 4 lists the adjusted gross incomes at which individuals may make the maximum contribution and the ranges in which this contribution limit is reduced. For example, a 40-year-old single taxpayer with income of $90,000 can contribute an annual contribution of $5,500 in 2018. A similar taxpayer making $120,000 would be subject to a reduced contribution limit, whereas a taxpayer with income of $140,000 would be ineligible to contribute to a Roth IRA.\nIndividuals aged 50 and older can make additional $1,000 catch-up contributions. The AGI limit for eligibility has been adjusted for inflation since 2007; beginning in 2009, the traditional and Roth IRA contribution limit has also been adjusted for inflation. A worksheet for computing reduced Roth IRA contribution limits is provided in IRS Publication 590-A.", "Roth IRAs must be designated as such when they are set up. As with traditional IRAs, they can be set up through many financial institutions. Transactions prohibited within traditional IRAs are also prohibited within Roth IRAs.", "Individuals may convert amounts from traditional IRAs, SEP-IRAs, or SIMPLE-IRAs to Roth IRAs. Since 2008, individuals have been able to roll over distributions directly from qualified retirement plans to Roth IRAs. The amount of the conversion must be included in taxable income. Conversions can be a trustee-to-trustee transfer, a same trustee transfer by redesignating the IRA as a Roth IRA, or a rollover directly to the account holder. Inherited IRAs cannot be converted.\nA provision in P.L. 115-97 (originally called the Tax Cuts and Jobs Act) repealed a special rule that allowed IRA contributions to one type of IRA to be recharacterized as a contribution to the other type of IRA. Prior to the repeal of the special rule, an individual could have made contributions to a traditional IRA and then, prior to the due date of the individual's tax return, could have transferred to the assets to a Roth IRA. In certain circumstances, this could have a beneficial effect on an individual's taxable income. Recharacterization of IRA contributions for the 2017 tax year can be completed by October 15, 2018.\nThe rules for rollovers that apply to traditional IRAs, including completing a rollover within 60 days, also apply. Additionally, withdrawals from a converted IRA prior to five years from the beginning of the year of conversion are nonqualified distributions and are subject to a 10% penalty.\nTax-free withdrawals from one Roth IRA transferred to another Roth IRA are allowed if completed within 60 days. Rollovers from Roth IRAs to other types of IRAs or to employer-sponsored retirement plans are not allowed.", "The three kinds of distributions from Roth IRAs are (1) return of regular contributions, (2) qualified distributions, and (3) nonqualified distributions. Returns of regular contributions and qualified distributions are not included as part of taxable income.", "Distributions from Roth IRAs that are a return of regular contributions are not included in gross income nor are they subject to the 10% penalty on early distributions.", "Qualified distributions must satisfy both of the following:\nthey are made after the five-year period beginning with the first taxable year for which a Roth IRA contribution was made, and they are made on or after the age of 59½; because of disability; to a beneficiary or estate after death; or to purchase, build, or rebuild a first home up to a $10,000 lifetime limit.", "Distributions that are neither returns of regular contributions nor qualified distributions are considered nonqualified distributions. Although individuals might have several Roth IRAs from which withdrawals can be made, for tax purposes nonqualified distributions are assumed to be made in the following order:\n1. the return of regular contributions, 2. conversion contributions on a first-in-first-out basis, and 3. earnings on contributions.\nNonqualified distributions may have to be included as part of income for tax purposes. A worksheet is available in IRS Publication 590-B to determine the taxable portion of nonqualified distributions. A 10% penalty applies to nonqualified distributions unless one of the exceptions in 26 U.S.C. Section 72(t) applies. The exceptions are identical to those previously listed for early withdrawals from traditional IRAs.", "If the owner of a Roth IRA dies, the distribution rules depend on whether the beneficiary is the spouse or a nonspouse. If the beneficiary is the spouse, then the spouse becomes the new owner of the inherited Roth IRA. If the spouse chooses not to treat the inherited Roth IRA as their own, or if the beneficiary is a nonspouse, then there are two options. The beneficiary can distribute the entire interest in the Roth IRA (1) by the end of the fifth calendar year after the year of the owner's death, or (2) over the beneficiary's life expectancy. As with an inherited traditional IRA, a spouse can delay distributions until the decedent would have reached the age of 70½.\nDistributions from inherited Roth IRAs are generally free of income tax. The beneficiary may be subject to taxes if the owner of a Roth IRA dies before the end of (1) the five-year period beginning with the first taxable year for which a contribution was made to a Roth IRA or (2) the five-year period starting with the year of a conversion from a traditional IRA to a Roth IRA. The distributions are treated as described in the \" Nonqualified Distributions \" section of this report.", "The Economic Growth and Tax Relief Reconciliation Act of 2001 ( P.L. 107 - 16 ) authorized a nonrefundable tax credit of up to $1,000 for eligible individuals, or $2,000 if filing a joint return, who contribute to IRAs or employer-sponsored retirement plans. The Retirement Savings Contribution Credit, also referred to as the Saver's Credit, is in addition to the tax deduction for contributions to traditional IRAs or other employer-sponsored pension plans. To receive the credit, taxpayers must be at least 18 years old, not full-time students, not an exemption on someone else's tax return, and have AGI less than certain limits. The limits are in Table 5 . For example, individuals who make a $2,000 IRA contribution in 2018, have income of $15,000, and list their filing status as single would be able to reduce their 2018 tax liability by up to $1,000. Taxpayers must file form 1040, 1040A, or 1040NR. The Saver's Credit is not available on form 1040EZ, which may limit the use of the credit.", "Table 6 contains data on the end-of-year assets in traditional and Roth IRAs from 2005 to 2016. According to the Investment Company Institute, traditional IRAs held much more in assets than Roth IRAs. At the end of 2016, there was $6.7 trillion held in traditional IRAs and $660 billion held in Roth IRAs. Within traditional IRAs, more funds flowed from rollovers from employer-sponsored pensions compared with funds from regular contributions. For example, in 2014 (the latest year for which such data are available) funds from rollovers were $423.9 billion, whereas funds from contributions were only $17.5 billion. However, within Roth IRAs in 2014 more funds flowed from contributions ($21.9 billion in 2014) than from rollovers ($5.7 billion in 2014).\nTable 7 and Table 8 provide additional data on IRA ownership amounts among U.S. households. The data are from CRS analysis of the 2016 Survey of Consumer Finances (SCF). The SCF is a triennial survey conducted on behalf of the Board of Governors of the Federal Reserve and contains detailed information on U.S. household finances, such as the amount and types of assets owned, the amount and types of debt owed, and detailed demographic information on the head of the household and spouse. The SCF is designed to be nationally representative of the 126.0 million U.S. households in 2016.\nTable 7 categorizes IRAs by the amount in the account. Among households that have IRAs, 61.1% have account balances of less than $100,000 and 4.4% have account balances of $1 million or more.\nTable 8 provides data on IRA ownership and account balances among households that owned IRAs in 2016.\nThe following are some key points from Table 8 regarding ownership of IRAs:\nIn 2016, 29.8% of U.S. households had an IRA. Among households that owned IRAs, the median account balance ($52,000) was smaller than the average account balance ($201,240), which indicates that some households likely had very large IRA account balances. Households were more likely to own IRAs as the age of head of household increased. The median and average account balances also increased as the head of the household increased. The percentage of households with an IRA and the median and average account balances increased with the income of the household. Among the explanations for this finding are that (1) households with more income are better able to save for retirement and (2) households with higher income are more likely to participate in a defined contribution (DC) plan (like a 401(k)) and therefore have an account to roll over. Married households were more likely to have an IRA than single households and their median and average account balances were also larger. The explanations could include the following: both spouses in a married household might have work histories, enabling both to save for retirement or married household might need larger retirement savings because two people would be using the retirement savings for living expenses in retirement.", "As part of the response to the 2005 hurricanes that affected the communities on and near the Gulf of Mexico, Congress approved provisions that exempted individuals affected by the storms from the 10% early withdrawal penalty for withdrawals from IRA. In 2008, Congress approved similar provisions in response to the storms and flooding in certain Midwestern states. Following Hurricane Sandy in October 2012, the California wildfires in 2017, and the hurricanes in 2017, the Internal Revenue Service (IRS) eased certain requirements for hardship distributions from defined contribution plans. However, the IRS was unable to exempt distributions from retirement plans from the 10% early withdrawal penalty because such an exemption requires congressional authorization.\nQualified Distributions Related to Hurricanes Katrina, Rita, and Wilma\nIn response to Hurricanes Katrina, Rita, and Wilma, Congress approved the Gulf Opportunity Zone Act of 2005 ( P.L. 109 - 135 ). The act amended the Internal Revenue Code to allow residents in areas affected by these storms who suffered economic losses to take penalty-free distributions up to $100,000 from their retirement plans, including traditional and Roth IRAs. The distributions must have been received after August 24, 2005 (Katrina), September 22, 2005 (Rita), or October 22, 2005 (Wilma), and before January 1, 2007. The distributions were taxable income and could be reported as income either in the year received or over three years (e.g., a $30,000 distribution made in May 2006, could have been reported as $10,000 of income in 2006, 2007, and 2008). Alternatively, part or all of the distribution could have been repaid to the retirement plan within three years of receiving the distribution without being considered taxable income.\nQualified Distributions Related to the Midwestern Disaster Relief Area\nIn response to severe storms, tornados, and flooding that occurred in certain Midwestern states, the Heartland Disaster Tax Relief Act of 2008 allowed residents of specified Midwest areas to take penalty-free distributions up to $100,000 from their retirement plans, including traditional and Roth IRAs. This act was passed as Division C of P.L. 110 - 343 , the Emergency Economic Stabilization Act of 2008. The bill amended 26 U.S.C. 1400Q, which was enacted as part of the Gulf Opportunity Zone Act of 2005 ( P.L. 109 - 135 ). The distributions must have been received after the date on which the President declared an area to be a major disaster area and before January 1, 2010. Apart from the dates and the areas affected, the provisions were identical to the provisions for individuals who were affected by Hurricanes Katrina, Rita, and Wilma.\nQualified Distributions Related to Hurricanes Harvey, Irma, and Maria\nIn response to Hurricanes Harvey, Irma, and Maria, Congress approved the Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ). The act amended the Internal Revenue Code to allow residents in areas affected by these storms who suffered economic losses to take penalty-free distributions up to $100,000 from their retirement plans, including traditional and Roth IRAs. The distributions must have been made on or after August 23, 2017 (Harvey), September 4, 2017 (Irma), or September 16, 2017 (Maria), and before January 1, 2019. The distributions are taxable income and can be reported either in the year received or over three years. Alternatively, part or all of the distribution may be repaid to the retirement plan within three years of receiving the distribution without being considered taxable income.\nHurricane Sandy and California Wildfire Relief\nIn the cases of Hurricane Sandy in 2012 and the California wildfires in 2017 no legislation was passed that would have (1) exempted individuals in areas affected by these natural disasters from the 10% penalty for early withdrawals from IRAs or defined contribution retirement plans or (2) eased requirements for loans from defined contribution pensions for individuals affected by them.\nThe IRS eased requirements for hardship distributions in areas affected by Hurricane Sandy in 2012 and the California wildfires in 2017. Among the relief offered by the IRS in Announcement 2012-44 and 2017-15 respectively, \"Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution\" rather than require documentation from the employee of the need. The relief offered by the IRS did not include an exemption from the 10% penalty for distributions before the age of 59½. Exemptions from the 10% penalty require congressional authorization. In addition, in the announcement, the IRS suspended the provision that requires an individual to suspend contributions to 401(K) and 403(b) plans for the six months following a hardship distribution." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 2, 3, 2, 1, 2, 2, 2, 2, 3, 3, 3, 2, 1, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_title h2_title h1_title", "", "", "", "h0_full", "h1_full", "", "h2_title", "h2_full", "", "h0_full h2_title h1_full", "h0_full", "", "h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is a similarity between traditional and Roth IRAs?", "What is the biggest difference between traditional and Roth IRAs?", "How are IRA distributions taxed?", "How much is the potential additional tax penalty?", "What is one functionality of an IRA?", "What is the purpose of a rollover?", "What is the special rule repealed by P.L. 115-97?" ], "summary": [ "Both traditional and Roth IRAs offer tax incentives to encourage individuals to save for retirement.", "Contributions to traditional IRAs may be tax-deductible for taxpayers who (1) are not covered by a retirement plan at their place of employment or (2) have income below specified limits. Contributions to Roth IRAs are not tax-deductible and eligibility is limited to those with incomes under specified limits.", "Distributions from traditional IRAs are generally included in taxable income whereas distributions from Roth IRAs are not included in taxable income.", "Some distributions may be subject to an additional 10% tax penalty, unless the distribution is for a reason specified in the Internal Revenue Code (for example, distributions from IRAs after the individual is aged 59½ or older are not subject to the early withdrawal penalty).", "Individuals may roll over eligible distributions from other retirement accounts (such as an account balance from a 401(k) plan upon leaving an employer) into IRAs.", "Rollovers preserve retirement savings by allowing investment earnings on the funds in the retirement accounts to accrue on a tax-deferred basis, in the case of traditional IRAs, or a tax-free basis, in the case of Roth IRAs.", "A provision in P.L. 115-97 (originally called the Tax Cuts and Jobs Act) repealed a special rule that allowed IRA contributions to one type of IRA to be recharacterized as contributions to the other type of IRA." ], "parent_pair_index": [ -1, 0, -1, 0, -1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Child Survival", "Maternal Health", "USAID's Efforts to Improve Child Survival", "Child Survival and Undernutrition", "Micronutrient Supplementation and Fortification", "Infant and Young Child Feeding", "Child Survival and Acute Respiratory Infections (Pneumonia)", "Child Survival and Malaria", "Child Survival and HIV/AIDS", "Child Survival and Diarrhea", "Child Survival and Measles", "USAID's Efforts to Improve Maternal and Newborn Health46", "Maternal Health and Hemorrhage", "Maternal Health and Sepsis", "Maternal Health and Hypertensive Disorders", "Maternal Health and Prolonged or Obstructed Labor", "Maternal Health and Unsafe Abortions", "Changes in USAID Global Health Appropriations", "FY2001-FY2003", "FY2004-FY2008", "Issues for Congress", "Consider Role of Family Planning in Improving Maternal and Child Health", "Increase Support for Health System Strengthening and Improve Donor Coordination", "Encourage Governments to Increase National Health Budgets", "Legislation Introduced in the 110th Congress Related to Maternal and Child Health" ], "paragraphs": [ "", "Although a number of U.S. agencies and departments implement global health programs that might improve child survival and maternal health (CS/MH), this report focuses only on CS/MH programs conducted by the U.S. Agency for International Development (USAID) from FY2001 to FY2008. This report also discusses the interconnected nature of USAID's global health programs, such as how advancements made in addressing malaria might improve maternal and child survival.", "In the United Nations Children's Fund (UNICEF) report The State of the World ' s Children 2008: Child Survival , UNICEF Executive Director Ann Veneman celebrated the decline of total annual deaths among children under age five. In 2006, an estimated 9.7 million children in that age range died, representing a 60% drop in under-five mortality since 1960. Despite the decrease, Ms. Veneman asserted that a critical number of daily deaths among children under five remains high; some 26,000 die each day. Most studies that measure child mortality focus on deaths that occur before age five because 90% of childhood deaths occur during this time, while 37% occur during the neonatal period (the first 28 days), amounting to about 4 million annual newborn deaths.\nThe majority of child deaths occur in developing countries, and almost half of them in Africa. On average, nearly 90% of all child deaths are caused by neonatal infections and five infectious diseases: acute respiratory infections (mostly pneumonia), diarrhea, malaria, measles and HIV/AIDS ( Table 1 ). According to UNICEF, undernutrition is the underlying cause of up to half of these deaths.\nSome health experts assert that maternal and child health are particularly important to monitor, because their mortality rates serve as a barometer for overall health conditions. Supporters of this idea often use the Millennium Development Goals (MDGs) listed in Table 2 to demonstrate the interconnected nature of health and development and to gauge improvements in child and maternal health ( Table 3 ). MDGs 4 and 5 call for a two-thirds reduction in child and maternal mortality. The ability to reach those goals, however, is affected by progress in other MDGs. For example, countries with significant undernourished populations (MDG 1) that lack sufficient access to clean water (MDG 7) tend to have higher maternal and child mortality rates (MDGs 4 and 5); undernourished women and children are also more likely to be impoverished (MDG 1) and are more susceptible to infectious diseases, such as HIV/AIDS, TB, and malaria (MDG 6). UNICEF found that 62 countries were making no progress towards the Millennium Development Goal on child survival; nearly 75% of these were in Africa.", "UNICEF asserts that child survival and maternal health are inextricably linked. More than 500,000 women die each year due to pregnancy-related causes, and an additional 15-20 million more suffer debilitating long-term effects, such as obstetric fistula (discussed below). The vast majority of women who die during or shortly after labor live in developing countries where maternal mortality rates are significantly higher than in industrialized nations ( Table 4 ). The United Nations Food and Agriculture Organization (FAO) maintains that almost all of these deaths could be prevented if women in developing countries had access to adequate diets, safe water and sanitation facilities, basic literacy, and health services during pregnancy and childbirth. UNICEF estimates that 20% of all maternal deaths are linked to undernutrition and that about 75% of maternal deaths are caused by obstetric complications including hemorrhage, sepsis, hypertensive disorders (mostly eclampsia), prolonged or obstructed labor, and unsafe abortions.\nMaternal mortality and morbidity rates are generally higher for mothers younger than 20 years who typically have more pregnancy and delivery complications, such as toxemia, anemia, premature delivery, prolonged labor, and cervical trauma, and are at higher risk of delivering low birth weight babies. Pregnancy-related complications are the leading cause of death among 15- to-19-year-olds around the world, and their babies have higher morbidity and mortality rates. The United Nations estimates that adolescents give birth to 15 million infants each year. Girls aged between 15 and 19 years are twice as likely to die from childbirth as women in their twenties, and those younger than 15 years are five times as likely to die. A survey conducted in Mali indicated that the maternal mortality rate for girls aged between 15 and 19 years was 178 per 100,000 live births and 32 per 100,000 for women aged between 20 and 34 years.\nCauses of maternal death vary significantly among regions. Data collected from 1990 through 2006 indicate that hemorrhage caused about 34% and 31% of maternal deaths in Africa and Asia, respectively. In industrialized nations and Latin America and the Caribbean, hemorrhage caused an estimated 13% and 21% of maternal deaths, respectively ( Table 5 ). The United Nations has found that regions with the lowest proportions of skilled health attendants at birth also have the highest maternal mortality rates. In sub-Saharan Africa, 43% of women gave birth with the assistance of a skilled birth attendant, 65% in south Asia, and 99% in industrialized nations. One in every 22 women in sub-Saharan Africa will likely die from pregnancy-related causes, as will one in every 59 Asian women. In industrialized nations, meanwhile, one in every 8,000 woman faces the probability of dying from pregnancy-related causes.\nUNICEF has found that health systems in many countries do not have the capacity to reduce mortality nationwide. Of the 68 priority countries that account for 97% of all maternal and child deaths, 54 (80%) have health workforce densities below the critical threshold (2.5 health workers per 1,000 people) for significantly improving their health conditions and reaching the health-related MDGs ( Table 6 ). South Africa and Swaziland are the only two sub-Saharan African countries among the 68 priority countries that have reached the minimum standard. Child and maternal survival rates are higher in areas with ample numbers of health workers to administer immunizations, easy access to clean water, controlled mosquito populations, and sufficient access to nutritious food.\nWhile the greatest shortage of health care workers in absolute terms is in southeast Asia (mostly in Bangladesh, India, and Indonesia), sub-Saharan Africa suffers from the greatest proportional shortage of health care workers in the world. WHO estimates that there are 57 countries with critical shortages of health care workers, of which 36 are in Africa and none in industrialized nations. Globally, WHO estimates that an additional 4.3 million health workers are needed, and that on average, countries across Africa would need to increase their number of health workers by about 140% in order to meet the minimum threshold of 2.5 health care professionals per 1,000 people.", "The U.S. Agency for International Development is the lead U.S. agency responsible for improving child survival around the world. According to USAID, research that it supported during the 1970s and 1980s has been used to develop interventions and technologies now used to save millions of children. Over the past 20 years, USAID has committed more than $6 billion in support of global child survival efforts. About half of those funds were committed from FY2001-FY2008, when Congress appropriated $3.4 billion to child survival and maternal health efforts.\nRecognizing that six health problems (acute respiratory infections, diarrhea, malaria, HIV/AIDS, measles, neonatal complications) cause about 90% of all child deaths in developing countries and that undernutrition contributes to half of these, USAID allocates a significant proportion of its child survival funds to addressing these health issues. This section summarizes information USAID has presented about its efforts to improve child and maternal health.", "The United Nations Food and Agriculture Organization (FAO) argues that the vast majority of the nearly 10 million children who die each year \"would not die if their bodies and immune systems had not been weakened by hunger and malnutrition.\" Ten WHO-supported community-based studies conducted from 1991 through 2001 of children under age five found that children who are mildly underweight are about twice as likely to die of infectious diseases as children who are better nourished; for those who are moderately to severely underweight, the risk of death is five to eight times higher. The studies also indicated that 45% of children who died after contracting measles were malnourished, as were more than 60% of children who died after the onset of severe diarrhea.\nGood nutrition can improve child survival, health, and cognitive development, while undernutrition impairs the immune system. Children with impaired immune systems disproportionately suffer from common childhood illnesses such as diarrhea, pneumonia, and measles. Undernourished children have also been found to be more susceptible to other infectious diseases such as malaria and tuberculosis. This section discusses USAID's nutrition programs, which focus on micronutrient supplementation and fortification and infant and young child feeding (IYCF).", "\"USAID-supported micronutrient programs add vital immune-building micronutrients including zinc, vitamin A, iron, and iodine to processed foods such as rice and sugar.\" USAID funds are also used to expand research on biofortified crops, which could improve the micronutrient content of basic foods, such as maize enhanced with vitamin A, iron, and zinc; beans enhanced with iron and zinc; and sweet potatoes enhanced with vitamin A. Micronutrient supplementation and other USAID nutrition programs are integrated with other interventions, including safe water, hygiene and sanitation.", "USAID estimates that more than \"two-thirds of malnutrition-related infant and child deaths are associated with poor feeding practices during the first two years of life.\" According to USAID, \"less than one third of infants in most countries are exclusively breastfed during the first six months of life.\" Early cessation of breastfeeding and introducing foods either too early or too late expose infants to disease. USAID contends that the foods that are introduced are often nutritionally inadequate and unsafe. One USAID-supported study showed that \"exclusively breastfed infants have 2.5 times fewer episodes of childhood diseases, are four times less likely to die of acute respiratory infection, and are up to 25 times less likely to die of diarrheal diseases.\" The study also indicated that continued breastfeeding during acute episodes of diarrhea protects infants from loss of energy and protein during illness. In communities affected by HIV/AIDS, USAID works with its implementation partners to integrate safe infant feeding practices with programs that prevent mother-to-child HIV transmission (PMTCT). USAID spends about $30 million each year on nutrition programs, which include Vitamin A, iodine, food fortification, anemia packages, and zinc.", "UNICEF asserts that pneumonia can be largely prevented if indoor pollution is minimized and if children are adequately nourished, exclusively breastfed, and receive Vitamin A and zinc supplements (as necessary). Children should also receive the full series of immunizations against infections that directly cause pneumonia, such as Haemophilus influenzae type b (Hib), and those that can lead to pneumonia as a complication (e.g., pertussis). International health organizations also seek to expand access to vaccines that protect against Streptococcus pneumoniae, the most common cause of severe pneumonia among children in the developing world.\nUSAID reports that since 2002, it has supported the administration of immunizations to almost 500 million children and the treatment of more than 375 million cases of child pneumonia. In the mid-1990s, UNICEF and WHO developed the Integrated Management of Childhood Illness (IMCI) with USAID support. The strategy integrates interventions for diarrhea, acute respiratory infections, malnutrition, and malaria. In recent years, USAID has expanded the IMCI strategy.", "Approximately 40% of the world's population, mostly those living in the world's poorest countries, are at risk of malaria. Every year, more than 500 million people become severely ill with malaria. Most cases, and most deaths, are in sub-Saharan Africa, though Asia, Latin America, the Middle East, and parts of Europe are also affected. The disease is particularly deadly for children; at least 1 million infants and children under age five in sub-Saharan Africa die each year from malaria—approximately one every 30 seconds.\nUSAID has been engaged in malaria eradication efforts since the 1950s. In 2005, the President proposed the President's Malaria Initiative (PMI), an interagency effort that aims to increase support for U.S. international malaria programs by more than $1.2 billion from FY2006 through FY2010 in 15 targeted countries and reduce the number of malaria deaths by 50% in those countries by 2010. USAID coordinates all PMI activities, which are implemented in partnership with the Centers for Disease Control and Prevention (CDC) of the Department of Health and Human Services (HHS). Advancements made under the initiative are not reported by agency, thus it is not possible to distinguish USAID's contributions to U.S. anti-malarial programs.\nIn January 2008, USAID reported that in its first year, PMI reached more than 6 million people and within two years, reached more than 25 million. Activities included\nindoor residual spraying in 10 PMI countries, benefitting more than 17 million people; procuring and distributing more than 4.7 million long lasting insecticide-treated nets (LLITNs) and retreating more than 1.1 million insecticide-treated nets (ITNs); procuring 12.6 million malarial treatments, including the distribution of 6.2 million; training more than 28,000 health workers in the correct use of malarial treatment; and purchasing more than 4 million anti-malarial tablets to reduce the impact of malaria in pregnancy.", "HIV/AIDS is preventable and treatable, but not curable. Most of the 420,000 children who acquired HIV in 2007 contracted the virus from their HIV-infected mothers during pregnancy, birth, or breastfeeding. With successful interventions the risk of mother-to-child HIV transmission can be reduced to 2%. About 33% of HIV-positive pregnant women in most resource-limited countries—where the burden of HIV is highest—receive drugs that can prevent mother-to-child HIV transmission (PMTCT). Nevirapine, a drug widely used to prevent mother-to-child HIV transmission, costs between $0.29 and $0.40 per dose. A Nevirapine tablet is taken by the mother at the onset of labor and Nevirapine syrup is given to the infant within 72 hours of birth.\nWHO asserts that it is critical that children are diagnosed early and provided with antiretroviral therapy (ART) as early as possible, as the course of HIV infection is faster and more aggressive in children. The cost of ART is significantly higher for children than for adults. UNAIDS estimates that an annual supply of generic ARTs costs about $260 per child, while the same regimen for adults costs about $183. Fixed-dosed treatments, in which two or three different drugs are combined in a single pill, have proved to be most effective, though they are more expensive for children. In 2005, a one-year supply of a standard three-drug regimen for an adult costs an average of $148 in low-income countries, but the regimen for children cost $2,000 per child and $800 for a generic version. The Clinton Foundation, however, was able to negotiate with pharmaceutical companies to charge lower prices for pediatric ARTs in its programs—about $0.16 per day or $60 per year.\nHealth experts point out that ART is not the only treatment that can be used to reduce child mortality among HIV-positive children. Treatment of opportunistic infections, such as pneumonia, can also improve child survival among HIV-positive children. Cotrimoxazole—a drug used to treat pneumonia—has been found to reduce mortality in children with HIV/AIDS by about 30% and costs about $0.03 per day or $10 per year. It is estimated that only 10% of the 4 million children who need the drug are receiving it.\nUSAID reports that since 1986, it has spent $6 billion on HIV/AIDS interventions in more than 100 countries. Since the inception of the President's Emergency Plan for AIDS Relief (PEPFAR), USAID stopped reporting its projects' outcomes. Instead all participating agency and department outcomes are reported as PEPFAR advancements. Through September 2007, PEPFAR implementing agencies and departments have provided more than $289.2 million to initiatives that have offered care and support to some 2.7 million orphans and vulnerable children (OVC). PEPFAR's food and nutrition programs reached some 332,000 OVC, 50,000 pregnant or lactating women, and an additional 20,000 severely malnourished individuals who were on ART. PEPFAR's child-focus programs support training for those who care for OVC, promote the use of time- and labor-saving technologies, support income-generating activities, and connect children and families to essential health care and other basic social services.\nThe Administration asserts that support for people living with HIV/AIDS who receive treatment, care, and support services should also be considered when analyzing support for children, as HIV-infected adults receiving support are better able to provide a nurturing, protective environment for their children. Through September 2007, PEPFAR has committed some $1.5 billion for programs that offer care and support to people living with HIV/AIDS.\nIn FY2006 and FY2007, PEPFAR partnerships dedicated nearly $191.5 million to pediatric treatment for some 85,900 children and from FY2004 through FY2007, PEPFAR-implementing agencies supported PMTCT services for women during more than 10 million pregnancies. PMTCT services included the provision of ART to HIV-positive women in over 827,000 pregnancies, preventing an estimated 157,000 infant HIV infections.", "Through research, UNICEF, WHO, and USAID found that diarrhea could be prevented and treated with Oral Rehydration Salts (ORS) and fluids, breastfeeding, continued feeding, and selective use of antibiotics and zinc supplementation for 10-14 days. USAID reports that since 2002, it has provided more than $1.5 billion in support of the treatment of almost 5 billion episodes of child diarrhea with lifesaving ORS. USAID also controls diarrheal disease by training health workers, promoting breastfeeding, applying social marketing and modern communication techniques, and expanding community capacity to administer ORS.\nUSAID's anti-diarrhea programs also focus on hygiene, which plays a significant role in the transmission of diarrhea. USAID estimates that handwashing with soap can decrease diarrhea prevalence among children by 42% to 46%. While soap is found in most households, USAID contends that handwashing with soap is not common in poorer communities and that soap is usually reserved for bathing or washing clothes and dishes. In one USAID-supported study, 1% of mothers in Burkina Faso used soap to wash their hands after using the toilet and 18% after cleaning a child's bottom. In slums in Lucknow, India, 13% of mothers were observed using soap after cleaning up a child and 20% after going outside to defecate. USAID supports public-private partnerships that promote handwashing with soap and other hygienic practices, such as safe storage and treatment of water, which can reduce diarrhea prevalence by 30% to 40%.", "WHO asserts that measles immunization is one of the most cost-effective public health interventions available for preventing childhood deaths and that it carries the highest health return for the money spent, saving more lives per unit cost than any other health intervention. The vaccine, injection equipment and operational costs amount to less than $1 per dose. The vaccine, which has been available for more than 40 years, costs about $0.33 per bundled dose (vaccine plus safe injection equipment) if bought through UNICEF. In many countries where the public health burden of rubella and/or mumps is considered to be important, the measles vaccine is often incorporated with rubella and/or mumps vaccines as a combined, live-attenuated (weakened) measles-rubella (MR) or measles-mumps-rubella (MMR) vaccine. If bought through UNICEF, a MR vaccine costs about $0.65 per bundled dose, and MMR costs about $1.04 to $1.50 per bundled dose.\nImmunization coverage rates for measles vaccination vary significantly by region. WHO and UNICEF estimate that in 2006 about 80% of all children were vaccinated, up from 72% in 2000. From 2000 to 2006, an estimated 478 million children from nine months to 14 years of age received measles vaccinations through supplementary immunization activities in 46 out of the 47 priority countries with the highest burden of measles. These accelerated activities have resulted in a significant reduction in global measles deaths. Overall, global measles mortality decreased by 68% between 2000 and 2006. The largest gains occurred in Africa, where measles cases and deaths fell by 91%.\nUSAID does not indicate how it specifically addresses measles, though it asserts that immunization programs are one of its greatest public health success stories. USAID-supported immunization programs \"train health workers; strengthen planning capacity; and improve the quality of service delivery and vaccine administration\" in more than 100 countries. USAID also partners with others, such as Global Alliance for Vaccines and Immunization (GAVI), the Vaccine Fund, and the Bill and Melinda Gates Foundation to bolster countries' capacity to administer vaccines.", "USAID's maternal health programs seek to ensure healthy pregnancy outcomes in low-resource environments through a wide range of interventions, including nutritional supplementation for mothers, treatment for parasitic worms that disrupt nutrient absorption, tetanus toxoid immunizations, prevention of mother-to-child HIV transmission, intermittent treatment for malaria, and detection and treatment of syphilis.\nUSAID advocates that families plan for all births to be attended by a skilled birth attendant and that communities develop contingency plans for accessing emergency obstetric care for mothers who deliver at home—the preferred method in many cultures. USAID trains birth attendants to avert infant deaths by facilitating infant breathing, resuscitating, and caring for the infant in the event of birth asphyxia; ensuring hygienic cord and eye care; and encouraging immediate breastfeeding. Community-based maternal health interventions include teaching families and communities to recognize birth complications and where to bring a mother for emergency care, identifying transportation to a hospital ahead of time, identifying a blood donor for the mother, and creating a savings plan for health care costs. This section discusses how USAID reports it addresses key causes of maternal mortality.", "USAID estimates that 32% of all maternal deaths are caused by postpartum hemorrhage. Low-cost interventions can prevent and treat the condition. In order to avert postpartum hemorrhage deaths, USAID urges communities to ensure that all mothers give birth in the presence of a trained health care practitioner who can administer drugs that slow or stop the bleeding and apply other life-saving techniques to prevent and treat postpartum hemorrhage. USAID-supported programs train birth attendants to actively manage the third stage of labor, which includes controlled traction of the umbilical cord, uterine massage, and the use of oxytocin—a drug that slows the flow of blood. USAID reports that this intervention can prevent 60% of hemorrhages.", "On average, sepsis or other infections cause nearly 10% of all maternal deaths in Africa, Asia, Latin America, and the Caribbean. A number of factors contribute to this problem. A USAID-supported study identified unhygienic delivery practices as a key cause of the affliction. Common practices such as introducing unclean hands, local herbs, or cloths inside the vagina during or after delivery and delivering in unclean conditions all contribute to sepsis. In addition, untrained delivery attendants might also use unclean instruments to cut the umbilical cord. USAID supports efforts to distribute delivery kits and ensure the presence of a trained delivery attendant at each birth to prevent mothers and babies from contracting sepsis. In addition, USAID trains birth attendants to identify signs of infection and to use antibiotics and other measures, where necessary.", "Hypertensive disorders cause about 9% of maternal deaths in Africa and Asia and nearly 26% of maternal deaths in Latin America and the Caribbean. USAID trains health care providers to recognize the signs and symptoms of pre-eclampsia (high blood pressure and proteinuria) and of eclampsia (convulsions) and to treat mothers with anti-convulsant drugs and supportive care.", "A mother might experience prolonged or obstructed labor if she is unable to deliver her baby for any number of reasons, including the position of the baby, the direction in which the baby faces, or if the baby's head can not fit through the mother's pelvis. If the delivery complication is not resolved, the baby may die or the mother and/or baby can suffer life-long debilities. Obstetric fistula is one of the most common consequences of prolonged or obstructed labor for pregnant women in low-resource settings.\nYoung girls and women who were stunted due to undernourishment, and who live in areas without obstetric care, are more likely to develop obstetric fistula because of their underdeveloped pelvic regions. In Kenya, one study found that 45% of all fistula cases were among adolescents. Obstetric fistula can be prevented by delaying pregnancy until the girl's pelvic region is fully developed, ensuring that women have ready access to emergency obstetric care in the case of prolonged labor, and removing the fetus through a caesarean surgery when needed.\nUSAID reports that it has supported fistula prevention programs since 1989 and repair programs since 2005. Obstetric fistula prevention programs are commonly integrated with other programs that address the major causes of maternal death and disability. Key activities include increasing access for women to emergency obstetrical care, encouraging the postponement of child marriage and sexual debut, training families and community health practitioners to identify the signs of prolonged or obstructed labor, increasing access for women to emergency obstetrical care, and reducing stigma about obstetric fistula.", "WHO estimates that complications due to unsafe abortion procedures account for 13% of maternal deaths worldwide, amounting to 67,000 deaths each year. There are significant regional variations, however. In Latin America and the Caribbean, the practice accounts for 12% of maternal deaths on average, while in Africa, about 4% of women die after attempting an unsafe abortion. USAID reports that its international family planning programs help to avoid these deaths and that it has helped to avert an estimated 4 million maternal deaths over the last 20 years.", "", "From FY2001 to FY2003, appropriations to USAID's CS/MH programs, in current terms, grew by about 8%, and overall support for USAID's global health programs grew by about 28% ( Table 7 ). The bulk of that growth came from increases in appropriations to HIV/AIDS and other infectious diseases (OID), which each grew by 65% and 24%, respectively. Higher appropriations for HIV/AIDS programs during this time period reflect support for the President's International Mother and Child HIV Prevention Initiative. The majority of OID funds were directed to tuberculosis and malaria programs. Throughout these years, Congress also demonstrated its strong support for the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria (Global Fund) with increased appropriations for U.S. contributions to the Fund ( Table 7 and Figure 1 ).", "From FY2004 through FY2008, U.S. support for global HIV/AIDS, TB, and malaria programs began to dominate discussions about USAID's health programs. While some Members applauded the Administration's focus on HIV/AIDS, particularly through the President's Emergency Plan for AIDS Relief (PEPFAR), they questioned why the Administration requested less for other global health interventions, particularly those related to child survival, maternal health, family planning, and reproductive health. Other Members challenged the Administration to consider the ability of recipient countries to absorb burgeoning HIV/AIDS funds because of overtaxed health infrastructures. Congress urged the Administration to better integrate HIV/AIDS and other health programs, particularly those related to TB and nutrition.\nStill, appropriations to HIV/AIDS, TB, and malaria far outpaced support for USAID's other health programs. From FY2004 through FY2008, Congress provided $19.7 billion for global HIV/AIDS, TB, and malaria programs. During that same time period, Congress appropriated $4.6 billion to USAID's child survival and maternal health, vulnerable children, and family planning and reproductive health initiatives ( Table 8 and Figure 2 ).", "Congress has consistently boosted appropriations to USAID's global health programs throughout the Administration of President George W. Bush, though mostly for specific diseases. From FY2001 through FY2008, Congress has supported the President's calls for higher spending on targeted, disease-specific U.S. programs through three key initiatives: the President's International Mother and Child HIV Prevention Initiative (FY2002-FY2004), PEPFAR (FY2004-FY2008), and the President's Malaria Initiative (FY2006-FY2010). At the same time, appropriations to other health issues, such as child survival and maternal health have changed little (with the exception of FY2008, when appropriations to CS/MH activities increased).\nWhile most health experts applaud the recent increase in U.S. commitment to countering the global spread of diseases like HIV/AIDS, many remained concerned that other health programs that offer life-saving interventions for women and children are overlooked and underfunded, particularly in sub-Saharan Africa. The World Health Organization asserts that some two-thirds of child deaths are preventable through practical, low-cost interventions. Those expressing concern about the apportionment of U.S. global health funds argue that HIV/AIDS, TB, and malaria are not the only diseases killing people. In addition to proposing an increase in funding for CS/MH programs, some observers urge Congress to boost support for other health issues that affect child survival and maternal health.", "Some urge Congress to consider how voluntary family planning could improve maternal and child health. According to USAID, family planning activities protect the health of women by reducing high-risk pregnancies and the health of children by allowing sufficient time between pregnancies; prevent HIV/AIDS with information, counseling, and access to male and female condoms; reduce abortions; and protect the environment by stabilizing population growth. Others oppose funding family planning for a number of reasons, including concern that in some countries abortions and coercive practices may occur in family planning programs.\nFamily planning can help improve the morbidity and mortality rates of adolescent girls. In many rural areas of developing countries, girls are married and begin to have children in their teen years. Some research indicates that mothers younger than 20 years of age are at higher risk of delivering low-birthweight babies and suffer more pregnancy and delivery complications, such as toxemia, anemia, premature delivery, prolonged labor, and cervical trauma. Girls between 15 and 19 years of age are twice as likely to die from childbirth as women in their twenties, and those younger than 15 years of age are five times as likely to die. Young girls are also more likely to develop obstetric fistula. In Kenya, one study found that 45% of all fistula cases were among adolescents. Obstetric fistula can be prevented by delaying pregnancy until the girl's pelvic region is fully developed and performing caesarean surgery when needed. The condition can be repaired for about $300, a cost that is prohibitive to most young girls and women in the most affected countries.", "Some observers advocate that Congress increase spending on health systems, because to significantly reduce maternal and child mortality, governments must be able to effectively undertake a range of health strategies, including ensuring income and food levels; the nutritional and health status of mothers; access to immunizations, oral rehydration therapy, and maternal and child health services (including prenatal care); safe drinking water; and basic sanitation. Improvements in these areas are significantly affected by the strength of health systems and availability of health workers. UNICEF has found that without donor support, health systems in many countries cannot deliver essential interventions (such as vaccinations) sufficiently enough to reduce mortality nationwide.\nSupporters of strengthening health systems urge Congress to direct USAID to better coordinate its health assistance with other donors and with respective health ministries to improve efficiency and overall health outcomes. Proponents of this idea point to WHO's International Health Partnership and related Initiatives (IHP+)—a coalition of international health agencies, governments, and donors committed to improving health and development outcomes in developing countries and reaching the health-related MDGs. The IHP+ encourages donors to create a compact with countries to commit development partners and governments to support one results-oriented national health plan in a harmonized way that will ensure predictable, long-term financing from both national and international sources. A compact is a contract through which the international community and the recipient country reach consensus on results based on mutual accountability. Country compacts bind all donors and respective government agencies to one single country health plan, one monitoring and evaluation plan, one budget (with external funding harmonized with recipient countries' budget cycles), one reporting and validation process, and benchmarks for government performance.", "Global health experts increasingly underscore the role recipient governments should play in improving health systems. Some critics contend that donors must consider the role that political will plays in minimal health spending by many developing countries. According to the International Monetary Fund (IMF), when asked about the most important reason health funds go unspent, some 29% of health practitioners who were surveyed cited a lack of political will, and only 1% blamed IMF or World Bank restrictions.\nAccording to WHO, on average each year, the 57 countries with severe shortages of health workers spend about $33 per person on health; comparatively, each year the U.S. government spends approximately, $2,548 per capita on health. The entire continent of Africa spends less than 1% of the world's expenditure on health. African leaders have pledged to increase spending on health.\nIn April 2001, Members of the African Union (AU) and the Organization of African Unity (OAU) signed the Abuja Declaration on HIV/AIDS, Tuberculosis, and Other Infectious Diseases , in which signatories pledged to spend at least 15% of their national budgets on health care. According to the Progress Report on the Implementation of the Plans of Action of the Abuja Declarations on Malaria (2000), and HIV/AIDS and Tuberculosis (2000/1 to 2005) , 33% of AU States had allocated 10% or more of their national budgets to the health sector by 2004, 38% spent between 5% and 10% on health care, and 29% indicated reserving less than 5% of their national budgets for health systems. Only Botswana reported spending at least 15% on health.\nAlthough most health experts agree that African governments need to boost their health budgets, some counter that poor political will is not the primary cause of low health spending. Instead, opponents argue that structural adjustment programs and conditional lending practices have limited African governments' abilities to increase investments in public health and health worker education. Shrunken health budgets have led to a decline in the quality of education and training opportunities for medical students, a perpetual shortage of health supplies and equipment (e.g., sanitation gloves and hypodermic needles), insufficient medicine and vaccine stocks, and a brain drain of African health workers. The International Development Research Center maintains, however, that discussions about the impact of structural adjustment, conditional lending, and health reform on public health infrastructures are often laden with biased terminology that observers use to make \"sweeping triumphalist or catastrophist arguments.\" The organization found that results of structural adjustment, conditional lending, and health reform were mixed and that the organization could \"support neither the opinion of those who believe the erosion of public expenditure on health is a characteristic feature of adjustment, nor of those who hold the opposite view.\"", "Below is a list of bills introduced to date in the 110 th Congress to directly and indirectly improve maternal and child health.\nH.Amdt. 360 to H.R. 2764 , Consolidated Appropriations Act of 2008, increased support for maternal and child health by $5 million for FY2008. The amendment was incorporated into the bill, which was enacted and became P.L. 110-161 .\nH.R. 5501 and S. 2731 , Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008, authorize $50 billion and $48 billion, respectively, for international HIV/AIDS, TB, and malaria interventions and require that women receiving drugs to prevent mother-to-child HIV transmission are also provided with or referred to appropriate maternal and child services. The House version, which passed by recorded vote, 308-116, calls for linkages to and referral systems for NGOs that implement multi-sectoral approaches for access to HIV/AIDS education and testing in family planning and maternal health programs supported by the United States. The Senate version does not include language on family planning. The Senate passed H.R. 5501 by voice vote, 80-16, with a substitute amendment that inserted the language of S. 2731 after amendments were made on the Senate floor.\nH.R. 1302 and S. 2433 , Global Poverty Act of 2007, require the President to develop and implement a comprehensive strategy to advance U.S. efforts to promote the reduction of global poverty, the elimination of extreme global poverty, and the achievement of the Millennium Development Goal of reducing by one-half the proportion of people worldwide, between 1990 and 2015, who live on less than $1 per day. Language in the bills indicates that improving maternal and child health is part of this comprehensive strategy. The House passed the bill by voice vote on September 25, 2007, and referred it to the Senate Foreign Relations Committee. The Senate version was placed on the Senate calendar on April 24, 2007.\nH.R. 2266 and S. 1418 , U.S. Commitment to Global Child Survival Act of 2007, provide assistance to improve the health of newborns, children, and mothers in developing countries, and for other purposes. The House version was referred to the House Foreign Affairs Committee. The Senate version was reported out of the Senate Foreign Relations Committee and placed on the Senate legislative calendar.\nH.R. 1225 , Focus on Family Health Worldwide Act of 2007, amends the Foreign Assistance Act of 1961 to improve voluntary family planning programs in developing countries, and for other purposes. The bill was referred to the House Foreign Affairs Committee.\nH.R. 2114 , Repairing Young Women's Lives Around the World Act, provides a U.S. voluntary contribution to the United Nations Population Fund for the prevention, treatment, and repair of obstetric fistula. The bill was referred to the House Foreign Affairs Committee.\nH.R. 2604 , United Nations Population Fund Women's Health and Dignity Act, provides financial and other support to the United Nations Population Fund to carry out activities to save women's lives, limit the incidence of abortion and maternal mortality associated with unsafe abortion, promote universal access to safe and reliable family planning, and assist women, children, and men in developing countries to live better lives. The bill was referred to the House Foreign Affairs Committee.\nS. 1998 , International Child Marriage Prevention Act of 2007, authorizes funds to reduce child marriage, and for other purposes. The bill was referred to the Senate Foreign Relations Committee.\nS. 2682 , United Nations Population Fund Restoration Act of 2008, directs U.S. funding to the United Nations Population Fund for certain purposes including maternal and child health. The bill was referred to the Senate Foreign Relations Committee.\nH.Res. 1045 , Global Security Priorities Resolution, while acknowledging a need to address the threat of international terrorism and protect the global security of the United States, calls for reducing the number and accessibility of nuclear weapons and preventing their proliferation. The resolution estimates that \"the savings generated in the long term by significant reduction of nuclear armaments will be appreciable, with estimates as high as $13 million annually.\" The resolution directs a portion of these savings towards child survival, hunger, and universal education, and calling on the President to take action to achieve these goals. The resolution was referred to the House Foreign Affairs Committee.\nH.Res. 1022 , affirms the House's commitment to promoting maternal health and child survival at home and abroad through greater international investment and participation and recognizes maternal health and child survival as fundamental to the well-being of families and societies, and to global development and prosperity. The House agreed to suspend the rules and agree to the resolution, as amended, but the motion to reconsider was agreed to without objection." ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 3, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "", "h2_full h1_full", "h2_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "", "h0_full h3_full", "", "", "", "h3_full" ] }

{ "question": [ "How much did CS/MH programs grow during President Bush's tenure?", "Why did that growth occur?", "How much support did Congress provide to international programs?", "What are the current rates of child death globally?", "Where are these deaths most likely to occur?", "What diseases or conditions can contribute to these deaths?", "What long-term effects can women suffer from due to pregnancy-related causes?", "What factors are linked to global maternal deaths?", "Where do most of these deaths occur?", "What has US global health commitment excluded in terms of funding?", "What regions are affected by this exclusion?", "What support is Congress encouraged to add?" ], "summary": [ "Appropriations for child survival and maternal health programs (CS/MH) have grown by about 22% during the tenure of President George W. Bush.", "Most of that growth occurred in FY2008, when Congress provided $521.9 million for CS/MH programs, up from $361.1 million in FY2001.", "Although Congress provided support during this time for other global health initiatives that affect CS/MH, such as some $19.7 billion for international programs that prevent and treat human immunodeficiency virus/ acquired immunodeficiency syndrome (HIV/AIDS), tuberculosis (TB), and malaria, other global health interventions are discussed only as they relate to USAID's CS/MH programs.", "According to latest estimates, 9.7 million children under the age of five died in 2006; some 26,000 each day.", "The majority of those deaths occurred in developing countries, and almost half of them in Africa.", "On average, nearly 90% of all child deaths are caused by neonatal infections and five other diseases: acute respiratory infections (primarily pneumonia), diarrhea, malaria, measles, and HIV/AIDS. Undernutrition contributes to more than half of these deaths.", "More than 500,000 women die each year due to pregnancy-related causes, and many more suffer debilitating long-term effects, such as obstetric fistula.", "About 20% of global maternal deaths are linked to undernutrition, and about 75% result from obstetric complications, most often hemorrhage, sepsis, eclampsia, and prolonged or obstructed labor.", "Most of these deaths occur in developing countries.", "While most health experts applaud the recent increase in U.S. commitment to global health, many remain concerned that funding is largely aimed at specific diseases, such as HIV/AIDS and malaria.", "Other health programs that offer life-saving interventions for women and children are overlooked and underfunded, they contend, particularly in sub-Saharan Africa.", "In addition to proposing an increase in funding for CS/MH programs, some observers urge Congress to boost support for health systems so that countries can better address a wide range of health issues that affect child survival and maternal health." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "The Federal Response to Homelessness", "Defining Homelessness: Who Is Served", "Original McKinney-Vento Act Definition of Homelessness", "Definitions Under Other Federal Programs", "HEARTH Act Changes to the McKinney-Vento Act Section 103 Definition", "Federal Programs Targeted to Assist Homeless Individuals", "Department of Education (ED)", "Education for Homeless Children and Youths", "Provisions Authorized under the McKinney-Vento Act", "Provisions Authorized under Title I-A of ESEA", "Department of Homeland Security (DHS)", "Emergency Food and Shelter (EFS) Program", "Department of Health and Human Services (HHS)", "Health Care for the Homeless (HCH) Program", "Projects for Assistance in Transition from Homelessness (PATH)", "Grants for the Benefit of Homeless Individuals", "Runaway and Homeless Youth Program", "Basic Center Program", "Transitional Living Program", "Street Outreach Program42", "Department of Justice (DOJ)", "Transitional Housing Assistance for Victims of Sexual Assault, Domestic Violence, Dating Violence, and Stalking", "Department of Housing and Urban Development (HUD)", "Homeless Assistance Grants", "Emergency Solutions Grants (ESG) Program", "Continuum of Care (CoC) Program", "Rural Housing Stability (RHS) Grants", "Department of Labor (DOL)", "Homeless Veterans Reintegration Program", "Referral and Counseling Services: Veterans at Risk of Homelessness Who Are Transitioning from Certain Institutions", "Department of Veterans Affairs (VA)", "Health Care for Homeless Veterans (HCHV)45", "Homeless Providers Grant and Per Diem Program46", "Homeless Veterans with Special Needs", "Domiciliary Care for Homeless Veterans (DCHV)", "Compensated Work Therapy/Transitional Residence Program48", "HUD VA Supported Housing (HUD-VASH)", "Supportive Services for Veteran Families (SSVF)", "Other Activities for Homeless Veterans", "Efforts to End Homelessness", "The Chronic Homelessness Initiative", "The U.S. Interagency Council on Homelessness Federal Strategic Plan to Prevent and End Homelessness", "The Department of Veterans Affairs Plan to End Homelessness", "Numbers of People Experiencing Homelessness", "Funding for Targeted Homeless Programs" ], "paragraphs": [ "", "Federal assistance targeted to homeless individuals and families was largely nonexistent prior to the mid-1980s. Although the Runaway and Homeless Youth program was enacted in 1974 as part of the Juvenile Justice and Delinquency Prevention Act ( P.L. 93-415 ), the first federal program focused on assisting all homeless people, no matter their age, was the Emergency Food and Shelter (EFS) program, established in 1983 through an emergency jobs appropriation bill ( P.L. 98-8 ). The EFS program was and continues to be administered by the Federal Emergency Management Agency (FEMA) in the Department of Homeland Security (DHS) to provide emergency food and shelter to needy individuals.\nIn 1987, Congress enacted the Stewart B. McKinney Homeless Assistance Act ( P.L. 100-77 ), which created a number of new programs to comprehensively address the needs of homeless people, including food, shelter, health care, and education. The act was later renamed the McKinney-Vento Homeless Assistance Act ( P.L. 106-400 ) after its two prominent proponents—Representatives Stewart B. McKinney and Bruce F. Vento. The programs authorized in McKinney-Vento include the Department of Housing and Urban Development (HUD) Homeless Assistance Grants, the Department of Labor (DOL) Homeless Veterans Reintegration Program, the Department of Health and Human Services (HHS) Grants for the Benefit of Homeless Individuals and Health Care for the Homeless, and the Department of Education (ED) Education for Homeless Children and Youths program.\nThe way homelessness is defined largely determines who is served by a particular federal program. This report discusses the definitions of homelessness used by targeted federal homeless programs. In addition, the report describes the current federal programs that provide targeted assistance to homeless individuals and families (other federal programs may provide assistance to homeless individuals but are not specifically designed to assist homeless persons). These include those programs listed above, as well as others that Congress has created since the enactment of McKinney-Vento. In addition, this report discusses federal efforts to end homelessness. Finally, Table 2 at the end of this report shows funding levels for each of the ED, DHS, HHS, HUD, DOL, and Department of Justice (DOJ) programs that assist homeless individuals. Table 3 shows funding levels for VA programs.", "Homelessness in the United States has always existed, but it did not come to the public's attention as a national issue until the 1970s and 1980s, when the characteristics of the homeless population and their living arrangements began to change. Throughout the early and middle part of the 20 th century, homelessness was typified by \"skid rows\": areas with hotels and single-room occupancy dwellings where transient single men lived. Skid rows were usually removed from the more populated areas of cities, and it was uncommon for individuals to actually live on the streets. Beginning in the 1970s, however, the homeless population began to grow and become more visible to the general public. According to studies from the time, homeless persons were no longer almost exclusively single men, but included women with children; their median age was younger; they were more racially diverse (in previous decades, the observed homeless population was largely white); they were less likely to be employed (and therefore had lower incomes); they were mentally ill in higher proportions than previously; and individuals who were abusing or had abused drugs began to become more prevalent in the population.\nA number of reasons have been offered for the growth in the number of homeless persons and their increasing visibility. Many cities demolished skid rows to make way for urban development, leaving some residents without affordable housing options. Other possible factors contributing to homelessness include the decreased availability of affordable housing generally, the reduced need for seasonal unskilled labor, the reduced likelihood that relatives will accommodate homeless family members, the decreased value of public benefits, and changed admissions standards at mental hospitals. The increased visibility of homeless people was due, in part, to the decriminalization of actions such as public drunkenness, loitering, and vagrancy.\nIn the 1980s, Congress first responded to the growing prevalence of homelessness with several separate grant programs designed to address the food and shelter needs of homeless individuals. These programs included the Emergency Food and Shelter Program ( P.L. 98-8 ), the Emergency Shelter Grants Program ( P.L. 99-591 ), and the Transitional Housing Demonstration Program ( P.L. 99-591 ). In 1983, a Federal Interagency Task Force on Food and Shelter for the Homeless was created to coordinate the federal response to homelessness. Among its activities was making vacant federal properties available as shelters.\nCongress began to consider comprehensive legislation to address homelessness in 1986. On June 26, 1986, H.R. 5140 and S. 2608 were introduced as the Homeless Persons' Survival Act to provide an aid package for homeless persons. No further action was taken on either measure, however. Later that same year, legislation containing Title I of the Homeless Persons' Survival Act—emergency relief provisions for shelter, food, mobile health care, and transitional housing—was introduced as the Urgent Relief for the Homeless Act ( H.R. 5710 ). The legislation passed both houses of Congress in 1987 with large bipartisan majorities. The act was renamed the Stewart B. McKinney Homeless Assistance Act after the death of its chief sponsor, Stewart B. McKinney of Connecticut; it was renamed again on October 30, 2000, as the McKinney-Vento Homeless Assistance Act after the death of another prominent sponsor, Bruce F. Vento of Minnesota. In 1987, President Ronald Reagan signed the act into law ( P.L. 100-77 ).\nThe original version of the McKinney-Vento Act consisted of 15 programs either created or reauthorized by the act, providing an array of services for homeless persons and administered by various federal agencies. The act also established the United States Interagency Council on Homelessness, which is designed to provide guidance on the federal response to homelessness through the coordination of the efforts of multiple federal agencies covered under the McKinney-Vento Act. Since the enactment of the McKinney-Vento Homeless Assistance Act, there have been some legislative changes to programs and services provided under the act and new programs that target homeless individuals have been created. Specific programs covered under the McKinney-Vento Act, as well as other federal programs responding to homelessness, are discussed in this report.", "There is no single federal definition of what it means to be homeless, and definitions among federal programs that serve homeless individuals may vary to some degree. As a result, the populations served through the federal programs described in this report may differ depending on the program. The definition of \"homeless individual\" that was originally enacted in the McKinney-Vento Act is used by a majority of programs to define what it means to be homeless. The McKinney-Vento Act defined the term \"homeless individual\" for purposes of the programs that were authorized through the law (see Section 103 of McKinney-Vento), though some programs that were originally authorized through McKinney-Vento use their own, less restrictive definitions. In 2009, the McKinney-Vento Act definition of homelessness was amended by the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act, enacted as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ).\nPrograms that use the definition in Section 103 of the McKinney-Vento Act are HUD's Homeless Assistance Grants, FEMA's Emergency Food and Shelter program, the VA homeless veterans programs, and DOL's Homeless Veterans Reintegration Program. (Throughout this section of the report, the term \"Section 103 definition\" is used to refer to the original McKinney-Vento Act definition of homelessness.)\nThis section describes the original McKinney-Vento Act Section 103 definition of homeless individual, how the definition compares to those used in other programs, and how it has changed under the HEARTH Act and HUD's implementing regulations.", "The definition of \"homeless individual\" in Section 103 of McKinney-Vento remained the same for years:\n[a]n individual who lacks a fixed, regular, and adequate nighttime residence; and a person who has a nighttime residence that is (a) a supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare hotels, congregate shelters, and transitional housing for the mentally ill); (b) an institution that provides a temporary residence for individuals intended to be institutionalized; or (c) a public or private place not designed for, nor ordinarily used as, a regular sleeping accommodation for human beings.\nThis definition was sometimes described as requiring one to be literally homeless in order to meet its requirements —either living in emergency accommodations or having no place to stay. This contrasts with definitions used in some other federal programs, where a person may currently have a place to live but is still considered homeless because the accommodation is precarious or temporary.", "Education for Homeless Children and Youths: The Department of Education program defines homeless children and youth in part by reference to the Section 103 definition of homeless individuals as those lacking a fixed, regular, and adequate nighttime residence. In addition, the ED program defines children and youth who are eligible for services to include those who are (1) sharing housing with other persons due to loss of housing or economic hardship; (2) living in hotels or motels, trailer parks, or campgrounds due to lack of alternative arrangements; (3) awaiting foster care placement; (4) living in substandard housing; and (5) children of migrant workers.\nTransitional Housing Assistance for Victims of Domestic Violence, Stalking, or Sexual Assault: The Violence Against Women Act definition of homelessness is similar to the ED definition.\nRunaway and Homeless Youth: The statute defines a homeless youth as either ages 16 to 22 (for transitional living projects) or ages 18 and younger (for short-term shelter) and for whom it is not possible to live in a safe environment with a relative or for whom there is no other safe alternative living arrangement.\nHealth Care for the Homeless: Under the Health Care for the Homeless program, a homeless individual is one who \"lacks housing,\" and the definition includes those living in a private or publicly operated temporary living facility or in transitional housing.\nProjects for Assistance in Transition from Homelessness: In the PATH program, an \"eligible homeless individual\" is described as one suffering from serious mental illness, which may also be accompanied by a substance use disorder, and who is \"homeless or at imminent risk of becoming homeless.\" The statute does not further define what constitutes being homeless or at imminent risk of homelessness.", "The Section 103 definition of \"homeless individual\" was changed in 2009 as part of the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act, enacted as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ). The HEARTH Act broadened the McKinney-Vento Section 103 definition and moved the definition away from the requirement for literal homelessness. On December 5, 2011, HUD released regulations that clarify some of the changes. The changes are as follows:\nAmendments to Original McKinney-Vento Act Language: The HEARTH Act made minor changes to the existing language in the McKinney-Vento Act. The law continues to provide that a person is homeless if they lack \"a fixed, regular, and adequate nighttime residence,\" and if their nighttime residence is a place not meant for human habitation, if they live in a shelter, or if they are a person leaving an institution who had been homeless prior to being institutionalized. The HEARTH Act added that those living in hotels or motels paid for by a government entity or charitable organization are considered homeless, and it included all those persons living in transitional housing, not just those residing in transitional housing for the mentally ill as in prior law. The amended law also added circumstances that are not considered suitable places for people to sleep, including cars, parks, abandoned buildings, bus or train stations, airports, and campgrounds. When HUD issued its final regulation in 2011, it clarified that a person exiting an institution cannot have been residing there for more than 90 days and be considered homeless. In addition, where the law states that a person \"who resided in a shelter or place not meant for human habitation\" prior to institutionalization, the \"shelter\" means emergency shelter and does not include transitional housing. Imminent Loss of Housing: P.L. 111-22 added to the Section 103 definition those individuals and families who meet all of the following criteria: They will \"imminently lose their housing,\" whether it be their own housing, housing they are sharing with others, or a hotel or motel not paid for by a government or charitable entity. Imminent loss of housing is evidenced by an eviction requiring an individual or family to leave their housing within 14 days; a lack of resources that would allow an individual or family to remain in a hotel or motel for more than 14 days; or credible evidence that an individual or family would not be able to stay with another homeowner or renter for more than 14 days. They have no subsequent residence identified. They lack the resources or support networks needed to obtain other permanent housing. HUD practice prior to passage of the HEARTH Act was to consider those individuals and families who would imminently lose housing within seven days to be homeless. Other Federal Definitions: P.L. 111-22 added to the definition of \"homeless individual\" unaccompanied youth and homeless families with children who are defined as homeless under other federal statutes. The law did not define the term youth, so in its final regulations HUD defined a youth as someone under the age of 25. In addition, the HEARTH Act did not specify which other federal statutes would be included in defining homeless families with children and unaccompanied youth. So in its regulations, HUD listed seven federal programs as those under which youth or families with children can be defined as homeless: the Runaway and Homeless Youth program; Head Start; the Violence Against Women Act; the Health Care for the Homeless program; the Supplemental Nutrition Assistance Program (SNAP); the Women, Infants, and Children nutrition program; and the McKinney-Vento Education for Children and Youths program. Five of these seven programs (all but Runaway and Homeless Youth and Health Care for the Homeless programs) either share the Education for Homeless Children and Youths definition, or use a similar definition. Youth and families who are defined as homeless under another federal program must meet each of the following criteria: They have experienced a long-term period without living independently in permanent housing. In its final regulation, HUD defined \"long-term period\" to mean at least 60 days. They have experienced instability as evidenced by frequent moves during this long-term period, defined by HUD to mean at least two moves during the 60 days prior to applying for assistance. The youth or families with children can be expected to continue in unstable housing due to factors such as chronic disabilities, chronic physical health or mental health conditions, substance addiction, histories of domestic violence or childhood abuse, the presence of a child or youth with a disability, or multiple barriers to employment. Under the final regulation, barriers to employment may include the lack of a high school degree, illiteracy, lack of English proficiency, a history of incarceration, or a history of unstable employment. Communities are limited to using not more than 10% of Continuum of Care (CoC) program funds to serve families with children and youth defined as homeless under other federal statutes. The 10% limitation does not apply if the community has a rate of homelessness less than one-tenth of 1% of the total population. Domestic Violence: Another change to the definition of homeless individual is that the HEARTH Act amendment considers homeless anyone who is fleeing a situation of \"domestic violence, dating violence, sexual assault, stalking, or other dangerous or life-threatening conditions in the individual's or family's current housing situation, including where the health and safety of children are jeopardized.\" The law also provides that an individual must lack the resources or support network to find another housing situation. HUD's 2011 final regulation specified that the conditions either must have occurred at the primary nighttime residence or made the individual or family afraid to return to their residence.", "The following subsections describe each of the federal programs targeted to assist homeless individuals, arranged by the agency administering the programs. Where relevant, there are references to other CRS reports that go into more detail about the programs.", "", "(42 U.S.C. §§11431-11435) The Education for Homeless Children and Youth (EHCY) program provides assistance to state educational agencies (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. The EHCY program was originally authorized under Title VII, Part B, of the McKinney-Vento Homeless Assistance Act. It was last reauthorized as part of the Every Student Succeeds Act of 2015 (ESSA), which was signed into law in December 2015. In addition to EHCY provisions authorized under the McKinney-Vento Act, there are a number of provisions relating to the education of homeless children and youth that are authorized under the Elementary and Secondary Education Act of 1965 (ESEA), which was also amended by ESSA.", "Under the EHCY program, grants made by SEAs to local educational agencies (LEAs) must be used to facilitate the enrollment, attendance, and success in school of homeless children and youth. LEAs may use 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.\nAdditionally, each state must designate a state coordinator, whose duties include monitoring LEAs, disseminating data on student homelessness, and implementing professional development programs for LEA McKinney-Vento liaisons. At the LEA level, McKinney-Vento liaisons are responsible for ensuring that homeless students enroll in schools, that they are identified by school personnel, and that they have access to and receive all educational services for which they are eligible.\nThe McKinney-Vento Act also requires that each LEA shall, according to each child's best interest, continue the student's education in the school of origin for the duration of homelessness or enroll the student in a public school that the student is eligible to attend. LEAs are required to provide transportation to and from the school of origin.\nEHCY grants are allotted to SEAs in proportion to grants made under Title I, Part A of the ESEA, except that no state can receive less than the greater of $150,000, 0.25% of the total annual appropriation, or the amount received in FY2001 under this program. The Department of Education must reserve 0.1% of the total appropriation for grants to the outlying areas . The department must also transfer 1.0% of the total appropriation to the Department of the Interior for services to homeless children and youth provided by the Bureau of Indian Education. States may reserve up to 25% of their Homeless Education program funding for state activities. Minimally funded states (defined as states that receive an EHCY allocation in a fiscal year equal to 0.25% of total program funds for that fiscal year) are permitted to reserve up to 50% of funding for state activities. States subsequently subgrant remaining funds to LEAs competitively.\nAll LEAs are required to report data annually to the Department of Education on the number of homeless students enrolled, regardless of whether or not they receive a McKinney-Vento Homeless Education grant. In School Year (SY) 2015-2016, 4,303 LEAs, out of a total of 17,678, or about a quarter of all LEAs, received EHCY grants. In the same school year, 1,304,803 homeless students were reported enrolled in school compared to 1,263,323 in SY2014-2015. According to the National Center for Homeless Education, states provided an average per pupil rate of $57.43 in federal McKinney-Vento funding to LEAs for the additional supports needed by homeless students.", "Title I-A of ESEA provides funds to elementary and secondary schools with relatively high concentrations of students from low-income families to be used for supplementary educational and related services. All LEAs receiving funds under Title I-A of ESEA must reserve funds to provide homeless students with an education comparable to those received by other Title I-A students. The amount of funds reserved for this purpose can be determined through a needs assessment that takes into account the homeless student enrollment averages and trends in the LEA. Funds reserved under Title I-A may be used for homeless children and youth attending any school in the LEA, for services not ordinarily provided to other students, to fund the LEA's McKinney-Vento liaison, and to provide transportation to and from the school of origin. State report cards authorized under Title I-A must disaggregate academic achievement and high school graduation rates for McKinney-Vento students.", "", "(42 U.S.C. §§11331-11352) The Emergency Food and Shelter program, the oldest federal program serving all homeless populations, was established in 1983 and is administered by the Federal Emergency Management Agency, in the Department of Homeland Security. The program allocates funds to local communities to fund homeless programs and homelessness prevention services. The EFS program is governed by a National Board chaired by FEMA and made up of representatives from the United Way Worldwide, the Salvation Army, the National Council of Churches of Christ in the U.S.A., Catholic Charities U.S.A., United Jewish Communities, and the American Red Cross. The National Board uses a formula comprised of unemployment rates and poverty rates to determine which local jurisdictions (typically counties) qualify for funds. Eligible local jurisdictions then convene a local board to determine which organizations—nonprofits and government agencies—within their communities should receive grants, and distribute their available funds accordingly.\nEligible expenses for which local organizations may use funds include items for food pantries such as groceries, food vouchers, and transportation expenses related to the delivery of food; items for mass shelters such as hot meals, transportation of clients to shelters or food service providers, and toiletries; payments to prevent homelessness such as utility assistance, hotel or motel lodging, rental or mortgage assistance, and first month's rent; and local recipient organization program expenses such as building maintenance or repair, and equipment purchases up to $300.\nThe EFS program was established by the Temporary Emergency Food Assistance Act of 1983 ( P.L. 98-8 ); in 1987 it was authorized under the McKinney-Vento Homeless Assistance Act. The authorization for the EFS program expired at the end of FY1994 (42 U.S.C. §11352), however it continues to be funded through annual appropriations. (For more information about the Emergency Food and Shelter Program, see CRS Report R42766, The Emergency Food and Shelter National Board Program and Homeless Assistance .)", "", "(42 U.S.C. §254b(h)) The Health Care for the Homeless (HCH) Program provides grants to nonprofit, state, or local government entities to operate outpatient health centers for homeless individuals. These are one of the four types of health centers authorized in Section 330 of the Public Health Service Act (42 U.S.C. §§201 et seq.). HCH is the only federal program that focuses on the health care needs of the homeless population. Centers funded under the HCH program are required to be community designed and operated and must provide primary health care and substance abuse prevention and treatment services to homeless individuals. Centers may also provide services to connect homeless individuals with support services such as emergency shelter and job training and may provide care at mobile sites. The HCH program authorizes grants to fund innovative programs that provide outreach and comprehensive primary health services to homeless children and children at risk of homelessness. In 2017, there were 299 program grantees that provided care to 1,008,648 homeless individuals. The vast majority of these patients (nearly 86%) lived at or below the federal poverty level. HCHs were permanently authorized in the Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended). (For more information about health centers, see CRS Report R43937, Federal Health Centers: An Overview .)", "(42 U.S.C. §290cc-21 through §290cc-35) Projects for Assistance in Transition from Homelessness (PATH) is a formula grant program that distributes funds to states (including the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands) to support local organizations providing services for people with serious mental illness (including those with co-occurring substance use disorders) who are homeless or at imminent risk of becoming homeless. Funds are distributed to states in amounts proportional to their populations living in urbanized areas; the minimum allotment is $300,000 for each of the 50 states, the District of Columbia, and Puerto Rico, and $50,000 for each of the other territories. States must provide matching funds of at least $1 for every $3 of federal funds. Up to 20% of the federal payments may be used for housing-related assistance, including (but not limited to) services to help individuals access housing, minor repairs, security deposits, and one-time rental payments to prevent eviction. Other services include (but are not limited to) outreach, mental health and substance abuse treatment, case management, and job training. The PATH program is administered by the Substance Abuse and Mental Health Services Administration's (SAMHSA's) Center for Mental Health Services (within HHS). Authorization for the PATH program expired at the end of FY2003; however, it continues to be funded through annual appropriations.", "(42 U.S.C. §290aa-5) Grants for the Benefit of Homeless Individuals (GBHI) is a competitive grant program that supports services to homeless individuals with substance use disorders (including those with co-occurring mental illness). Grants are awarded competitively to community-based public or nonprofit entities for periods of up to five years. GBHI-funded programs and services include substance abuse treatment, mental health services, wrap-around services, immediate entry into treatment, outreach services, screening and diagnostic services, staff training, case management, primary health services, job training, educational services, and relevant housing services. Under the GBHI authority, SAMHSA's Center for Substance Abuse Treatment administers two grant portfolios: Treatment Systems for Homeless and (in collaboration with SAMHSA's Center for Mental Health Services) Cooperative Agreements to Benefit Homeless Individuals. Authorization for the GBHI program expired at the end of FY2003; however, it continues to be funded through annual appropriations.", "The Runaway and Homeless Youth Program is administered by the Family and Youth Services Bureau (FYSB) within HHS's Administration for Children and Families (ACF). The program was established in 1974 and was most recently authorized by the Reconnecting Homeless Youth Act of 2008 ( P.L. 110-378 ). The law authorized federal funding for three programs through FY2013 (and Congress has continued to provide funding in subsequent years): the Basic Center Program (BCP), Transitional Living Program (TLP), and Street Outreach Program (SOP). These programs are designed to provide services to runaway and homeless youth outside of the law enforcement, juvenile justice, child welfare, and mental health systems. The funding streams for the Basic Center Program and Transitional Living Program were separate until Congress consolidated them in 1999 ( P.L. 106-71 ). Together, the two programs, along with other program activities, are known as the Consolidated Runaway and Homeless Youth Program. Although the Street Outreach Program is a separately funded component, SOP services are coordinated with those provided under the BCP and TLP. Grantees must provide at least 10% of the funds to cover the total cost of the services provided under the three programs. (For more information about the program, see CRS Report RL33785, Runaway and Homeless Youth: Demographics and Programs .)", "(34 U.S.C. §§11211-11214) The Basic Center Program is intended to provide short-term shelter and services for youth under age 18 and their families through public and private community-based centers. Youth eligible to receive BCP services include those youth who are at risk of running away or becoming homeless (and who may live at home with their parents), or have already left home, either voluntarily or involuntarily. These centers, which may shelter as many as 20 youth for up to 21 days, are located in areas that are frequented or easily reached by runaway and homeless youth. The centers seek to reunite youth with their families, whenever possible, or to locate appropriate alternative placements. The centers also provide basic provisions, individual and family counseling, and other supports. Some centers provide runaway and homeless youth (or those at-risk) with services in the home and through outreach on the streets. As specified in the law, BCP centers are intended to provide services as an alternative to involving runaway and homeless youth in the law enforcement, juvenile justice, child welfare, and mental health systems. Grantees are required to have a plan for ensuring they have relationships with law enforcement, health and mental health care, social service, welfare, and school district system personnel to coordinate services. They must also provide assurance that they coordinate with the McKinney-Vento school district liaison to ensure that runaway and homeless youth receive information about the educational services available under the Education for Homeless Children and Youths program.\nBCP grants are allocated directly to nonprofit entities for three-year periods. Funding is generally distributed to entities based on the proportion of the nation's youth under age 18 in the jurisdiction (50 states, the District of Columbia, and the U.S. territories) where the entities are located. The states, the District of Columbia, and Puerto Rico each receive a minimum allotment of $200,000. Separately, the territories (as currently funded, this includes American Samoa and Guam) each receive a minimum of $70,000. The amount of funding for each state or territory can further depend on whether grant applicants in that jurisdiction applied for funding, and if so, whether the applicant fulfilled the requirements in the authorizing law and grant application.", "(34 U.S.C. §11221 through §11222) The Transitional Living Program provides longer-term shelter and assistance for youth ages 16 through 22 (including pregnant and/or parenting youth) who may leave their biological homes due to family conflict, or have left and are not expected to return home. TLP grants are distributed competitively by HHS to community-based public and private organizations. Each TLP grantee may shelter up to 20 youth at host family homes, supervised apartments owned by a social service agency, or scattered-site apartments and single-occupancy apartments rented directly with the assistance of the agency. Youth under age 18 may remain at TLP projects for up to 540 days (18 months) or longer. Youth ages 16 through 22 may remain in the program for a continuous period of 635 days (approximately 21 months) under \"exceptional circumstances.\" TLP grantees are to assess the needs of youth and develop a plan to help them in transitioning to living independently or to another living arrangement. Youth receive several types of TLP services:\nbasic life-skills training, including consumer education, and instruction in budgeting and housekeeping; interpersonal skill-building; educational preparation; assistance in job attainment; education and counseling on substance abuse; and mental and physical health care services.\nTLP grantees are required to have a plan for ensuring that youth are properly referred to social service, law enforcement, educational (including post-secondary education), vocational, workforce training, and other supports. Grantees must also provide assurance that they coordinate with the McKinney-Vento school district liaison to ensure that runaway and homeless youth receive information about the educational services available under the Education for Homeless Children and Youths program.\nGrantees may, and do, use TLP funds to directly serve unwed pregnant and parenting teens. These organizations provide youth with parenting skills, including child development education, family budgeting, health and nutrition, and other skills to promote their well-being and the well-being of their children.", "(34 U.S.C. §11261) The Street Outreach Program provides supports to runaway and homeless youth, including those living on the streets, who have been subjected to, or are at risk of being subjected to, sexual abuse, prostitution, sexual exploitation, and trafficking. The program's goal is to assist youth in transitioning to safe and appropriate living arrangements. SOP services include outreach and education, treatment, counseling, provision of information, and referrals to other social service agencies. Youth also receive health and hygiene products, and food and drink items. The Street Outreach Program is funded separately from the BCP and TLP, and is authorized to receive such sums as may be necessary. Since FY1996, when funding for the Street Outreach Program was established, HHS has provided SOP grants to community-based public and private organizations.", "", "(34 U.S.C. §12351) The Transitional Housing Assistance Grants for Victims of Sexual Assault, Domestic Violence, Dating Violence, and Stalking Program (Transitional Housing Program), administered by the Office on Violence Against Women, funds programs that provide assistance to victims of sexual assault, domestic violence, dating violence, and/or stalking who are in need of transitional housing, short-term housing assistance, and related supportive services. Assistance may include counseling, support groups, safety planning, and advocacy services as well as practical services such as licensed child care, employment services, transportation vouchers, telephones, and referrals to other agencies. Services are available to minors, adults, and their dependents.\nThe Transitional Housing Program was first authorized by the Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act of 2003 (the PROTECT Act, P.L. 108-21 ). The PROTECT Act amended Subtitle B of the Violence Against Women Act of 1994 (VAWA; 42 U.S.C. 13701 note; 108 Stat. 1925) to (1) establish this grant program to support states, units of local government, Indian tribes, and other organizations, and (2) authorize annual funding for the program at $30 million for FY2004-FY2008. In 2005, the reauthorization of VAWA ( P.L. 109-162 ) authorized annual funding at $40 million for the Transitional Housing Program for FY2007-FY2011. Most recently, the Violence Against Women Reauthorization Act of 2013 ( P.L. 113-4 ) reauthorized the Transitional Housing Program for FY2014-FY2018, decreasing the authorized annual funding level to $35 million.\nThe Transitional Housing Program first received appropriations in FY2004 as a separate, standalone program. For FY2005 through FY2011, Congress appropriated funding for the program through a set-aside from the STOP (Services, Training, Officers, and Prosecutors) Formula Grant Program. For FY2012 through FY2016, Congress once again funded the Transitional Housing Program as a separate, standalone program. (For more information about the Violence Against Women Act, see CRS Report R42499, The Violence Against Women Act: Overview, Legislation, and Federal Funding .)", "", "The Homeless Assistance Grants were established in 1987 as part of the McKinney-Vento Homeless Assistance Act ( P.L. 100-77 ). The grants, administered by HUD, fund housing and services for homeless persons. The Homeless Assistance Grants have gone through several permutations since their enactment, with the most recent change taking place when the grants were reauthorized in the 111 th Congress by the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act, enacted as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ).\nThe Homeless Assistance Grants consist of three separate programs: the Emergency Solutions Grants (ESG) program, the Continuum of Care (CoC) program, and Rural Housing Stability (RHS) grants. ESG funds are used primarily for emergency shelter and homelessness prevention, while the CoC program largely funds transitional and permanent housing. The statute provides that RHS funds may be carved out of CoC program funds for rural communities that wish to apply separately for funds. However, HUD has not implemented the RHS program. The following subsections describe each of these three programs. (For more information about the Homeless Assistance Grants, see CRS Report RL33764, The HUD Homeless Assistance Grants: Programs Authorized by the HEARTH Act .)", "(42 U.S.C. §§11371-11378) The ESG program distributes formula grants to state and local governments. Recipient governments may then distribute all or a portion of the funds to private nonprofit organizations, public housing agencies, or local redevelopment authorities to provide assistance to homeless individuals. ESG funds are distributed so that state and local governments receive the same proportion of total ESG funds as they receive of Community Development Block Grant (CDBG) funds. Factors used to determine how CDBG funds are distributed include poverty rates, population, the number of persons in poverty, housing overcrowding (homes in which there are more than 1.01 persons per room), the age of housing (the number of housing structures built prior to 1940), and the extent of population growth lag in a given community. There is a dollar-for-dollar match requirement for local governments; there is no match requirement for the first $100,000 for states but a dollar-for-dollar match is required for the remainder of the funds. Recipient states and local governments may use up to 7.5% of their grants for administrative costs.\nESG funds may be used in two categories: (1) emergency shelter and related services, and (2) homelessness prevention and rapid rehousing. The statute limits use of funds in the first category to the greater of 60% of a state or local government's ESG allocation or the amount the recipient spent for these purposes in the year prior to the effective date of the HEARTH Act (or 2009).\nIn the case of emergency shelter, funds may be used for the renovation, major rehabilitation, or conversion of buildings into emergency shelters. In addition, ESG funds may be used to provide services in conjunction with emergency shelter, including employment, health, or education services; family support services for homeless youth; substance abuse services; victim services; or mental health services. Another allowable use of funds is the maintenance, operation, insurance, utilities, and furnishing costs for these emergency shelters. Funds may also be used to prevent homelessness or to quickly find housing for those who find themselves homeless. Recipients may use funds to provide short- or medium-term rental assistance for individuals and families at risk of homelessness. Funds may also be used to provide services for those who are homeless or to help stabilize those at risk of homelessness. These services include housing searches, outreach to property owners, legal services, credit repair, payment of security or utility deposits, utility payments, a final month of rental assistance, or moving costs.", "(42 U.S.C. §§11381-11389) The CoC program provides funds for transitional housing, permanent housing, and Homeless Management Information Systems (HMIS) for data collection. HUD considers permanent housing to include permanent supportive housing (housing together with supportive services) and rapid rehousing, a process through which grantees help homeless individuals and families find housing and provide rental assistance for a number of months.\nCoC funds are distributed through a community process that is also referred to as the \"Continuum of Care.\" Through this process, local communities (typically cities, counties, and combinations of both) establish CoC advisory boards made up of representatives from local government agencies, service providers, community members, and formerly homeless individuals who meet to establish local priorities and strategies to address homelessness in their communities. Each Continuum of Care designates a Collaborative Applicant (either itself or another eligible applicant) to apply for funds on behalf of eligible grant recipients.\nEligible grant recipients are state governments, local governments, instrumentalities of state and local governments, Public Housing Authorities, and private nonprofit organizations. Grantees may provide housing and services by acquiring, rehabilitating, or constructing properties; leasing properties; providing rental assistance; and by paying operating costs. Both grantees and the local Collaborative Applicants may use funds for administrative purposes―10% for grantees and 3% for Collaborative Applicants (and another 3% for Collaborative Applicants that take on additional responsibility). Each recipient community must match the total grant funds received with 25% in funds from other sources (including other federal grants) or in-kind contributions (with an exception for leasing).", "(42 U.S.C. §11408) As of the date of this report, HUD had not yet distributed funds to rural communities through the RHS program. The program reserves not less than 5% of Continuum of Care Program funds for rural communities to apply separately for funds that would otherwise be awarded as part of the Continuum of Care Program. A rural community is defined to include (1) a county where no part is contained within a metropolitan statistical area, (2) a county located within a metropolitan statistical area, but where at least 75% of the county population is in nonurban Census blocks, or (3) a county located in a state where the population density is less than 30 people per square mile, and at least 1.25% of the acreage in the state is under federal jurisdiction. However, under this definition, no metropolitan city in the state (as defined by the CDBG statute) can be the sole beneficiary of the RHS grants.\nUnlike the Continuum of Care program, rural communities are able to serve persons who are not necessarily eligible under HUD's definition of \"homeless individual.\" HUD may award grants to rural communities to be used for (1) rehousing or improving the housing situation of those who are homeless or are in the worst housing situations in their geographic area, (2) stabilizing the housing situation of those in imminent danger of losing housing, and (3) improving the ability of the lowest-income residents in the community to afford stable housing.\nGrantees under the RHS program may use funds to assist people who are experiencing homelessness in many of the same ways as the CoC program. These include transitional housing, permanent housing, rapid rehousing, data collection, and a range of supportive services. Funds may also be used for homelessness prevention activities, relocation assistance, short-term emergency housing, and home repairs that are necessary to make housing habitable.", "", "(38 U.S.C. §2021) The Homeless Veterans Reintegration Program (HVRP) provides grants to states or other public entities and nonprofit organizations to operate employment programs that reach out to homeless veterans. The main goal of the HVRP is to reintegrate homeless veterans into the economic mainstream and labor force. HVRP grantee organizations provide services that include outreach, assistance in drafting a resume and preparing for interviews, job search assistance, subsidized trial employment, job training, and follow-up assistance after placement. Recipients of HVRP grants also provide supportive services not directly related to employment such as transportation, provision of or assistance in finding housing, and referral for mental health treatment or substance abuse counseling. HVRP grantees often employ formerly homeless veterans to provide outreach to homeless veterans and to counsel them as they search for employment and stability. In 2010, the Veterans' Benefits Act of 2010 ( P.L. 111-275 ) created a separate HVRP for women veterans and veterans with children. The program, which includes child care among its services, is authorized through FY2020 at $1 million per year ( P.L. 115-251 ).\nHVRP, initially authorized as part of the McKinney-Vento Homeless Assistance Act, was most recently authorized at $50 million through FY2020 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ) . (For more information about HVRP and other programs for homeless veterans, see CRS Report RL34024, Veterans and Homelessness .)", "(38 U.S.C. §2023) The Homeless Veterans Comprehensive Assistance Act of 2001 ( P.L. 107-95 ) instituted a demonstration program to provide job training and placement services to veterans leaving prison, long-term care, or mental institutions who are at risk of homelessness. The enacting law gave both the VA and the Department of Labor authority over the program. Congress extended the program through FY2012 as part of the Veterans' Mental Health and Other Care Improvements Act of 2008 ( P.L. 110-387 ). The law removed the program's demonstration status and expanded the number of sites able to provide services to 12 (up from six originally authorized in the law). Congress has continued to reauthorize the program, most recently through FY2020 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ), and, since FY2010, funding has been provided for the program as part of the HVRP appropriation.", "For more detailed information about VA programs for homeless veterans, see CRS Report RL34024, Veterans and Homelessness .", "(38 U.S.C. §§2031-2034) The Health Care for Homeless Veterans program operates at VA sites around the country where staff provide outreach services, physical and psychiatric health exams, treatment, and referrals to homeless veterans with mental health and substance use issues. As appropriate, the HCHV program places homeless veterans needing long-term treatment into one of its contract community-based facilities. Housing is provided either through residential treatment facilities that contract with the VA or through organizations that receive Grant and Per Diem funding for transitional housing (the \" Homeless Providers Grant and Per Diem Program \" is described below). The HCHV program was most recently authorized through FY2020 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ).", "(38 U.S.C. §§2011-2013) The Grant and Per Diem (GPD) program has two aspects: the grants portion of the program funds capital grants that organizations may use to build or rehabilitate facilities to be used for transitional housing and service centers for homeless veterans, while the per diem portion funds services to homeless veterans. Starting with the FY2017 competition for GPD funds, grantees are to focus on making transitional housing a short-term intervention and helping veterans obtain permanent housing as quickly as possible.\nCapital grants may be used to purchase buildings, to expand or remodel existing buildings, and to procure vans for use in outreach to and transportation for, homeless veterans. Service centers for veterans must provide health care, mental health services, hygiene facilities, benefits and employment counseling, meals, transportation assistance, job training and placement services, and case management. The capital grants will fund up to 65% of the costs of acquisition, expansion, or remodeling of facilities, and grantees must provide the remaining 35%. Under the per diem portion of the program, both capital grant recipients and those organizations that would be eligible for capital grants (but have not applied for them) are eligible to apply for funds, although grant recipients have priority in receiving per diem funds. The Grant and Per Diem program is authorized at $258 million for FY2015 and each fiscal year thereafter ( P.L. 114-228 ).", "(38 U.S.C. §2061) Within the Homeless Providers Grant and Per Diem program there is also a special purpose program that provides grants to health care facilities and to grant and per diem providers to encourage the development of programs for homeless veterans who are women, veterans with children (men and women), frail elderly, and those who have terminal illnesses or chronic mental illnesses. The program was most recently authorized at $5 million per year through FY2020 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ).", "(38 U.S.C. §1710(b)) The Domiciliary Care for Homeless Veterans program is a residential rehabilitation program specifically intended to meet the clinical needs of homeless veterans while preventing the therapeutically inappropriate use of hospital and nursing home care services. Veterans served through the Domiciliary Care program typically suffer from mental illness, substance use disorders, or both. A multi-dimensional, individually tailored treatment approach is used to stabilize the clinical status of veterans while the underlying causes of homelessness are addressed. The basic components of the DCHV program include community outreach and referral, admission screening and assessment, medical and psychiatric evaluation, treatment and rehabilitation, and post-discharge community support. DCHV staff help veterans apply for housing assistance, or arrangements are made for placement of homeless veterans in long-term care facilities such as State Soldiers Homes, group homes, adult foster care, or halfway houses. Homeless veterans are provided employment training through involvement in the VA's Incentive Therapy Program, a medically prescribed rehabilitation program involving therapeutic work assignments at VA medical centers for which veterans receive nominal payments.", "(38 U.S.C. §2063) The Compensated Work Therapy (CWT) program is a comprehensive rehabilitation program that prepares veterans for competitive employment and independent living. The program was created by the Veterans Omnibus Health Care Act of 1976 ( P.L. 94-581 ). The major goals of the program are (1) to use remunerative work to maximize a veteran's level of functioning; (2) to prepare veterans for successful re-entry into the community as productive citizens; and (3) to provide structured daily activity to veterans with severe and chronic disabling physical and/or mental conditions. As part of their work therapy, veterans produce items for sale or undertake subcontracts to provide certain products and/or services such as temporary staffing to a company. Funds collected from the sale of these products and/or services are used to fund the program. Funding for this program comes from the VA's Special Therapeutic and Rehabilitation Activities Fund, and the program is permanently authorized.\nIn 1991, as part of P.L. 102-54 , the Veterans Housing, Memorial Affairs, and Technical Amendments Act, Congress added the Therapeutic Transitional Housing component to the CWT program. The housing component is authorized through FY2020 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ). The purpose of the program is to provide housing to participants in the CWT program who have mental illnesses or chronic substance use disorders and who are homeless or at risk of homelessness. Although the law initially provided that both the VA itself or private nonprofit organizations, through contracts with the VA, could operate housing, it was subsequently changed so that only the VA now owns and operates housing. The housing is transitional—up to 12 months—and veterans who reside there receive supportive services.", "(42 U.S.C. §1437f(o)(19)) HUD-VASH is a joint HUD and VA initiative that provides specially designated Section 8 rental assistance vouchers to homeless veterans while the VA provides supportive services. The HUD-VASH statute requires that the program serve homeless veterans who have chronic mental illnesses or chronic substance use disorders; however, this requirement has been waived in recent years. Every homeless veteran who receives a housing voucher must be assigned to a VA case manager and receive supportive services. HUD-VASH originally began as a Memorandum of Agreement between HUD and the VA, and through that relationship 1,780 vouchers were allocated to homeless veterans. The Homeless Veterans Comprehensive Assistance Act of 2001 ( P.L. 107-95 ) codified the program and authorized the creation of an additional 500 vouchers each year for FY2003-FY2006. In the 109 th Congress, the Veterans Benefits, Health Care, and Information Technology Act of 2006 ( P.L. 109-461 ) similarly authorized additional HUD-VASH vouchers for FY2007 through FY2011.\nFunds were not provided for additional vouchers until the 110 th Congress, when the FY2008 Consolidated Appropriations Act ( P.L. 110-161 ) allocated $75 million for additional HUD-VASH vouchers. Since then, Congress has appropriated funding for new HUD-VASH vouchers in each appropriations act through FY2018, for a total of $715 million to fund HUD-VASH vouchers for one-year terms, bringing the total number of vouchers that are expected to be funded over the time period to more than 90,000. After the first year of funding, HUD-VASH vouchers are funded through the Section 8 account. Separately, in FY2015 funds were set aside to pay for a tribal HUD-VASH program, supporting approximately 500 vouchers. Funds for supportive services are allocated through the VA medical services appropriation.", "(38 U.S.C. §2044) In the 110 th Congress, the Veterans' Mental Health and Other Care Improvements Act of 2008 ( P.L. 110-387 ) authorized a program of supportive services to assist very low-income veterans and their families who either are making the transition from homelessness to housing or who are moving from one location to another. The VA calls the program Supportive Services for Veteran Families. Most recently, the program was authorized at $380 million for FY2019 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ).\nOrganizations that assist families transitioning from homelessness to permanent housing are given priority for funding under the law. Among the eligible services that recipient organizations may provide are outreach; case management; assistance with rent, utility, and moving costs; and help applying for VA and mainstream benefits such as health care services, daily living services, financial planning, transportation, legal assistance, child care, and housing counseling.", "In addition to the targeted programs for which specific funding is available (see Table 3 at the end of this report), the VA engages in several activities to assist homeless veterans that are not reflected in this report as separate programs.\nAn Advisory Committee on Homeless Veterans was established within VA to consult with and seek advice concerning VA benefits and services to homeless veterans (38 U.S.C. §2066). The Advisory Committee consists of 15 members appointed from Veterans Service Organizations, community-based homeless service providers, previously homeless veterans, experts in mental illness, experts in substance use disorders, and others. The Advisory Committee was most recently authorized through FY2022 as part of the Department of Veterans Affairs Expiring Authorities Act of 2018 ( P.L. 115-251 ). The VA's Veterans Benefits Administration has the authority to sell, at a discount, foreclosed properties acquired through the VA home loan program to nonprofit organizations and government agencies that will use them to shelter or house homeless veterans. This program is called Acquired Property Sales for Homeless Veterans and was mostly recently authorized through FY2017 as part of the Department of Veterans Affairs Expiring Authorities Act of 2015 ( P.L. 114-228 ). In addition, the VA Excess Property for Homeless Veterans Initiative provides for the distribution of federal excess personal property (hats, parkas, footwear, sleeping bags) to homeless veterans and homeless veterans programs. The VA initiated the Veterans Justice Outreach Program through which VA outreach specialists assist veterans who are involved in the justice system but do not face imprisonment. The outreach specialists help veterans connect with VA health services and benefits for which they might be eligible. The VA provides dental care for homeless veterans if needed to gain employment, relieve pain, or treat certain conditions. Veterans are eligible if they are receiving care in the Domiciliary Care for Homeless Veterans program, the Compensated Work Therapy Transitional Housing program, Community Residential Care Facilities, or a Grant and Per Diem program. Through Enhanced Use Leasing authority, the VA may lease VA properties to outside entities for the provision of supportive housing. Supportive housing is defined as housing combined with supportive services for veterans or their families who are homeless or at risk of homelessness. Among the types of housing that qualify are transitional, permanent, and single room occupancy housing, congregate living, independent living, or assisted living facilities. The Department of Labor makes funds available through its Homeless Veterans Reintegration Program for local communities that organize Stand Downs for Homeless Veterans. Stand Downs are local events, staged annually in many cities across the country, in which local Veterans Service Organizations, businesses, government entities, and other social service organizations come together for up to three days to provide services for homeless veterans. Some of these services include food, shelter, clothing, and a range of other types of assistance, including VA provided health care, benefits certification, and linkages with other programs.", "For nearly 10 years, since 2009, agencies within the federal government have focused on ending homelessness among all people experiencing it by focusing on specific populations, including veterans, families with children, youth, and people considered chronically homeless. However, efforts to bring about an end to homelessness began almost 20 years ago, when the concept was introduced in a report from the National Alliance to End Homelessness (NAEH), which outlined a strategy to end homelessness in 10 years. The plan included four recommendations: developing local, data-driven plans to address homelessness; using mainstream programs (such as Temporary Assistance for Needy Families, Section 8, and Supplemental Security Income) to prevent homelessness; employing a housing first strategy to assist most people who find themselves homeless; and developing a national infrastructure of housing, income, and service supports for low-income families and individuals.\nWhile the idea of ending homelessness for all people was embraced by many groups, the George W. Bush Administration and federal government focused on ending homelessness among chronically homeless individuals specifically. Initially, the term \"chronically homeless\" only included single, unaccompanied individuals. The term was defined as \"an unaccompanied homeless individual with a disabling condition who has been continually homeless for a year or more, or has had at least four episodes of homelessness in the past three years.\" The HEARTH Act updated the definition to include families with a head of household who has a disability.\nIn the year following the release of the NAEH report, then-HUD Secretary Martinez announced HUD's commitment to ending chronic homelessness at the NAEH annual conference. In 2002, as a part of his FY2003 budget, President Bush made \"ending chronic homelessness in the next decade a top objective.\" The bipartisan, congressionally mandated Millennial Housing Commission, in its Report to Congress in 2002, included ending chronic homelessness in 10 years among its principal recommendations. And, by 2003, the United States Interagency Council on Homelessness (USICH) had been re-engaged after six years of inactivity and was charged with pursuing the President's 10-year plan. For the balance of the decade, multiple federal initiatives focused funding and efforts on this goal.\nHowever, the initiative to end chronic homelessness raised some concerns among advocates for homeless people that allocating resources largely to chronically homeless individuals is done at the expense of families with children who are homeless, homeless youth, and other vulnerable populations. When it was enacted in 2009, the HEARTH Act mandated that the USICH draft a Federal Strategic Plan to End Homelessness among all groups (families with children, unaccompanied youth, veterans, and chronically homeless individuals) within a year of the law's enactment, and to update the plan annually. In addition to the USICH plan, in November 2009 the VA announced a plan to end homelessness among veterans within five years. These plans—to end chronic homelessness, to end homelessness generally, and to end veterans' homelessness—are described below. Further, Table 1 , following the descriptions of plans to end homelessness, presents numbers of homeless people, including people in families, veterans, and those experiencing chronic homelessness.", "In 2002, the George W. Bush Administration established a national goal of ending chronic homelessness within 10 years, by 2012. An impetus behind the initiative to end chronic homelessness is that chronically homeless individuals were estimated to account for about 10% of all users of the homeless shelter system, but are estimated to use nearly 50% of the total days of shelter provided. (For more information about research surrounding chronic homelessness and permanent supportive housing, see CRS Report R44302, Chronic Homelessness: Background, Research, and Outcomes .)\nPermanent supportive housing is generally seen as a solution to ending chronic homelessness. It consists of housing, paired with social services, available to low-income and/or homeless households. Services can include case management, substance abuse counseling, mental health services, income management and support, and life skills services. A model of permanent supportive housing called \"housing first\" offers homeless individuals with addictions and mental health issues immediate access to housing even if they have not participated in treatment. Instead, the housing first model offers counseling and treatment services to clients on a voluntary basis rather than requiring sobriety or adherence to psychiatric medication treatment. It also stresses the importance of resident choice about where to live and the type and intensity of services, with services structured to fit individual resident needs. In the late 1990s, research began to show that finding housing for homeless individuals with severe mental illnesses meant that they were less likely to be housed temporarily in public accommodations, such as hospitals, jails, or prisons. Based on the research, service providers and HUD began to devote resources to housing first initiatives.\nThe Administration undertook several projects to reach its goal of ending chronic homelessness within 10 years, each of which took place during the mid-2000s. These included (1) a collaboration among HUD, HHS, and VA (the Collaborative Initiative to Help End Chronic Homelessness ) that funded housing and treatment for chronically homeless individuals; (2) a HUD and DOL project called Ending Chronic Homelessness through Employment and Housing , through which HUD funded permanent supportive housing and DOL offered employment assistance; and (3) a HUD pilot program called Housing for People Who Are Homeless and Addicted to Alcohol that provided supportive housing for chronically homeless persons.\nIn addition, since FY2005, HUD has encouraged the development of housing for chronically homeless individuals in the way that it distributes the Homeless Assistance Grants to applicants through its annual grant competition. For example, HUD has set aside additional funding for projects that serve those experiencing chronic homelessness. In addition, HUD's Continuum of Care program requires that at least 30% of funds (not including those for permanent housing renewal contracts) are to be used to provide permanent supportive housing to individuals with disabilities or families with an adult head of household (or youth in the absence of an adult) who has a disability. While homeless people with disabilities need not have been homeless for the duration required for chronic homelessness, there is overlap in the populations. The requirement for permanent supportive housing is to be reduced proportionately as communities increase permanent housing units for those individuals and families, and it will end when HUD determines that a total of 150,000 permanent housing units have been provided for homeless persons with disabilities since 2001.", "The HEARTH Act, enacted on May 20, 2009 as part of the Helping Families Save Their Homes Act ( P.L. 111-22 ), charged the U.S. Interagency Council on Homelessness (USICH) with developing a National Strategic Plan to End Homelessness. The HEARTH Act specified that the plan should be made available for public comment and submitted to Congress and the President within one year of the law's enactment.\nThe USICH released its report, entitled Opening Doors , in 2010. The plan set out goals of ending chronic homelessness as well as homelessness among veterans within the next five years and ending homelessness for families, youth, and children within the next 10 years. USICH updated the plan several times in subsequent years. The 2015 version expanded on what it means to end homelessness. It does not mean that homelessness will never occur, but rather that it should be \"rare, brief, and non-recurring.\" Specifically, communities should\nbe able to identify people experiencing and at risk of homelessness; prevent and divert people from homelessness; provide immediate access to shelter and services while working to obtain permanent housing; and quickly connect people to housing and services when homelessness occurs.\nThe 2018 update to the USICH plan was retitled Home, Together . The plan continues the goals of ending homelessness among specific populations, but it does not include time limits. The report includes six areas of increased focus—affordable housing, homelessness prevention and diversion, unsheltered homelessness, rural communities, employment, and learning from people who have experienced homelessness.", "On November 3, 2009, the VA announced a plan to end homelessness among veterans within five years, by the end of 2015. While the VA did not reach its goal to end homelessness within the time period, it has continued to work toward reducing veteran homelessness, acknowledging in 2017 that ending veteran homelessness may still be a \"multi-year process.\" Similar to the USICH plan, an end to veteran homelessness, according to the VA, means that communities will identify all veterans experiencing homelessness, be able to provide shelter immediately for veterans who want it, be able to help veterans move quickly into permanent housing, and have the capacity to help veterans who fall into homelessness in the future.\nThe VA has not released a formal written plan to end homelessness. Instead, beginning with the FY2011 budget, VA budget documents have outlined ways in which it will pursue the goal of ending homelessness.", "In the years since USICH and the VA announced efforts to end homelessness, there have been reductions in the overall number of people experiencing homelessness according to HUD's point-in-time counts, as well as in specific populations—people in families with children, veterans, and chronically homeless individuals. However, some communities, particularly in urban areas with growing housing costs, have seen an increase in the number of people experiencing homelessness over the same time period. Among those that have drawn attention for rising numbers of homeless people are Los Angeles City and County, which saw homelessness increase by 66% between 2010 and 2017, Seattle and King County (29%), New York (44%), and Honolulu (69%).\nSee Table 1 for point-in-time counts of people experiencing homelessness since 2007. For more information on HUD counts and estimates, see CRS In Focus IF10312, How Many People Experience Homelessness?", "Table 2 shows final appropriation levels for FY2008-FY2019 for the targeted homelessness programs included in this report with the exception of programs administered by the VA. Note that, as of the date of this report, not all federal agencies had received final appropriations for FY2019. As a result, Table 2 only contains FY2019 funding numbers for programs in the Departments of Labor, Health and Human Services, and Education.\nTable 3 shows actual obligations for the Department of Veterans Affairs targeted homeless programs for FY2005-FY2017. It does not contain FY2018 obligations because, as of the date of this report, only estimated obligations were available." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 1, 2, 3, 4, 4, 2, 3, 2, 3, 3, 3, 3, 4, 4, 4, 2, 3, 2, 3, 4, 4, 4, 2, 3, 3, 2, 3, 3, 4, 3, 3, 3, 3, 3, 1, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "", "h0_full", "h0_full", "", "h0_full", "h2_title h1_title", "", "", "", "", "", "", "h1_title", "h1_full", "", "", "", "", "", "", "h1_title", "h1_full", "", "", "", "", "", "h2_title", "h2_full", "", "h2_title", "", "", "", "", "", "h2_full", "", "h2_full", "h3_full h2_title", "h2_full", "", "", "h3_full", "" ] }

{ "question": [ "What departments use the McKinney-Vento Homeless Assistance Act definition of homelessness?", "What is the McKinney-Vento definition of homelessness?", "What definition do other departments use?", "What programs serve people experiencing homelessness?", "What programs do the Department of Health and Human Services provide?", "What measures is the Department of Justice taking against domestic violence?", "What are Homeless Assistance Grants?", "What services do the VA operate for aiding homeless veterans?", "What department operates the Homeless Veterans Reintegration Program?", "What are the current goals of the U.S. Interagency Council on Homelessness?", "What are the findings of point-in-time counts of people experiencing homelessness?", "What areas in the U.S. have been experiencing increasing homelessness?" ], "summary": [ "A number of programs, including those overseen by the Departments of Housing and Urban Development (HUD), Veterans Affairs (VA), Homeland Security (DHS), and Labor (DOL), use the definition enacted as part of the McKinney-Vento Homeless Assistance Act (P.L. 100-77), as amended.", "The McKinney-Vento definition largely considers someone to be homeless if they are living in a shelter, are sleeping in a place not meant to be used as a sleeping accommodation (such as on the street or in an abandoned building), or will imminently lose their housing.", "Definitions for several other programs, such as the Department of Education (ED), are broader, and may consider someone living in a precarious or temporary housing situation to be homeless.", "Programs that serve people experiencing homelessness include the Education for Homeless Children and Youths program administered by ED and the Emergency Food and Shelter program, a Federal Emergency Management Agency (FEMA) program run by DHS.", "The Department of Health and Human Services (HHS) administers several programs that serve homeless individuals, including Health Care for the Homeless, Projects for Assistance in Transition from Homelessness, and the Runaway and Homeless Youth program.", "The Department of Justice administers a transitional housing program for victims of domestic violence.", "HUD administers the Homeless Assistance Grants, made up of grant programs that provide housing and services for homeless individuals ranging from emergency shelter to permanent housing.", "The VA operates numerous programs that serve homeless veterans. These include Health Care for Homeless Veterans, Supportive Services for Veteran Families, and the Homeless Providers Grant and Per Diem program, as well as a collaborative program with HUD called HUD-VASH, through which homeless veterans receive Section 8 vouchers from HUD and supportive services through the VA.", "The Department of Labor also operates a program for homeless veterans, the Homeless Veterans Reintegration Program.", "The federal government, through the U.S. Interagency Council on Homelessness, has established a goal of ending homelessness among various populations, including families, youth, chronically homeless individuals, and veterans (the VA also has its own goal of ending veteran homelessness).", "Point-in-time counts of those experiencing homelessness in 2017 show overall reductions among homeless people, as well as reductions among chronically homeless individuals, people in families, and veterans compared to recent years. At the same time, however, homelessness in some parts of the country, particularly areas with high housing costs, has increased.", "At the same time, however, homelessness in some parts of the country, particularly areas with high housing costs, has increased." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, -1, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "", "Background", "Brief History of Impoundment", "Controversies Increase", "Impoundment Control Act of 1974", "Alternative to an Item Veto", "Evolution of Expanded Rescission Proposals", "Enactment of the Line Item Veto Act of 1996", "Developments During the 105th Congress", "Initial Court Decisions", "The Line Item Veto in Action", "More Court Challenges", "Consideration of Alternatives to the Line Item Veto Act", "Developments from 1999-2004", "106th Congress", "107th Congress", "108th Congress", "Developments in the 109th Congress", "Measures Reported in the 109th Congress", "Developments in the 110th Congress", "Measures Introduced in the 110th Congress", "Developments During the 111th Congress", "Actions Taken in Congress", "Expedited Rescission and the Obama Administration", "Measures Introduced in the 111th Congress" ], "paragraphs": [ "", "Debate about the appropriate relationship between the branches in the federal budget process seems inevitable, given the constitutional necessity of shared power in this sphere. Under the Constitution, Congress possesses the \"power of the purse\" (\"No money shall be drawn from the Treasury but in consequence of appropriations made by law\"), but the President enjoys broad authority as the chief executive who \"shall take care that the laws be faithfully executed.\"\nThe Constitution is silent concerning the specifics of a budget system for the federal government. Informal procedures sufficed for many years. The Budget and Accounting Act of 1921 (P.L. 67-14) for the first time required the President to submit a consolidated budget recommendation to Congress. To assist in this task, the act also created a new agency, the Bureau of the Budget, \"to assemble, correlate, revise, reduce, or increase the estimates of the several departments or establishments.\" In 1970, the budget agency was reconstituted as the Office of Management and Budget (OMB). OMB also plays an important role later in the budget process when funds are actually spent as appropriations laws are implemented. Impoundment of funds by the President represents an important component in this stage of budget execution.\nPresidential impoundment actions have sometimes been controversial. The subject of granting the President item veto authority, akin to that exercised by 43 governors, also has elicited considerable debate. With an item veto, the executive can delete specific provisions in a piece of legislation presented for signature, and then proceed to sign the measure into law.", "Impoundment includes any executive action to withhold or delay the spending of appropriated funds. One useful distinction among impoundment actions, which received statutory recognition in the 1974 Impoundment Control Act, focuses on duration: whether the President's intent is permanent cancellation of the funds in question (rescission) or merely a temporary delay in availability (deferral).\nAnother useful contrast distinguishes presidential deferrals for routine administrative reasons from deferrals for policy purposes. Virtually all Presidents have impounded funds in a routine manner as an exercise of executive discretion to accomplish efficiency in management. The creation of budgetary reserves as a part of the apportionment process required by the Antideficiency Acts (31 U.S.C. 1511-1519) provided formal structure for such routine impoundments, which originated with an administrative regulation issued in 1921 by the Bureau of the Budget and then received a statutory base in 1950. Impoundments for policy reasons, such as opposition to a particular program or a general desire to reduce spending, whether short-term or permanent, have proved far more controversial.", "Instances of presidential impoundment date back to the early nineteenth century, but Presidents typically sought accommodation rather than confrontation with Congress. In the 1950s and 1960s, disputes over the impoundment authority resulted from the refusal of successive Presidents to fund certain weapons systems to the full extent authorized by Congress. These confrontations between the President and Congress revolved around the constitutional role of commander-in-chief and tended to focus on relatively narrow issues of weapons procurement. President Johnson made broader use of his power to impound by ordering the deferral of billions of dollars of spending during the Vietnam war in an effort to restrain inflationary pressures in the economy. While some impoundments during these periods were motivated by policy concerns, they typically involved temporary spending delays, with the President acting in consultation with congressional leaders, so that a protracted confrontation between the branches was avoided.\nConflict over the use of impoundments greatly increased during the Nixon Administration and eventually involved the courts as well as Congress and the President. In the 92 nd and 93 rd Congresses (1971-1974), the confrontation intensified as the President sought to employ the tool of impoundment to reorder national priorities and alter programs previously approved by Congress. Following President Nixon's reelection in 1972, the Administration announced major new impoundment actions affecting a variety of domestic programs. For example, a moratorium was imposed on subsidized housing programs, community development activities were suspended, and disaster assistance was reduced. Several farm programs were likewise targeted for elimination. Perhaps the most controversial of the Nixon impoundments involved the Clean Water Act funds. Court challenges eventually reached the Supreme Court, which in early 1975 decided the case on narrower grounds than the extent of the President's impoundment authority.", "During these impoundment conflicts of the Nixon years, Congress responded not only with ad hoc efforts to restore individual programs, but also with gradually more restrictive appropriations language. Arguably, the most authoritative response was the enactment of the Impoundment Control Act (ICA), Title X of the Congressional Budget and Impoundment Control Act of 1974. As a result of a compromise in conference, the ICA differentiated deferrals, or temporary delays in funding availability, from rescissions, or permanent cancellations of designated budget authority, with different procedures for congressional review and control of the two types of impoundment. The 1974 law also required the President to inform Congress of all proposed rescissions and deferrals and to submit specified information regarding each. The ICA further required the Comptroller General to oversee executive compliance with the law and to notify Congress if the President failed to report an impoundment or improperly classified an action.\nThe original language allowed a deferral to remain in effect for the period proposed by the President (not to exceed beyond the end of the fiscal year so as to become a de facto rescission) unless either the House or the Senate took action to disapprove it. Such a procedure, known as a one-house legislative veto, was found unconstitutional by the Supreme Court in INS v. Chadha (462 U.S. 919 (1983)). In May 1986 a federal district court ruled that the President's deferral authority under the ICA was inseverable from the one-house veto provision and hence was null; the lower court decision was affirmed on appeal in City of New Haven v. United States (809 F.2d 900 (D.C.C. 1987)).\nIn the case of a rescission, the ICA provided that the funds must be made available for obligation unless both houses of Congress take action to approve the rescission request within 45 days of \"continuous session\" (recesses of more than three days not counted). In practice, this usually means that funds proposed for rescission not approved by Congress must be made available for obligation after about 60 calendar days, although the period can extend to 75 days or longer. Congress may approve all or only a portion of the rescission request. Congress may also choose after the 45-day period to rescind funds previously requested for rescission by the President. Congress does rescind funds never proposed for rescission by the President, but such action is not subject to the ICA procedures.\nThe ICA establishes no procedures for congressional disapproval of a rescission request during the 45-day period. However, some administrations have voluntarily followed a policy of releasing funds before the expiration of the review period, if either the House or the Senate authoritatively indicates that it does not intend to approve the rescission.\nIn the fall of 1987, as a component of legislation to raise the limit on the public debt ( P.L. 100-119 ), Congress enacted several budget process reforms. Section 207 prohibited the practice, sometimes used by Presidents when Congress failed to act on a rescission proposal within the allotted period, of submitting a new rescission proposal covering identical or very similar matter. By using such resubmissions, the President might continue to tie up funds even though Congress, by its inaction, had already rejected virtually the same proposal. The prohibition against such seriatim rescission proposals contained in the 1987 law applies for the duration of the appropriation, so that it may remain in effect for two or more fiscal years. Section 206 of P.L. 100-119 served to codify the decision in the New Haven case, allowing deferrals to provide for contingencies, to achieve savings made possible through changes in requirements or efficiency of operations, or as provided in statute. The ICA as amended no longer sanctions policy deferrals.", "The U.S. Constitution provides that the President may either sign a measure into law or veto it in its entirety. However, constitutions in 43 states provide for an item veto (usually confined to appropriation bills), allowing the governor to eliminate discrete provisions in legislation presented for signature. Ten states allow the governor to reduce amounts as well as eliminate items, and seven states have an \"amendatory\" veto, permitting the governor to return legislation with specific suggestions for change.\nThe first proposal to provide the President with an item veto was introduced in 1876. President Grant endorsed the mechanism, in response to the growing practice in Congress of attaching \"riders,\" or provisions altering permanent law, to appropriations bills. Over the years many bills and resolutions (mainly proposed constitutional amendments) have been introduced, but action in Congress on item veto proposals, beyond an occasional hearing, has been limited. In 1938 the House approved an item veto amendment to the independent offices appropriations bill by voice vote, but the Senate rejected the amendment. Contemporary proposals for item veto are usually confined to bills containing spending authority, although not necessarily limited to items of appropriation.\nIn the 101 st Congress, the Senate Judiciary Subcommittee on the Constitution held a hearing on proposed constitutional amendments permitting an item veto on April 11, 1989, and reported two such amendments, without recommendation, on June 8. S.J.Res. 14 would have allowed the President to veto only selected items in an appropriations bill, while S.J.Res. 23 would have authorized him to disapprove or reduce any item of appropriation, excluding legislative branch items. On April 26, 1990, the full Judiciary Committee voted 8-6 to report both measures favorably, but the report was not filed until September 19, 1990.\nIn the 102 nd Congress, the House voted on language providing item veto authority for the President. On June 11, 1992, during debate on H.J.Res. 290 , proposing a constitutional amendment requiring a balanced budget, the House rejected by vote of 170-258 an amendment by Representative Kyl ( H.Amdt. 602 ). The Kyl proposal sought to allow the President to exercise item veto authority in signing any measure containing spending authority (broadly defined), limit total outlays for a fiscal year to 19% of the gross national product of that year, and require a three-fifths vote of the Congress to approve any additional funds.\nSome contended that the President already had item veto authority as a part of his constitutional powers. An article by Stephen Glazier, appearing in the Wall Street Journal on December 4, 1987, advocated this position. While a minority interpretation, this view claims some notable supporters. The Senate Judiciary Committee's Subcommittee on the Constitution held a hearing on June 15, 1994, to receive testimony on the subject.\nSome continue to believe that a statutory framework (different from the Line Item Veto Act of 1996) may yet be devised to give the President authority akin to an item veto without the necessity of a constitutional amendment. One statutory alternative entails bills incorporating the separate enrollment approach, which stipulate that each item of an appropriations bill be enrolled as a separate bill. Since 1985 such separate enrollment measures have been introduced repeatedly in the Senate. The Dole amendment to S. 4 in the 104 th Congress, as passed by the Senate in March 1995 ( S.Amdt. 347 ), incorporated the separate enrollment approach. In the 109 th Congress, H.R. 4889 likewise reflects this approach.", "Consideration of impoundment reform became increasingly joined with the idea of an item veto. During the Ford and Carter Administrations, the provisions of the ICA proved relatively noncontroversial. Dissatisfaction increased during the Reagan Administration. President Reagan, in his 1984 State of the Union message, specifically called for a constitutional amendment to grant item veto authority, which he considered to be a \"powerful tool\" while governor of California. In his last two budget messages, President Reagan included enhanced rescission authority among his budget process reform proposals. President George H. W. Bush also endorsed the idea of expanded rescission authority and an item veto for the President. During the 1992 campaign, then-Governor Bill Clinton advocated a presidential item veto, and he subsequently endorsed enhanced rescission authority. During the 2000 campaign George W. Bush went on record in support of expanded rescission authority, and as President, he has repeatedly called for some kind of item veto authority.\nInstead of granting true item veto authority to the President via a constitutional amendment, efforts came to focus on modifying the framework for congressional review of rescissions by the President. Legislative activity directed toward granting the President expanded rescission authority extended over several years. Such statutory alternatives sometimes have been referred to as giving the President a \"line item veto\"; while the nomenclature is not technically correct, it does call attention to some functional similarities.\nIn examining impoundment reform legislation, the distinction often has been drawn between \"enhanced\" and \"expedited\" rescission proposals. With enhanced rescission, the intent is to reverse the \"burden of action\" and thereby create a presumption favoring the President. Such proposals usually stipulate that budget authority identified in a rescission message from the President is to be permanently canceled unless Congress acts to disapprove the request within a prescribed period. In contrast, the expedited rescission approach focuses on procedural changes in Congress to require an up or down vote on certain rescission requests from the President. Such measures contain expedited procedures to ensure prompt introduction of a measure to approve the rescission, fast report by committee or automatic discharge, special limits on floor amendments and debate, and so on. Under expedited rescission, congressional approval would still be necessary to cancel the funding, but it would become difficult to ignore proposed rescissions and hence to reject them by inaction.\nSome bills are \"hybrids,\" reflecting a combination of item veto and rescission language and sometimes features of both expedited and enhanced approaches to rescission reform as well. H.R. 2 in the 104 th Congress (and ultimately, P.L. 104-130 ) represented such hybrids.\nToward the end of the 102 nd Congress, H.R. 2164 , characterized by its supporters as a compromise rescission reform measure agreeable to most sponsors of the other measures as well, had over 220 cosponsors. For the first time an expanded rescission measure received favorable floor action, when H.R. 2164 gained House approval on October 3, 1992, by vote of 312-97. The measure would have established procedures for expedited congressional consideration of certain rescission proposals from the President submitted not later than three days after signing an appropriations act. Under the measure, the proposed rescission could not reduce a program below the budget level of the previous year or by more than 25% for new programs. Funds would have become available after a vote in Congress to reject the proposed rescission.\nConsideration of expanded rescission bills resumed in the 103 rd Congress. On two separate occasions, the House passed expedited rescission measures. Meanwhile, on March 25, 1993, the Senate adopted two sense of the Senate amendments relating to rescission reform as a part of the Budget Resolution for FY1994. The conference version retained a single sense of the Senate provision in this regard, stating the \"President should be granted line-item veto authority over items of appropriations and tax expenditures\" to expire at the end of the 103 rd Congress. H.Con.Res. 218 , the Budget Resolution for FY1995, as adopted in May 1994, also contained sense-of-the-House provisions regarding enactment of certain budget process legislation, including expedited rescission authority for the President.", "Action on an expanded rescission measure commenced early in the 104 th Congress. This reflected the results of the November midterm elections, which returned a Republican majority to both the House and Senate. On September 28, 1994, many House Republican Members and candidates signed the Republican Contract with America , which pledged action on a number of measures, including a \"legislative line item veto,\" within the first 100 days, should a Republican majority be elected.\nHearings began on January 12, 1995, when the Senate Committee on Governmental Affairs and the House Committee on Government Reform and Oversight held a joint hearing on H.R. 2 , to give the President legislative line item veto authority. On January 18, the Senate Budget Committee held a hearing on related measures ( S. 4 , S. 14 , and S. 206 ). The Senate Judiciary Subcommittee on the Constitution held a hearing on January 24 to consider constitutional amendment proposals. On January 25, the House Committee on Government Reform and Oversight ordered H.R. 2 reported, as amended, and the next day the House Rules Committee likewise reported a further amended version of H.R. 2 .\nHouse floor consideration of H.R. 2 commenced on February 2, 1995, on the version of H.R. 2 reported as an amendment in the nature of a substitute, with an open rule and over 30 amendments pending. The House debated the measure for three days during which time six amendments were approved and 11 amendments were rejected, along with a motion to recommit with instructions. On February 6, 1995, the House passed H.R. 2 , as amended, by vote of 294-134. The date of passage had special meaning, as it was the 84 th birthday of former President Ronald Reagan, long a supporter of an item veto for the President.\nOn February 14, 1995, the Senate Budget Committee held markup on pending rescission measures. The committee ordered S. 4 , as amended, reported without recommendation, by vote of 12-10. S. 14 was also ordered reported without recommendation, with an amendment in the nature of a substitute further amended, by vote of 13-8. The committee failed to order reported proposed legislation to create a legislative item veto by requiring separate enrollment of items in appropriations bills and targeted tax benefits in revenue bills.\nOn February 23, 1995, the Senate Governmental Affairs Committee held a hearing on S. 4 and S. 14 . There had been a joint hearing with the House Government Reform and Oversight Committee on January 12, but some Senators on the committee, including the ranking minority member, maintained that the additional hearing day was needed because they had been unable to attend in January, due to competing duties that day on the Senate floor. On March 2, 1995, the Governmental Affairs Committee held markup, with similar results as occurred in the Budget Committee: both bills were ordered reported without recommendation. S. 4 was ordered reported by voice vote; previously the Stevens amendment to the Glenn motion to report carried by vote of 9-6. During markup of S. 14 , the Pryor amendment to exempt budget authority for the operations of the Social Security Administration from expedited rescission was adopted by voice vote. S. 14 was then ordered reported by vote of 13-2.\nIn the Senate, general debate on the subject of item veto began on March 16; it continued on March 17 and on March 20 until late in the afternoon, when floor consideration of S. 4 began. The Republican leaders in the Senate reportedly delayed consideration of legislative line item veto bills in hopes of developing a compromise measure that supporters of S. 4 and S. 14 could all embrace. The \"Republican compromise\" substitute appeared as Dole Amendment No. 347 on March 20; this substitute amendment incorporated the separate enrollment approach, which seeks to confer item veto authority by statutory means. During consideration of S. 4 on March 20, two perfecting amendments added by the Budget Committee were withdrawn; the provisions so deleted related to procedures for deficit reduction and to a sunset date for the enhanced rescission authority (both are still found in S. 14 ).\nFloor debate on S. 4 continued on March 21-23. Eight amendments were adopted by voice vote, including the Dole Amendment itself, providing for separate enrollment for presentation to the President of each item of any appropriation and authorization bill or resolution providing direct spending or targeted tax benefits. The Senate ultimately passed S. 4 , with the Dole Amendment in the nature of a substitute and additional amendments, on March 23, 1995, by vote of 69-29.\nThe significant differences between the House-passed H.R. 2 (enhanced rescission approach), and the Senate-passed S. 4 (separate enrollment approach), needed to be resolved in conference. On May 17, 1995, the House passed S. 4 , after agreeing to strike all after the enacting clause of Senate-passed S. 4 and insert in lieu the language of the House-passed H.R. 2 . The Senate agreed to a conference and named eighteen conferees on June 20. On August 1, the Senate approved (83-14) a Dorgan Amendment to H.R. 1905 , FY1996 Energy and Water Appropriations, to express the sense of the Senate that the House Speaker should move immediately to appoint conferees on S. 4 . On September 7, 1995, the Speaker appointed eight House conferees, after a motion to instruct conferees to make the bill applicable to current and subsequent fiscal year appropriation measures was agreed to by voice vote.\nThe conference committee held an initial meeting on September 27, 1995, at which opening statements were presented, and Representative Clinger was chosen as conference chairman. The Members present then instructed staff to explore alternatives for reconciling the two versions. On October 25, 1995, the House agreed to a motion to instruct the House conferees on S. 4 to insist upon the inclusion of provisions to require that the bill apply to the targeted tax benefit provisions of any revenue or reconciliation bill enacted into law during or after FY1995, by vote of 381-44. The conferees met again on November 8, 1996, at which time the House Republicans on the committee offered a compromise package. Some key elements included accepting the House approach of enhanced rescission, using the Senate definition of \"item\" for possible veto, using compromise language approved by the Joint Committee on Taxation for defining \"targeted tax benefits,\" including new direct spending, accepting Senate \"lockbox\" language (designed to ensure that any savings from cancellations could be used only for deficit reduction), and dropping the Senate sunset proposal.\nIn his State of the Union message on January 23, 1996, President Clinton urged Congress to complete action on a line item veto measure, stating \"I also appeal to Congress to pass the line item veto you promised the American people,\" but negotiations apparently remained stalled. Following return from the congressional recess in February, the pace of conference activity appeared to pick up considerably. On March 14, 1996, Republican negotiators on the conference committee reported that they had reached agreement on a compromise version of S. 4 , and the conference report was filed on March 21, 1996. Although there was no public conference meeting for approval, the Republican negotiators obtained the signatures of a majority of conferees, thus readying the conference report for final action.\nThe conference substitute reflected compromise between the House and Senate versions, although the enhanced rescission approach of H.R. 2 rather than the separate enrollment framework of S. 4 was chosen. As in the November compromise package, new direct spending and certain targeted tax benefits were subject to the new authority of the President as well as items of discretionary spending in appropriation laws. The measure was to take effect on January 1, 1997, absent an earlier balanced budget agreement, and would terminate on January 1, 2005. The Senate approved the conference substitute on March 27, 1996, by vote of 69-31, and the House followed suit on March 28, 1996, by vote of 232-177. President Clinton signed S. 4 on April 9, 1996.\nThe Line Item Veto Act of 1996 (LIVA) amended the Congressional Budget and Impoundment Control Act of 1974 ( P.L. 93-344 ), to give the President \"enhanced rescission authority\" to cancel certain items in appropriations and entitlement measures and also certain narrowly applicable tax breaks. The act authorized the President to cancel in whole any dollar amount of discretionary budget authority (appropriations), any item of new direct spending (entitlement), or limited tax benefits with specified characteristics, contained in a bill otherwise signed into law. The cancellation was to take effect upon receipt in the House and Senate of a special notification message. \"Cancellation\" in this context meant to prevent from having legal force; in other words, provisions canceled never were to become effective unless Congress reversed the action of the President by enacting a \"disapproval bill.\" The President was only to exercise the cancellation authority if he determined that such cancellation would reduce the federal budget deficit and would not impair essential government functions or harm the national interest; and then notified the Congress in a special message of any such cancellation within five calendar days after enactment of the law providing such amount, item, or benefit. The act provided 30 days for the expedited congressional consideration of disapproval bills to reverse the cancellations contained in the special messages received from the President. Detailed provisions for expedited consideration of the disapproval bill in the House and Senate were outlined. The LIVA also contained a \"lockbox\" procedure to help ensure that any savings from cancellations go toward deficit reduction. This was to be accomplished by binding the new procedures to existing requirements relating to discretionary spending limits and the PAYGO requirements of the Budget Enforcement Act of 1990. To facilitate judicial review, the act provided for (1) expedited review by the U.S. District Court for the District of Columbia of an action brought by a Member of Congress or an adversely affected individual on the ground that any provision of this act violates the Constitution; (2) review of an order of such Court by appeal directly to the Supreme Court; and (3) expedited disposition of such matter by the Supreme Court. The act became effective on January 1, 1997.", "During 1997, the first year with the Line Item Veto Act in effect, several noteworthy developments involved judicial challenges and the first use of the new authority by President Clinton. In Congress, disapproval bills to overturn the cancellations by the President were introduced, along with alternative measures for providing the President with expanded rescission authority, bills to repeal the Line Item Veto Act, and even a bill to correct an apparent \"loophole\" in the original Act. In 1998, there were additional court challenges, with the Supreme Court eventually striking down the new law as unconstitutional.", "On April 9, 1996 (the same day the Line Item Veto Act was signed by President Clinton), the National Treasury Employees Union et al. filed a complaint for declaratory and injunctive relief, challenging the constitutionality of the new law in the U.S. District Court for the District of Columbia (Civil Action No. 96-624). Only individuals \"adversely affected\" by the expanded presidential authority, or Members of Congress, can bring action under the \"expedited judicial review\" provision in the law. On July 3, 1996, a federal judge dismissed the case, ruling that the union's claims were \"too speculative and remote\" to provide legal standing under the law.\nOn January 2, 1997, the day after the Line Item Veto Act went into effect, another suit challenging its constitutionality was filed in the same court (referred to as Byrd v. Raines ). The plaintiffs, led by Senator Robert Byrd, now included six Members of Congress: Senators Byrd, Mark Hatfield, Daniel Moynihan, and Carl Levin, and Representatives David Skaggs and Henry Waxman. Office of Management and Budget Director Franklin Raines and Secretary of the Treasury Robert Rubin were named as defendants, because of their responsibilities for implementing key aspects of the law. The plaintiffs contended that the act violated the constitutional requirements of bicameral passage and presentment \"by granting to the President, acting alone, the authority to 'cancel' and thus repeal provisions of federal law.\"\nOn January 22, 1997, the Senate by unanimous consent agreed to S.Res. 21 to direct the Senate Legal Counsel to appear as amicus curiae (friend of the court) in the name of the Senate in the Byrd v. Raines case. During debate on S.Res. 21 , Majority Leader Trent Lott noted that Title VII of the Ethics in Government Act authorized such action by the Senate in any legal action \"in which the powers and responsibilities of the Congress under the Constitution are placed in issue.\"\nOn March 21, 1997, U.S. District Court Judge Thomas Penfield Jackson heard oral arguments in the case of Byrd v. Raines . Less than three weeks later, on April 10, Judge Jackson ruled that the Line Item Veto Act was unconstitutional because it violated provisions of the Presentment Clause in the Constitution (Article I, Section 7, Cl. 2). His ruling found that compared with permissible delegations in the past, the Line Item Veto Act, \"hands off to the President authority over fundamental legislative choices.\" In so doing, \"Congress has turned the constitutional division of responsibilities for legislating on its head.\"\nAs already noted, the Line Item Veto Act provided for expedited judicial review, allowing for appeal of a district court decision directly to the Supreme Court. Such a request was filed, and on April 23, 1997, the Supreme Court agreed to an accelerated hearing. The Court heard oral arguments on May 27 and announced its decision in Raines v. Byrd on June 26, 1997. In a 7-2 decision, the Court held that the Members of Congress challenging the law lacked legal standing, so the judgment of the lower court (finding the act unconstitutional) was put aside and the Line Item Veto Act remained in force. However, the Supreme Court confined its decision to the technical issue of jurisdiction and refrained from considering the underlying merits of the case (i.e., whether the Line Item Veto Act was unconstitutional).", "On August 11, 1997, President Clinton exercised his new veto authority for the first time by transmitting two special messages to Congress, reporting his cancellation of two limited tax benefit provisions in the Taxpayer Relief Act of 1997 ( P.L. 105-34 ), and one item of direct spending in the Balanced Budget Act of 1997 ( P.L. 105-33 ). Both measures had been signed into law on August 5, 1997. The law provided a period of 30 calendar days of session after receipt of a special message (only days when both the House and Senate are in session count) for Congress to consider a disapproval bill under expedited procedures.\nUpon reconvening in early September, Congress responded quickly to the President's cancellations, with the introduction of four disapproval bills. S. 1144 and H.R. 2436 sought to disapprove the cancellation of the direct spending provision in P.L. 105-33 , transmitted by the President on August 11, 1997, and numbered 97-3, regarding Medicaid funding in New York. S. 1157 and H.R. 2444 sought to disapprove the cancellations of two limited tax benefit provisions in P.L. 105-34 , transmitted by the President on August 11, 1997, and numbered 97-1 and 97-2. The first provision dealt with income sheltering in foreign countries by financial services companies, and the second involved tax deferrals on gains from the sales of agricultural processing facilities to farmer cooperatives. A compromise was apparently reached between the White House and congressional leaders on the canceled tax benefit provisions; on November 8, 1997, the disapproval bill ( H.R. 2444 ) was tabled in the House, and no further action occurred on S. 1157 .\nOn October 6, 1997, President Clinton exercised the new authority to veto items in appropriations bills by cancelling 38 projects contained in the FY1998 Military Construction Appropriations Act ( P.L. 105-45 ). On October 24, the Senate Appropriations Committee approved S. 1292 , with an amendment to exclude two more of the projects from the disapproval bill, reflecting the wishes of Senators from the states involved; there was no written report. On October 30, the Senate passed S. 1292 , after the committee amendment was withdrawn, disapproving 36 of the 38 cancellations, by vote of 69-30. On November 8, 1997, the House passed its version of the disapproval bill, H.R. 2631 (covering all 38 of the cancellations originally in the President's message), by vote of 352-64. On November 9, the Senate passed H.R. 2631 by unanimous consent, precluding the need for conference action, and clearing the disapproval measure for the President. On November 13, 1997, the President vetoed H.R. 2631 , the first disapproval bill to reach his desk under the provisions of the 1996 law. The House voted to override on February 5, 1998 (347-69), and the Senate did likewise on February 25, 1998 (78-20); therefore, the disapproval bill was enacted over the President's veto ( P.L. 105-159 ). (Cancellations under the Line Item Veto Act became effective on the date the special message from the President was received by the House and Senate, but the cancellations became null and void if a disapproval bill was enacted.)\nOn October 14, 1997, President Clinton vetoed 13 projects in the Department of Defense Appropriations. On October 16, 1997, he used the cancellation authority on a provision in the Treasury and General Government Appropriations relating to pension systems for federal employees. On October 17, 1997, the President applied his veto to eight more projects, this time in the Energy and Water Appropriations Act. On November 1, 1997, President Clinton exercised his line-item veto authority in two appropriations acts, canceling seven projects in the VA/HUD measure and three projects in the Transportation Act. On November 20, 1997, the President canceled two projects from Interior and five from the Agriculture Appropriations Act. On December 2, 1997, President Clinton exercised his line-item veto authority for a final time in one of the 13 annual appropriations acts for FY1998, canceling a project in the Commerce-Justice-State measure. This action brought the total of special messages in 1997 to 11, and the total cancellations under the new law to 82 .", "Once the President used the new authority, other cases were expected to be brought by parties who could more easily establish standing, having suffered ill effects directly as a result of the cancellations. On October 16, 1997, two separate cases challenging the Line Item Veto Act were initiated. A complaint was filed by the City of New York and other interested parties seeking to overturn the cancellation of the new direct spending provision affecting Medicaid funding in the Balanced Budget Act in the U.S. District Court for the District of Columbia (case number 1:97CV02393). On the same day, the National Treasury Employees Union (who had brought the first suit challenging the new law in the spring of 1996, even before it became effective), filed another suit in district court, seeking to overturn the veto of the federal pension provision in the Treasury Appropriations Act (case number 1:97CV02399). On October 21, 1997, a third case, seeking to overturn the cancellation of the limited tax benefit affecting farm cooperatives, was filed in the district court by Snake River Potato Growers, Inc. (case number 1:97CV02463). On October 24, 1997, the cases of the three suits challenging the Line Item Veto Act, were combined, placed in the random assignment pool, and ultimately reassigned to Judge Thomas Hogan. On October 28, 1997, NTEU filed an amended complaint, challenging the specific application of the cancellation authority (as well as the constitutionality of the law). A hearing on the consolidated case was set for January 14, 1998.\nMeanwhile, on December 19, 1997, the Clinton Administration conceded that the President's cancellation in October of the federal pension provision exceeded the authority conveyed in the Line Item Veto Act. On January 6, 1998, Judge Hogan approved a negotiated settlement in the suit between the Justice Department and the National Treasury Employees Union and ordered that the previously canceled pension provision for an open season to switch pension plans be reinstated. The order found that the President lacked authority to make this cancellation, and so it was \"invalid and without legal force and effect.\" The NTEU's constitutional challenge was declared moot, but oral arguments for the two remaining parties in the consolidated case challenging the law's constitutionality were to proceed.\nOn January 14, 1998, there was a three-hour hearing before Judge Hogan. Arguments were presented by attorneys for the Idaho potato farmers group and for New York City and co-plaintiffs in the cases involving cancellations by the President in August, 1997, of a limited tax benefit provision and an item of new direct spending (affecting Medicaid funding). Judge Hogan on February 12, 1998, issued his ruling, which held the Line Item Veto Act unconstitutional, because it \"violates the procedural requirements ordained in Article I of the United States Constitution and impermissibly upsets the balance of powers so carefully prescribed by its Framers.\" On February 20, 1998, the Justice Department appealed that decision to the Supreme Court, and on February 27, 1998, the Supreme Court agreed to review the case.\nThe Supreme Court heard oral arguments in the case of Clinton v. New York City on April 27, 1998. Both sides conceded that a true item veto, allowing the President to sign some provisions and veto others when presented a piece of legislation, would be unconstitutional. The Solicitor General sought to distinguish the President's cancellation of provisions under the Line Item Veto Act from a formal repeal of the provisions, but several of the Justices seemed skeptical. Another key argument concerned the matter of delegation and whether the act conveys so much authority to the President as to violate the separation of powers. The issue of standing for the two groups of plaintiffs combined in the case also was examined. On June 25, 1998, the Court rendered its decision, holding the Line Item Veto Act unconstitutional, because its cancellation provisions were in violation of procedures set forth in the Constitution's presentment clause found in Article I, section 7.\nIn the immediate aftermath of the Supreme Court decision there was some uncertainly regarding how funding for projects canceled under the now unconstitutional law could be restored. In the view of some, OMB might not be required to fund projects eliminated from appropriations acts, because the cancellations in the consolidated case brought before the Supreme Court only involved limited tax benefit and direct spending provisions. Some suggested that each affected party might have to sue, as did New York City in the case decided by the Supreme Court. Although it was widely expected that funding for projects not explicitly covered by the Supreme Court decision would be restored, three weeks passed before the Justice Department and OMB determined officially that the funds were to be released. On July 17, 1998, OMB announced that funds for the remaining cancellations (those not overturned by previous litigation or the disapproval bill covering the Military Construction appropriations) would be made available.", "After the President exercised the new authority to cancel items in appropriations acts, bills were introduced to repeal the Line Item Veto Act. On October 9, 1997, such a bill was introduced by Representative Skaggs ( H.R. 2650 , 105 th Congress), and on October 24, 1997, a similar bill was introduced by Senators Byrd and Moynihan ( S. 1319 , 105 th Congress).\nShortly after the district court decision in April 1997, expanded rescission measures were reintroduced in the 105 th Congress. On April 15, 1997, H.R. 1321 , an expedited rescission measure similar to that passed by the House in the 103 rd Congress, was introduced, and on the following day, S. 592 , a separate enrollment measure identical to S. 4 as passed by the Senate in the 104 th Congress, was introduced. Joint resolutions proposing an item veto constitutional amendment were also introduced. Another bill introduced in the fall of 1997, H.R. 2649 , combined the features of H.R. 2650 (repealing the line-item veto) and H.R. 1321 (establishing a framework for expedited rescission).\nOn March 11, 1998, the House Rules Subcommittee on Legislative and Budget Process began two days of hearings on the Line Item Veto Act. Although the principal focus of the hearing was on the operation of the act during its first year, there was some consideration of possible alternatives should the law be found unconstitutional by the Supreme Court.\nOn June 25, 1998, the same day the Supreme Court held the Line Item Veto Act unconstitutional, three more bills were introduced. Two new versions of expedited rescission (similar but not identical measures), seeking to apply expedited procedures to targeted tax benefits as well as to rescissions of funding in appropriations measures, were introduced as H.R. 4174 and S. 2220 (105 th Congress). A modified version of separate enrollment, applicable to authorizing legislation containing new direct spending, as well as to appropriations measures, was introduced as S. 2221 .", "", "Upon convening of the 106 th Congress in January 1999, measures were again introduced to propose constitutional amendments giving the President line-item veto authority ( H.J.Res. 9 , H.J.Res. 20 , H.J.Res. 30 , and S.J.Res. 31 ), and to provide alternative statutory means for conveying expanded impoundment authority to the President ( S. 100 and S. 139 ). Subsequently, two expedited rescission bills were introduced in the House ( H.R. 3442 and H.R. 3523 ).\nOn July 30, 1999, the House Rules Subcommittee on the Legislative and Budget Process held a hearing to address the subject, \"The Rescissions Process after the Line Item Veto: Tools for Controlling Spending.\" Testimony was received from the Office of Management and Budget, the Congressional Budget Office, and the General Accounting Office, as well as from a panel of academic experts.\nOn March 23, 2000, the House Judiciary Subcommittee on the Constitution held a hearing to consider measures proposing a constitutional amendment for an item veto. Two Members testified in support of H.J.Res. 9 . A second panel, consisting of seven outside witnesses, provided various viewpoints. During the presidential election campaign in 2000, the topic of expanded rescission authority for the President received some attention, with both candidates on record in support of such legislation.", "In his budget message transmitted to Congress on February 28, 2001, President George W. Bush endorsed several budget process reforms, including a call to \"restore the President's line item veto authority.\" In the subsequent discussion, the document suggested that the constitutional flaw in the Line Item Veto Act of 1996 might be corrected by linking the line-item veto to retiring the national debt. On April 9, 2001, President Bush transmitted to Congress a more detailed budget for FY2002, without further mention of the line-item veto proposal.\nIn his budget submission for FY2003, sent to Congress on February 4, 2002, President Bush again endorsed various proposals for reform of the budget process, including another try at crafting a line-item veto that could pass constitutional muster. As described therein, the President's proposal would restore authority exercised by Presidents prior to 1974 (and the restrictions imposed by the ICA). Specifically, the proposal \"would give the President the authority to decline to spend new appropriations, to decline to approve new mandatory spending, or to decline to grant new limited tax benefits (to 100 or fewer beneficiaries) whenever the President determines the spending or tax benefits are not essential Government functions, and will not harm the national interest.\"\nIn the 107 th Congress, two measures proposing an item veto constitutional amendment were introduced. H.J.Res. 23 sought to allow the President to disapprove any item of appropriation in any bill. H.J.Res. 24 sought to allow the President to decline to approve (i.e., to item veto) any entire dollar amount of discretionary budget authority, any item of new direct spending, or any limited tax benefit. On March 28, 2001, during House consideration of H.Con.Res. 83 (FY2002 budget resolution), a substitute endorsed by Blue Dog Coalition was offered, which contained a sense of the Congress provision calling for modified line-item veto authority to require Congressional votes on rescissions submitted by the President; the amendment was rejected 204-221.\nOn October 9, 2002, the Congressional Budget Office estimated a total federal budget deficit of about $157 billion for FY2002, reflecting the largest percentage drop in revenues in over 50 years and the largest percentage growth in spending on programs and activities in 20 years. Some hoped that the worsening deficit picture might stimulate renewed interest in mechanisms thought conducive to spending control, such as a line-item veto or expanded impoundment authority for the President.", "In his budget submission for FY2004, President Bush repeated his request for legislation to provide him with a \"constitutional line-item veto\" to use on \"special interest spending items.\" While discussion the previous year had called for applying savings to debt reduction, the explanation now suggested that all savings from the line-item veto would be designated for deficit reduction.\nEarly in the 108 th Congress, H.R. 180 , an omnibus budget reform measure, was introduced, containing provisions for expedited procedures for congressional action on proposals from the President to rescind budget authority identified as \"wasteful spending\" (Section 252). On April 11, 2003, during remarks on a forthcoming supplemental appropriations conference report, the ranking member of the Appropriations Committee offered his observations on the demise of the Line Item Veto Act of 1996. On June 16, 2003, H.J.Res. 60 , proposing a constitutional amendment to authorize the line-item veto, was introduced by Representative Andrews. On November 19, 2003, S.J.Res. 25 , proposing a constitutional amendment and reading, in part, \"Congress shall have the power to enact a line-item veto,\" was introduced by Senator Dole.\nIn his budget submission for FY2005, transmitted February 2, 2004, President Bush again called for legislation to provide him with a \"constitutional line-item veto\" linked to deficit reduction. According to the explanation provided, such a device is needed to deal with spending or tax provisions benefitting \"a relative few which would not likely become law if not attached to other bills.\" The line-item veto envisioned would give the President authority \"to reject new appropriations, new mandatory spending, or limited grants of tax benefits (to 100 or fewer beneficiaries) whenever the President determines the spending or tax benefits are not essential Government priorities.\" All savings resulting from the exercise of such vetoes would go to reducing the deficit.\nIn the second session of the 108 th Congress, additional budget reform measures were introduced with provisions that would have granted expedited rescission authority to the President. The budget resolution for FY2005 ( S.Con.Res. 95 ), as approved by the Senate on March 11, 2004, contained several Sense of the Senate provisions in Title V. Section 501, relating to budget process reform, called for enactment of legislation to restrain government spending, including such possible mechanisms as enhanced rescission or constitutional line-item veto authority for the President.\nA bill in the 108 th Congress, H.R. 3800 , the Family Budget Protection Act of 2004, contained expedited rescission provisions in Section 311; and H.R. 3925 , the Deficit Control Act of 2004, included such provisions in Section 301. On June 16, 2004, an editorial in the Wall Street Journal endorsed H.R. 3800 , offering special praise for its expedited rescission provisions: \"Presidents would have the power of rescission on line items deemed wasteful, which would then be sent back to Congress for an expedited override vote.\" Further, the editorial stated, the procedures would preserve Congress's power of the purse, and might also provide \"a deterrent effect on the porkers.\" On June 24, 2004, provisions from H.R. 3800 were offered as a series of floor amendments during House consideration of H.R. 4663 , the Spending Control Act of 2004. An amendment that sought to initiate expedited rescission for the President to propose the elimination of wasteful spending identified in appropriations bills was rejected by a recorded vote of 174-237.\nOn August 3, 2004, the Kerry-Edwards [Democratic Party] plan \"to keep spending in check while investing in priorities and cutting wasteful spending\" was released. Included in the presidential campaign document was a proposal for expedited rescission authority, whereby the President could sign a bill and then send back to Congress a list of specific spending items and tax expenditures of which he disapproved, for an expedited, up-or-down vote.\nPresident Bush reiterated his support for restoring presidential line item veto authority in his speech to the Republican national convention on September 2, 2004. At his first post-election news conference, on November 4, 2004, in response to a question about reducing the deficit, he stated, in part, that the president needed a line item that \"passed constitutional muster,\" in order \"to maintain budget discipline.\" At a press conference on December 20, 2004, the President again called for line item veto authority, responding that he had not yet vetoed any appropriations bills, because Congress had followed up on his requested budget targets; but further observing, \"Now I think the president ought to have the line item veto because within the appropriations bills there may be differences of opinion [between the executive branch and Congress] on how the money is spent.\"", "On January 31, 2006, in his State of the Union address, President Bush reiterated his request for line-item veto authority, noting: \"And we can tackle this problem [of too many special-interest \"earmark\" projects] together, if you pass the line-item veto.\" In his budget submission for FY2006, transmitted February 7, 2005, President Bush called for a \"line item veto linked to deficit reduction.\"\nOn March 6, 2006, President Bush sent a draft bill titled the Legislative Line Item Veto Act of 2006 to Congress, and the measure was introduced the next day ( see H.R. 4890 and S. 2381 below ). Title notwithstanding, the bills sought to amend the Impoundment Control Act of 1974 (ICA) to incorporate a typical expedited rescission framework, intended through procedural provisions to require an up-or-down vote on presidential requests to cancel certain previously enacted spending or tax provisions. Since congressional approval would remain necessary for the rescissions to become permanent, expedited rescission is generally viewed as a weaker tool than an item veto. H.R. 4890 and S. 2381 , as introduced, also contained rather novel provisions authorizing the President to withhold funds proposed for rescission or to suspend execution of items of direct spending for up to 180 days. These provisions arguably might sanction the return of policy deferrals, originally provided for in the ICA, subject to a one-house veto, but invalidated by the Chadha and New Haven decisions, as well as the statutory provisions in P.L. 100-119 .\nOn March 15, 2006, the House Rules Subcommittee on the Legislative and Budget Process held a hearing on H.R. 4890 . Testimony was received from Representative Paul Ryan, sponsor of H.R. 4890 , and from Representative Jerry Lewis, chairman of the House Appropriations Committee. The Deputy Director of OMB and the Acting Director of CBO also appeared before the subcommittee. On April 27, 2006, the House Judiciary Subcommittee on the Constitution held a hearing on the line item veto and received testimony from Representatives Paul Ryan and Mark Kennedy; and from two attorneys, Charles J. Cooper in private practice, and Cristina Martin Firvida of the National Women's Law Center. On May 2, the Senate Budget Committee held a hearing on S. 2381 ; witnesses included Senator Robert Byrd, Austin Smythe from OMB, Donald Marron from CBO, [author name scrubbed] from the Library of Congress, and attorney Charles J. Cooper.\nThe House Budget Committee held two hearings on H.R. 4890 , on May 25 and June 8, 2006. The first day focused on \"Line-Item Veto: Perspectives on Applications and Effects\" and featured four witnesses representing private sector groups, including a former Member and two former congressional aides. The second hearing concentrated on constitutional issues, with testimony received from Charles Cooper, [author name scrubbed], and Professor Viet D. Dinh from the Georgetown University Law Center.\nOn June 14, the House Budget Committee held markup of H.R. 4890 . Representative Paul Ryan offered a substitute amendment, which was further amended. An amendment offered by Representative Cuellar to add a sunset provision, whereby the act would expire after six years, was approved by voice vote. Also successful was an amendment offered by Representative Neal, as further amended by Representative McCotter, expressing the sense of Congress regarding possible abuse of proposed cancellation authority: no President or other executive official should make any decision for inclusion or exclusion of items in a special message contingent upon a Members' vote in Congress. The Ryan substitute, as amended, was adopted by voice vote. The Committee then voted 24-10 to report the bill favorably.\nSeveral amendments offered by minority Members were rejected, generally with a straight party-line vote. Democrats sought to exempt future changes in Social Security, Medicare, and veterans' entitlement programs from possible cancellations under the LLIVA. Democrats also attempted unsuccessfully to restore pay-as-you-go budget rules, to strengthen requirements for earmark disclosures, and to facilitate enforcement of the three-day lay-over rule for appropriations bills before floor votes.\nOn June 15, the House Rules Committee met to markup H.R. 4890 and voted 8-4 to approve a substitute amendment containing the same version as approved by the Budget Committee. Several changes in the substitute version addressed concerns with the bill as introduced. For example, in response to concern expressed over a return to policy deferrals by allowing the President to withhold spending for up to 180 calendar days, the substitute would allow the President to withhold funds for a maximum of 90 calendars days (an initial 45-day period, which could be extended for another 45 days). Submission of special rescission or cancellation messages by the President would occur only within 45 days of enactment of the measure, and the President would be limited to submission of five special messages for each regular act and 10 messages for an omnibus measure. Submission of duplicative proposals in separate messages would be prohibited.\nOn the other hand, some changes in the substitute version approved by the Budget and Rules Committees, and subsequently by the full House, arguably might be subject to additional critiques. The substitute narrowed the definition of a targeted tax benefit to a revenue-losing measure affecting a single beneficiary, with the chairs of the Ways and Means and Finance Committees to identify such provisions. The definition in H.R. 4890 as introduced referred to revenue-losing measures affecting 100 or fewer beneficiaries, as did the Line Item Veto Act of 1996. The bill as introduced, however, would have allowed the President to identify the provisions by default, whereas the 1996 law assigned the duty to the Joint Committee on Taxation. Supporters of the substitute version suggested that it would treat targeted tax benefits comparably to earmarks in appropriations bills. Critics countered that the new definition was too narrow, and that few tax benefits would be subject to cancellation.\nOn June 21, the House Rules Committee voted to report H.Res. 886 , providing for the consideration of H.R. 4890 , as amended, favorably by a nonrecord vote. A manager's amendment offered by Representative Paul Ryan was adopted as a part of the rule for debate. In response to concerns raised by the Transportation and Infrastructure Committee, the amendment added clarifying language that any amounts cancelled which came from a trust fund or special fund would be returned to the funds from which they were originally derived, rather than revert to the General Fund. The following day the House took up H.R. 4890 , approved the rule ( H.Res. 886 ) by vote of 228-196, and passed the measure by vote of 247-172. A motion by Representative Spratt to recommit H.R. 4890 to the Budget Committee with instructions to report it back to the House with an amendment was rejected by vote of 170-249.\nMeanwhile, on June 20, 2006, the Senate Budget Committee marked up S. 3521 , the Stop Over Spending Act of 2006, an omnibus budget reform measure containing provisions for expedited rescission in Title I. Minority amendments to exclude Medicare, Social Security, and Veterans' Health Programs from possible rescissions were rejected 10-12 on party-line votes. A manager's amendment was adopted by voice vote, which among other things would prohibit the resubmission of items of direct spending or targeted tax benefits previously rejected by Congress, but would allow the President to resubmit proposed cancellations if Congress failed to complete action on them due to adjournment. Whereupon the committee voted 12-10 to report S. 3521 , as amended, favorably. The report to accompany S. 3521 was filed on July 14, 2006.\nOn June 27, 2006, the President met with some Senators at the White House to discuss the Legislative Line Item Veto bill, and he subsequently urged that the Senate act quickly to approve such a measure. Despite the White House lobbying effort, press accounts questioned the likelihood of further Senate action in the 109 th Congress. As reported in a story on July 20, 2006, \"Senate Budget Chairman Judd Gregg, R-NH, all but pronounced the White House's item veto proposal dead for the year, telling reporters that the Bush Administration had not worked aggressively enough to round up the votes.\" According to a similar story appearing the same day:\nSenate Budget Chairman Judd Gregg, R-NH, conceded this week that his budget overhaul package ( S. 3521 ), which includes a sunset commission, line-item rescission authority and other budget enforcement measures has little chance of passage. Supporters have been unable to overcome Democratic opposition and a reluctance among some Republicans to address it in an election year.\nIn addition to the alternative of possible action on S. 3521 , the Senate could have chosen to consider a stand alone item veto measure, such as H.R. 4890 , as passed by the House, or S. 2381 . A news story published shortly before Congress departed for the August recess suggested that the issue remained an open question: \"Senate Majority Leader Bill Frist, R-TN, has made no decisions about timing or which [line item rescission measure] to bring up, and is taking a wait-and-see approach to the White House lobbying effort.\" None of these bills, however, saw floor action in the Senate before the 109 th Congress adjourned.", "H.R. 4890 (Paul Ryan)/ S. 2381 (Frist) . Legislative Line Item Veto Act of 2006. Amends the ICA of 1974 to provide for expedited consideration of certain rescissions of budget authority or cancellation of targeted tax benefits proposed by the President in special messages. Requires any rescinded discretionary budget authority or items of direct spending to be dedicated to deficit reduction. Grants the President authority to withhold funds proposed for rescission or to suspend execution of direct spending and targeted tax benefits. Both bills introduced on March 7, 2006. H.R. 4890 referred jointly to Committees on Budget and on Rules; S. 2381 referred to Budget Committee. Reported favorably, as amended, by House Budget Committee on June 16 ( H.Rept. 109-505 Part 1), and by Rules Committee on June 19, 2006 ( H.Rept. 109-505 Part 2). Passed House, as amended, by vote of 247-172 on June 22, 2006.\nS. 3521 (Gregg) . Stop Over Spending Act of 2006. An omnibus budget reform bill. Title I, the Legislative Line Item Veto Act, amends the ICA of 1974 to provide for expedited consideration of certain rescissions of budget authority or cancellation of targeted tax benefits proposed by the President. Introduced on June 15, 2006; referred to the Budget Committee. Committee voted 21-10 to report bill, as amended, favorably on June 20, 2006. The report was filed on July 14, 2006 ( S.Rept. 109-283 ).", "Early in the 110 th Congress, line item veto measures received Senate floor consideration. On January 10, 2007, Senator Judd Gregg introduced \"The Second Look at Wasteful Spending Act of 2007\" as an amendment ( S.Amdt. 17 to S.Amdt. 3 to S. 1 ) to the Legislative Transparency and Accountability Act of 2007, an ethics and lobbying reform bill. According to Senator Gregg, the language in S.Amdt. 17 was similar to the expedited rescission provisions contained in a Democratic amendment, known as the Daschle substitute, offered in 1995 during Senate consideration of the Line Item Veto Act of 1996. The Bush Administration went on record in support of S.Amdt. 17 : \"The Administration strongly supports Senator Gregg's legislative line item veto amendment—an initiative that is consistent with the President's goals.\"\nS.Amdt. 17 would have provided for expedited consideration of certain rescissions of discretionary or new mandatory spending or cancellation of targeted tax benefits proposed in special messages from the President. The President could submit up to four rescission packages a year (once with the Budget and three other times at the President's choosing). The President could withhold funding contained in a special message for up to 45 days. The new authority would expire in four years.\nAt one point, it appeared that the ethics and lobbying reform measure might become stalled, with the minority leader insisting on a vote on the Gregg amendment before proceeding to final action on S. 1 . An agreement was worked out, however, between the majority leader and the minority leader, with a promise of a vote on the line item veto amendment during debate on the minimum wage bill ( H.R. 2 ) the following week. On January 18, 2007, S.Amdt. 17 was withdrawn, and S. 1 passed by vote of 96-2.\nIn accordance with the leadership agreement, Senator Gregg filed another amendment ( S.Amdt. 101 to H.R. 2 ) on January 22, 2007, and two hours of floor debate on the line item veto measure ensued. Senator Gregg noted \"one major change\" in provisions from the previous S.Amdt. 17 incorporated into S.Amdt. 101 : addition of the right to strike. During consideration of a rescission package proposed by the President, a Senator, with the support of 11 others, could move to strike one or more of the rescissions included in the bill; in other words, Congress could amend the President's proposal by deleting selected items. Senator Gregg suggested that this change brought S.Amdt. 101 even more in line with the Daschle substitute in 1995. He also observed that several of the 20 cosponsors of the previous Daschle amendment were still in the Senate.\nSenator Kent Conrad, chair of the Budget Committee, suggested that the two amendments differed in important respects. The Gregg amendment would have allowed the President to propose rescinding items of new direct spending in programs such as Medicare, whereas the Daschle amendment did not cover such mandatory spending. The Gregg amendment would have permitted the President to propose rescissions from multiple bills in one rescission package whereas the Daschle amendment would have required that a presidential rescission package cover just one bill. According to Senator Conrad, this latter arrangement would give the President less leverage over an individual member.\nDebate on S.Amdt. 101 resumed on January 24, 2007. A vote to invoke cloture on the line item veto amendment failed to attain the necessary 60 votes (49-48). The amendment was subsequently set aside, and formally withdrawn on January 31.\nIn his budget submission for FY2008 transmitted on February 5, 2007, President Bush once again called for enactment of a line item veto mechanism, such as the Administration's proposal from March 2006, that \"would withstand constitutional challenge.\"\nExpedited rescission bills were also introduced in the House in the 110 th Congress (see below ). On the same day as the cloture motion on the Gregg line item veto proposal failed in the Senate, Representative Paul Ryan, ranking Republican on the House Budget Committee, along with 83 cosponsors, introduced H.R. 689 , the Legislative Line Item Veto Act of 2007. H.R. 689 was nearly identical to H.R. 4890 as passed by the House in the 109 th Congress.\nOn April 23, 2007, companion bills titled the Congressional Accountability and Line-Item Veto Act were introduced as H.R. 1998 by Representative Paul Ryan, and as S. 1186 by Senator Russell Feingold. In his introductory remarks, Senator Feingold sought to differentiate this measure from previous bills, noting the following:\nThere have been a number of so-called line-item veto proposals offered in the past several years. But the measure Congressman Ryan and I propose today is unique in that it specifically targets the very items that every line-item veto proponent cites when promoting a particular measure, namely earmarks. When President Bush asked for this kind of authority, the examples he gave when citing wasteful spending he wanted to target were congressional earmarks.\nThe universe of items subject to rescission or cancellation by the President in S. 1186 showed noteworthy differences from those contained in the 109 th Congress bills, as passed by the House ( H.R. 4890 ) and reported in the Senate ( S. 3521 , Title I). Instead of allowing the President to propose rescission of any amount of discretionary spending in appropriations acts, et al. (as did the 109 th bills), in H.R. 1998 / S. 1186 the newly expedited rescission authority would have only applied to \"congressional earmarks\" (as defined in the bill). The provisions regarding the cancellation of limited tax benefits seen in H.R. 1998 / S. 1186 reflected language both from the House-passed bill (chairmen of Ways and Means and Finance Committees to identify them) and Senate-reported version (applicable to any revenue-losing provisions affecting a single or limited group). Most significantly, perhaps, under H.R. 1998 / S. 1186 , the expedited rescission authority would have covered no mandatory spending, but in a departure from provisions in the bills receiving action in the109 th Congress, would have applied to limited tariff benefits.\nThe 110 th Congress bills, H.R. 1998 and S. 1186 , had some provisions similar to those seen in one or more bills from the 109 th Congress. For example, language in H.R. 1998 / S. 1186 regarding the relationship with the ICA paralleled that in the House-passed version of H.R. 4890 , 109 th Congress, as did the language regarding seriatim rescissions, abuse of the proposed cancellation authority, and using any savings for deficit reduction. The expedited congressional procedures in the 109 th , compared with the 110 th , bills are virtually the same.\nIn most cases, when provisions in H.R. 1998 / S. 1186 differed from those in the 109 th Congress bills, the new features served to further confine the boundaries of the additional rescission authority to be granted the President. The deadline for submission of special rescissions or cancellation messages under H.R. 1998 / S. 1186 would have been within 30 days of enactment, compared to 45 days in the House-passed bill in the 109 th Congress and one year in the Senate-reported bill ( S. 3521 , Title I). In a similar manner, S. 1186 would have set a limit of one special message for each act, except for an omnibus budget reconciliation or appropriations measure when two special messages would have been allowed.\nOn the other hand, stipulations regarding deferrals (withholding of spending) by the President in S. 1186 appeared to be less restrictive than those found in the House-passed and Senate-reported versions in the 109 th Congress. Both H.R. 4890 as passed by the House and S. 3521 as reported, allowed withholding for a period not to exceed 45 calendar days. S. 1186 would have permitted the President to withhold funding for designated earmarks or suspend execution of limited tax or tariff benefits for a period of 45 calendar days of continuous session. In addition, S. 1186 would have allowed the extension of the withholding for another 45-day period if the President submitted a supplemental message between days 40 and 45 in the original period. Under the ICA, the President likewise may withhold funds included in a rescission request for 45 calendar days of continuous session, which often equals 60 or more calendar days. Under the provisions in H.R. 1998 / S. 1186 , the President could conceivably have withheld funds for 100 days or longer.\nAs noted already, the original Administration bill in 2006 allowed the President to withhold funds for 180 calendar days. In 2006, some contended that the 180-day withholding mechanism arguably might be viewed as sanctioning the return of policy deferrals, originally provided for in the ICA, subject to a one-house veto, but invalidated by the Chadha and New Haven decisions, as well as the statutory provisions in P.L. 100-119 . The extension of the withholding period in H.R. 1998 / S. 1186 conceivably to over 100 days, compared with the 45-calendar-day period in the House-passed and Senate-reported bills, might arguably be appraised as representing a de facto return to policy deferrals.\nTwo constitutional amendment proposals were introduced in the 110 th Congress. H.J.Res. 38 would have allowed the President to decline to approve any dollar amount of discretionary budget authority, any item of new direct spending, or any tax benefit. This coverage was similar to that seen previously in the Line Item Veto Act of 1996. S.J.Res. 27 would have allowed the President to reduce or disapprove any appropriation in a measure presented to him; after so \"amending\" the measure, the President may have signed the legislation as modified into law.", "H.R. 595 (Mark Udall and Paul Ryan) . Stimulating Leadership in Limiting Expenditures Act of 2006. Amends the ICA to provide for expedited consideration of certain presidential proposals for rescission of budget authority contained in appropriation acts. Introduced on January 19, 2007; jointly referred to Committees on Budget and on Rules.\nH.R. 689 (Paul Ryan et al.) . Legislative Line Item Veto Act of 2007. Amends the ICA of 1974 to provide for expedited consideration of certain rescissions of discretionary budget authority or cancellation of an item of new direct spending, limited tariff benefit, or targeted tax benefits proposed by the President in a special message. Dedicates any savings only to deficit reduction or increase of a surplus. Introduced on January 24, 2007; jointly referred to Committees on Budget and on Rules.\nH.R. 1375 (Buchanan) . Earmark Accountability and Reform Act of 2007. Amends the ICA of 1974 to provide for expedited consideration of certain rescissions of discretionary budget authority or cancellation of an item of new direct spending or targeted tax benefit proposed by the President in a special message. Dedicates any cancellation only to deficit reduction or increase of a surplus. Amends House Rules to provide that any earmark not contained in House- or Senate-passed versions be deemed out of scope in conference. Introduced on March 7, 2007; referred jointly to Committees on Budget and on Rules.\nH.R. 1998 (Paul Ryan) . Congressional Accountability and Line-Item Veto Act. Amends the ICA of 1974 to authorize the President to propose in a special message the repeal of any congressional earmark or the cancellation of any limited tariff benefit or targeted tax benefit. Provides expedited procedures for congressional consideration of the proposals contained in special messages. Dedicates any savings from a repeal or cancellation only to deficit reduction or increase of a surplus. Introduced on April 23, 2007; referred jointly to Committees on Budget and on Rules.\nH.R. 2084 (Hensarling) . Family Budget Protection Act. Omnibus budget reform bill. Section 311 establishes expedited procedures for congressional consideration of certain rescission proposals from the President. Similar expedited rescission provisions were considered by the House in 2004 and rejected by vote of 174-237. Introduced on May 1, 2007; referred to the Committee on the Budget and in addition to the Committees on Rules, Ways and Means, Appropriations, and Government Reform for consideration of those provisions falling within their respective jurisdictions.\nH.J.Res. 38 (Platts) . Constitutional amendment. Allows the President to decline to approve in whole any dollar amount of discretionary budget authority, any item of new direct spending, or any tax benefit. Introduced on February 27, 2007; referred to the Judiciary Committee.\nS. 1186 (Feingold) . Congressional Accountability and Line-Item Veto Act. Companion bill to H.R. 1998 (see above). Introduced on April 23, 2007; referred to the Budget Committee.\nS.J.Res. 27 (Dole) . Constitutional amendment. Allows the President to reduce or disapprove any appropriation in any bill, order, resolution, or vote which is presented to him. Introduced on December 11, 2007; referred to the Judiciary Committee.", "", "On March 4, 2009, the Congressional Accountability and Line-Item Veto Act was reintroduced in the 111 th Congress. In the Senate, S. 524 was cosponsored by Senators Feingold and McCain, and in the House H.R. 1294 was introduced by Representatives Paul Ryan and Mark Kirk.\nSenator Gregg and cosponsor Senator Lieberman introduced S. 640 , the Second Look at Wasteful Spending Act of 2009, on March 19, 2009. S. 640 is similar to a bill in the 109 th Congress, S. 3521 (Title I) as reported by the Senate Budget Committee in 2006 (then chaired by Senator Gregg). Some provisions in the earlier bill, however, appear in modified form in S. 640 . For example, with respect to limited tax benefit provisions that the President would be able to propose for cancellation, S. 3521 in the 109 th Congress stipulated that the Joint Committee on Taxation was to identify such provisions, while S. 640 is silent regarding the identification function. There are also some provisions in S. 640 that were not included in S. 3521 , 109 th Congress. For example, a new section in S. 640 contains expedited provisions for deliberations by a conference committee.\nSenator Carper, along with 20 cosponsors, introduced S. 907 , the \"Budget Enforcement Legislative Tool Act of 2009,\" on April 28, 2009. This bill is similar to one introduced in the 102 nd Congress ( H.R. 2164 ) by then Representative Carper with over 200 cosponsors. The House passed H.R. 2164 by vote of 312-97, under a suspension of the rules, on October 3, 1992. This constituted the first time an expanded rescission bill received favorable floor action in either chamber.\nThe Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, on December 16, 2009, held a hearing on \"Tools to Combat Deficits and Waste: Expedited Rescission Authority,\" and considered S. 524 , S. 640 , and S. 907 . Witnesses included Senator Feingold, and staff from the Congressional Research Service, the Government Accountability Office, the National Governors Association, the Concord Coalition, and Citizens Against Government Waste.\nThe Senate Judiciary Subcommittee on the Constitution held a hearing on May 25, 2010, concerning \"The Legality and Efficacy of Line-Item Veto Proposals.\" Witnesses included Senator Carper, Jeffrey Liebman, Acting Deputy Director of OMB, and three witnesses from the private sector.", "In his budget submissions for FY2010 and FY2011, President Obama endorsed an \"expedited process for considering rescission requests.\" According to a FY2011 budget volume, \"There would be a benefit to establishing the option of an additional procedure [besides that in the ICA] in those cases where the President finds a need for a rapid, up-or-down vote on a package of rescission proposals.\" Proposals for rescissions under the expedited procedures could \"only reduce or eliminate funding for budget accounts, programs, projects, or activities.\"\nOn May 24, 2010, President Obama transmitted an Administration draft bill to Congress, the Reduce Unnecessary Spending Act of 2010, which would provide expedited rescission procedures for consideration of certain requests from the President. Within 45 days after signing a bill into law, the President would be able to submit a package of rescissions for reducing or eliminating discretionary appropriations or non-entitlement mandatory spending. Such proposed rescissions from the President would be considered as a group and would be subject to expedited procedures in Congress, designed to ensure an up-or-down vote on the package. As explained in a section-by-section analysis accompanying the 2010 draft, \"There is no method to provide an absolute guarantee of a vote, because all rules of the House and Senate are implemented by persons making the motions under the rules. If no one moves to consider a piece of legislation, it will not be considered.\"\nOn May 28, 2010, the Reduce Unnecessary Spending Act of 2010 as proposed by President Obama was introduced in the House as H.R. 5454 by Representative Spratt along with 20 cosponsors, and on June 9 S. 3474 was introduced by Senator Feingold and eight cosponsors.\nOn June 17, 2010, the House Budget Committee held a hearing titled the \"Administration's Proposal for Expedited Rescission.\" The sole witness was Dr. Liebman from OMB, who called for prompt action by Congress to pass the Reducing Unnecessary Spending Act. Chairman Spratt, who has supported expedited rescission measures in the past and introduced H.R. 5454 , indicated that the bill would receive careful scrutiny by the committee, concluding his opening statement by saying, \"I look forward to working with all interested parties as we consider ways to improve this bill and move it through Congress.\"", "H.R. 1294 (Paul Ryan et al.). Congressional Accountability and Line-Item Veto Act. Amends the ICA of 1974 to authorize the President to propose in a special message the repeal of any congressional earmark or the cancellation of any limited tariff benefit or targeted tax benefit. Provides expedited procedures for congressional consideration of the proposals contained in such a special message. Dedicates any savings from a repeal or cancellation only to deficit reduction or increase of a surplus. Introduced on March 4, 2009; referred to Committees on Budget and on Rules.\nH.R. 1390 (Buchanan) . Earmark Accountability and Reform Act of 2009. Amends the ICA of 1974 to provide for expedited consideration of certain rescissions of discretionary budget authority or cancellation of an item of new direct spending or targeted tax benefit proposed by the President in a special message. Dedicates any cancellation only to deficit reduction or increase of a surplus. Amends House Rules to provide that any earmark not contained in House- or Senate-passed versions be deemed out of scope in conference. Introduced on March 9, 2009; referred to Committees on Budget and on Rules.\nH.R. 3268 (Reichert et al.) . Earmark Transparency and Accountability Reform Act, Title II, Earmark Rescission Authority. Amends the ICA of 1974 to authorize the President to propose in a special message the repeal of any congressional earmark or the cancellation of any limited tariff benefit or targeted tax benefit. Provides expedited procedures for congressional consideration of the proposals contained in such special messages. Dedicates any savings from a repeal or cancellation only to deficit reduction or increase of a surplus. Authorizes temporary presidential authority to withhold congressional earmarks and to suspend any limited tariff or targeted tax benefit. Requires the Comptroller General to develop and implement a systematic process to audit and report to Congress annually on programs, projects, and activities funded through earmarks. Introduced on July 20, 2009; referred to House committees on Rules, Standards of Official Conduct, Judiciary, and Oversight and Reform.\nH.R. 3964 (Hensarling et al.). Spending, Deficit, and Debt Control Act of 2009. Title II, subtitle B: Legislative Line-Item Veto Act of 2009. Amends the ICA of 1974 to authorize the President to propose to Congress in a special message the cancellation of any item of discretionary spending, item of direct spending, or limited tariff benefit or targeted tax benefit. Provides expedited procedures for congressional consideration of the proposals contained in such special messages. Dedicates any savings from a repeal or cancellation only to deficit reduction or increase of a surplus. Authorizes the President to withhold discretionary budget authority temporarily from obligation (or to defer), or to suspend temporarily direct spending, a limited tariff, or targeted tax benefit. Requires the Comptroller General to report to Congress when any item of discretionary spending is not made available or any item of direct spending, limited tariff benefit, or targeted tax benefit continues to be suspended after the deferral period has expired. Introduced on October 29, 2009; referred to the Committee on the Budget, and in addition to the Committees on Rules, Appropriations, Oversight and Government Reform, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.\nH.R. 4921 (Minnick et al) . Budget Enforcement Legislative Tool Act of 2010. Companion bill to S. 907 (see below). Introduced on March 24, 2010; referred to the Budget Committee and in addition to the Rules Committee, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.\nH.R. 5454 ( Spratt et al.) . Reduce Unnecessary Spending Act of 2010. Amends the ICA of 1974 to provide an expedited process for consideration of certain rescission requests from the President, submitted within 45 days after signing a bill into law. The President would be able to request in such a rescission package the reduction or elimination of any new budget authority or obligation limits in spending measures except to the extent that the funding would provide for an entitlement law. Items in the special message would be considered as a package and would be subject to expedited procedures in Congress, designed to ensure an up-or-down vote on the approval bill. Introduced on May 28, 2010; referred to the Budget Committee and in addition to the Rules Committee, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.\nH.J.Res. 15 (Platts). Constitutional amendment. Allows the President to decline to approve in whole any dollar amount of discretionary budget authority, any item of new direct spending, or any limited tax benefit. Introduced on January 8, 2009; referred to the Judiciary Committee.\nS. 524 (Feingold and McCain). Congressional Accountability and Line-Item Veto Act of 2009. Companion bill to H.R. 1294 (see above). Introduced on March 4, 2009; referred to the Budget Committee.\nS. 640 (Gregg and Lieberman). Second Look at Wasteful Spending Act of 2009. Amends the ICA of 1974 to authorize the President to propose rescission of dollar amounts of discretionary budget authority, items of direct spending, or cancellation of targeted tax benefits in a special message to Congress. Provides expedited procedures for consideration of the draft bill accompanying the special message from the President. Introduced on March 19, 2009; referred to the Budget Committee. Similar to provisions in S. 3521 ,109 th Congress, reported favorably by the Budget Committee on ( S.Rept. 109-283 ).\nS. 907 (Carper et al.) . Budget Enforcement Legislative Tool Act of 2009. Amends the ICA of 1974 to authorize the President to propose certain rescissions of discretionary budget authority in a special message to Congress within three days of enactment of the appropriations act. Establishes expedited procedures for congressional consideration of a draft measure (to accompany each special message), approving of the requested rescissions. Introduced on April 28, 2009; referred to the Budget Committee.\nS. 1808 (Feingold) . Control Spending Now Act. Title I, subpart B: Legislative Line Item Veto Act of 2009. Congressional Accountability and Line Item Veto Act of 2009—Amends the ICA of 1974 to authorize the President to propose the repeal of any congressional earmark or the cancellation (line item veto) of any limited tariff or targeted tax benefit. Dedicates any such repeal or cancellation only to deficit reduction or increase of a surplus. Prescribes procedures for expedited consideration in Congress for such proposals. Authorizes the President temporarily to withhold congressional earmarks from obligation or suspend a limited tariff or targeted tax benefit. Requires the Comptroller General to report to Congress when any item of discretionary spending is not made available or any item of direct spending, limited tariff benefit, or targeted tax benefit continues to be suspended after the deferral period has expired. Expresses the sense of Congress on abuse of proposed repeals and cancellations. Introduced on October 20, 2009; referred to the Committee on Finance.\nS. 3026 (Bayh and McCain) . Fiscal Freeze Act of 2010. Title I, Congressional Accountability and Line-Item Veto Act of 2010. This title of the omnibus budget reform measure is virtually the same as H.R. 1294 and S. 524 . Introduced on February 23, 2010; referred to the Budget Committee.\nS. 3423 (Kerry) . Veto Wasteful Spending and Protect Taxpayers of 2010. Amends the ICA of 1974 to authorize the President to propose cancellation of any dollar amount of discretionary budget authority, any item of new direct spending, or any limited tax benefit, within 10 days of enactment. Provides expedited procedures for congressional consideration of the approval bill accompanying each special message from the President. Introduced on May 25, 2010; referred to the Budget Committee.\nS. 3474 (Feingold et al.). Reduce Unnecessary Spending Act of 2010. Companion bill to H.R. 5454 (see above). Introduced on June 9, 2010; referred to the Budget Committee.\nS.J.Res. 22 (LeMieux) . Constitutional amendment. Includes provisions relative to requiring a balanced federal budget and granting the President the power to exercise a line-item veto. Introduced on December 15, 2009; referred to the Judiciary Committee." ], "depth": [ 0, 1, 2, 3, 3, 2, 2, 1, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_title", "h1_title", "", "h1_full", "", "", "h2_full", "h2_title h3_title", "", "", "h2_full", "h3_full", "h0_title h3_title", "", "", "h0_full h3_full", "", "", "h3_full", "", "h3_title", "", "h3_full", "h3_full" ] }

{ "question": [ "What is one source of tension between the President and Congress?", "What is the role of impoundment during budget implementation?", "How are Presidents protesting the lack of control over federal spending?", "What is the Impoundment Control Act of 1974?", "How does the Impoundment Control Act work?", "What is the Line Item Veto Act?", "Why was the Act declared unconstitutional?", "What measures have been introduced in Congress to establish expedited rescission procedures?", "What expedited process for rescission requests has the Obama Administration endorsed?", "What hearings have been held regarding the Administration bill so far?" ], "summary": [ "Conflicting budget priorities of the President and Congress accentuate the institutional tensions between the executive and legislative branches inherent in the federal budget process.", "Impoundment, whereby a President withholds or delays the spending of funds appropriated by Congress, provides an important mechanism for budgetary control during budget implementation in the executive branch; but Congress retains oversight responsibilities at this stage as well.", "Many Presidents have called for an item veto, or possibly expanded impoundment authority, to provide them with greater control over federal spending.", "The Impoundment Control Act of 1974 (Title X of P.L. 93-344), established two categories of impoundments: deferrals, or temporary delays in funding availability; and rescissions, or permanent cancellation of budget authority.", "With a rescission, the funds must be made available for obligation unless both houses of Congress take action to approve the President's rescission request within 45 days of \"continuous session.\"", "The Line Item Veto Act was signed into law on April 9, 1996 (P.L. 104-130), and it became effective January 1, 1997. Key provisions allowed the President to cancel any dollar amount of discretionary budget authority, any item of new direct spending, or certain limited tax benefits contained in any law, unless disapproved by Congress.", "On June 25, 1998, the Supreme Court, in the case of Clinton v. City of New York, held the law unconstitutional on the grounds that it violated the presentment clause; in order to grant the President true item veto authority, a constitutional amendment would be needed (according to the majority opinion).", "Several measures have been introduced in the 111th Congress that would establish expedited rescission procedures, including H.R. 1294, H.R. 1390, H.R. 4921, S. 524, S. 640, S. 907, and S. 3423. Other proposals would provide for expedited rescission along with various other budget process reforms, such as increased earmark accountability or spending controls.", "The Obama Administration has endorsed an expedited process for congressional consideration of rescission requests and announced on May 24, 2010, the transmittal of a proposal to Congress, titled Reduce Unnecessary Spending Act of 2010.", "The Administration bill has been introduced as H.R. 5454 and S. 3474. In the 111th Congress, three committees have held hearings on expedited rescission measures, the most recent being on June 17, 2010, by the House Budget Committee. This report will be updated as events warrant." ], "parent_pair_index": [ -1, -1, -1, -1, 0, -1, 0, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 3, 3, 5, 5, 5 ] }

{ "title": [ "", "An Overview of Justice Kennedy's Jurisprudence", "Individual Liberty", "Structural Protections of the Constitution", "The Role of the Judiciary", "Justice Kennedy's Decisive Votes in Roberts Court-Era Cases", "Administrative Law", "Business Law", "Civil Rights", "Criminal Law and Procedure", "Cruel and Unusual Punishment", "Environmental Law", "Federalism", "Freedom of Religion", "Freedom of Speech", "National Security", "Second Amendment", "Separation of Powers", "Substantive Due Process and Fundamental Rights", "The Takings Clause and Eminent Domain", "Conclusion", "Appendix. Justice Kennedy As a \"Swing\" Vote on the Roberts Court: Select Data" ], "paragraphs": [ "O n June 27, 2018, Justice Anthony M. Kennedy announced that, effective July 31, 2018, he would retire from active service as an Associate Justice on the Supreme Court of the United States. Nominated to replace Justice Lewis Powell in 1987, Justice Kennedy has been one of the longest-serving Justices in the history of the Court. His decisive role on the Court, particularly during the Roberts Court era, cannot be overstated. While Justice Kennedy has been a critical vote on the Court for much of his 30-year tenure, since the October 2005 term that marked the beginning of the Roberts Court, Justice Kennedy has been the Court's \"median Justice,\" voting for the winning side in a case more often than any of his colleagues in 9 out of 12 terms.\nDuring this era, the High Court issued a number of landmark rulings that spanned the ideological spectrum. For instance, during the Roberts Court era, the Court held that the Fourteenth Amendment to the Constitution requires states to recognize marriages between same-sex couples in the same circumstances as they recognize marriages between opposite-sex couples; invalidated state laws viewed to impose an \"undue burden\" on a woman's right to terminate a pregnancy; afforded enemy belligerents detained at Guantanamo Bay certain procedural protections; and concluded that the Eighth Amendment prohibits the states from imposing the death penalty or a sentence of life without parole in certain circumstances. At the same time, since 2005, the Court also struck down campaign finance laws banning corporate independent expenditures for electioneering communications; invalidated Section 5 of the Voting Rights Act of 1965 on federalism grounds; recognized that the Second Amendment protects an individual's right to possess a firearm and to use that firearm for lawful purposes; upheld President Trump's proclamation placing entry restrictions on foreign nationals from specified countries; and invalidated on First Amendment grounds state laws that aimed to regulate certain commercial activities. In all of these cases, the sitting Justices were closely divided, and the composition of Justices in the deciding majority in such cases shifted dramatically from case-to-case with one exception: Justice Kennedy.\nPerhaps because of his pivotal role on the Court, like Justice Powell whom he succeeded, Justice Kennedy was viewed by many to be the Court's \"swing\" vote. The label of being a \"swing vote\" on the Court, however, may invite misleading conclusions about Justice Kennedy's approach to cases. As several commentators have noted, Justice Kennedy's jurisprudence did not necessarily focus on compromise or balance in the Court's decisions, but was instead, at times, informed by principles that resulted in votes that could not be categorized uniformly by a conservative or liberal ideology. For his part, Justice Kennedy resisted the \"swing vote\" moniker, declaring in a 2015 interview that \"[t]he cases swing, I don't.\" As a result, an examination of the underlying cases in which Justice Kennedy cast critical votes during the Roberts Court era may be necessary to fully gauge his jurisprudence and the significance of his retirement.\nThis report provides a broad overview of Justice Kennedy's approach to the law, with a particular emphasis on how he interpreted the Constitution. The report then discusses what his retirement may mean for the future of the Court in various areas of the law, broadly noting key legal decisions during the Roberts Court era in which Justice Kennedy cast a decisive vote. The report does not, however, purport to discuss fully every area of law that Justice Kennedy considered during his more than three decades of service on the Court. Nonetheless, guided by several tables in the Appendix noting the opinions in which Justice Kennedy cast decisive votes during the Roberts Court era, the report highlights key aspects of Justice Kennedy's jurisprudence and the key legal issues where his absence from the Court could result in a shift in the Court's jurisprudence.\nOn July 9, 2018, President Trump announced the nomination of Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to fill the impending vacancy on the Supreme Court caused by Justice Kennedy's scheduled retirement. CRS reports analyzing Judge Kavanaugh's jurisprudence on particular areas of the law, as well as a tabular listing of lower-court decisions in which he authored opinions, are in preparation.", "As one legal scholar has observed, \"identifying Justice Kennedy's judicial philosophy is no easy task.\" Unlike Justice Antonin Scalia, his colleague for nearly 28 years on the High Court, Justice Kennedy did not subscribe to a particular judicial philosophy, such as originalism or textualism. In his 1987 confirmation hearings, Justice Kennedy eschewed committing himself to a \"single, overarching theory\" of legal interpretation. For instance, in response to a question posed by Senator Robert Byrd concerning the role of history when interpreting the Constitution, the nominee opined that a judge cannot rely only on \"history in order to make the meaning of the Constitution more clear,\" and that \"new generations\" can also \"yield new insights and new perspectives\" that change \"our understandings\" of the Constitution. These and similar statements made during his confirmation hearing appear to have presaged the approach taken by Justice Kennedy on the Court, wherein he often synthesized several approaches to judging to guide his decision as to the appropriate result in a given case. Justice Kennedy's approach to judging appeared informed by certain guiding principles, three of the most determinative of which are discussed below.", "Justice Kennedy's jurisprudence was often grounded in concerns for personal liberty, that is, freedom from government interference with \"thought, belief, expression, and certain intimate conduct.\" The Justice's concerns for liberty manifested themselves in several free speech cases, wherein Justice Kennedy took the view that the First Amendment prohibited government actions that told individuals what they could say or what they could hear. For instance, on the day before he announced his retirement, Justice Kennedy authored a concurring opinion to explain how government paternalism with respect to speech could \"imperil[]\" liberty:\nIt is forward thinking to begin by reading the First Amendment as ratified in 1791; to understand the history of authoritarian government as the Founders then knew it; to confirm that history since then shows how relentless authoritarian regimes are in their attempts to stifle free speech; and to carry those lessons onward as we seek to preserve and teach the necessity of freedom of speech for the generations to come. . . . Freedom of speech secures freedom of thought and belief.\nIn this vein, Justice Kennedy, on behalf of the Court in Citizens United v. FEC, struck down a federal campaign finance law banning corporate independent expenditures for electioneering communications, rejecting arguments that the government needed to police corporate political speech. For Justice Kennedy, when the \"[g]overnment seeks to use its full power . . . to command where a person may get his or her information or what distrusted source he or she may not hear, it uses censorship to control thought\" in violation of the First Amendment. This rationale undergirded several other cases in which Justice Kennedy viewed the First Amendment to impose clear limits on the government's ability to regulate speech within the commercial sphere.\nJustice Kennedy's emphasis on liberty also manifested itself in a number of decisions he authored or joined on issues implicating religion. For instance, in Church of Lukumi Babalu Aye v. City of Hialeah , Justice Kennedy, on behalf of the Court, struck down a set of ordinances enacted by a Florida city prohibiting animal sacrifice, viewing the challenged laws as designed to \"persecute or oppress\" adherents to the Santeria religion. In so doing, Justice Kennedy cautioned against \"state intervention stem[ming] from animosity to religion or distrust of its practices,\" and identified what he viewed to be the \"high duty\" imposed on government officials by the First Amendment: to \"commit[] government to religious tolerance.\" Quoting Lukumi 25 years later in his opinion for the Court in Masterpiece Cakeshop v. Colorado Civil Rights Commission, Justice Kennedy concluded that a state civil rights commission violated its \"duty\" to not treat a party before it with hostility because of that party's religious beliefs. Likewise, expressing concern over the \"danger[s] to liberty\" that \"lie\" when the state excludes religious groups from a public forum or exhibits viewpoints based on hostility toward religion, Justice Kennedy wrote or joined several opinions that resulted in public spaces being opened for use by religious entities. Nonetheless, the soon-to-be-retired Justice viewed the constitutional requirement of tolerance to apply to how religious adherents treated the nonreligious, as well. Writing for the Court in Lee v. Weisman, Justice Kennedy held that the First Amendment's Establishment Clause prohibited a sectarian invocation and benediction at a public school graduation ceremony, maintaining that \"prayer exercises in public schools carry a particular risk of indirect coercion\" for objecting students, who may feel embarrassed or pressured by the state's action.\nBeyond the realm of the First Amendment, Justice Kennedy's liberty jurisprudence animated a number of decisions in which the Court struck down several federal and state laws on either equal protection or substantive due process grounds. In particular, his substantive due process cases seemed informed by a particular consideration related to liberty—the belief that the government must treat individuals with \"dignity\" —when concluding that a government measure either infringed upon an individual's right to privacy or involved the sanctioned animus toward a particular group. For instance, in Planned Parenthood of Southeastern Pennsylvania v. Casey, a plurality opinion of the Court authored by Justice Kennedy, along with Justice Sandra Day O'Connor and Justice David Souter, declared that the Constitution prohibits the government from interfering with certain life decisions \"central to personal dignity and autonomy\" because at the \"heart of liberty\" \"is the right to define one's own concept of existence, of meaning, of the universe, and of the mystery of human life.\" For the Casey plurality, \"there is a realm of personal liberty which the government may not enter.\" And Justice Kennedy echoed the themes of Casey in his opinion for the Court in Lawrence v. Texas , where the Court struck down a law that criminalized homosexual sodomy on the grounds that the Due Process Clause gives all people the \"full right to engage in private [sexual] conduct without government intervention.\"\nLawrence was one of four opinions Justice Kennedy authored that, relying on a broad view of the concepts of liberty and dignity, invalidated laws on the grounds they interfered with the rights of persons who engage in same-sex relationships. First, in Romer v. Evans, the Supreme Court struck down an amendment to the Colorado Constitution prohibiting \"all legislative, executive, or judicial action at any level of state or local government\" designed to protect persons based on their gay, lesbian, or bisexual status. Writing for the Court, Justice Kennedy declared that an \"inevitable inference\" must be made that the Colorado law was \"born of animosity toward the class of persons affected\" and concluded that the law was enacted out of a \"bare . . . desire to harm a politically unpopular group\" in violation of the Equal Protection Clause of the Fourteenth Amendment. Building on the themes of Romer seven years later in Lawrence v. Texas, Justice Kennedy emphasized the \"stigma\" created by the Texas antisodomy statute and its implications for the \"dignity of the persons charged,\" including the potential humiliation of having a charge appear on an individual's criminal record and having to register as a sex offender in several states.\nA decade after Lawrence , the Court in United States v. Windsor struck down the federal Defense of Marriage Act (DOMA), which mandated that the federal government not recognize same-sex marriages. Justice Kennedy's majority opinion declared that the \"avowed purpose and practical effect of\" DOMA was to interfere \"with the equal dignity of same-sex marriages, a dignity conferred by the States in the exercise of their sovereign power,\" by denying a host of federal benefits to those same-sex couples who were married under the laws of their respective states. As a consequence, the Court viewed DOMA as an attempt by Congress to stigmatize a particular group, because the \"differentiation\" of how same-sex marriage was treated under federal law \"demean[ed] the [same-sex] couple\" and \"humilate[d] the tens of thousands of children now being raised by same-sex couples.\"\nTwo years after Windsor , Justice Kennedy authored the Court's landmark ruling in Obergefell v. Hodges , deciding that the \"right to marry\" applies with \"equal force\" to same-sex couples as it does to opposite-sex couples. Specifically, the Obergefell Court held that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out of state. In so holding, the Court concluded that a denial of marital recognition to same-sex couples ultimately \"demean[ed]\" and \"stigma[tized]\" those couples and any children resulting from such partnerships. Given this conclusion, the Court held that, while limiting marriage to opposite-sex couples may have once seemed \"natural,\" such a limitation was inconsistent with the right to marriage inherent in the \"liberty\" of the person as protected by the Fourteenth Amendment.\nWhile liberty concerns informed Justice Kennedy's assessment of government activities addressing certain facets of life, it should be noted that these concerns were not overtly determinative in all instances. Justice Kennedy, for example, tended to have a more restricted view of the Fourth Amendment, as exemplified in his 2013 opinion in Maryland v. King , where, writing on behalf of the Court, the Justice concluded that taking a cheek swab of a criminal arrestee's DNA was a reasonable search that did not require a warrant. Moreover, on matters concerning government interference with personal property rights, Justice Kennedy joined several opinions declining to limit the scope of the government's power. Nonetheless, as discussed, Justice Kennedy's \"capacious notion\" of liberty and dignity and his skepticism toward governmental efforts that could be viewed to interfere with those values underscore much of his constitutional jurisprudence.", "The structural protections of the Constitution—i.e., restraints imposed on the federal government by the doctrines of separation of powers and federalism—also influenced Justice Kennedy's jurisprudence. With respect to separation of powers, even before Justice Kennedy joined the Court, he authored as a federal appellate judge an opinion, eventually affirmed by the Supreme Court, that invalided the legislative veto, a mechanism by which one or both houses of Congress could, without enacting new legislation, override executive action. Writing for the U.S. Court of Appeals for the Ninth Circuit, he identified two \"principal purposes\" of the separation of powers: \"preventing concentrations of power dangerous to liberty and . . . promoting governmental efficiency.\" As a Justice on the Supreme Court, Justice Kennedy tended to emphasize the former principle in his decisions on separation of powers. Concurring in Clinton v. New York , which struck down the Line Item Veto Act of 1996, Justice Kennedy described the Constitution's separation of powers as \"designed to implement a fundamental insight: concentration of power in the hands of a single branch is a threat to liberty.\" Accordingly, for Justice Kennedy, separation of powers was a \"defense against tyranny,\" and, in this vein, the Roberts Court era witnessed Justice Kennedy authoring or joining a number of majority opinions that invalidated on separation-of-powers grounds intrusions on the executive, legislative, or judicial functions.\nBeyond emphasizing the importance of \"horizontal\" structural protections imposed by the Constitution upon the three branches of the federal government, Justice Kennedy's jurisprudence also placed significant importance on the \"vertical\" structure created by the nation's founding legal document respecting the sovereign roles of federal and state governments. During the Rehnquist and Roberts Courts, Justice Kennedy often found himself joining majority opinions that recognized federalism-based limitations on the power of the federal government, establishing limitations on Congress's legislative powers and reaffirming protections for state sovereignty grounded in part in the Tenth and Eleventh Amendments. At the same time, Justice Kennedy frequently concluded that when Congress acted within its enumerated powers and did not contravene any other federalism-based constraints on its power, Congress's power was supreme and therefore preempted conflicting state laws.\nLike his separation-of-power decisions, Justice Kennedy's federalism jurisprudence was frequently grounded in liberty-based rationales. For instance, as Justice Kennedy maintained in his majority opinion in Bond v. United States , \"[f]ederalism is more than an exercise in setting the boundary between different institutions of government for their own integrity.\" Instead, the Justice viewed federalism as \"secur[ing] the freedom of the individual\" by allowing \"those who seek a voice in shaping the destiny of their own times without having to rely solely upon the political processes that control a remote central power\" and \"by ensuring that laws enacted in excess of delegated governmental power cannot direct or control their actions.\" This central tenet of Justice Kennedy's judicial approach was captured by the joint dissent he coauthored in NFIB v. Sebelius :\nStructural protections—notably, the restraints imposed by federalism and separation of powers—are less romantic and have less obvious a connection to personal freedom than the provisions of the Bill of Rights or the Civil War Amendments. Hence they tend to be undervalued or even forgotten by our citizens. It should be the responsibility of the Court to teach otherwise, to remind our people that the Framers considered structural protections of freedom the most important ones, for which reason they alone were embodied in the original Constitution and not left to later amendment. The fragmentation of power produced by the structure of our Government is central to liberty, and when we destroy it, we place liberty at peril.", "Justice Kennedy's jurisprudence was also undergirded by a relatively robust view of the role of the Court, in which the Court, led by the Justice, began to exercise its power of judicial review with respect to new or formerly ignored legal issues. Like other aspects of his judicial approach, Justice Kennedy was not uniform in his views on judicial power. He recognized, at times, limits to the power of the judiciary, particularly in cases interpreting the justiciability requirements of Article III of the Constitution. For example, Justice Kennedy joined the Court's 2013 opinion in Clapper v. Amnesty International , which held that a plaintiff seeking injunctive relief from a court first had to allege that any injury he was going to suffer as a result of the complained-of action was \"certainly impending.\" Likewise, in matters concerning the judiciary's role in scrutinizing national security decisions by the political branches, Justice Kennedy tended to view the Court's role more minimally.\nNonetheless, during his time on the Court, Justice Kennedy voted to strike down federal or state laws as unconstitutional with greater regularity than most of his colleagues. Washington University Law's Supreme Court Database identifies Justice Kennedy, from the October 1988 term through the October 2016 term, as joining Court rulings striking down federal or state legislation with more regularity than 12 of the 16 Justices he served with during that period (Justices Harry Blackmun, William Brennan, Thurgood Marshall, and Byron White were Justice Kennedy's only colleagues from his tenure on the Court, through the October 2016 term, who were more likely to join such opinions). Justice Kennedy's willingness to invalidate federal or state laws may be indicative of his broad conception of the Court's role in resolving issues of national significance. As Justice Kennedy declared in an interview in 2005, the Supreme Court \"make[s] more important decisions\"—i.e., decisions that \"will control the direction of society\"—than the \"legislative branch does—precluding foreign affairs perhaps.\"\nIn rulings where Justice Kennedy typically provided a critical vote, the Court in recent decades has made significant pronouncements in legal areas where it earlier had been silent or expressly recognized the decisions of the political branches as dispositive. For instance, in the era preceding Justice Kennedy's appointment to the High Court, a majority of the Court had concluded that the \"political processes\" (i.e., discretionary actions taken by Congress and the President), and not the Court, would be the primary means to enforce federalism-based limits on Congress's powers. However, with the Rehnquist Court came a shift in federalism jurisprudence, and the judiciary began to police the limits of Congress's powers vis-à-vis the states. Justice Kennedy's concurrence in United States v. Lopez included a robust defense for this shift in approach:\n[T]he absence of structural mechanisms to require those officials to undertake [the] principled task [of \"maintaining the federal balance\"], and the momentary political convenience often attendant upon their failure to do so, argue against a complete renunciation of the judicial role. Although it is the obligation of all officers of the Government to respect the constitutional design, . . . the federal balance is too essential a part of our constitutional structure and plays too vital a role in securing freedom for us to admit inability to intervene when one or the other level of Government has tipped the scales too far.\nAnother example of how the Court's role ascended during Justice Kennedy's tenure concerned the Court's approach toward laws that discriminated against persons engaged in same-sex relationships. The decades that preceded Justice Kennedy's appointment saw the Court upholding laws criminalizing same-sex sodomy and summarily affirming rulings that rejected a constitutional right to same-sex marriage. However, as discussed, Justice Kennedy's 1996 opinion in Romer v. Evans ushered in a new era in which the Court began to scrutinize laws that denied certain rights to persons in same-sex relationships. In Lawrence, the Court reversed its earlier ruling with respect to the criminalization of same-sex sodomy, and 12 years later, Justice Kennedy's opinion for the Court in Obergefell recognized a constitutional right for same-sex couples to marry, marking a stark contrast to the Court's approach to such matters in the decades preceding Justice Kennedy joining the Court.\nMore broadly, Justice Kennedy's jurisprudence reaffirmed the role of the Court as the final expositor of the meaning of the Constitution. For example, in City of Boerne v. Flores , which invalidated the Religious Freedom Restoration Act of 1993's application to state governments, Justice Kennedy's majority opinion rejected a reading of older precedent from the Warren Court era that implied that Congress, through enacting legislation under the Enforcement Clause of the Fourteenth Amendment, could expand upon the rights the Court previously had recognized the amendment to protect. For Justice Kennedy, Congress's power under the Fourteenth Amendment was limited to \"determine whether and what legislation is needed to secure the guarantees of the Fourteenth Amendment,\" but the Court retained the power to determine the meaning of the Constitution and its precedents. The Supreme Court's interpretation of the Constitution ultimately \"must control,\" rather than the interpretation advanced by another branch of government.\nJustice Kennedy's view of judicial supremacy with respect to constitutional interpretation was not limited to clashes between the legislative and judicial branches. For example, in United States v. Windsor , Justice Kennedy's majority opinion rejected the argument that the Court lacked jurisdiction to adjudicate an appeal when both the plaintiff and executive branch defendant agreed as to the ultimate outcome of the case (i.e., that DOMA was unconstitutional). The Windsor Court believed that, if judicial review of the legality of a measure could be circumvented by the executive branch conceding a plaintiff's claim that a federal statute was unlawful, \"[t]his would undermine the clear dictate of the separation-of-powers principle that when an Act of Congress is alleged to conflict with the Constitution, it is emphatically the province and duty of the judicial department to say what the law is.\" In a similar vein, Justice Kennedy, in concluding on behalf of the Court in Boumediene v. Bush that enemy belligerents detained at the U.S. Naval Base in Guantanamo Bay, Cuba, were entitled to seek writs of habeas corpus, rejected the executive branch's argument that the constitutional writ of habeas could never extend to noncitizens being held outside of U.S. sovereign territory, regardless of the degree of control the United States exercised over the location. For Justice Kennedy, the Constitution \"cannot be contracted away\" through a lease between the U.S. and Cuban governments. The political branches lacked the power to \"say 'what the law is'\" and could not \"switch the Constitution on or off at will.\" As a consequence, while Justice Kennedy may have occasionally recognized limits to the role of the Court in resolving legal disputes, opinions like Boumediene placed the Court, at least in the view of one legal commentator, at the \"apex of power in the constitutional structure.\"", "The principles that undergirded Justice Kennedy's judicial philosophy often cut across ideological lines, as his views on liberty, the structural Constitution, and the power of the Court resulted in the Justice taking sometimes idiosyncratic approaches to a given case. As a result, Justice Kennedy's approach to the law placed him in the middle of the Roberts Court, with the Justice not necessarily voting in tandem with the blocs of Justices that commentators have labeled to be \"liberal\" or \"conservative.\" Justice Kennedy had a significant influence on the Court, sometimes because the substance of his opinions was jurisprudentially significant, as in the areas of free speech and substantive due process, and sometimes by means of providing a fifth vote in closely divided cases.\nThe following subsections broadly note critical areas of law in which Justice Kennedy was particularly influential on the Roberts Court. The subsections briefly highlight Justice Kennedy's approach to a given area of law, noting the key cases that help explain the Justice's views on a given legal issue. Throughout, the subsections, by noting Justice Kennedy's influence on a particular area of law, signal how the trajectory of the Court's jurisprudence in that area may change when Justice Kennedy retires from active service on the Court.", "Justice Kennedy was less influential on administrative law matters than he was in other areas of the law, though he did, at times, express the opinion that courts should carefully police the power of the administrative state based on separation-of-powers concerns. For instance, in a concurring opinion in FCC v. Fox Television Stations, Inc. , he noted the unique \"role and position\" of administrative agencies in the federal government, and stated that \"if agencies were permitted unbridled discretion, their actions might violate important constitutional principles of separation of powers and checks and balances.\" To address this danger, he argued that courts should carefully apply the various doctrines limiting agencies' power.\nNonetheless, like other legal issues he approached while on the Court, Justice Kennedy's votes in administrative law cases tended to place him in the middle of the Roberts Court. One of the biggest flashpoints in administrative law is a judge's stance on the doctrines governing judicial deference to agencies' interpretations of statutes, and Chevron deference in particular. Chevron deference counsels that if a statute is ambiguous, courts should defer to certain reasonable agency constructions of the statute. Justice Kennedy's track record under Chevron was relatively mixed overall: he provided the Roberts Court's fifth vote in decisions deferring to an agency's interpretation under Chevron in four cases and provided the fifth vote to reject deference in at least six cases. Moreover, Justice Kennedy authored the Court's 2013 opinion in Decker v. Northwest Environmental Defense Center , relying, over Justice Scalia's dissent, on the Auer doctrine, which affords deference toward an agency's interpretation of its own regulations.\nHowever, in the Court's most recent term, less than a week before Justice Kennedy announced that he would be retiring, Justice Kennedy authored an opinion in which he called for the Court to \"reconsider\" Chevron . Echoing the separation-of powers concerns he had earlier voiced in opinions such as FCC v. Fox Television Stations, Inc. , Justice Kennedy expressed concern that lower courts had sometimes afforded agency interpretations \"reflexive deference,\" abdicating \"the Judiciary's proper role in interpreting federal statutes.\" He suggested that this abdication violated \"constitutional separation-of-powers principles.\" Accordingly, with a number of Justices arguing for reexaminations of both the Chevron and Auer doctrines, Justice Kennedy's successor could have an important role to play regarding the future of administrative law and how courts scrutinize an agency's legal conclusions.", "Justice Kennedy cast numerous decisive votes in business law cases throughout his tenure on the Roberts Court, including in cases involving antitrust, business taxation, bankruptcy and debt collection, intellectual property, securities, civil tort liability, class action litigation, and employment discrimination. While it may be difficult to observe discernible trends across this diverse group of legal matters, at least two trends in Justice Kennedy's business law jurisprudence during the Roberts Court era are readily apparent. First, in a string of closely divided cases presenting the issue of whether businesses can require plaintiffs to submit their disputes to binding arbitration instead of litigating their disputes in court, Justice Kennedy frequently was part of Court majorities ruling that the claims were arbitrable. Second, Justice Kennedy cast deciding votes in several cases holding that federal law preempted certain state tort causes of action, thereby limiting the circumstances in which plaintiffs could hold businesses liable for conduct that would otherwise violate state law. Justice Kennedy's deciding vote in such cases may have helped solidify the Roberts Court's reputation as being particularly pro-business, prompting the question of whether Justice Kennedy's departure from the Court will change the Roberts Court's approach to business matters.", "While serving on the Roberts Court, Justice Kennedy was a critical vote in civil rights cases, addressing both constitutional and statutory matters relating to a broad range of subjects, including voting rights, education, and labor and employment. For instance, in the context of labor and employment law, Justice Kennedy sided with the majority in a number of closely divided rulings adopting a narrower interpretation of Title VII of the Civil Rights Act of 1964 relative to the approach favored by the dissenting Justices on the Court. Justice Kennedy joined the majority opinion in Ledbetter v. Goodyear Tire, which held that a female employee's complaint of pay discrimination was time barred. In a ruling later abrogated by Congress, the majority reasoned that the statutory period for bringing such a claim began with the defendant's original discriminatory pay decision, and thus concluded that each subsequent paycheck that followed did not reset the statute of limitations.\nIn other contexts, Justice Kennedy took a broader view regarding the statutory and constitutional protections afforded to certain marginalized groups. Most notably, as discussed, Justice Kennedy authored four major opinions that recognized constitutional protections against state-sponsored discrimination based on sexual orientation. Justice Kennedy also wrote the Court's opinion in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc. , in which a bare majority held that plaintiffs could, under the Fair Housing Act, assert disparate impact claims—that is, claims based not on intentional discrimination, but instead on a particular practice that adversely affects a protected group.\nJustice Kennedy was particularly consequential in Roberts Court's decisions concerning race-conscious education policies. For example, Justice Kennedy concurred in the judgment rendered in Parents Involved in Community Schools v. Seattle School District No. 1 , which invalidated school assignment plans that partially relied on race to determine which schools children in the districts could attend. At the same time, however, Justice Kennedy wrote a separate opinion in Parents Involved expressing his view that school districts should nonetheless be \"free to devise race-conscious measures\" to promote diversity as long as those measures \"address the problem in a general way and without treating each student in different fashion solely on the basis of a systematic, individual typing by race.\" The Justice then authored the Court's latest pronouncement on affirmative action two terms ago in Fisher v. University of Texas at Austin , which rejected a white applicant's constitutional challenge to a state university's race-conscious admissions program.\nGiven Justice Kennedy's deciding vote on many of the cases mentioned above, his replacement could have an especially influential role in a host of civil rights matters.", "While Justice Kennedy was perhaps less consequential for the Court's jurisprudence in the area of criminal law and procedure than in other areas, he nonetheless provided the deciding vote in a number of cases concerning criminal law and procedure. In the realm of the Fourth Amendment, which provides protection from unreasonable searches and seizures, Justice Kennedy often came down on the side of the government, upholding searches and seizures or otherwise allowing the admission of evidence. In a number of cases, Justice Kennedy suggested that the Court should leave room for local governments to develop their own procedures governing searches, giving local authorities discretion to strike the proper balance between preventing unreasonable searches while still allowing law enforcement officers to conduct effective searches in the interest of public security. The Justice was similarly deferential to the government in the context of Miranda warnings, citing police officers' need for discretion to make \"difficult decisions\" in the face of ambiguity. In line with his tendency to side with the government in many criminal procedure disputes before the Court, Justice Kennedy was in dissent in a number of the Court's recent rulings taking more expansive views of the Fourth Amendment, the Sixth Amendment's Confrontation Clause, and the Sixth Amendment's right to a jury trial.\nWhile often taking a position favorable to the government in criminal law cases, Justice Kennedy joined or authored Court rulings in several close decisions favorable to criminal defendants' ability to raise right-to-counsel claims. Perhaps most notably, Justice Kennedy authored a pair of 2012 opinions on behalf of a closely divided Court, Missouri v. Frye and Lafler v. Cooper , that held that \"as a general rule, defense counsel has the duty to communicate formal offers from the prosecution to accept a plea on terms and conditions that may be favorable to the accused,\" and held that a failure to abide by that rule might undermine even a subsequent prosecution before a jury.\nJustice Kennedy was arguably less often a \"swing vote\" in criminal law matters, regularly siding with the government, particularly in the area of the Fourth Amendment. However, he was still decisive to the outcome of a number of criminal law cases, and some commentators have argued that his successor will have an important role to play in resolving cases dealing with privacy and the scope of the Fourth Amendment's protections in light of evolving technology.", "Justice Kennedy cast numerous decisive votes in closely divided Eighth Amendment cases, including death penalty cases. In several of those cases, Justice Kennedy authored majority opinions granting relief to petitioners either based on their characteristics or those of the crimes they committed. For instance, in Kennedy v. Louisiana , Justice Kennedy authored the majority opinion ruling that the Eighth Amendment prohibits the death penalty as a punishment for the rape of a child where the crime does not result—and was not intended to result—in the victim's death. Similarly, in Hall v. Florida , Justice Kennedy, building upon the Court's earlier ruling in Atkins v. Virginia , authored an opinion ruling that Florida's death penalty regime created an unconstitutional risk of executing persons with intellectual disabilities. Justice Kennedy also wrote the Court's 5-4 opinion in Roper v. Simmons , which held that the Eighth Amendment forbids executing defendants who were under 18 years of age at the time of their capital crimes, and he joined the 5-4 opinion in Miller v. Alabama , which held that the Eighth Amendment prohibits mandatory life imprisonment for juveniles.\nHowever, Justice Kennedy also cast decisive votes against petitioners in a variety of Eighth Amendment cases, especially in cases presenting broader efforts to challenge the death penalty. For example, in Glossip v. Gross , the Court, in a 5-4 opinion with Justice Kennedy in the majority, rejected the petitioner's claim that Oklahoma's three-drug lethal injection protocol violated the Eighth Amendment by creating an unacceptable risk of severe pain. Likewise, in Kansas v. Marsh , Justice Kennedy joined a 5-4 opinion concluding that Kansas's death penalty regime did not offend the Eighth Amendment. As a result, Justice Kennedy's death penalty jurisprudence placed him squarely in the middle of the Roberts Court, making this area of law a critical one that is likely to be influenced by whoever replaces the Justice.", "Justice Kennedy authored or joined several consequential opinions in closely divided environmental law cases during his time on the Roberts Court. For example, Justice Kennedy wrote an influential opinion concurring in the judgment in Rapanos v. United States , which concerned the proper interpretation of the term \"waters of the United States\" for the purposes of the Clean Water Act. Justice Kennedy's concurrence became the controlling opinion for many lower courts, thereby defining the scope of the federal government's authority to regulate certain bodies of water and wetlands connected to them. Justice Kennedy also joined the Court's 5-4 opinion in Massachusetts v. EPA , a case that some scholars have characterized as \"one of the most significant cases in the history of federal environmental litigation.\" The Massachusetts Court held (1) that the State of Massachusetts had standing to challenge the Environmental Protection Agency's alleged failure to adequately regulate greenhouse gas; and (2) that greenhouse gases fit within the Clean Air Act's definition of \"air pollutant\" and therefore fell within the EPA's regulatory authority. The Court's ruling in Massachusetts not only expanded the universe of environmental law challenges that federal courts had authority to adjudicate, but it also directly influenced the EPA to establish a new program to regulate greenhouse gases.\nNonetheless, Justice Kennedy also cast several critical votes that did not necessarily align him with those seeking greater legal protections for the environment. For example, Justice Kennedy joined the 5-4 opinion in Summers v. Earth Island Institute , in which the Court ruled that a group of environmental organizations lacked standing to challenge certain federal regulations. Additionally, Justice Kennedy joined the Court's 5-4 opinion in Michigan v. EPA , which held that the Environmental Protection Agency unreasonably deemed cost irrelevant with respect to certain regulations of power plants. As a consequence, like in other areas of law, Justice Kennedy was often at the center of the Court's environmental law decisions, making it likely that his replacement will have significant influence on the future of environmental law.", "Justice Kennedy helped shape the Court's jurisprudence regarding the relationship between the federal government and the states. As noted above, beginning in the Rehnquist Court era, Justice Kennedy frequently authored or joined majority opinions recognizing federalism-based limitations on the federal government's power. That trend continued during the Roberts Court. For instance, Justice Kennedy authored the Court's opinion in Coleman v. Court of Appeals of Maryland , which held that Congress did not validly abrogate the states' sovereign immunity when it enacted a provision of the Family Medical Leave Act. Justice Kennedy likewise joined the Court's 5-4 opinion in Shelby County v. Holder , which held that Section 5 of the federal Voting Rights Act—a formula that determined which states were required \"to obtain federal permission before enacting any law related to voting\"—impermissibly interfered with \"the traditional course of relations between the States and the Federal Government.\"\nThat said, Justice Kennedy nonetheless tended to favor a somewhat broader conception of federal power in a few contexts. In preemption cases, Justice Kennedy commonly (though not invariably) voted to invalidate state statutes or common law doctrines on the grounds that they conflicted with federal law. More broadly, Justice Kennedy's expansive view of the role of the Court in protecting individual liberty resulted in a number of votes to invalidate state laws on the ground that they violated the Constitution. Most obviously, Justice Kennedy's majority opinion in Obergefell v. Hodges \"struck down bans on same-sex marriage in 13 states.\" Justice Kennedy also authored several key opinions articulating federal constitutional standards for when state judges were required to recuse themselves from state court cases. As a consequence, Justice Kennedy's influence on the balance of powers between the federal and state governments was pronounced, making it a key area to consider with regard to how a successor might approach similar issues.", "Justice Kennedy played a pivotal role in cases involving religious liberty interests. Most recently, Justice Kennedy wrote the Court's opinion in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission , in which the Court concluded that a state civil rights commission contravened the Free Exercise Clause when evaluating a baker's claim that selling a wedding cake to a same-sex couple would violate his religious convictions. As discussed above, Masterpiece Cakeshop built on an earlier Justice Kennedy opinion, Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah , in which the Court struck down an ordinance forbidding practitioners of Santeria from engaging in animal sacrifice in accordance with the tenets of their religion. Justice Kennedy also joined the Roberts Court's 5-4 opinion in Burwell v. Hobby Lobby Stores, Inc. , which held that regulations promulgated pursuant to the Patient Protection and Affordable Care Act that required employers to provide cost-free contraception to their employees contravened the Religious Freedom Restoration Act.\nNonetheless, Justice Kennedy did not uniformly side with the interests of religious objectors. For instance, he joined the Court's 5-4 opinion in Christian Legal Society v. Martinez , which held that a public law school did not violate the First Amendment by refusing to officially recognize a Christian student organization because the organization did not comply with the school's policy of allowing all students to join its group. Justice Kennedy further noted in Masterpiece Cakeshop that when reviewing the claims of those who deny goods and services to individuals protected by federal or state public accommodations laws, courts must resolve these disputes \"without subjecting gay persons to indignities when they seek goods and services in an open market.\"\nWith respect to the Establishment Clause, an issue that has tended to divide the Court over the past half century, Justice Kennedy has tended to adopt a more accommodationist approach, wherein his assessment of whether an Establishment Clause violation occurred stemmed from evidence of religious discrimination or coercion by the government, as opposed to mere endorsement of religion. During the Rehnquist Court era, Justice Kennedy often found himself in dissent in rulings counseling for stricter separation of church and state. Nonetheless, Justice Kennedy authored the Court's opinion in Lee v. Weisman in 1993, concluding that the Establishment Clause prohibited a nonsectarian prayer at a public school graduation ceremony because of the coercive effects the prayer would have on nonadherents.\nWith Justice O'Connor's retirement from the Court in 2005, Justice Kennedy became the Court's median vote on Establishment Clause issues. While the Roberts Court has entertained few appeals on Establishment Clause issues, in its most notable ruling, Town of Greece, New York v. Galloway, Justice Kennedy, writing for a plurality of the Court, embraced a most accommodationist view of the First Amendment to conclude that a municipality did not violate the Constitution by opening its meetings with a prayer. Given Justice Kennedy's critical role on religious freedom matters and a spate of disputes over religious liberty continuing to arise in the lower courts, Justice Kennedy's successor could be quite influential in how the Court resolves such disputes in the future.", "Throughout his tenure on the Roberts Court, Justice Kennedy authored or joined numerous opinions invoking the First Amendment's Free Speech Clause to strike down state and federal laws. In particular, Justice Kennedy frequently voted to invalidate statutes that, in his view, unconstitutionally restricted political participation. For instance, Justice Kennedy authored the 5-4 majority opinion in Citizens United v. FEC , which held that a federal campaign finance law banning corporate independent expenditures for electioneering communications violated the First Amendment. Justice Kennedy also joined the Court's 5-4 opinion in McCutcheon v. FEC , which invoked the First Amendment to invalidate a federal statute that imposed aggregate limits on political contributions.\nJustice Kennedy's broad conception of the Free Speech Clause carried over into other contexts as well. For one, Justice Kennedy cast decisive votes in several First Amendment cases involving labor organizations. Most significantly, Justice Kennedy joined the Court's recent 5-4 opinion in Janus v. American Federation of State, County, & Municipal Employees, Council 31 , which held that a state's extraction of agency fees from nonconsenting public sector employees violated the First Amendment. In addition, Justice Kennedy regularly voted to invalidate restrictions on commercial or professional speech. For example, Justice Kennedy's majority opinion in Sorrell v. IMS Health Inc. , struck down a state statute restricting speech in aid of pharmaceutical marketing.\nNevertheless, Justice Kennedy believed that speech could at times be subject to government restraint. Justice Kennedy's 5-4 majority opinion in Garcetti v. Ceballos , for instance, concluded that statements made by government employees pursuant to their official duties were not protected by the First Amendment. Justice Kennedy also joined the Court's 5-4 opinion in Morse v. Frederick , which held that a school principal did not violate a student's right to free speech by confiscating a banner that the student displayed at an off-campus, school-approved activity. Additionally, Justice Kennedy joined the majority opinion in Holder v. Humanitarian Law Project , in which the Court concluded that a federal law making it a crime to \"knowingly provid[e] material support or resources to a foreign terrorist organization,\" including \"training\" or \"expert advice and assistance,\" did not violate certain plaintiffs' free speech rights. With the prospect of free speech issues continuing to dominate the Roberts Court's docket, it remains to be seen whether Justice Kennedy's free speech jurisprudence will continue to be the prevailing view on the High Court.", "Justice Kennedy authored or joined a number of majority opinions that closely divided the Court on matters related to national security. These opinions have tended to defer to the authority of the political branches on national security matters. For example, in Ziglar v. Abbasi , writing the opinion of the Court, Justice Kennedy held that lower courts had erred by allowing certain detained foreign nationals to sue the government under an implied cause of action. He wrote that \"[n]ational-security policy is the prerogative of the Congress and President,\" cautioning that \"judicial inquiry into the national-security realm\" raises separation-of-powers concerns.\nJustice Kennedy similarly emphasized national security concerns in several of the Court's rulings with respect to immigration matters. In at least two determinative opinions, Justice Kennedy accorded significant deference to immigration decisions of the political branches because they implicated foreign affairs and national security. Most recently, in Trump v. Hawaii , Justice Kennedy joined an opinion reaffirming the deference afforded to the political branches on immigration when upholding a presidential proclamation restricting the entry of foreign nationals from specified countries.\nNonetheless, Justice Kennedy has also provided the deciding vote in cases recognizing limitations on the authority of the President over matters concerning national security. For example, in Hamdan v. Rumsfeld , he joined the Court in an opinion concluding that a presidential order creating a military commission to try enemy belligerents for specified categories of offenses violated the governing federal statutes.\nPerhaps most notably, Justice Kennedy authored the majority opinion in Boumediene v. Bush , in which the Court held that foreign nationals \"designated as enemy combatants and detained at the United States Naval Station at Guantanamo Bay, Cuba\" were entitled to invoke the constitutional \"privilege of habeas corpus.\" While Justice Kennedy's majority opinion recognized the President's \"substantial authority to apprehend and detain those who pose a real danger to our security,\" the Court ultimately concluded that this power would be \"vindicated, not eroded,\" by extending the writ of habeas corpus. He wrote that \"few exercises of judicial power are as legitimate or as necessary as the responsibility to hear challenges to the authority of the Executive to imprison a person.\" Given how closely divided the Court has been in cases like Trump and Boumediene , a critical question going forward is how the Roberts Court will approach national security matters without Justice Kennedy.", "Justice Kennedy also provided key deciding votes in the few but significant cases the Roberts Court heard on the Second Amendment. Most notably, Justice Kennedy joined the five-Justice majority that concluded in District of Columbia v. Heller that the Second Amendment protected an individual (as opposed to collective) right to keep and bear arms. Two years later, he joined a majority of the Court to hold in McDonald v. City of Chicago that the Second Amendment governed state and local governments through the Fourteenth Amendment. However, Justice Kennedy declined to join other Justices who called for the Supreme Court to consider Second Amendment challenges to laws imposing waiting periods for purchasing firearms or restricting the right to carry firearms in public. Given the close divide on the Court relating to the regulation of firearms, Justice Kennedy's successor could have a notable effect on how the Second Amendment and the Heller ruling are interpreted going forward.", "As discussed, since his appointment to the Court, Justice Kennedy has frequently stressed the importance of the Constitution's separation of the legislative, executive, and judicial powers, often casting decisive votes in the Court's separation-of-powers cases. For example, in a 2011 decision, Justice Kennedy emphasized the historical and practical importance of constitutional limitations on the power of the judicial branch. Justice Kennedy provided the fifth vote in a number of Roberts Court decisions interpreting Article III of the Constitution, delineating—and frequently limiting—the authority of the courts to adjudicate disputes. Justice Kennedy has authored or joined opinions limiting the power of the legislative and executive branches, as well. For example, as discussed above, Justice Kennedy has called for the judicial branch to carefully police the administrative state, while also recognizing that the judicial branch should tread carefully in realms committed to the political branches, such as national security.\nIn so doing, Justice Kennedy has not necessarily adopted a uniform approach toward separation-of-power matters. He has, at times, authored or joined opinions taking a more formalist approach toward analyzing whether a particular action violates the separation of powers, and supported invalidating some acts that transgress upon the separation of powers regardless of the severity of the violation. In other cases, however, Justice Kennedy has embraced a more functionalist approach to such claims, one that investigates the nature of the challenged action and the extent to which that action violates separation-of-powers principles before concluding that the action is unlawful. His willingness to employ both formalist and functionalist approaches to separation-of-powers issues was illustrated by a concurring opinion he authored during his first term on the Court, where he suggested that, at least in the context of intrusions on executive authority, the approach the Court takes in separation-of-powers disputes should depend upon the particulars of the dispute and on whether the Constitution explicitly assigns a given power exclusively to the President. Justice Kennedy's views on the separation of powers placed him in the middle of the Roberts Court in cases concerning the allocation of powers among the three branches of the federal government, suggesting that Justice Kennedy's successor may be quite influential on the future direction of the Court's approach in such cases.", "Justice Kennedy played an especially important role in shaping the Supreme Court's substantive due process jurisprudence. The substantive due process doctrine holds that the Constitution's Due Process Clauses protect certain unenumerated \"fundamental rights and liberties which are . . . 'deeply rooted in this Nation's history and tradition,'\" such as the right to marry and the right to privacy. On many occasions throughout his tenure on the Court, Justice Kennedy authored or joined opinions invoking the substantive due process doctrine to invalidate a variety of federal and state laws—most consequentially on the subjects of abortion and sexual orientation.\nAs noted above, Justice Kennedy is perhaps best known for authoring many of the Supreme Court's landmark opinions on issues pertaining to sexual orientation, several of which were based on the substantive due process doctrine. Justice Kennedy's opinion for the Court in Lawrence v. Texas , for example, invoked substantive due process and the right to privacy to invalidate a state statute criminalizing private sexual conduct between persons of the same sex. Similarly, Justice Kennedy's opinion in Obergefell v. Hodges , which held that prohibitions on same-sex marriage were unconstitutional, was likewise based in part on the substantive due process doctrine and the fundamental right to marriage.\nNonetheless, Justice Kennedy did find limits on the rights recognized in cases like Lawrence and Obergefell, especially when those rights clashed with other constitutional rights. For example, Justice Kennedy wrote the majority opinion in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission , in which the Court ruled in favor of a baker who refused to create a cake for a same-sex wedding reception, concluding that in justifying its decision to enforce state antidiscrimination laws against the baker, the State of Colorado had exhibited impermissible \"hostility\" toward the baker's religious beliefs. And Justice Kennedy likewise voted with the majority in Boy Scouts of America v. Dale , in which the Court refused to force the Boy Scouts to readmit a scoutmaster it had previously expelled because of his sexual orientation.\nJustice Kennedy also played an important role in shaping the Supreme Court's substantive due process jurisprudence in the abortion context. Not only was Justice Kennedy one of the coauthors of the joint plurality opinion in Planned Parenthood v. Casey during the Rehnquist Court era, but he also continued to cast decisive votes in closely divided Roberts Court-era abortion cases. In some of those cases, Justice Kennedy voted to uphold abortion restrictions. Most notably, Justice Kennedy wrote the Court's 5-4 opinion in Gonzales v. Carhart , which upheld the constitutionality of the federal Partial Birth Abortion Ban Act. In other cases, by contrast, Justice Kennedy voted to invalidate abortion laws, including Whole Woman's Health v. Hellerstedt , in which Justice Kennedy joined a five-Justice majority opinion holding that a Texas law unconstitutionally imposed an undue burden on women's right to seek previability abortions.\nOutside the contexts of challenges to statutes restricting sexual and reproductive autonomy, however, Justice Kennedy's approach to substantive due process was more circumscribed. For instance, Justice Kennedy joined the Court's refusal to recognize a constitutional right to physician-assisted suicide in Washington v. Glucksberg , evidently agreeing with the Court's conclusion that substantive due process protects only those rights that are \"deeply rooted in [the nation's] history and traditions.\" Yet, Justice Kennedy's subsequent opinion in Obergefell rejected Glucksberg 's admonition that the substantive due process doctrine only protects rights with a long historical pedigree, and instead concluded that \"history and tradition . . . do not set [the] outer boundaries\" of the unenumerated rights guaranteed by the Due Process Clause. Going forward, Justice Kennedy's role in the Court's abortion and sexual orientation jurisprudence, which in large part stems from his views about the substantive component of the Due Process Clauses, will likely loom large as the Senate considers the Justice's successor.", "Like other areas of law, Justice Kennedy cast several important votes in eminent domain cases—that is, cases involving whether and when federal and state governments may take private property for public use. In several eminent domain cases Justice Kennedy sided with the government. Perhaps most significantly, Justice Kennedy joined the Court's opinion for five Justices in Kelo v. City of New London, Connecticut , which upheld a city's use of its eminent domain power to implement an economic development plan, even though the plan would benefit private parties. In other cases, by contrast, Justice Kennedy sided with the property owner. For example, Justice Kennedy joined the majority opinion in Horne v. Department of Agriculture , in which the Court ruled that (1) the Constitution's Takings Clause applies to real property and personal property alike; and (2) the federal government had violated the Takings Clause by requiring raisin growers to relinquish their crops without paying them just compensation. With Justice Kennedy's retirement, legal commentators have speculated what the Justice's successor could mean for the future of property rights and the Court's view of the Takings Clause.", "Justice Byron White noted that \"every time a new justice comes to the Supreme Court, it's a different court.\" That adage could be particularly true when the departing Justice is considered a \"swing vote.\" Several Justices considered \"swing votes\" who left the Court in recent decades were replaced, respectively, by Justices who altered the trajectory of the Court's jurisprudence. Justice Lewis Powell's retirement in 1987 and Justice Kennedy's arrival on the Court the next year witnessed noticeable changes in the Court's jurisprudence, including with respect to abortion, the death penalty, and the rights of same-sex couples. Justice Sandra Day O'Connor's departure had similar consequences on the Court's jurisprudence. Not only did Justice O'Connor's replacement, Justice Alito, take a markedly different approach than his predecessor on a number of legal issues, but her departure also cemented Justice Kennedy's position as the critical vote in closely divided cases decided by the Court. Accordingly, because of the \"difference one Justice [can] make\" on the Court, Justice Kennedy's jurisprudence and the areas in which he was a deciding vote may be relevant considerations as the Senate determines whether to confirm the President's choice to replace the soon-to-be-retired Justice.", "Justice Kennedy cast the deciding vote in many consequential Supreme Court cases, particularly during the Roberts Court era beginning with the October 2005 Supreme Court term. This section includes several tables relating to 186 cases where Justice Kennedy cast a deciding vote from the date of Chief Justice Roberts's elevation to the Court to the date of Justice Kennedy's retirement. For purposes of the tables, Justice Kennedy is considered to have cast a \"deciding vote\" any time he joined a majority or plurality opinion or concurred in the result of a case where the Justices were divided either 5-4, 5-3, 4-3, or 4-2 on one or more issues. Per curiam opinions are included only if they resolved an appeal pending before the Court.\nTable A-1 identifies cases primarily centering on questions of constitutional interpretation in which Justice Kennedy cast a deciding vote. Table A-2 includes cases mainly addressing questions of statutory interpretation—including the interpretation of administrative regulations, procedural rules, and other legal rules promulgated in accordance with statutory authority—in which Justice Kennedy cast a deciding vote. Table A-3 compiles closely divided cases that do not fall neatly into either of the prior tables (e.g., cases centering on issues of federal common law or principles of equity). Table A-1 , Table A-2 , and Table A-3 also identify (1) the statute, constitutional provision, or other source of law primarily at issue in the case; and (2) Justice Kennedy's position on the key issue in the case. The cases in these three tables are listed alphabetically by year, and are categorized under the following subject areas:\nAbortion Law, Administrative Law, Business Law (including issues arising in antitrust, banking, bankruptcy and debt collection, consumer law, contract law, intellectual property law, and securities law), Civil Rights Law (including issues arising under the Fourteenth Amendment and civil actions brought under 42 U.S.C. §1983), Civil Liability (including torts), Communications Law, Criminal Law and Procedure, Education Law, Election Law, Environmental Law, Family Law, Food and Drug Law, Freedom of Association, Freedom of Religion, Freedom of Speech, Habeas Corpus, Immigration Law, Indian Law, International Law, Judicial System (including issues involving federal and state courts generally, civil procedure, standing and justiciability, class actions, equitable remedies, arbitration, and judicial ethics), Labor and Employment Law, Maritime Law, Military Law, National Security, Privacy Law, Public Benefits, Second Amendment, Separation of Powers, Takings, Tax Law, and Territorial Law.\nFor purposes of brevity, no more than two subject areas are identified as relevant to a particular case. While these categorizations are intended to provide a helpful guide to readers in identifying the subject matters of decisions, they do not necessarily reflect the full range of legal issues a judicial opinion may involve.\nTable A-1 , Table A-2 , and Table A-3 also identify the composition of Justices hearing a listed case, dividing the members of the Court who participated in the case into two categories: (1) Justices making up the majority or controlling plurality, including those who concurred with the Court's judgment; and (2) those Justices who dissented in whole or in part from the key ruling of the case. The author of the primary opinion is designated with an asterisk (*). Authors of concurring and dissenting opinions are identified with plus signs (+). Justice Kennedy's name has been capitalized throughout for the reader's convenience. For ease of reference, Justices are listed in alphabetical order, rather than order of seniority. Table A-4 identifies how frequently Justice Kennedy voted with specific lineups of Justices in the cases in which he cast a decisive vote." ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_title", "h0_full", "h0_full", "h0_full h2_full", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "h1_full", "" ] }

{ "question": [ "What views did Justice Kennedy not subscribe to in entirety?", "What opinions did Justice Kennedy hold on personal freedom?", "Why was Justice Kennedy a supporter of separation of powers?", "What beliefs did Justice Kennedy hold about the importance of the Court in national affairs?", "Why is Justice Kennedy's role in Court as a swing vote so important?", "What is Justice Kennedy's role in appointing his replacement?", "What nomination did President Trump put forth as Justice Kennedy's replacement?", "Why are the CRS reports on Judge Kavanaugh's jurisprudence not yet released?" ], "summary": [ "Unlike several other Justices on the Court, Justice Kennedy did not necessarily subscribe to a particular judicial philosophy, such as originalism or textualism. Instead, Justice Kennedy's judicial approach seemed informed by a host of related principles.", "First, Justice Kennedy's views on the law were often grounded in concerns for personal liberty, particularly freedom from government interference with thought, belief, expression, and certain intimate conduct. His emphasis on liberty manifested itself in a range of opinions he wrote or joined during his tenure on the Court, including on issues related to free speech, religious freedom, and government policies concerning same-sex relationships.", "Second, the structural protections of the Constitution—i.e., restraints imposed on the federal government and its respective branches by the doctrines of federalism and separation of powers—also animated Justice Kennedy's jurisprudence. For Justice Kennedy, separation of powers was a \"defense against tyranny,\" and he authored or joined a number of Court opinions that invalidated on separation-of-powers grounds intrusions on the executive, legislative, or judicial functions. Likewise, during the Rehnquist Court and Roberts Court eras, Justice Kennedy joined several majority opinions that recognized federalism-based limitations on the enumerated power of the federal government, established external limitations on Congress's legislative powers over the states, and reaffirmed protections for state sovereignty.", "Third, Justice Kennedy's jurisprudence was undergirded by his view that the Court often has a robust role to play in resolving issues of national importance. With Justice Kennedy casting critical votes, over the last 30 years the Court has reasserted its role in a number of areas of law in which it was previously deferential to the judgment of the political branches.", "Given Justice Kennedy's outsized role on the Roberts Court, whoever succeeds him could have an important influence on any number of areas of law. In particular, Justice Kennedy's votes were critical to the outcome of numerous Court decisions on matters relating to abortion, business law, civil rights, the death penalty, the regulation of elections, eminent domain, the environment, federalism, the First Amendment, gun rights, immigration, national security, oversight of the administrative state, and separation of powers.", "Accordingly, Justice Kennedy's jurisprudence in these areas—particularly in cases where he was the deciding vote—may be especially relevant to the Senate as it determines whether to approve the President's nominee to replace the soon-to-be-retired Justice.", "On July 9, 2018, President Trump announced the nomination of Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to– fill the impending vacancy on the Supreme Court caused by Justice Kennedy's scheduled retirement.", "CRS reports analyzing Judge Kavanaugh's jurisprudence on particular areas of the law, as well as a tabular listing of lower-court decisions in which he authored opinions, are in preparation." ], "parent_pair_index": [ -1, 0, 0, 0, -1, -1, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 3, 3 ] }

{ "title": [ "", "Introduction", "Current and Anticipated Applications", "U.S. Competitiveness Indicators", "Research and Development Investments24", "Public Investments", "Private Sector Investments", "Scientific Papers", "Output of Peer-Reviewed Papers", "Citations to Peer-Reviewed Papers", "Papers in \"High-Impact\" Journals", "Patents", "The Federal Role in U.S. Competitiveness: Issues and Options", "Technology Development", "Direct Support", "Indirect Support", "Infrastructure Development", "Addressing Regulatory Concerns", "Workforce Development", "International Coordination and Cooperation", "Reassessing and Realigning Resources", "Concluding Observations" ], "paragraphs": [ "", "Nanotechnology is believed by many to be one of the most promising areas of technological development and among the most likely to deliver substantial economic and societal benefits to the United States in the 21 st century. With so much potentially at stake, a global competition has emerged among nations and companies to develop and capture the value of nanotechnology products.\nCompetitiveness generally refers to the comparative ability of a nation or company to bring products or services to markets. Assessments of competitive strength generally rely on indicators such as revenues, market share, and trade. However, since nanotechnology is still largely in an early stage of development the U.S. government does not collect this type of data for nanotechnology products. In addition, nanotechnology is not a discrete industry, but rather a technology applied across a wide range of products in disparate industries for which nanotechnology products generally account for a small fraction of total sales. For these reasons, an assessment of U.S. industrial competitiveness in nanotechnology—in the same manner that analysts would assess the competitiveness of mature industries—is not possible at this time. Alternatively, this report reviews national nanotechnology research and development (R&D) investments, scientific papers, and patents as indicators of current U.S. scientific and technological competitiveness and potential indicators of future industrial competitiveness in nanotechnology products.\nThe federal government has played a central role in catalyzing U.S. R&D efforts. In 2000, President Clinton launched the U.S. National Nanotechnology Initiative (NNI), the world's first integrated national effort focused on nanotechnology. The NNI has enjoyed strong, bipartisan support from the executive branch, the House of Representatives, and the Senate. Each year, the President has proposed increased funding for federal nanotechnology R&D, and each year Congress has provided additional funding. Since the inception of the NNI, Congress has appropriated a total of $8.4 billion for nanotechnology R&D intended to foster continued U.S. technological leadership and to support the technology's development, with the long-term goals of: creating high-wage jobs, economic growth, and wealth creation; addressing critical national needs; renewing U.S. manufacturing leadership; and improving health, the environment, and the overall quality of life.\nThe United States is not alone in seeking to tap the perceived potential of nanotechnology. Following the creation of the NNI, more than 60 nations have established their own national nanotechnology initiatives, many based on the U.S. model. Estimated global annual public investments in nanotechnology, including those of the United States, reached $6.4 billion in 2006, with another $6.0 billion invested by the private sector. In addition, some countries have established strategic plans; nanotechnology-focused science, technology, and innovation parks; venture capital funds; and other policies and programs to accelerate the translation of nanotechnology research into products to exploit its economic potential. These investments and policies, coupled with generally optimistic expectations, have raised interest and concerns about the global competitive position of the United States in the development and commercialization of nanotechnology.\nIn 2003, Congress enacted the 21 st Century Nanotechnology Research and Development Act ( P.L. 108-153 ) assigning responsibilities and initiating research efforts to address key challenges. In the act, Congress explicitly established global technological leadership, commercialization, and national competitiveness as central goals of the NNI:\nThe activities of the Program shall include—\n...ensuring United States global leadership in the development and application of nanotechnology;\nadvancing the United States productivity and industrial competitiveness through stable, consistent, and coordinated investments in long-term scientific and engineering research in nanotechnology;\naccelerating the deployment and application of nanotechnology research and development in the private sector, including start-up companies; ...and\nencouraging research on nanotechnology advances that utilize existing processes and technologies.\nCongress has expressed interest in understanding whether the current level of appropriations and the portfolio of activities pursued by the NNI is sufficient to achieve these goals. There are a variety of perspectives on the sufficiency and balance of activities and resources devoted to nanotechnology R&D, regulation, and infrastructure. This report provides an overview of nanotechnology, current and anticipated applications, indicators of U.S. scientific and technological strength, and issues and options Congress may opt to consider for the federal role, if any, in promoting the nation's competitive position in nanotechnology.", "Nanotechnology—a term encompassing nanoscale science, technology, and engineering—involves the understanding and control of matter at scales between 1 and 100 nanometers. A nanometer is one-billionth of a meter; by way of comparison, the width of a human hair is approximately 80,000 nanometers.\nAt this size, the physical, chemical, and biological properties of materials can differ in fundamental and potentially useful ways from the properties of individual atoms and molecules, on the one hand, or bulk matter, on the other hand. Nanotechnology research and development is directed toward understanding and creating improved materials, devices, and systems that exploit these properties as they are discovered and characterized.\nMost nanotechnology products currently on the market—such as faster computer processors, higher density memory devices, better baseball bats, lighter-weight auto parts, stain-resistant clothing, cosmetics, and clear sunscreen—are evolutionary in nature, offering valuable, but generally modest, economic and societal benefits.\nOver the next five to ten years, proponents see nanotechnology offering the potential for additional evolutionary improvements in existing products. Beyond the next ten years, they believe that nanotechnology could deliver revolutionary advances that could transform or replace existing products and industries, and create entirely new ones. Some hoped-for applications discussed by the technology's proponents, involving various degrees of speculation and varying time-frames, include: new prevention, detection, and treatment technologies that reduce death and suffering from cancer and other deadly diseases; new organs to replace damaged or diseased ones; clothing that protects against toxins and pathogens; clean, inexpensive, renewable power through energy creation, storage, and transmission technologies; universal access to safe water through portable, inexpensive water purification systems; energy efficient, low-emission \"green\" manufacturing systems; high-density memory systems capable of storing the entire Library of Congress collection on a device the size of a sugar cube; agricultural technologies that increase yield and improve nutrition, reducing global hunger and malnutrition; self-healing materials; powerful, small, inexpensive sensors that can warn of minute levels of toxins and pathogens in air, soil, or water, and alert us to changes in the environment; and environmental remediation of contaminated industrial sites. Proponents in government, academia, and industry also maintain that nanotechnology could make substantial contributions to national defense, homeland security, and space exploration and commercialization.\nMany areas of public policy could affect the ability of the United States to capture the future economic and societal benefits associated with these investments. Congress established programs, assigned responsibilities, authorized funding levels, and initiated research to address key issues in the 21 st Century Nanotechnology Research and Development Act. The agency budget authorizations provided for in this act extend through FY2008 (see text box, \" National Nanotechnology Initiative National Nanotechnology Initiative ,\" for discussion of authorizations and appropriations). Both the House and Senate have held committee hearings related to amending and reauthorizing this act in 2008. A companion report, CRS Report RL34401, The National Nanotechnology Initiative: Overview, Reauthorization, and Appropriations Issues , by [author name scrubbed], provides an overview of nanotechnology; the history, goals, structure, and federal funding of the National Nanotechnology Initiative; and issues related to its management and reauthorization.\nAs the state of nanotechnology knowledge has advanced, new policy issues have emerged. In addition to providing funding for nanotechnology R&D, Congress has directed increased attention to issues affecting the U.S. competitive position in nanotechnology and related issues, including nanomanufacturing; commercialization; environmental, health, and safety concerns; workforce development; and international collaboration. Views and options related to these issues are presented later in this report.", "Nanotechnology is, by and large, still in its infancy. Accordingly, measures such as revenues, market share, and global trade statistics—indicators often used to assess and track U.S. competitiveness in other technologies and industries—are not available for assessing the U.S. position in nanotechnology. To date, the federal government does not collect data on nanotechnology-related revenues, trade or employment, nor is comparable international government data available.\nNevertheless, many experts believe that the United States is the global leader in nanotechnology. For example, a survey of U.S. business leaders in the field of nanotechnology showed 63% believe that the United States is leading other countries in nanotechnology R&D and commercialization while only 7% identified the United States as lagging behind other countries.\nHowever, some believe that in contrast to many previous emerging technologies—such as semiconductors, satellites, software, and biotechnology—the U.S. lead appears narrower and the investment level, scientific and industrial infrastructure, technical capabilities, and science and engineering workforces of other nations are more substantial than in the past. Charles Vest, president of the National Academies of Engineering and a member of the President's Council of Advisors on Science and Technology (PCAST), asserted early in 2008 that nanotechnology was the first emerging technology \"where we [the United States] don't have a huge lead.\" Vest added that it was also the first emerging technology in which the federal government's efforts included \"commercialization as a specific goal\" and thus was \"the first real test\" of the United States' \"loosely-coupled public-private partnership in the new competitive environment.\"\nEvidence of commercialization of nanotechnology-based products is generally available. For example, the Woodrow Wilson International Center for Scholars' Project on Emerging Nanotechnologies counts more than 600 company-identified nanotechnology products on the market, more than half of which are produced by companies based in the United States. Some private organizations have attempted to estimate current nanotechnology-derived revenues and to estimate future revenues. For example, Lux Research estimates that products incorporating nanotechnology produced $50 billion in global revenues in 2006 (less than 0.1% of global manufacturing output), and that by 2014 revenues will reach $2.6 trillion or 15% of projected global manufacturing output.\nIn the absence of comprehensive and authoritative economic output data (e.g., revenues, market share, trade), indicators such as inputs (e.g., public and private research investments) and non-financial outputs (e.g., scientific papers, patents) are now used to gauge a nation's current and future competitive position in emerging technologies. These indicators offer insights into nations' scientific and technological strength which may serve as a foundation for future product and process innovation.\nHowever, research and development investments, scientific papers, and patents may not provide reliable indicators of the United States' current or future competitive position. Scientific and technological leadership may not necessarily result in commercial leadership and/or in national competitiveness for the following reasons:\nBasic research in nanotechnology may not translate into viable commercial applications. Though no formal assessment of the composition of the NNI budget has been made, there is general consensus that the NNI investment since its inception has been focused on basic research. The National Science Foundation defines the objective of basic research as seeking \"to gain more comprehensive knowledge or understanding of the subject under study without applications in mind.\" Therefore, while basic research may underpin applied research, development, and commercialization, that is not its primary focus or intent. In general, basic research can take decades to result in commercial applications, and many advances in scientific understanding may not present commercial opportunities.\nBasic research is generally available to all competitors. Even when basic research presents the potential for commercial exploitation, it may not deliver national advantage. Open publication and free exchange of research results are guiding principles of federally funded fundamental research and research conducted by U.S. colleges and universities. This approach may allow for the rapid expansion of global scientific and technical knowledge as new work is built on the scaffolding of previous work. However, the information is available to all competitors, U.S. and foreign alike, and thus may not confer competitive advantage to the United States.\nU.S.-based companies may conduct production and other work outside of the United States . In today's economy, supply chains are global and the work required to develop, design, produce, market, sell, and service products is generally conducted where it can be done most efficiently. Even if U.S.-based companies successfully develop and bring nanotechnology materials and products to market, work may be conducted, and the economic value captured, outside of the United States. Federal policies and investments may offer tools that can make the United States the most attractive place for companies to conduct a greater share of value-adding activities, contributing to U.S. economic growth and job creation.\nU.S.-educated foreign students may return home to conduct research and create new businesses. In the era following World War II, many of the most gifted and talented students from around the world were attracted to the science and engineering programs of U.S. colleges and universities. For many years, many of those who graduated from these programs decided to stay in the United States and contributed to U.S. global scientific, engineering, and economic leadership. Today, many foreign students educated in the United States have economic opportunities in their home countries that did not exist for previous generations. Some nations are making strong appeals and offering significant incentives for their students to return home to conduct research and create enterprises. Thus, federal support for universities, in general, and scientific and engineering research activities, in particular, may contribute to the development of leading scientists and engineers who might return to their home countries to exploit the knowledge, capabilities, and networks developed in the United States.\nSmall businesses may lack the resources needed to bring their nanotechnology innovations to market. Federal programs, such as the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program, support leading-edge nanotechnology research by small innovative firms. Federally funded university research can produce small start-up ventures. These small businesses may develop commercially valuable technology, and even successfully develop new nanotechnology materials, tools, processes, or products, but lack the capital, infrastructure, or sales and distribution channels to effectively bring such advances to market.\nU.S. companies with leading-edge, nanotechnology capabilities and/or their intellectual property may be acquired by foreign competitors. Foreign companies may acquire leading-edge nanotechnology companies or their intellectual property. This can take place, for example, as the result of an intentional business strategy to be acquired (a common exit strategy for start-up companies), a hostile takeover if the enterprise is a public company, or when a business has failed or is failing. In the latter case, the company or its intellectual property might be acquired at a fraction of its development cost or potential value.\nU.S. policies or other factors may impede nanotechnology commercialization, make it unaffordable, or make it less attractive than foreign alternatives. Federal, state, and local policies (e.g., taxes, environmental and health regulations, ethical restrictions) and other factors (e.g., availability, quality, and cost of labor; proximity to markets; customer requirements; manufacturing infrastructure; public attitudes) may prevent or discourage commercialization of nanotechnology innovations in the United States. Companies may be prohibited from producing a commercially viable product in the United States, may be unable to do so affordably, or may find comparatively favorable conditions (e.g. lower taxes or tax holidays; fewer regulatory restrictions; qualified, available, and less costly workforce) outside the United States.\nComparisons of aggregate national data may be misleading. For example, a small nation with limited resources may be unable to pursue leading-edge research across a broad spectrum of nanotechnology-related disciplines and applications, and instead opt to seek technological dominance in a discreet area by investing in a limited set of disciplines and applications (or even a single one). In such a case, that country may become the strongest competitor in a given area, while analysis of aggregate numbers might obscure this strength. Alternatively, a rapidly developing nation may invest substantial capital in nanotechnology research, but lack key elements—such as a strong scientific and technological infrastructure; mature industry, service, and private capital infrastructure; experienced scientists, engineers, managers, and entrepreneurs; and/or a market-oriented business climate—needed to fully capitalize on such an investment.\nIn addition, the concept of a national competitive position may differ from the past as a result of increased globalization of research, technical talent, and production. For example, the world's leading-edge research in a field of nanotechnology might be conducted at an American university, by Chinese students, supported by research funds from a German-based corporation, with engineering underway in Russia, plans to manufacture in Taiwan, shipping by Greek-flagged vessels, and technical support provided online and by telephone from India. In such an example, the global distribution of knowledge workers, investors, and producers make the determination of national competitiveness more difficult.\nJust as other countries might benefit from U.S. nanotechnology R&D, so too might the United States benefit from nanotechnology R&D conducted in other nations through a variety of means including studying published research results, acquiring or licensing patents, conducting joint business ventures, and by fostering a business environment that attracts production and related activities. Some economists assert that international R&D collaboration can benefit the United States as well by improving the productivity of the R&D process.\nWith these caveats, the following section reviews input and non-economic output measures as indicators of the U.S. competitive position in nanotechnology.", "National research and development investment is an input measure that may provide some perspective on how successful a nation and the firms within the nation may become in producing scientific and technical knowledge that can lead to innovative products and processes. However, the long-term value of these investments may be affected by a variety of factors such as: the capability of the scientists and engineers conducting the R&D and the tools available to them; the efficiency of the system (e.g., businesses, supply chains, infrastructure, innovation climate, government policies) for translating R&D results into commercial products; the fields of nanoscience and nanotechnology pursued; the balance in fundamental research, applied research, and development efforts; and balance in R&D directed at exploiting commercial opportunities, meeting societal needs (e.g., health, environment), addressing government missions (e.g., defense, homeland security), and non-directed efforts to expand the scientific knowledge frontier.", "The United States has led, and continues to lead, all nations in public investments in nanotechnology R&D. However the estimated U.S. share of global public R&D investments in nanotechnology has fallen as other nations have established similar programs and increased funding. In the early part of this decade, many nations followed the U.S. lead and established formal national nanotechnology programs in recognition of the potential contributions nanotechnology may offer for economic growth, job creation, energy production and energy efficiency, environmental protection, public health and safety, and national security. According to Mike Roco, past chair of the National Science and Technology Council's (NSTC) Nanoscale Science, Engineering, and Technology (NSET) subcommittee, at least 60 countries have adopted national nanotechnology projects or programs. Japan, Germany, and South Korea are making substantial sustained investments across a broad range of nanoscale science, engineering, and technology and are strong competitors for global leadership. More recently, China and Russia have increased investments in nanotechnology. In addition, others—such as Israel, Singapore, and Taiwan—have focused their resources on either a specific nanotechnology niche or on technology development (in contrast to fundamental research).\nLux Research estimates that total 2006 public global R&D investments increased 10% over the 2005 level, reaching $6.4 billion. International investment levels can be compared using differing methods, producing substantially different perspectives on leadership. For example, using a currency exchange rate comparison, the United States ranks ahead of all others, with federal and state investments of $1.78 billion in 2006 (27.8% of global public R&D investments), followed by Japan ($975 million, 15.2%) and Germany ($563 million, 8.8%). When national investments are adjusted using purchasing power parity (PPP) exchange rates (which seek to equalize the purchasing power of currencies in different countries for a given basket of goods and/or services), China ranks second in public nanotechnology spending in 2006 at $906 million, behind only the United States; Japan drops to third as its PPP-adjusted investment falls to $889 million. Comparative international public funding for nanotechnology R&D is provided in Table 1 .", "Private investments in nanotechnology R&D come from two primary sources, corporations and venture capital investors. Globally, corporations invested an estimated $5.3 billion in nanotechnology research and development in 2006. This figure represents a 19% increase over the 2005 estimate, a growth rate nearly twice that of global public R&D investments. Faster growth in corporate R&D may be an indicator that nanotechnology research is moving closer to commercial production.\nAs with public R&D investments, on a PPP comparison basis, the United States led the world in 2006 in private sector R&D investments in nanotechnology with an estimated $1.9 billion investment, led by companies such as Hewlett-Packard, Intel, DuPont, General Electric, and IBM. Japan's $1.7 billion in private investments in nanotechnology R&D—led by companies such as Mitsubishi, NEC, and Hitachi—ranks a close second behind the United States. The private investments of companies headquartered in these two nations account for nearly three-fourths of corporate investment in nanotechnology R&D in 2006. In contrast to its high PPP ranking in public R&D investment, China ranks fifth in corporate investment, accounting for only about 3% of global private R&D investments in nanotechnology.\nStrength in an existing industry base may be a driver for private investment in nanotechnology innovations. For example, multi-walled carbon nanotubes (MCWNTs) offer significant improvements in lithium-ion (Li-ion) battery life. Japan's strength in Li-ion batteries is seen as a driving force in Japan's leading position in the manufacture of MWCNTs and Japanese companies' investments in ton-scale production capabilities.\nVenture capital investment—early-stage equity investment, generally characterized by high risk and high returns—provides another possible indicator of international competitiveness. In 2007, venture capital for nanotechnology reached an estimated $702 million worldwide of which U.S.-based companies received $632 million (approximately 90%).", "The quantity of peer-reviewed scientific papers published by scientists and engineers of each nation is one indicator of the scientific leadership of that nation. The scientific journals used to generate such counts tend to be considered among the most reliable and prestigious in the fields. Nevertheless, as a tool for assessing national competitiveness, this indicator has shortcomings. For example, paper counts do not assess the level or significance of contributions made by each of the authors. While an article may list a principal investigator, such as a university professor, as the lead author, the other authors, possibly graduate students or post-grads from a country other than that of the lead author, may have made the most important contributions to the work. Publication of a scientific paper may also represent a recognition of its unique scientific insights, yet offer little or no potential for useful applications or commercial relevance.", "The United States leads all other nations in peer-reviewed nanotechnology papers published in scientific journals. A National Bureau of Economic Research (NBER) analysis reported that the United States' 24% share of global publication output was more than double that of the next most prolific nation, China. However, this share represents a decline from the early 1990s when the United States accounted for approximately 40% of nanotechnology papers. The NBER working paper concludes, \"Taken as a whole these data confirm that the strength and depth of the American science base points to the United States being the dominant player in nanotechnology for some time to come, while the United States also faces significant and increasing international competition.\"\nA quantitative analysis of published scientific papers comparing the United States to the Europe Union (EU) nations as a whole was prepared by United Kingdom-based Evaluametrics, Ltd. following an inquiry from the Congressional Research Service in December 2007. Evaluametrics' analysis shows that the number of nanotechnology papers more than doubled between 2000 and 2005. Using a fractional count of papers, the United States maintained about a 22% share of papers from 2000 to 2005. The EU27's share of papers fell from 32% to 25% during this period, while China's share rose from 11% to 20%. Viewed from this perspective, the EU27 led the United States in output of nanotechnology-related scientific papers, but the EU27 share has been in decline. China's share is approaching that of both the United States and the EU27 (see Figure 1 ).\nUsing an integer count, with each paper assigned to the nation of the lead author's address, yields similar results. By this method, the EU27 led the world in 2006 with approximately 29% of all papers, followed by the United States with 25%, and China with approximately 23%. Evaluametrics' analysis of preliminary data shows that China may have surpassed the United States in share of papers in 2007.\nEvaluametrics' analysis of the papers by scientific disciplines reveals regional differences. The United States' articles were more heavily weighted toward the biological and medical fields, China's toward chemistry and engineering, and the EU27's toward the biological and medical fields, similar to the United States, but with a greater emphasis on physics and less on chemistry.\nEvaluametrics also calculated for each country/region the share that nanotechnology papers represented as a percentage of all scientific papers. Dividing this percentage by the average for all nations yields a ratio the author calls a nation's \"relative commitment\" to nanotechnology. Of the 10 countries examined, South Korea, China, and Japan showed the highest relative commitment, while the United States and EU27 fell somewhat short of the world average (see Figure 2 ).", "Another measure of global leadership in nanotechnology is the quality and value of peer-reviewed papers. One measure of the quality and value of a paper is the frequency with which it is cited in other peer-reviewed papers. Evaluametrics' analysis shows that papers attributed to the United States are much more frequently cited than those attributed to China, the EU27, and the rest of the world as a whole. This held true overall and separately in each of the four disciplines examined (biology, chemistry, engineering, and physics). The U.S. lead was particularly pronounced in biology. China fell below the world average number of citations in each of the four disciplines, as well as overall. The EU27 performed near the world average in engineering and physics, and somewhat higher in chemistry. Using a slightly different citation metric, 56% of U.S. papers have 10 or more citations, in contrast to only 38% for the EU27 and approximately 30% for China. The Netherlands and Germany lead the EU27 in papers with 10 or more citations with approximately 45% each.", "A second measure of the quality of a nation's papers is the share of its papers in influential journals. A review of Science , Nature , and Physical Review Letters (which PCAST refers to as \"high impact journals\") shows the United States accounted for more than 50% of nanotechnology-related papers in these journals in 2004. However, while the absolute number of papers in these journals attributed to the United States has grown continuously since 1991, the U.S. share of papers has fallen as other countries collectively increased their production at an even faster rate.", "Patent counts—assessments of how many patents are issued to individuals or institutions of a particular country—are another indicator used to assess a nation's competitive position. According to the U.S. Patent and Trade Office (USPTO), a patent grants ownership rights to a person who \"invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.\" By this definition, patents may be an indicator of future value and national strength in a technology, product, or industry.\nBy this measure the United States position appears to be very strong. United States assignees dominate all other countries in patents issued by the USPTO. According to an analysis by the USPTO of patents in the United States and in other nations, U.S. origin inventors and assignees/owners have:\nthe most nanotechnology-related U.S. patents by a wide margin; the most nanotechnology-related patent publications globally, but by a narrower margin (followed closely by Japan); and the most nanotechnology-related inventions that have patent publications in three or more countries, 31.7%—an indication of a more aggressive pursuit of international intellectual property protection and, by inference, of its perceived potential value. By this measurement, the United States is followed by Japan (26.9%), Germany (11.3%), Korea (6.6%), and France (3.6%).\nThere has been rapid growth in nanotechnology patents in the USPTO and European Patent Office (EPO) patent databases. A 2007 study reports that the number of U.S. nanotechnology patents in the USPTO and EPO databases grew at a near exponential pace between 1980 and 2004. The study showed that each year since 1990, U.S. assignees have accounted for approximate two-thirds of all patents in the USPTO database. In 2004, U.S. assignees accounted for 66.9% of USPTO nanotechnology patents.\nAn earlier study of USPTO data, covering patents from 1976 to 2002, also indicated U.S. nanotechnology patent leadership, with the United States accounting for more than 67% of patents (based on a full text search of patents for nanotechnology-related key words), followed by Japan, Germany, France, and Canada. In 2003, the United States, Japan, Germany, Canada, and France continued to rank in the top five, with the Republic of Korea and the Netherlands jumping several spots each to sixth and seventh places, respectively; Ireland and China made their first appearance in the top 20 nations. With respect to patent citations by subsequent patents—a possible indicator of the usefulness of a patent—the study showed U.S. nanotechnology patents dominated citations and reflected strong interactions with Japanese and German patents.\nPatent counts, however, have shortcomings in assessing future competitiveness. Experience shows that not all patents have equal value. Some patents are \"blockbusters\" that largely define products and industries, and result in substantial wealth creation and competitive advantage for its owners. Other patents are useful, but offer only moderate value. And some patents are never realized in materials, products or processes. Patent counts do not attempt to assess the relative value of each patent, instead assigning equal value to each. Thus, a nation with a high patent count in nanotechnology may not benefit as much as a nation with fewer, but more valuable, patents.\nIn addition, companies may choose not to patent a particular idea—even one with significant value—for a variety of reasons. For example, public exposure of the idea as required by the patent application process may enable other companies to engineer around their patent, finding a way to do what the original patent accomplished, but in a way that is sufficiently different that it qualifies for a new patent. Alternatively, a company may be able to block the original patent holder from further improvements by filing patent applications that essentially block out potential improvements. Or, unscrupulous producers may ignore the patent and use the intellectual property without compensating the patent holder. Instead of filing for a patent, a company may choose instead to hold a valuable intellectual property as a trade secret. In contrast to patents which provide protection for defined periods, trade secrets can extend indefinitely. The Coca-Cola Company has held its formula(s) for Coke as a trade secret for over 100 years.", "Congress has provided $8.4 billion in funding for nanotechnology R&D under the National Nanotechnology Initiative, and more than tripled annual funding since its inception. At the same time, other nations have established and bolstered their nanotechnology investments, programs, and policies, stirring debate about how the federal government can best ensure U.S. competitiveness in this field.\nWhile there is broad consensus that U.S. competitiveness in nanotechnology is important, there are a wide variety of views about the role the federal government could or should play in supporting this objective. These perspectives are reflective of long-running policy debates over the appropriate role of government in promoting research, development, innovation, and industrial competitiveness. Some argue that the federal role should be limited to funding basic research, R&D needed to meet agency mission requirements, and development of the U.S. scientific and technical workforce. Some believe the federal government should also fund development efforts that move nanotechnology closer to commercial products, especially in light of its potential economic and societal benefits. Others assert that the federal government's role in competitiveness should be limited to establishing a healthy business environment and allowing market forces and the private sector to shape U.S. competitiveness. Among those concerned about nanotechnology's potential adverse implications for health, safety, and the environment are those who support a more active federal role in funding environmental, health, and safety (EHS) research to better understand, characterize, and regulate nanotechnology, and those who prefer the federal government act to slow the development and commercialization of nanotechnology pending further EHS research.", "Much of the public dialogue on how the government can advance U.S. strength in nanotechnology has focused on federal technology funding. Advocates for increased federal support put forth a variety of arguments.\nSome believe that the federal government should provide increased funding for \"downstream research,\" i.e., applied research and development closer to commercial products, including production prototypes. Those who advocate this position generally assert that many promising research breakthroughs and early technology developments fail to make it to market. This failure, they argue, results from inadequate funding mechanisms to bring the technology to a state of maturity in which private corporations and other sources of capital are willing to invest in the technology—or in the company that holds the technology—to bring it to market. For example, they assert that investor demand for short-term returns can result in companies being unable to invest in higher-risk, longer-term technology development projects needed to sustain their viability in the future. Similarly, according to these advocates, venture capitalists and other investors often have exit strategies and/or seek returns in a timeframe (generally three to five years) inconsistent with the longer-term development horizons of emerging and enabling technologies. With federal investments, say supporters, technical risk could be reduced to a level that enables promising research and early-stage technologies to overcome \"the valley of death\" and reach the marketplace where the nation would be able to capture their economic and societal benefits.\nOne rationale offered by some economists for federal funding of R&D is that the private sector under-invests in R&D because many of the benefits (economic and societal) are captured by others, particularly where the results cannot be easily appropriated for production and profit. However, as research moves closer to commercialization, private sector incentives to invest increase and the rationale for federal R&D funding is diminished.\nAnother argument for government R&D funding put forth by economists and others is that the development of emerging and enabling technologies may be beyond the ability of any single company or industry to develop due to high cost, high risk, lack of requisite expertise, and an inability to capture adequate returns. While a single company or industry may not be able to achieve adequate returns across its limited line of products and services, the economic benefits that accrue across all industries may be sufficient, even sweeping. Another justification for federal funding, say advocates, is that institutional, legal, cultural and other barriers may inhibit or prevent all parties from working together to share the costs and risks of R&D. The National Cooperative Research Act of 1984 ( P.L. 98-462 ) and the National Cooperative Production Amendments of 1993 ( P.L. 103-42 ) sought to spur collaborative research and manufacturing efforts by lowering legal barriers.\nOpposition to expanded federal R&D efforts stem from a variety of perspectives, including those who believe that such efforts may be ineffective or counterproductive, a view held by many economists.\nThe best way to deal with the many changes in demand that occur in a dynamic economy is to allow investors and workers to respond to such changes....\nGovernment allocation of investment that ignores market signals usually stunts growth by diverting labor and capital from more productive uses....\nAn industrial policy that increases government planning, government subsidies, and international protectionism would only be a burden on our economic life and a threat to our long-term economic prosperity.\nSome economists assert that public R&D funding displaces private R&D investment. In his book, The Economic Laws of Scientific Research , Cambridge University scientist Terence Kealey argues that public R&D funding actually decreases overall R&D funding as companies reduce their R&D investments and rely on public investments. Other research suggests that evidence of displacement is ambiguous.\nOpponents also argue that industry, not government, is best suited to make commercial technology decisions, citing the failure of some high-profile commercially-directed government efforts, such as the Concorde supersonic transport aircraft, a failed effort of the governments of the United Kingdom and France. Opponents further contend that governments—responding to political interests, not market signals—have often continued to invest in technologies—such as those supported by the U.S. synfuels program—that have been proven by markets and technological developments to be economically unsound.\nLibertarian opposition to increased federal R&D, such as that put forth by the Cato Institute, is grounded in a philosophy of limited government and reliance on the free market. Libertarians generally assert that markets, free from government interventions, are the most effective mechanism for allocating resources to the most promising opportunities. In their view, government interventions represent an industrial policy in which the preferences of politicians and bureaucrats are substituted for market forces and/or objective criteria. When the federal government provides direct and/or indirect financial support to a particular technology, assert these advocates, it may not only provide a direct benefit to the technology—especially with respect to existing technology or alternatives—but it may also signal technology developers and investors that the technology may receive future preferential treatment by government as well. This may, as a result, skew corporate development activities and private investments toward less-promising directions producing more costly and/or less beneficial results.\nMany libertarians also see government financial support for technology development as an inappropriate involuntary transfer of wealth from taxpayers to private interests—including large, highly profitable companies. The Cato Institute has labeled such efforts \"corporate welfare\" and has expressed concerns that such efforts may \"create an unhealthy relationship between government and industry that might corrupt both.\"\nOptions for federal efforts to support technology development include both direct support and indirect support:", "There are a variety of mechanisms that the federal government might use to support downstream research. Some favor a direct approach with the federal government providing grants or loans to companies, universities, and or consortia to support research and development activities that move their work closer to commercial production. Examples of this approach include the National Institute of Standards and Technology's (NIST) Technology Innovation Program (TIP); its defunct predecessor, the Advanced Technology Program (ATP), also administered by NIST; and the multi-agency Small Business Innovation Research (SBIR) program. According to NIST, the mission of TIP is to \"accelerate innovation in the United States through high-risk, high-reward research in areas of critical national need.\" As originally conceived, ATP was intended to support the development of emerging and enabling technologies that offered the potential for significant economic and/or societal returns to the nation. The SBIR program, operating at each of the major R&D funding agencies, provides funding to help advance technology development with a goal of commercialization. (For additional information, see CRS Report 96-402, Small Business Innovation Research Program , and CRS Report RS22815, The Technology Innovation Program , both by [author name scrubbed].)", "In addition to direct funding mechanisms, a variety of indirect approaches might be used by the federal government if it chose to support additional nanotechnology research and development. The tax code could be used to increase private investment in nanotechnology companies, or to create incentives for companies to expand and accelerate their research, development, and production activities. Tax options might include general provisions to induce greater corporate investment, such as the current research and experimentation (R&E) tax credit; targeted tax provisions that support a particular technology, application, industry, or sector; consumer tax deductions or credits designed to induce the purchase of targeted technologies and products, such as tax credits currently provided for the purchase of hybrid and flex-fuel vehicles; or incentives for the formation of capital pools to support R&D, such as favored tax treatment for research and development limited partnerships (RDLPs). (For additional information, see CRS Report RL31181, Research and Experimentation Tax Credit: Current Status and Selected Issues for Congress , by [author name scrubbed].)", "Another option for federal support, proposed by some in industry, is increased investments in infrastructure and supporting technologies to reduce the cost of, and to accelerate, applied research and development. Candidate activities for such support include modeling, prototyping, testing, and materials characterization facilities; measurement tools and sensors; standards; reference materials; and nomenclature development.\nIn addition, state and local governments in the United States, as well as foreign governments, have established science, technology, and innovation parks, both specialized and general, to foster innovation. Some nanotechnology advocates believe the federal government should provide funding for the planning and development of nanotechnology-focused parks that offer land, facilities, equipment, and services to new, emerging, and established companies, and that bring together a variety of stakeholders with unique capabilities and interests.\nSome in the private sector have also sought increased federal efforts to protect the intellectual property rights of inventors and companies, including increasing the speed and quality of the patent process and protecting the rights of U.S. patent holders against infringement and abuse by actors in other nations. The USPTO, an NNI-participating agency, has undertaken efforts to educate its patent examiners on nanotechnology, established a separate class for nanotechnology (Class 977), and created over 250 cross-reference sub-classes to improve the ability to search and examine nanotechnology-related patent documents.", "Environmental, health, and safety (EHS) concerns also present potential barriers to nanotechnology commercialization and U.S. competitiveness in nanotechnology. The properties of nanoscale materials—e.g., small size; high surface area-to-volume ratio; unique chemical, electric, optical, and biological characteristics—that have given rise to great hopes for beneficial applications have also given rise to concerns about their potential implications for health, safety, and the environment. EHS issues have become a specific concern of the National Nanotechnology Initiative. In FY2008, the NNI will spend $58.6 million on EHS research, accounting for about 3.9% of NNI funding. President Bush has requested $76.4 million for NNI EHS research in FY2009, or 5.0% of NNI funding. Some believe that these funding levels are too low and should amount to 10% or more of NNI funding.\nThe potential for adverse effects on health, safety, and the environment may discourage investment in, and development of, nanotechnology resulting from the possibility of regulations that bar products from the market or impose excessive regulatory compliance costs, and the potential for costly product liability claims and clean-up costs. If U.S. regulations are restrictive and expensive, companies may move nanotechnology research, development, and production to nations that do not impose or enforce regulations, or take a less stringent approach to regulation. Many advocates in industry, academia, and environmental non-governmental organizations believe the federal government should increase its EHS R&D investments to reduce uncertainty, inform the development of regulations, and protect the public. Regulation of nanotechnology products may fall under the authorities of several federal agencies, including the Environmental Protection Agency, Food and Drug Administration, Occupational Safety and Health Administration, and Consumer Product Safety Commission. (For additional information, see CRS Report RL34332, Engineered Nanoscale Materials and Derivative Products: Regulatory Challenges , and CRS Report RL34118, The Toxic Substances Control Act (TSCA): Implementation and New Challenges , both by [author name scrubbed].)\nBeyond support for research and development, the federal role in a variety of other policy and programmatic activities might be strengthened. For example, some argue for the use of specialized extension centers, both university-based and independent centers, to provide technical and EHS best practices information to small and medium-size manufacturers that lack the in-house expertise and resources of larger enterprises. USDA's Agricultural Extension Service and NIST's Manufacturing Extension Partnership (MEP) may serve as possible models for such efforts.\nIn addition, some experts advocate efforts to create regulatory processes that can keep pace with rapid technological change and help create a more predictable environment for those investing in nanotechnology development and commercialization. Another potential regulatory barrier to nanotechnology development and commercialization is over-regulation of the export of nanotechnology and nanotechnology-related products due to their potential military applications. Such restrictions, or even the anticipation of them, might impede investment in, and development of, nanotechnology since global revenues may account for a significant share of expected return on investment. In this regard, the Department of Commerce asked the President's Export Council (PEC), a presidential advisory committee, to undertake efforts to ensure that nanotechnology products were not unnecessarily restricted from sale to other nations under export control regulations. In December 2005, the PEC sent a letter to President Bush recommending principles for the federal government's approach to export controls to maximize U.S. companies' access to global markets consistent with the protection of national and homeland security. In February 2008, the Commerce Department's Bureau of Industry and Security announced its intent to establish an Emerging Technologies and Research Advisory Committee (ETRAC) comprised of representatives of research universities, government laboratories, and industry to make recommendations regarding emerging technologies, including nanotechnology.", "Ensuring the United States has a cadre of world-class scientists, engineers, and technicians—an asset deemed critical to U.S. innovation and competitiveness—has been an enduring concern of Congress, generally, and now specifically with respect to nanotechnology. Advocates for this position assert the need for federal support for curricula development, as well as scholarships and expanded efforts to encourage students to pursue associate, bachelor's and advanced degrees in nanotechnology-related disciplines.", "Some nanotechnology advocates want the federal government to work with other nations to ensure a \"level playing field\" for nanotechnology development and commercialization (i.e., to ensure they are not put at a disadvantage by government subsidization of their foreign competitors, less stringent regulatory standards, fewer worker protections, and/or imposition of tariffs and non-tariff trade barriers), to develop common international standards and nomenclature, to harmonize regulations, and to open markets for nanotechnology products.", "As discussed above, the federal government is engaged in fostering the advancement of nanotechnology across a broad range of activities, including: conducting and supporting nanotechnology R&D; seeking to address environmental, health, and safety issues; preparing students and workers for nanotechnology job opportunities through investments in education and training; fostering public understanding and engagement; coordinating and cooperating with other nations; and promoting the development of standards, nomenclature, and reference materials. These activities involve substantial investments of capital, personnel, facilities, equipment, and other resources.\nMany NNI activities have developed over time to address new challenges and opportunities as the NNI advanced. Resource allocation decisions have been made piecemeal, generally without consideration for alternative uses of the resources. Over time, such an approach may produce a portfolio of activities that is out of balance with current needs. More than seven years into the NNI, some observers believe that reassessing and realigning resources with opportunities and challenges would improve the efficiency and effectiveness of federal investments and activities.\nHowever, there are substantial barriers to such an effort. First, the NNI is not funded centrally, but rather is an aggregation of the resources provided to agencies to meet their mission requirements. Moving funds from one program or agency to another might meet with resistance within agencies, between agencies, or from the Congressional appropriations subcommittees with jurisdiction for these programs and agencies. Second, agencies participate in the NNI on a voluntary basis. If it appears that participation in the NNI might reduce funding, an agency may choose to no longer participate or may not classify its activities as nanotechnology. Third, the NNI seeks to meet multiple goals, including scientific leadership, meeting agency mission requirements and national needs, and fostering U.S. commercial leadership. No relative values have been explicitly set for these and other goals making comparative resource allocation choices subjective.\nThe National Research Council (NRC) and the National Nanotechnology Advisory Panel (NNAP) have each conducted assessments of the NNI at the direction of Congress as specified in the 21 st Century Nanotechnology Research and Development Act. The act requires assessments to be performed triennially by the NRC and biennially by the NNAP. Past assessments have addressed U.S. competitiveness in nanotechnology as part of wider reviews. To clarify the U.S. competitive position, Congress could opt to direct the NRC, NNAP, or the U.S. Government Accountability Office to conduct a focused assessment of: the effectiveness of the NNI in achieving the global technological leadership, commercialization, and national competitiveness goals established under the act; whether the current portfolio of NNI resources and activities are appropriately balanced; and whether additional resources activities may be required to achieve these objectives.", "Nanotechnology is expected by many to deliver significant economic and societal benefits. The United States launched the first national nanotechnology initiative in 2000, but has since been joined by more than 60 other nations. Tens of billions of dollars have been invested in nanotechnology research and development over the past eight years by governments, companies, and investors.\nWhile it has been estimated that there are more than 600 nanotechnology products on the market today, most involve incremental improvements to existing products. Much of the investment has been focused on fundamental research to gain scientific understanding of nanoscale phenomena and processes, and to learn how to manipulate matter at the nanoscale. These investments are expected by many to deliver revolutionary changes in products and industries with implications for global technological, economic, and military leadership. The potential implications of nanotechnology, coupled with the substantial sustained investments, have raised concerns and interest in the U.S. competitive position in nanotechnology.\nThe data typically used to assess technological competitiveness in mature industries—e.g., revenues, market share, trade—is not available to assess the U.S. position in nanotechnology because it is a new technology, commercial products are just beginning to enter the market in a significant manner, and it is incorporated in wide array of products across many industries. Accordingly, the federal government currently does not collect this data on nanotechnology, nor do other nations. The number of nanotechnology products in the marketplace is increasing quickly though. Congress may elect to ask federal agencies to assess what data (e.g. economic, labor force, students) would be useful in formulating federal policies and making resource allocation decisions and direct federal statistical agencies to collect, analyze, and make public such data. The federal government may also seek to foster data collection efforts in other nations.\nIn the absence of such data, assessments of nanotechnology depend largely on alternative indicators, such as inputs (e.g., public and private investments) and non-economic outputs (e.g., scientific papers, patents). By these measures, the United States appears to lead all other nations in nanotechnology, though the U.S. lead in this field may not be as large as it has been in previous emerging technology areas. This is due to increased investments and capabilities of many nations based on recognition that technological leadership and commercialization are primary paths to increased economic growth, improved standards of living, and job creation.\nNevertheless, these alternative indicators may not present an accurate view of technological leadership and economic competitiveness for many reasons. Nor does national technological leadership alone guarantee that the economic value produced by nanotechnology innovations will be captured within a nation's borders. In today's global economy, companies have the option of locating work—e.g. research, development, design, engineering, manufacturing, product support—where it can be done most effectively.\nA variety of federal policy issues may affect the development and commercialization of nanotechnology in the United States, including the magnitude and focus of research and development efforts, the regulatory environment, and science and engineering workforce development. Some support an active federal approach; others believe that a more limited federal involvement is likely to be more successful and equitable. In addition to these factors, U.S. competitiveness in nanotechnology will depend not just on the efforts of the United States, but also on the speed and efficacy of foreign nanotechnology development efforts.\nCongress established a legislative foundation for some of the activities of the National Nanotechnology Initiative and to address key issues associated with nanotechnology thorough enactment of the 21 st Century Nanotechnology Research and Development Act, 2003. The act provided funding authorizations for five NNI agencies through FY2008. Action is being considered in both the House and Senate on possible amendments to and reauthorization of the program. Congress may opt to address some or many of the issues identified in this paper in the course of deliberation on the reauthorization of this act or, alternatively, in separate legislation." ], "depth": [ 0, 1, 1, 1, 2, 3, 3, 2, 3, 3, 3, 2, 1, 2, 3, 3, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h1_full", "h0_full", "", "", "", "", "", "", "", "", "h1_full", "h1_full", "", "", "", "h1_full", "", "", "", "h0_full" ] }

{ "question": [ "Why is data not available for assessing nanotechnology that is available for other technologies?", "What is the result of this information not being available?", "What could provide insight into the U.S. position in nanotechnology?", "Why do people believe the U.S. leadership position in nanotechnology is not as large as it has been?", "What do people who support a limited federal role in nanotechnology believe?", "Why do these people believe federal effort is less efficient?", "What is considered corporate welfare?", "What other beliefs are there about federal support in research and nanotechnology?" ], "summary": [ "The data used to assess competitiveness in mature technologies and industries, such as revenues and market share, are not available for assessing nanotechnology. In fact, the U.S. government does not currently collect such data for nanotechnology, nor is comparable international data available.", "Without this information, an authoritative assessment of the U.S. competitive position is not possible.", "Alternatively, indicators of U.S. scientific and technological strength (e.g., public and private research investments, nanotechnology papers published in scientific journals, patents) may provide insight into the current U.S. position and serve as bellwethers of future competitiveness.", "However, other nations are investing heavily and may lead in specific areas of nanotechnology. Some believe the U.S. leadership position in nanotechnology may not be as large as it has been in previous emerging technologies.", "Some support a more limited federal role. Some who hold this view maintain that the market, free from government interventions, is most efficient.", "They assert that federal efforts can create market distortions and result in the federal government picking \"winners and losers\" among technologies, companies, and industries.", "Others oppose federal support for industrial research and applications, labeling such efforts \"corporate welfare.\"", "Others oppose federal support for industrial research and applications, labeling such efforts \"corporate welfare.\" Still others argue for a moratorium on nanotechnology R&D until environmental, health, and safety concerns are addressed." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Observations from Preliminary Work Identify Promising Practices and Potential Vulnerabilities", "Promising Practices", "Potential Vulnerabilities", "GAO’s Plans to Further Assess Controls and Perform Data Analysis as Part of Ongoing Work", "Agency Comments and Our Evaluation" ], "paragraphs": [ "The FECA program covers over 2.7 million civilian federal and postal employees in more than 70 agencies, providing wage-loss compensation and payments for medical treatment to employees injured while performing their federal duties. FECA claims are initially received at the employing agency, then forwarded to Labor’s OWCP where eligibility and payment decisions are made. Every year, employing agencies reimburse OWCP for the amounts paid to their employees in FECA compensation during the previous year. Certain government corporations and USPS also make payments to Labor for program administrative fees. Figure 1 displays the standard process for FECA claims reviews and payments by OWCP.\nOWCP is the central point where FECA claims are processed and eligibility and benefit decisions are made. Claims examiners at OWCP’s 12 FECA district offices determine applicants’ eligibility for FECA benefits and process claims for wage-loss payments. FECA laws and regulations specify complex criteria for computing compensation payments. Using information provided by the employing agency and the claimant on a claims form, OWCP calculates compensation based on a number of factors, including the claimant’s rate of pay, the claimant’s marital status, and whether or not the claimant has dependents. In addition, claimants cannot receive FECA benefits at the same time they receive certain other federal disability or retirement benefits, or must have benefits reduced to eliminate duplicate payments. For example, Social Security Administration (SSA) disability benefits are reduced if an individual is also receiving FECA payments.\nAccording to OWCP officials, initial claims received from employing agencies are reviewed to assess the existence of key elements. The elements include evidence that the claim was filed within FECA’s statutory time requirements, that the employee was, at the time of injury, disease, or death, an employee of the United States, and that the employee was injured while on duty, and that the condition resulted from the work-related injury. If the key elements are in place, OWCP will approve a claim and begin processing reimbursements for medical costs. After initial claim approval, additional reviews are done while a claim remains active if the claim exceeds certain dollar thresholds. Once a claim is approved, payments are sent directly to the claimant or provider. An employee can continue to receive compensation for as long as medical evidence shows that the employee is totally or partially disabled and that the disability is related to the accepted injury or condition. OWCP considers claimants who are not expected to return to work within 3 months to be on its periodic rolls for payment purposes. OWCP officials review medical evidence annually for claimants on total disability receiving long-term compensation who are on the program’s periodic rolls, and every 3 years for claimants on the periodic rolls who have been determined to not have any wage-earning capacity. Claimants are also required to submit an annual form (CA-1032) stating whether their income or dependent status has changed. The form must be signed to acknowledge evidence of benefit eligibility and to acknowledge that criminal prosecution may result if deliberate falsehood is provided. If questions arise about medical evidence submitted by the claimant, OWCP can request a second medical examination be performed by a physician of its choosing.", "", "We have identified several promising practices that employing agencies and Labor have implemented that may help to reduce fraudulent FECA claims. We are planning to look further into these practices as part of our ongoing work.\nThree employing agencies informed us that they employed dedicated, full-time FECA program staff including injury compensation specialists and other staff, which, according to officials, helps staff gain program knowledge and expertise. It also allows program staff to specialize in FECA claims and reviews without having to perform additional duties. Agencies with full time staff may be able to dedicate resources to training them in fraud prevention, which is a positive practice noted in GAO’s fraud-prevention framework. GAO’s Standards for Internal Control in the Federal Governmentcompetent personnel are a key element to an effective control also specifically mentions that appropriate, environment. Officials from one employing agency with this structure stated that having dedicated and experienced FECA staff allows them to conduct more aggressive monitoring of long-term workers’ compensation cases. Labor officials agreed that agencies that can devote dedicated full time resources are positioned better to manage the program. Examples include the following:\nFECA staff in one Navy region reported having an average of 15 years of program experience, which they said helps them to identify specific indicators of potential fraud.\nAccording to the Air Force, it has specific teams that specialize in reviewing FECA claims at different phases of the claims process.\nUSPS officials also stated they assign staff full time to manage FECA cases.\nIn addition, in 2008, we recommended that the Secretary of Labor direct OWCP to take steps to focus attention on the recovery of FECA overpayments, such as determining whether having fiscal staff dedicated to recovering overpayments would increase its recovery.that it carefully evaluated having fiscal staff dedicated to recovering overpayments. However, given the integral involvement of claims examiners in overpayment processing, the unavailability of fiscal staff to undertake this specialized activity, and expected continued budget constraints, Labor believes that keeping this function with claims examiners is the most cost-effective debt-collection strategy.\nOfficials at five employing agencies and Labor have instituted periodic reviews of active FECA claims, which may improve overall program controls. Specifically, several agencies reported that annual reviews of FECA case files were used to help increase program officials’ awareness of potential fraudulent activities. These controls fall within the detection and monitoring component of GAO’s fraud-prevention framework and could help to validate claimants’ stated medical conditions, income information, and dependent information. GAO’s Standards for Internal Control in the Federal Government also states that monitoring activities, such as comparisons of different data sets to one another, can help to encourage continued compliance with applicable laws and regulations.\nAgency officials stated that these types of reviews assist with identifying claimants who are not eligible to continue to receive FECA benefits. According to agency staff:\nLabor requires long-term claimants to submit updated claim documentation about wages earned and dependent status for annual reviews. While much of the information provided on the CA-1032 is self-reported, the requirement for annual submissions can help identify necessary changes to benefits. In addition, Labor officials stated they also perform regular medical-claim reviews depending on the status of a case.\nStaff at one Navy regional office send annual questionnaires to claimants to determine if information, including income and dependent status, is consistent with annual documentation submitted to Labor.\nA DHS component agency sends periodic letters to claimants asking about their current status. If DHS determines that action should be taken, DHS then sends a letter to Labor requesting the claim be closed.\nUnder DOD policies, Air Force, Army, and Navy staff are required to conduct an annual review of selected long-term claim files and medical documentation to determine whether claimants are receiving compensation benefits they are entitled to and identify claimants who are fit to return to work.\nThe Air Force has developed quarterly working groups to review all paid compensation benefits.\nUSPS performs periodic reviews of claimant data. USPS IG officials identified a claimant who fraudulently claimed $190,000 in mileage reimbursements for travel to therapy almost every day for 5 years, including weekends and holidays.\nOfficials from employing agencies and Labor stated that their program staff conducted data analysis, such as comparisons of mileage claims to medical bills, to verify information submitted by claimants. Agencies also reported using available data sources to verify whether claimants should continue to receive FECA benefits. Similar to the periodic reviews previously discussed, these controls fall within the monitoring component of GAO’s fraud-prevention framework and could help to validate claimants’ self-reported income and medical-condition information. Data sources reviewed ranged from federal agency data to other publicly available information. Agencies also conduct reviews of claimant physician and prescription drug payments to identify fraud. Specifically, according to agency officials:\nLabor gives each employing agency access to its Agency Query System (AQS), which allows agencies to electronically review information on FECA claims, including current claims status, wage- compensation payment details, and medical-reimbursement details.\nLabor officials also stated they provide at least quarterly, and for some employing agencies weekly, extracts from their data system that give employing agencies information on wage-compensation payments, medical-billing payments, and case-management data.\nThe Navy reviews pharmacy bills, medical-diagnosis codes, and mileage-reimbursement details from the AQS system on a case-by- case basis to determine whether physician claims are related to the injury sustained by the claimant and to identify whether mileage for physician visits was reimbursed on days when the claimant did not visit a physician.\nNavy officials use publicly available state government information to identify claimants who owned and received income from their own businesses. For example, one public records search found that a FECA claimant was an active owner of a gentleman’s club while he was fraudulently receiving FECA wage-loss benefits.\nOfficials from employing agencies and Labor stated that they reviewed SSA’s Death Master File periodically to identify benefits erroneously dispersed to deceased individuals’ survivors. Specifically, Labor said it conducts monthly data matches with SSA’s Death Master File records and plans to revise the forms used in survivors’ claims to gather Social Security numbers for survivors and beneficiaries, enabling Labor to match all FECA payees with SSA death records.\nVA has developed a process that allows the agency to track prescription drug usage claims and identify anomalies.\nFour employing agencies reported that using investigative resources by investigating potential fraud cases helped to increase program controls. The Navy FECA component has assigned responsibilities to staff that investigate and help prosecute fraudulent FECA claims, while the Air Force has designated staff that refers allegations to its Office of Special Investigations. USPS program officials reported that they refer potential fraud cases internally to USPS IG officials for investigation and prosecution. The investigation and effective prosecution of claimants fraudulently receiving benefits is a key element in GAO’s fraud-prevention framework. While these activities are often the most costly and least effective means of reducing fraud in a program, the deterrent value of prosecuting those who commit fraud sends the message that fraudulent claims will not be tolerated. Examples of the effective integration of investigative resources provided by these employing agencies include the following:\nThe Air Force discussed its plan to hire staff in early fiscal year 2012 to conduct background investigations and surveillance of claimants to determine whether they are entitled to receive FECA benefits.\nThe USPS IG reported that since October 2008 it identified and facilitated terminating benefits for 476 claimants who were committing workers’ compensation fraud, and recovered over $83 million in medical and disability judgments.\nNavy officials stated that their internal investigators’ work at one region led to 10 convictions from 2007 to 2011 and an $8.6 million cost-avoidance to the agency.\nOne individual received monthly workers’ compensation payments after falsely denying that he had outside employment and outside income while claiming total disability that prevented him from working. Interviews with former employers uncovered that this claimant had been employed and been paid over $100,000 per year while he was receiving benefits. This individual was sentenced to 18 months in prison, 3 years supervised probation, and $302,380 in restitution for making a false statement to obtain FECA benefits.\nAnother individual collected FECA benefits made out to his father for 4 years after his father was deceased. This individual was sentenced to 5 years of probation and full restitution in the amount of $53,410.\nDHS officials within the Transportation Security Administration stated they have successfully used an internal affairs unit consisting of seven staff members to examine and respond to fraud, waste, and abuse cases and make referrals to investigators. The investigators then conduct video surveillance and examine data to find potential fraud.\nA recent Labor IG testimony cited numerous Labor IG investigations that have been conducted over the years focusing on FECA claimants who work while continuing to receive benefits, and on medical or other service providers who bill the program for services not rendered.", "Our preliminary observations also identified potential vulnerabilities in the FECA program fraud-prevention controls that could increase the risk of claimants receiving benefits they are not entitled to. Again, we plan to examine these potential vulnerabilities as part of our ongoing work.\nWe found that management of the FECA program could be affected by limited access to necessary data. Specifically, agency officials stated the program lacked proper coordination among federal agencies and that there was limited or no access to data sources that could help reduce duplicate payments. For example, Labor does not have authority to compare private or public wage data with FECA wage-loss compensation information to identify potential fraud. This prevents agencies from verifying key eligibility criteria submitted by claimants, such as income. GAO’s fraud-prevention framework emphasizes effective monitoring of continued compliance with program guidelines, and outlines how validating information with external data can assist with this process. Specific potential vulnerabilities identified in the area included the following:\nProgram officials at Labor and the employing agencies do not have access to payroll information included in the National Directory of New Hires (NDNH) and federal employee payroll data, which could help reduce duplicate payments by identifying unreported income. In a previous report, we recommended that Labor develop a proposal seeking legislative authority to enter into a data-matching agreement with the Department of Health and Human Services (HHS) to identify FECA claimants who have earnings reported in the NDNH. However, Labor officials stated that they investigated using NDNH and communicated with HHS, but determined that this would not be an effective solution due to cost issues, limited participation by employers in the NDNH, and the likelihood that illegitimate earnings would not be listed. As an alternative, Labor recently provided testimony proposing legislative reforms to FECA that would enhance its ability to assist FECA beneficiaries. As part of this reform, OWCP sought authority to match Social Security wage data with FECA files. OWCP currently is required to ask each individual recipient to sign a voluntary release to obtain such wage information. According to Labor, direct authority would allow automated screening to assess whether claimants are receiving salary, pay, or remuneration prohibited by the statute or receiving an inappropriately high level of benefits. It would be important to assess whether access to Social Security wage data is an effective alternative to access to NDNH data, and we plan to assess this as part of our ongoing work.\nNavy and Air Force officials cited difficulty coordinating with VA to determine whether individuals are receiving disability benefits for the same conditions related to FECA claims. This information is key for employing agencies to assess whether claimants received duplicate benefits for the same injuries under both VA disability benefits and FECA benefits. VA commented that privacy concerns related to providing beneficiary data to external agencies has affected coordination.\nAn employing agency official stated that Labor does not provide them with remote access to the claimant’s annual certification form CA- 1032, which would be useful for their periodic review efforts. However, Labor does allow employing agency officials to view the CA-1032 forms if the officials come to a Labor district office. The CA-1032 form contains information on a claimant’s income and dependent status, which is useful when employing agencies review claims files for continued eligibility. We raise this issue because, as stated above, the Navy utilizes information submitted to Labor as part of its periodic review efforts.\nA 2010 SSA IG audit found individuals receiving duplicate benefits for SSA and FECA. According to the SSA IG, development of a computer-matching agreement with Labor and its FECA payments database would allow SSA to reduce the number of duplicate SSA payments by verifying the accuracy of payment eligibility. According to the SSA IG report, the agreement has not been finalized with Labor due to changes in personnel at SSA.\nOur preliminary observations identified program processes that relied heavily on data self-reported by claimants that is not always verified by agency officials. Not verifying information concerning wages earned and dependent status reported by claimants creates potential vulnerabilities within the program. For example, individuals who are working can self- certify that they have no other income, and continue to remain on the program while their statements are not verified. Prior reports by us and Labor’s IG have shown that relying on claimant-reported data could lead to overpayments. For example:\nA 2008 GAO report found that Labor relied on unverified, self-reported information from claimants that was not always timely or correct.Specifically, the annual CA-1032 forms submitted to Labor to determine whether a beneficiary is entitled to continue receiving benefits relies on statements made by the claimant that are not verified.\nA 2007 Labor IG report also found that an OWCP district office did not consistently ensure that claimants returned their annual form CA-1032 or adjust benefits when the information reported by claimants indicated a change in their eligibility. Labor agreed with the findings of this report.\nDuring fiscal year 2004, claimants and beneficiaries continued to receive compensation payments even though they had not provided required timely evidence of continuing eligibility. In one case, the claimant’s augmented payment rate was not reduced even though the claimant reported that his spouse was no longer a dependent.\nAccording to Labor officials, a new case-management system was deployed after the Labor IG audit field work was conducted, which addresses some of the issues raised in the Labor IG report.\nOur preliminary observations found that FECA program regulations allow claimants to select their own physician, and also requires examination by a physician employed or selected by the government only when a second opinion is deemed necessary by the government. We found this could result in essential processes within the FECA program operating without reviews by physicians selected by the government. This potential vulnerability affects key control processes outlined in GAO’s fraud- prevention framework in two areas: first, the lack of reviews when assessing validity of initial claims and second, the lack of the same when monitoring the duration of the injury. However, the addition of a government physician into the process does not necessarily mitigate all risks, and costs associated with additional medical reviews would need to be considered. For example, there may be difficulties in successfully obtaining information from physicians representing the government’s interest. Specifically, a prior GAO report found challenges in obtaining sound or thorough evidence from physicians approved by Labor in Black Lung Benefits Program claims for miners. Our report also noted that physicians stated that guidance provided by Labor for effectively and completely documenting their medical opinions was not clear, which resulted in the challenges in providing useful information to Labor concerning Black Lung claims. Details of this potential vulnerability include the following:\nLabor, not the claimant’s employing agency, determines if a second opinion is necessary. Employing-agency officials, including officials from DHS and USPS stated that there have been instances where Labor failed to respond to their requests to have a second-opinion examination performed at the employing agencies’ request even though the costs would be borne by their agencies. We did not verify these claims. Labor officials stated that its claims examiners are trained to review files and make the appropriate case-management decision on the need for a second opinion. In addition, they stated that resources associated with second opinions include significant time and effort for a claims examiner to review a file, document the need for a second opinion, and determine the specific issues to be reviewed by the physician. Finally, Labor officials noted that numerous requests by employing agencies for second opinions can put a strain on the limited number of physician staff it uses for these examinations.\nOfficials at multiple employing agencies covered in our work to date stated that they faced difficulties successfully investigating and prosecuting fraud. GAO’s fraud-prevention framework states that targeted investigations and prosecutions, though costly and resource intensive, can help deter future fraud and ultimately save money. We plan to follow up with agency IG and United States Attorney officials to gain their perspective on FECA fraud cases as part of our ongoing work. Details offered by employing-agency program officials included the following:\nOfficials at DOD stated that their investigative units do not normally invest resources in FECA fraud cases because national defense, antiterrorism, and violent crimes cases are higher priorities.\nUSPS officials also stated that, in their experience, limited resources at United States Attorneys offices means that those attorneys will often not prosecute cases with an alleged fraud of less than $100,000. According to these officials, many of their strong allegations of fraud and abuse fall below this amount when estimating the cost of fraud that has already occurred. In addition to the challenges noted above related to fraud investigations, in 2008, we recommended that OWCP take steps to focus attention on recovering FECA overpayments. Specifically, we recommended considering reducing the dollar threshold for waiving overpayments as OWCP’s overpayment processing data system develops additional capabilities. With respect to reducing the waiver threshold, Labor declined to consider reducing the dollar threshold while their current processing data system was developing additional capabilities to recover overpayments.", "We plan to follow up on these promising practices and potential weaknesses as part of our ongoing review of FECA fraud-prevention controls. We will also determine whether duplication of benefits and other problems within the FECA program may have contributed to specific cases of fraud and abuse or other program vulnerabilities and develop illustrative case studies as appropriate. To complete this work, we have attempted to obtain access to NDNH data. However, HHS has denied access to the NDNH database because they assert that we do not have authority to obtain NDNH data, despite the fact that we have a broad right of access to all federal agency records.slowed the progress of this engagement reviewing federal beneficiary fraud and abuse and has limited our ability to assess the potential vulnerability of the FECA program to fraud and abuse at a national level. Although we have been able to obtain some of the data from a number of states, we have not received complete data from all states contacted. Legislation that is currently pending in the House and Senate (H.R. 2146, S. 237) would refute HHS’ erroneous interpretation of our statutory access rights and would ensure that we have access to the NDNH and can complete our congressionally requested work in a timely manner.\nHHS’ denial of access has In addition to our fraud-prevention work in the FECA program, we are conducting two other program-related engagements. Those engagements focus largely on issues related to retirement-age FECA beneficiaries. The results of that work will also be reported separately.", "On November 9, 2011, we issued a statement for the record to the Senate Committee on Homeland Security and Governmental Affairs detailing our preliminary observations on FECA fraud prevention controls. At that time, we discussed our key findings with Labor and officials at the six employing agencies. Labor and the employing agencies generally agreed with the preliminary findings and provided technical comments, which were incorporated into the statement. Those findings and associated technical comments are included in this report.\nWe are sending copies of this report to the Secretaries of Labor, Defense, Homeland Security, Veterans Affairs, the Postmaster General, and interested congressional committees. In addition, this report is also available at no charge on the GAO website 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." ], "depth": [ 1, 1, 2, 2, 1, 1 ], "alignment": [ "h2_full h1_full", "h0_title h2_title h1_title", "h0_full h2_full", "h0_full h2_full h1_full", "h0_full", "h0_full" ] }

{ "question": [ "What do the promising practices to reduce risk of fraud within FECA include?", "How have these practices already been beneficial?", "What vulnerabilities have been found in FECA's design?", "How did labor and employing agencies feel about the findings in this report?", "Why has progress in the next step been slowed?", "What did federal and postal employees receive through FECA?", "What is the purpose of FECA?", "How does FECA work?", "What are wage-loss benefits?", "What did the OWCP estimate regarding future actuarial liabilites for FECA compensation payments?", "Why did USPS remove claimants from the OWCP?", "Why did Congress ask for preliminary observations to be provided?" ], "summary": [ "The promising practices link back to fraud-prevention concepts contained in GAO’s Fraud Prevention Framework and Standards for Internal Control in the Federal Government, and include agencies’ use of full-time staff dedicated to the FECA program, periodic reviews of claimants’ continued eligibility, data analysis for potential fraud indicators, and effective use of investigative resources.", "These promising practices have already resulted in successful investigations and prosecutions of FECA-related fraud at some agencies, and could help to further enhance the program’s fraud-prevention controls.", "However, our preliminary work has also identified several potential vulnerabilities in the program’s design and controls that could increase the risk for fraud. Specifically, we found that limited access to necessary data is potentially reducing agencies’ ability to effectively monitor claims and wage-loss information. In addition, agencies’ reliance on self-reported data related to wages and dependent status, lack of a physician selected by the government throughout the process, and difficulties associated with successful investigations and prosecutions all potentially reduce the program’s ability to prevent and detect fraudulent activity.", "Labor and employing agencies generally agreed with the preliminary findings presented in this report and provided technical comments, which were incorporated into this report.", "We plan to follow up on the promising practices and potential vulnerabilities as part of our ongoing work, although our progress has been slowed by difficulties in accessing certain databases.", "According to the Department of Labor (Labor), in fiscal year 2010 about 251,000 federal and postal employees and their survivors received wage-loss compensation, medical and vocational rehabilitation services, and death benefits through the Federal Employees’ Compensation Act (FECA) program.", "Administered by Labor, the FECA program provides benefits to federal employees who sustained injuries or illnesses while performing their federal duties.", "Employees must submit claims to their employing agency, which are then reviewed by Labor. For those claims that are approved, employing agencies reimburse Labor for payments made to their employees, while Labor bears most of the program’s administrative costs.", "Wage-loss benefits for eligible workers—including those who are at, or older than, retirement age—with total disabilities are generally 66.67 percent of the worker’s salary (with no spouse or dependent) or 75 percent for a worker with a spouse or dependent. FECA wage-loss compensation benefits are tax free and not subject to time or age limits.", "Labor’s Office of Workers’ Compensation Programs (OWCP) estimated that future actuarial liabilities for governmentwide FECA compensation payments to those receiving benefits as of fiscal year 2011 would total nearly $30 billion (this amount does not include any costs for workers added to the FECA rolls in future years).", "In April 2011, the USPS IG testified that USPS had removed 476 claimants from the program based on disability fraud since October 2008 and recovered more than $83 million in judgments.", "Given the significant projected outlays of the governmentwide FECA program and prior USPS IG findings of fraud, Congress asked us to provide preliminary observations on our ongoing work examining FECA fraud-prevention controls and discuss related prior work conducted by us and other federal agencies." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, -1, 1, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Overview", "Major Themes", "\"Responsive Authoritarianism\"", "U.S. Government Policy", "The Obama Administration", "Congressional Actions", "Recent Developments", "Crackdown on Dissent", "Jasmine Revolution", "Nobel Laureate Liu Xiaobo", "Labor Issues", "A Mixed Picture", "Major Human Rights Issues", "Prisoners of Conscience", "Forms of Illegal Detention", "Reeducation Through Labor", "Americans Detained in China", "Human Rights Reforms/Legislation", "Civil Society", "Social Organizations", "Rule of Law", "The Internet", "Google in China", "The Media", "Religious Freedom", "Chinese Christians", "Tibet", "Uighur Muslims", "Falun Gong", "Social Variables Affecting Human Rights", "Social Unrest", "The Middle Class", "U.S. Efforts to Advance Human Rights in China", "Selected Policy Tools", "Sanctions", "Openly Criticizing China", "Congressional Actions", "United Nations Human Rights Council", "Human Rights Dialogue", "Rule of Law and Civil Society Programs", "National Endowment for Democracy", "Labor Rights", "Internet Freedom", "Public Diplomacy", "International Broadcasting" ], "paragraphs": [ "", "Human rights conditions in the People's Republic of China (PRC) remain a central issue in U.S.-China relations. For many U.S. policy-makers, progress in this area represents a test of the success of U.S. engagement with China, particularly since permanent normal trade relations (PNTR) status was established in 2000. Some analysts contend that the U.S. policy of engagement with China has failed to produce meaningful political reform, and that without fundamental progress in this area, the bilateral relationship will remain unstable. Others argue that U.S. engagement has helped to accelerate economic and social change and build social and legal foundations for democracy and the advancement of human rights in the PRC.\nMany observers argue that violations of civil liberties and cases of political and religious persecution in China have increased in recent years, the leadership remains authoritarian, and economic development, based largely upon trade with the United States, has strengthened the Communist government rather than empowered the people. Other analysts and many Chinese citizens contend that economic and social freedoms have grown considerably, the government's control over most aspects of people's lives has receded, opportunities for providing opinions on policy have increased, and rights activism has sprouted. Disagreements over whether progress has been made often stem from differences over which indicators are emphasized, such as central government policies, local government actions, civil society, or short-term versus long-term trends. In many ways, growing government restrictions on political, religious, and other freedoms and greater assertion of civil rights have occurred simultaneously.", "This findings of this report reflect the following themes:\nA crackdown on dissent in 2011 has been attributed to the government's nervousness about continued outbreaks of social unrest, growing rights activism, the upcoming PRC leadership change in 2012-2013, and the potential for Arab Spring-inspired anti-government demonstrations. Some analysts also blame decreasing leverage by the United States on Chinese human rights policies. It is not yet clear how recent PRC government actions will affect social stability, civil society, public opinion, and political reform in China in the medium term. Some experts view the crackdown as representing one of the largest setbacks for liberalization in China since an attempt to launch a new political party, the China Democracy Party, was squelched and its leaders were imprisoned in 1998. Other observers argue that due to the greater political assertiveness of the Chinese people compared to a decade ago, the government likely will seek to avoid a popular backlash, by limiting its repressive actions to selected key activists and dissidents.\nThe PRC government has compromised little, if at all, on popular demands that it perceives to represent challenges to its authority. Serious human rights abuses continue in many areas. The PRC government has shown itself to be particularly intolerant of political dissent, freedom of speech, independent social and religious organizations, resistance to government policies from Tibetans, Uighurs, and Falun Gong adherents, and challenges to the official verdict of the 1989 Tiananmen democracy movement.\nMany Chinese citizens have experienced some marginal improvements in human rights protections and rights activism has increased. These changes have come about through both government policies and the development of civil society. The government has enacted laws to acknowledge or try to prevent some of the most egregious violations of human rights and abuses of power, strengthened the legal system, and occasionally publicly sympathized with aggrieved citizens. Social groups have engaged in protests to defend their rights, often aided by journalists, lawyers, and activists whose activities put them at risk of physical harm, loss of their professional licenses, harassment of themselves and their families, and imprisonment.\nThe Internet has provided Chinese citizens with unprecedented amounts of information and the opportunity to express opinions publicly. Due to government censorship and other controls and to the non-political nature of most web activity in China, the Internet has proven to be less of a political factor than many observers had expected or hoped. Nonetheless, the Internet has made it impossible for the government to restrict information as fully as before. In many cases, news disseminated independently online has helped to hold government officials more accountable than in the past.\nThe following social variables could potentially provide impetus for political reform in China: A shift in public concerns from local and economic issues to national and political ones; the growth of protest activity that includes not only socially and economically marginalized groups, such as farmers, workers, and migrant laborers, but also the urban middle class, professionals, and private entrepreneurs; linkages among social groups; and the development of new communications media and counter-censorship technologies.\nThe U.S. government has developed a comprehensive array of tactics and programs aimed at promoting democracy, human rights, and the rule of law in China, but their effects have been felt primarily along the margins of the PRC political system. Some experts argue that these policies have had little impact, and are constrained by the overarching policy of U.S. diplomatic and economic engagement with China. Other observers contend that U.S. human rights and engagement policies have helped to set conditions in place in China that are necessary for progress and have helped the U.S. government to remain involved in the process.", "The People's Republic of China is an authoritarian state in which the permanent leadership role of the Chinese Communist Party (CCP) is inscribed in the Constitution, and the legislative and judicial branches lack the power to check the CCP and the state. Recent speeches by PRC leaders have indicated that the CCP fully intends to maintain its monopoly in power. Although Premier Wen Jiabao, who is thought to be relatively liberal, has advocated deepening political reforms and expanding direct popular elections at the local levels, he has not called for radical change, but rather for incremental progress under the leadership of the CCP. The PRC Constitution protects many civil liberties, including the freedoms of speech, press, association, assembly, and religious belief, but these rights for the most part are not respected in practice. The government regards these ends as subordinate to the CCP's authority and to the policy goals of maintaining state security and social stability, promoting economic development, and providing for economic and social rights. The CCP leadership denounces foreign criticisms of its human rights policies as interference in China's internal affairs, and asserts that perspectives on human rights vary according a country's level of economic development and social system.\"\nUnder the leadership of CCP General Secretary and President Hu Jintao and Premier Wen Jiabao, both in office since 2003, the PRC government has developed along the lines of what some scholars call \"responsive authoritarianism.\" It has striven to become more responsive, accountable, and law-based. Chinese leaders also have become more sensitive to popular views, particularly those expressed on the Internet. However, the government has rejected political reforms that might challenge its monopoly on power, and continued to respond forcefully to signs and instances of social instability, autonomous social organization, and independent political activity. Although the government has made some progress in enacting laws aimed at curbing some of the most egregious human rights abuses, it has not created or adequately strengthened institutions that would help enforce these laws, such as checks and balances and genuine popular elections beyond the village level. Furthermore, many lawyers, activists, and journalists seeking to protect people's rights or expose violations of them have been harassed or imprisoned by authorities. PRC leaders have tolerated some mass demonstrations against government officials and policies, particularly at the local level, but also have arrested protest leaders. Communist Party and state officials have retained a significant degree of arbitrary authority, and corruption has negated many efforts to improve governance.", "Many experts and policy makers have sharply disagreed over the best policy approaches and methods to apply toward human rights issues in China. Differing U.S. goals include promoting fundamental political change in the PRC and supporting incremental progress. Possible approaches range from placing human rights conditions upon the bilateral relationship to inducing democratic change through bilateral and international engagement. Policy tools include private discussions; sanctions; open criticism of PRC human rights policies; coordinating international pressure; support of and contact with dissidents; bilateral dialogue; human rights, democracy, and related programs; promoting Internet freedom; public diplomacy efforts; and monitoring and highlighting human rights abuses.\nSince the end of the 1980s, successive U.S. administrations have employed broadly similar strategies for promoting human rights in China. Some analysts have referred to the U.S. foreign policy approach of promoting democracy in China through diplomatic and economic engagement, without directly challenging Communist Party rule, as a strategy of \"peaceful evolution.\" President Bill Clinton referred to this policy as \"constructive engagement\" – furthering diplomatic and economic ties while pressing for open markets and democracy, calling it \"our best hope to secure our own interest and values and to advance China's.\" President George W. Bush also came to view U.S. engagement as the most effective means of promoting U.S. interests and freedom in China.", "As China's importance in global economic, security, environmental, and other matters has grown, both the Bush and Obama Administrations aimed to forge bilateral cooperation on many fronts, while disagreeing deeply with Beijing on many human rights issues. In remarks during the summit with PRC President Hu Jintao in January 2011, President Obama referred to the universality of the freedoms of speech, assembly, and religion, a point frequently made by President Clinton. Echoing a theme evoked by President Bush in his second term, President Obama also suggested that greater respect for human rights in China would benefit China's success and global stability.\nIn December 2009, Secretary of State Hillary Clinton described the Administration's human rights policy as one of \"principled pragmatism.\" This policy is based upon the premise that tough but quiet diplomacy is both less disruptive to the overall relationship and more effective in producing change than public censure. Some policy observers have admonished President Obama for reducing the prominence of human rights in U.S. policy toward China and favoring other concerns, such as economic, security, and environmental issues. Other analysts have argued that Sino-U.S. cooperation in these areas creates greater and more favorable opportunities for promoting human rights in the PRC. Some critics have pointed to a number of actions (or inactions) by the Administration, including the postponement of a White House meeting with the Dalai Lama until after President Obama's trip to China in November 2009, and Secretary Clinton's February 2009 statement that pressing Beijing on human rights issues \"can't interfere\" with other key areas of the relationship. Some policy makers also have criticized the Administration for producing too few concessions, such as political prisoner releases, by the PRC government.\nNonetheless, the Administration has pressed China on human rights issues, both privately and openly. During his visit to China in November 2009, President Obama briefly spoke about human rights and Internet freedom during a town hall meeting with university students in Shanghai. Although the broadcast of the speech was limited to Shanghai and transcripts on the Internet were censored, thousands of Chinese reportedly accessed the White House website and cheered Obama's appeal for Internet freedom. Secretary Clinton has spoken out on human rights issues, including criticizing China's Internet censorship and alleged hacking of U.S. companies in January 2010, demanding Nobel laureate Liu Xiaobo's release from prison in October 2010, calling for the release of dissident artist Ai Weiwei in April 2011, and discussing China's human rights record, calling it \"deplorable,\" in a June 2011 interview. In July 2011, President Obama met with the Dalai Lama at the White House and reiterated his support for human rights in Tibet and for dialogue between the Dalai Lama and Beijing.", "The U.S. Congress has been at the forefront of maintaining human rights as a pillar of U.S. policy toward the PRC, through such measures and efforts as sanctions, resolutions, hearings, and democracy assistance in support of human rights in China and in Tibet. Congress legislated sanctions following the Tiananmen military crackdown in 1989 and has withheld support for United Nations Population Fund programs in China. Members of Congress have introduced resolutions calling attention to human rights abuses in the PRC, including the imprisonment and detention of political, religious, and minority figures; persecution of Tibetans, Uighurs, and Falun Gong adherents; censorship of the Internet and other mass media; coercive abortions; and China's deportation of North Korean refugees. Congressional committees, the Tom Lantos Human Rights Commission, the Congressional-Executive Commission on China, the U.S. Commission on International Religious Freedom, and other congressionally mandated bodies and fora have investigated, publicized, and reported on human rights conditions in China. Foreign operations appropriations measures have authorized and funded democracy, human rights, and rule of law programs in the PRC; economic, cultural, and environmental programs in Tibet; and Internet freedom efforts in China and other countries.", "", "In the winter and spring of 2011, the PRC government intensified efforts to suppress China's increasingly active civil society, including rights defenders, activist lawyers, bloggers and other critical voices, non-governmental organizations (NGOs), independent churches, restive ethnic minority groups, and others whom it deemed threatening to social and political stability. Chinese security forces reportedly detained, arrested, or held incommunicado between 50 and 100 people, including 20 who face prosecution for subversion, and placed another roughly 200 people under heavy surveillance for political reasons. According to many experts, the breadth and intensity of the crackdown in 2011 is unprecedented under the current PRC leadership. Recent major events and cases include large police presences in Beijing and Shanghai in February 2011 in attempts to head off Middle East-inspired anti-government demonstrations, and the April 2011 arrest of one of China's best-known artists and government critics, Ai Weiwei, for tax evasion and other charges. (Ai was released on June 22, 2011.) The Congressional-Executive Commission on China provides a list of people targeted in the crackdown.\nThe recent spate of arrests appeared to be part of a broader and longer-term policy of adapting to and regulating a fast-changing and increasingly dynamic society while selectively applying tactics of intimidation and coercion against individuals and groups that the state perceives to be challenging or publicly questioning its authority or control. Several indicators support this trend. The number of people arrested for endangering state security, the most serious political crime, was over 950 in 2010, according to one estimate, of which a majority were Tibetans and Uighurs charged with \"splittism\" and related crimes. This number represents a 44% decline from 2008, when protests in Tibetan regions and preparations for the Beijing Olympics gave rise to many arrests, but still a substantial increase from pre-2008 levels. PRC public security officials reportedly issued statements in 2009-2010 in support of an \"indefinite extension of a security crackdown\" aimed at \"safeguarding social stability,\" while the government has bolstered the budget and capacity of the police forces. State control methods reportedly have increasingly made use of coercive, extra-judicial tactics, including physical harassment or beatings by plain-clothes agents, forced disappearances, and threats against and harassment of family members.\nThe PRC government's recent attempts to silence its critics and subdue social forces have been widely attributed to the recent political unrest in the Middle East and the CCP's fear of similar, large-scale protests at home. Some experts argue that the PRC government has done a better job of satisfying public demands for economic opportunity and social justice than many Middle Eastern governments, and that political movements on a national scale are unlikely. Nonetheless, China's leaders, who face a leadership transition in 2012-2013, have reason to be concerned about their ability to respond to democratic forces in the society. Deep and manifold popular grievances against mostly local government officials are well-documented—roughly 90,000-100,000 \"mass protests\" have been reported annually in the past several years. In 2010, there were 72 \"major\" incidents of social unrest, according to a Chinese study, a 20% increase from the previous year. Awareness of legal and human rights among Chinese citizens, in some ways promoted by the government, continues to grow, while a small but increasing number of activists, lawyers, journalists, and others has continued to champion human rights causes.", "In February 2011, an online appeal that appeared to be authored by Chinese activists overseas called on people in China to take part in a \"Jasmine Revolution\"—peaceful \"protest walks\" in major cities on consecutive Sundays—to highlight the desire for greater democracy in China in light of popular movements sweeping the Middle East. Although a few hundred protesters reportedly were turned away by public security forces from the main city square in Shanghai, uniformed and plainclothes police and curious onlookers appeared to far outnumber demonstrators in Beijing, while in other cities there was little if any protest activity. Government authorities reportedly detained dozens of human rights activists and lawyers, charged several prominent dissidents with subversion, and physically assaulted and threatened foreign reporters.", "In October 2010, the Nobel Committee awarded Liu Xiaobo, formerly a professor at Beijing Normal University and a long time political dissident, activist, and writer, the Nobel Peace Prize for his \"long and non-violent struggle for fundamental human rights.\" He had spent three years in prison for his role in the 1989 democracy movement and three years in a labor camp (1996-1999) for openly questioning Communist Party rule. From 2003 to 2007, Liu served as President of the Independent Chinese PEN Center, which advocates freedom of speech and press, and experienced frequent harassment by local authorities. In December 2008, Liu helped draft \"Charter '08\" commemorating the 60 th anniversary of the United Nations' adoption of the Universal Declaration of Human Rights. The document, signed by 300 Chinese citizens and posted on the Internet, called for human rights and fundamental changes in China's political system. It eventually garnered roughly 10,000 additional signatures online. The PRC government shut down the Charter's website, harassed, interrogated, or denied career benefits to dozens of signatories, and arrested Liu. In December 2009, a Beijing court sentenced Liu to 11 years in prison on charges of \"inciting subversion of state power.\"\nFollowing the announcement of the Nobel Peace Prize, the PRC government harassed, detained, interrogated, placed under house arrest, denied visas to, and confiscated the computer equipment of dozens of fellow Chinese dissidents, political activists, and family members. It barred members and representatives of Liu's family from traveling to Oslo to accept the prize, and blocked western news media in the days leading up to the awards ceremony. The PRC government also reportedly lobbied foreign governments, warning them not to send diplomats to the Nobel ceremony.", "In the spring and summer of 2010, China experienced a surge in labor disputes and unrest, including three dozen strikes at Foxconn, Honda, Hyundai, and other foreign-owned factories in Guangdong province. In addition, many less-noticed labor incidents occurred \"everywhere\" and in \"all kinds of enterprises.\" These developments indicated an evolving relationship between workers, enterprises, and the government. Wage pressures—caused by China's economic development, a shortage of young workers due to demographic changes, the rising value of the renminbi , and greater enforcement of the 2008 Labor Contract Law—coupled with widening income disparities, a growing awareness of rights, and rising expectations among China's new generation of workers, helped to fuel the unrest. At Taiwan electronics giant Foxconn, known as the world's largest supplier of components for global brands such as Apple, Microsoft, and Hewlett-Packard, strikes in some of its factories in China were preceded by the suicides of 11 Chinese employees earlier in the year. Many observers and labor activists attributed the suicides to highly demanding and stressful working conditions.\nMost labor protesters sought higher wages, improved working conditions, and enforcement of PRC labor laws, although some workers also demanded the right to elect their own union representatives or form their own unions. Some Chinese labor experts and official sources expressed support for higher wages, a greater advocacy role for China's official union, the All China Federation of Trade Unions (ACFTU), and the process of collective bargaining. Some legislative proposals at the provincial and national levels supported the right to strike.\nCompared to past labor movements in China, the strikes of 2010 were unusual for several reasons: the official media covered them; they resulted in positive results for many workers, such as substantial pay raises; labor organizers skillfully used Internet social networking tools; and, in some cases, management negotiated directly with strike leaders. However, as in the past, the activism of workers did not represent a national labor or political movement. For the most part, workers did not organize on a long-term basis or build linkages between enterprises, and their aims were narrow or focused on wages and working conditions. Moreover, strikers at some enterprises exploited nationalistic or anti-Japanese sentiment, thereby reducing antagonism between labor and the government. China's leaders, meanwhile, remain vigilant against the development of a national labor movement, do not allow the formation of independent unions or democratic elections for ACFTU representatives, and have not adopted proposals to formally allow strikes. Roughly two dozen labor activists are known to be in jail.", "The past few years have witnessed a mixed picture regarding human rights conditions in China. On the one hand, human rights organizations and commissions have reported worsening and deteriorating conditions in China. None of the groups known to suffer the greatest persecution by the PRC government has experienced real improvement in overall treatment, according to reports. These groups include Tibetans and ethnic Uighur (Uygur) Muslims, leaders of unsanctioned Christian churches, Falun Gong practitioners, political dissidents, and human rights defenders. The Nobel Committee's award of the 2010 Peace Prize to jailed dissident Liu Xiaobo, which the PRC government denounced as a western political ploy to weaken China, highlighted the Chinese leadership's deep resistance to change. On the other hand, the PRC government has continued to enact laws and policies aimed at reducing some of the most egregious human rights abuses, protecting property and labor rights, and promoting government transparency and citizen input. Moreover, the official press has become more critical of some human rights abuses.", "Major, ongoing human rights violations in China include the following: excessive use of violence by security forces and their proxies; unlawful and abusive detention; torture; arbitrary use of state security laws against political dissidents; coercive family planning policies; state control of information; harassment and persecution of people involved in unsanctioned religious activities, including worship in unregistered Protestant \"house churches\" and Catholic churches that express loyalty to the Pope; and mistreatment and deportation of North Korean refugees. Many Tibetans, Uighurs, and Falun Gong adherents have been singled out for especially harsh treatment.\nThe following ongoing human rights abuses, some of which are discussed at greater length elsewhere in this report, represent a selection of human rights issues in China.\nHarassment, beatings by public security forces and government agents, house arrest, and unlawful detentions of petitioners, protest leaders, human rights attorneys, journalists, dissidents, and others. Unlawful killings of persons in state custody; family members generally are not allowed to investigate the causes of such deaths. Physical abuse and the use of torture by the state against political detainees and criminal suspects, often resulting in forced confessions or renunciations of faith, despite government efforts to reduce such practices. Arbitrary use of state security laws against political dissidents, Tibetans, Uighur Muslims, Internet bloggers, and others. Sporadic reports of coercive abortions, forced sterilizations, and other related, unlawful government actions against women. Strict controls over and punishments for public speech, discussion, and reporting of politically sensitive topics, such as the Tiananmen events of 1989, Taiwan relations, Tibet, Falun Gong, and the legitimacy of the Chinese Communist Party. Harassment and arrests of Christians worshipping in unofficial churches. Detention and arrests of Tibetans and Uighur Muslims suspected of engaging in \"splittist\" and other anti-government activities. Persecution of Falun Gong adherents. Repatriation of North Korean nationals residing in China, who likely face severe forms of punishment after returning North Korea, in violation of the U.N. Refugee Convention and its protocols.", "The Dui Hua Foundation , a non-profit organization that reports on human rights issues and monitors prisoners of conscience—political and religious prisoners and detainees—in China, estimates that there are roughly 25,000 such individuals in prisons, reeducation through labor (RTL) centers, and other facilities. The vast majority were sentenced for involvement with \"cults\" such as Falun Gong, endangering state security, or committing \"counterrevolutionary\" crimes. Sentences for state security crimes are relatively lengthy (5-15 years or longer), while many Falun Gong detainees have served one or more terms of up to 3-4 years in RTL camps.", "Many petitioners, generally citizens from rural areas who file complaints at petition offices in Beijing and provincial capitals seeking redress for government abuses and misconduct, reportedly are sent to secret detention centers or \"black jails,\" where they lack legal protections and face a variety of abuses. In Beijing alone, thousands of people reportedly are detained illegally in such facilities, which number between 50 and 73, each year. Many petitioners, activists, dissidents, underground religious worshippers, Falun Gong practitioners, and others reportedly also have been held in psychiatric ( ankang ) hospitals for the criminally insane, where they have been forced to take medications, denied contact with their families, and subjected to rights abuses. In 2010, more than 100 Chinese lawyers reportedly urged the government to end the practice of detaining sane people in mental health facilities.", "Reeducation through labor ( laojiao ) or RTL, an administrative measure, empowers the police to sentence persons found guilty of minor or non-criminal offenses, such as petty theft, prostitution, unlawful religious activity, and \"disrupting social order,\" to a maximum of three to four years in labor camps without trial. Approximately 300 RTL centers holding roughly 250,000 people have absorbed large numbers of individuals deemed by the state to be a threat to social or political stability. According to some estimates, normally between 2% and 10% of the RTL population are being held for political reasons. Many Falun Gong adherents were sent to RTL camps during the height of the crackdown a decade ago, at one time reportedly constituting up to half of all inmates.\nThe National People's Congress and Party officials have openly discussed reforming the RTL system, including reducing the use of the measure, shortening terms, improving conditions, providing better legal protections for detainees, particularly minors, and providing better judicial oversight. In 2010, two Chinese legal scholars debated reforming the RTL system in a series of editorials.", "Xue Feng, a China-born, naturalized U.S. citizen, was arrested in Beijing in 2007 on charges related to his acquisition of a Chinese database on China's oil industry while working for an American firm. In July 2010, after having been held incommunicado for a period and allegedly tortured, Xue was sentenced to eight years in prison for providing state secrets to foreigners. Xue claimed that he had believed the database to be commercially available. U.S. consular officials have had regular contact with Xue, although U.S. officials were denied access to Xue's November 2010 appeal hearing, in violation of the 1980 U.S.-China Consular Convention. Another naturalized U.S. citizen, David Wei Dong, was sentenced in 2005 to 13 years in prison on the charge of espionage (spying for Taiwan). He is said to be in poor health. Dong's sentence was reduced by 18 months in 2010.", "While the government led by President Hu Jintao and Premier Wen Jiabao has placed more emphasis upon social stability and economic development than political reform, it has enacted major laws aimed at reducing some of the most serious patterns of human rights abuse. In 2004, the phrase, \"the State respects and protects human rights\" was added to the PRC Constitution. New laws and regulations designed to protect or promote human rights include those related to criminal defendants, the use of torture, the death penalty, labor conditions, private property, and government transparency and responsiveness. The PRC government's 9 th White Paper on Human Rights reported that in 2009, procuratorial organs found 22,268 unlawful actions related to people in detention and prison and urged corrective actions to be taken on 337 cases of excessive detention.\nRights of the Accused: In July 2006, the state enacted prohibitions on specific acts of torture and requirements that interrogations of criminal suspects be video-recorded. These regulations followed a 2004 law forbidding the use of torture to obtain confessions. In 2010, the PRC government issued new rules and regulations intended to reduce physical abuses of detainees and inmates, including rejecting evidence obtained through torture, raising the accountability of state personnel for deaths and injuries sustained by people in their custody, and punishing police misconduct. However, many reports of torture continue, and state compensation for wrongful detention and physical and mental abuse suffered by detainees remains the exception rather than the rule. Organ Transplants: In 2006 and 2007, PRC regulations banning trade in human organs went into effect. They stipulated that the donation of organs for transplant be free and voluntary. These restrictions followed growing evidence and international criticism of a booming and unregulated international trade in organs of executed Chinese prisoners, including what one report claimed were \"large numbers\" of Falun Gong practitioners. State Secrets Law: In 2010, the PRC government amended legislation to reduce arbitrary use of the \"state secrets\" law and to make it easier for citizens to obtain compensation due to state negligence or abuse of power. However, according to most observers, the law remains vague and still can be used broadly against political dissidents and others. The Death Penalty: According to Amnesty International and other groups, China is believed to execute several thousands of people each year. In March 2007, the Supreme People's Court was granted sole power to review and ratify all death sentences, following four years of discussion among the CCP leadership. In 2010, the National People's Congress amended the Criminal Law to reduce the number of crimes punishable by death from 68 to 55. In May 2011, the Supreme People's Court instructed lower courts to suspend death sentences for two years for \"all cases that don't require immediate execution.\" Labor Rights: In March 2007, China's legislature passed the Labor Contract Law to help enforce the rights of workers. The law, which went into effect in January 2008, reportedly spurred an initial dramatic rise in labor dispute arbitration cases and strikes. After a period in which enforcement was weakened due to the global economic crisis, the law was a catalyst for a new surge in labor unrest in 2010. Property Rights: In March 2007, the National People's Congress passed a constitutional amendment designed to protect property rights that had been debated since 2002. The new property law helps to protect private entrepreneurs, urban home owners, and farmers whose crop lands often risk seizure by government-backed real estate developers. In October 2008, the government issued new measures allowing farmers to lease and sell rights to use the property allocated to them by the state. Government Transparency: In April 2007, the PRC government announced new rules requiring greater disclosure of official information. In addition, institutional and legal mechanisms were established to provide for greater government responsiveness and accountability. In part, these measures represented attempts to compel local governments to reveal financial accounts related to land takings in rural areas. Government Responsiveness: During the past several years, the government has sought greater public input on policy questions through consultation with experts and think tanks, public hearings, the Internet, and other channels. The Chinese Communist Party also has begun experimenting with soliciting recommendations on candidates for local Party positions. Human Rights Action Plan: In April 2009, the PRC State Council released a two-year \"action plan\" that pledged an increased government commitment to human rights, including farmers' rights over land use, due process, freedom from torture, and expanded citizen participation and consultation. The government declared that its policy was designed to help bring China up to international standards as prescribed in the PRC Constitution, the Universal Declaration of Human Rights, and the International Covenant on Civil and Political Rights. As the plan expired on December 31, 2010, many human rights activists criticized its limited scope, its emphasis on economic and social rather than political and civil rights, and continued human rights violations in China. In July 2011, the State Council Information Office announced that the government was drawing up a four-year human rights plan which, as some analysts suggested, appeared designed primarily to address economic and social grievances.", "Although the Party remains the final, undisputed authority, non-state actors play a small but growing role in policy-making, political discourse, and social activity. In some cases, the state has promoted civil society as a way to help promote social welfare. In other cases, civil society activists have pushed the boundaries of permissible social activity at great personal risk. Lawyers, journalists, and activists have been at the forefront in helping to protect and promote human rights and the public interest, although they have faced severe restrictions. They may form the beginnings of a small, loosely organized, and still largely latent human rights movement, in which \"civil elites\" work with grass roots groups to safeguard and promote rights.", "The PRC government has expressed both an appreciation for the public contributions of social or civil society organizations (CSOs) and a wariness about their potential autonomy, intentions, and foreign contacts. Social organizations, which generally are required to be sponsored by a government agency, face complicated challenges related to their legality, financing, and political survival. According to PRC official estimates, China has over 430,000 registered social organizations, compared to 288,000 in 2004. When CSOs that are not officially registered are included, the total number of social organizations is estimated to be several million. These groups include those that are state-administered, those that are formed outside of the government but have an official sponsor, those that register as businesses because they cannot secure a state sponsor, and unregistered student, community, and grassroots organizations. Environmental groups have been at the forefront of the development of social organizations in China. Other areas in which CSOs operate include legal aid, public health, education, poverty alleviation, and rural development.\nIn the middle of the last decade, after nearly a decade of steady growth, Beijing began to tighten restrictions on social organizations while expressing suspicions about foreign funding and foreign NGOs operating in China. The government has been especially fearful of the potential for foreign NGOs to help foment political unrest, and reportedly established an office to monitor foreign NGOs and their Chinese partners. PRC leaders expressed the fear that China's fledgling civil society, combined with foreign \"democracy assistance\" and the involvement of international NGOs, could bring about a \"color revolution.\" In 2010, the PRC government continued to apply pressure on civil society groups through the \"selective enforcement of regulations.\"\nThe PRC government limits the potential growth and influence of civil society organizations through legal and extra-legal means. For example, PRC laws prohibit social organizations from establishing branches and engaging in public fundraising. Many CSOs have come to rely heavily upon foreign grants. However, in 2010, the State Administration for Foreign Exchange issued a new set of requirements for accepting foreign donations, making it difficult for non-officially registered social organizations to accept foreign funding. The new rules also warned that such donations \"shall not go against social morality or damage public interests and the legitimate rights and interests of other citizens.\" The government has forbidden grants from some foreign democracy groups, and has punished politically provocative social organizations.\nThe industrial city of Shenzhen, bordering Hong Kong, has roughly 3,500 social organizations, more than double the national average per capita. In 2009, the municipality began to carry out reforms, in partnership with the Ministry of Civil Affairs, which have been debated but not enacted at the national level. The city has begun to ease legal restrictions on CSOs, allowing them to register without direct supervision by a government entity, to solicit funding within China and overseas, and to hire foreigners. Some labor groups in Shenzhen, however, reported that they were denied the right to register as social organizations.", "China's legal system has made significant strides since the Cultural Revolution (1966-1976), when legal and judicial institutions were severely weakened and heavily politicized. According to some analysts, legal reforms may ultimately provide foundations for far-reaching social and political change in China. The state still wields disproportionate power against citizens and legal activists and continues to interpret the law arbitrarily in many cases. However, due to the development of the legal system, the government has been compelled to acknowledge at least some claims regarding violations of legal rights.\nAlthough some experts suggest that most Chinese still do not place much faith in the nation's courts, other analysts contend that PRC citizens have rising expectations that the state will honor basic legal rights. According to many reports, rising legal awareness and the development of laws have resulted in the growth of legal activity. Chinese citizens increasingly are turning to the courts to assert claims and even to sue public officials. More than 150,000 cases are filed annually against the government, although the rate of success remains low. Some reports point to a trend of modest growth in cases and a more dramatic growth in the number of appeals. PRC lawyers also have begun to file \"public interest\" cases in growing numbers. Though rarely successful, these cases often draw publicity through the mass media and help to further spread legal consciousness.\nChina's legal profession has grown quickly from a small base. The country reportedly has roughly 190,000 lawyers, an increase from 110,000 in 2005, or about one for every 7,000 people. This ratio compares to about one lawyer for every 6,000 people in Japan and every 300 in the United States. China's changing legal environment has provided an opening for human rights attorneys, albeit one that is fraught with personal risks. In the past decade, several dozen lawyers in China have made names for themselves by taking on sensitive rights cases against government entities or economic enterprises.\nLaw firms and lawyers who have pursued prominent human rights or politically sensitive cases have faced a range of troubles, however, including closure of law offices, disbarment, unlawful detention, house arrest, and prison sentences. Many human rights and defense lawyers have been harassed by officials or abducted and beaten by agents of local governments or economic interests. In recent years, the PRC government has stepped up its harassment of many lawyers and law firms that work on prominent human rights or politically sensitive cases. In 2010, the licenses of about a dozen attorneys who had accepted human rights cases were suspended.\nIn 2008, an amended Law on Lawyers went into effect. Legal reforms included permitting defense lawyers to meet with clients without first seeking permission from judicial authorities; banning police from observing conversations between lawyers and clients; reducing restrictions on access to case files and obtaining evidence; and exempting statements made by lawyers in the courtroom from prosecution. The PRC court system also has implemented programs to strengthen the competence and professionalism of judges and the effectiveness of the judicial system.\nAlthough the new legal provisions provide some protections for attorneys and their clients, defense lawyers remain highly vulnerable, and continue to complain of the \"three difficulties of criminal defense\"—gaining access to detained clients, reviewing prosecutors' case files, and collecting evidence. Furthermore, pursuant to Article 306 of China's Criminal Law, any defense lawyer accused of fabricating evidence or inducing a witness to change his testimony can be immediately detained, arrested and prosecuted for perjury. Hundreds of lawyers reportedly have been prosecuted under Article 306, although the majority of them have been acquitted.\nDespite reforms around the edges, the legal and judicial systems in China remain fundamentally flawed. The Communist Party does not accept the notion of a fully independent judiciary. Although there appears to be an increasing number of cases that are dismissed by PRC courts due to insufficient evidence, the government continues to place a heavy emphasis on establishing the guilt of defendants. There is no adversarial process, no presumption of innocence, no protection against double jeopardy, and no law governing the type of evidence that may be introduced. In many instances, police, prosecutors and judges disregard the protections that Chinese law does offer. In criminal and political cases, sentences are decided not by judges but by a court committee named by the Party. The conviction rate for criminal defendants, most of whom did not have legal counsel, was over 99% in 2009.", "China has the largest number of Internet users in the world, with roughly 450 million people online, including over 300 million mobile Internet users and tens of millions of bloggers. According to one estimate, the number of micro-bloggers in China is expected to reach 100 million in 2011. Although most Internet users in China do not view the medium as a political tool, it has provided many netizens with unprecedented amounts of information, news, and opportunities to express opinions, as well as means to organize protests. While the PRC government generally has managed to prevent politically sensitive information from being disseminated on the Internet or used for political purposes, it has not been able to control all information all the time.\nThe PRC government employs a variety of methods to control online content and expression, including website (URL) blocking and keyword filtering; regulating Internet service providers, Internet cafes, and university bulletin board systems; registering websites and bloggers; and occasionally arresting high profile \"cyber dissidents.\" The state routinely blocks many websites, including Radio Free Asia, international human rights websites, and many Taiwan news sites. Nervous about social media as a tool for political organization, the government filters international social networking, blogging and micro-blogging, video, and file sharing sites, such as Facebook, Blogger, Twitter, and YouTube, and offers Chinese versions of them, which it can better control. The government reportedly also has hired thousands of students to express pro-government views on websites, bulletin boards, and chat rooms. Some analysts argue that the PRC government cannot control all Internet content and use, but its selective targeting of users and services creates an undercurrent of fear and promotes self-censorship. In July 2010, major Chinese Internet portals reportedly shut down the blogs of at least 100 prominent scholars, lawyers, and activists. In 2010, according to Reporters Without Borders, 30 reporters and 74 \"cyber dissidents\" were in prison in China.\nMany international English news sites, such as the WashingtonPost.com , NYTimes.com , CNN.com , and Voice of America (English) are generally not jammed, while many Internet users in China circumvent government filtering through the use of proxy servers or virtual private networks using special software. Such methods have enabled many Chinese to access Twitter—dissident artist Ai Weiwei was an avid user before his arrest—despite government censorship of the site.\nThe state has the capability to block news of events and to partially shut down the Internet. In the Xinjiang Uighur Autonomous Region, following the ethnic unrest that erupted there in July 2009, the government blocked the Internet for ten months. Nonetheless, the sheer volume of information on the Internet means that the state often acts after news is already disseminated, if only fleetingly, online.\nBulletin and comment boards, chat rooms, blogs, and social networking and other outlets have allowed for an unprecedented amount of information and public comment on social issues. Although periodically blocked by the government, blogs have daringly pushed the limits of public discourse. Twitter and domestic micro-blogging sites helped to spread word about Nobel award winner Liu Xiaobo until government censors caught up with the online traffic. One study found that 61% of blogs carried \"critical\" opinions, including those related to society, government, corporations, and public figures, while 36% of blogs demonstrated \"pluralism\" or two or more different perspectives. The blogosphere reportedly has been an important forum for discussion about the ecological damage thought to have been caused by the Three Gorges Dam.\nInternet and cellular technologies have enhanced the abilities of activists and aggrieved citizens to assemble and to record and publicize social protests and the actions of government officials. In the summer of 2010, the Internet and cell phones helped disgruntled and striking workers throughout China to communicate domestically and internationally, expose human rights abuses, learn from each other's protest strategies, and research relevant labor laws. The threat of public exposure and condemnation reportedly has compelled some government officials to conduct affairs more openly. The PRC government has referred positively to the \"Internet's role in supervision.\" One report lists a growing number of cases in which large-scale \"Internet protests\" have resulted in the punishment of errant officials or retractions of policies. Several government departments have set up \"informant websites\" to facilitate the reporting of corrupt or negligent officials. Furthermore, official news outlets have become much quicker to report on news events, albeit the government's version of the stories, in order to respond to news that has been spread independently on the Internet.\nThe PRC government has displayed a growing nervousness about the Internet's influence on Chinese society and politics, although it has attempted to enact and enforce restrictions judiciously and selectively, and to induce self-censorship, in order to avoid provoking an uproar among China's online and foreign business communities. In recent years, the government has attempted to impose greater surveillance upon Internet users. Although this effort ostensibly has focused upon curtailing Internet pornography and other illegal content, it also has had a chilling effect on political content and discourse. New guidelines include requiring users to provide their real names and official identification numbers when they post online comments or patronize Internet cafes and public libraries. Applicants for \".cn\" domain names now must provide a color headshot photo as well as other forms of personal identification.\nInternet cafes are obligated to install software to track online activity, although they reportedly have been somewhat lax regarding obtaining personal information. The Ministry of Industry and Information Technology has increased pressure on Internet service providers to monitor the content and online activities of individuals and webmasters, including the transfer of state secrets. In May 2011, the PRC government created a new central agency, the State Internet Information Office, to better coordinate the myriad agencies that oversee the Internet in China.\nThe Internet has proven to be less of a political factor than many observers had expected or hoped. Users who mine the Internet for political information reportedly make up a small minority, and between 2% and 8% of Internet users in China access proxy servers to get around government-erected firewalls. For many of China's educated elite who frequent English-language sites, the availability of foreign news to a minority of Chinese citizens is not nearly as critical as the ability to seek political change on the basis of such information. Such ability remains substantially curtailed. Furthermore, some analysts suggest that the limited amount of Internet freedom in China defuses political activism by allowing people to vent their opinions online. Finally, many Chinese Internet users support the idea of censorship, particularly the government's efforts to ban online pornography, gambling, illegal commerce, phishing, and spam. Nonetheless, the State Department reported that in the past year, a small community of dissidents and political activists \"continued to use the Internet to advocate and call attention to political causes such as prisoner advocacy, political reform, ethnic discrimination, corruption, and foreign policy concerns.\"", "In January 2010, Google, at the time the second-most popular search engine in the PRC after China's Baidu , and reportedly the least censored, claimed that Chinese hackers had attacked its Gmail service and corporate network as well as the computer systems of many other large U.S. corporations in the PRC. Google's chief legal officer announced that the company would no longer censor results on Google.cn, even if that meant having to shut down its search engine, and potentially its offices, in China. The PRC government accused Google of violating a written promise to filter its search engine and abide by Chinese laws, after the company began re-routing users automatically to its Hong Kong site, which Google does not censor.\nIn July 2010, China renewed Google's license, after the company set up a link on its landing page to its Hong Kong search engine, rather than continuing to automatically re-direct Chinese customers to the Hong Kong site. Although Google does not censor its Hong Kong search engine, the PRC government can block sites or search results that it deems undesirable for Internet users in mainland China. Some analysts regarded this as a compromise—Google can still be accessed in China (through Hong Kong), but there is no direct link to the Hong Kong site. Google's share of China's search-engine market fell to 19.6% in the fourth quarter of 2010 from 30% a year earlier, according to research company Analysys International. Baidu's market share rose to 75.5% from 58% at the end of 2009. In June 2011, Google claimed that hackers likely originating in China attempted to access hundreds of Gmail accounts, including those of U.S. government officials. The PRC government denied involvement in both the 2009 and 2011 hacking incidents.", "The state directly controls the largest mass media outlets, pressures other media enterprises regarding major or sensitive stories, and imposes severe measures against its critics. However, overall, the PRC government exercises less control over news and information than it did a decade ago, and in the past year, the \"range of permissible public discourse continued to expand, with significant exceptions.\" One scholar characterizes state control of the media as evolving from one of \"omnipresence to selective enforcement.\" The greater volume and variety of news reporting has not translated into fundamental advances in freedom of expression, but nor have new regulations and policies affecting journalists and other critical voices significantly curbed the flow of information, thanks in large part to the Internet. In some cases, the government has supported journalistic efforts to expose official corruption and incompetence, particularly at the local level. The press has become more open about issues related to food safety, highlighted the challenges facing social organizations, lawyers, petitioners, and Internet users, and documented and broached sensitive issues, such as social unrest, abuses of detainees, and the network of black jails.\nIncreasingly commercialized media outlets negotiate a delicate balance between responding to growing public demands for information and remaining within the bounds of what authorities will allow and advertisers will support. Under the economic reform policies of the past two decades, a burgeoning private media industry has developed, pushing the limits of social, cultural and, to a small extent, political content. Traditional state media have had to provide more probing and provocative fare in order to attract readers, stay competitive, and respond to news and public opinion appearing on the Internet. The chief editor of a major official publication explained that he is pressured by both the market and his Communist Party bosses: \"I live between them. But the market has a bigger and bigger influence.\" However, another study suggests that reporting that is too provocative may risk not only government sanction but also a loss of advertising revenue.\nThe tug-of-war between the state's attempts to maintain social and political control, on the one hand, and, on the other hand, society's demand for news and information, is likely to continue. China's leaders still view the ultimate duty of reporters and the mass media as serving the state. In 2010, new requirements for journalists included knowledge of \"Communist Party journalism and Marxist views of news.\" The state intimidates journalists and authors through criminal prosecution and civil lawsuits, as well as violence, detention, and other forms of harassment. Newspaper editors continue to face possible punishment for publishing major stories of controversy. In March 2010, the top editor of the independent Economic Observer was dismissed after sponsoring an editorial published in 13 newspapers, including his own, that was critical of China's household registration system ( hukou ), which restricts migration within the country.\nGrowing numbers of Internet users reportedly are chafing against information controls and expressing such frustrations online. Journalists are increasingly willing to speak out in support of their right to report stories, if not \"press freedom\" per se, particularly regarding corporate scandals and, occasionally, local corruption. In one survey, while 40% of journalists in a sample believed that the news media should play a watchdog role, only 19% believed that the their organization emphasized this function. In October 2010, a group of prominent Party elders posted an open letter online calling for the end to restrictions on speech and the press.", "The extent of religious freedom and activity in China varies widely by region and jurisdiction. Hundreds of millions of Chinese openly practice one of five officially recognized religions (Buddhism, Protestantism, Roman Catholicism, Daoism, and Islam) and religious organizations are playing growing roles in providing social and charitable services. The PRC Constitution protects \"normal\" religious activities and those that do not \"disrupt public order, impair the health of citizens or interfere with the educational system of the state.\" The government officially disapproves of religious groups that are not incorporated into official bodies. Although in many localities, unsanctioned religious congregations receive little state interference, they still are vulnerable to arbitrary restrictions and possible shutdown by authorities. The PRC government imposes especially draconian policies and measures upon many unofficial Christian churches, Tibetan Buddhists, Uighur Muslims, and Falun Gong practitioners, largely due to the potential for these groups to become independent social forces and cultivate foreign support. The Department of State has identified China as a \"country of particular concern\" (CPC) for \"particularly severe violations of religious freedom\" for 12 consecutive years (2000-2011).", "Despite restrictions, Christian worship has continued to grow. According to some estimates, roughly 30 million Chinese Christians worship in state-sanctioned, \"official\" churches, while over 70 million Chinese practice their faith in unregistered, mostly Protestant congregations. Unofficial churches, or \"house churches,\" lack legal protections and remain highly vulnerable to human rights abuses by local officials. In some areas, particularly in the more affluent southeastern provinces, many unofficial congregations reportedly experience little state interference. In other areas, however, such groups often face harassment by government authorities, their leaders have been beaten, detained, and imprisoned, and their properties have been destroyed.\nMany problems involving house churches stem from ambiguities over registration requirements and distrust between unofficial congregations and the State Administration for Religious Affairs. Many Chinese Protestants have rejected the official church, known as the Three Self Patriotic Movement, for political or theological reasons, while some house churches claim that their attempts to apply for official status have been rejected by the local religious affairs bureau. In some cases, government officials have claimed that foreign missionaries have discouraged unofficial churches from registering with the state. Catholics in China are divided between those who follow the Pope and those who belong to the official Chinese Catholic Patriotic Association , which does not recognize the Pope's authority. Beijing and the Vatican have long been at odds regarding which side has the authority to appoint bishops, although most Chinese bishops have received approval from both Beijing and the Holy See.\nAccording to ChinaAid, an organization that monitors human rights abuses against Christians in China, the persecution of Christians has worsened for five consecutive years, and the number of Christians arrested soared by nearly 43% (from 389 to 556 people), between 2009 and 2010. In the past year, PRC authorities reportedly temporarily detained over 500 members of unofficial churches and stepped up efforts to prevent unsanctioned congregations from worshipping. At least 40 unregistered Chinese bishops reportedly are under surveillance, in hiding, in detention, confined to their homes, or have disappeared. Beijing authorities refused to allow the 1,000-member Shouwang Protestant church, one of the largest unofficial congregations in China, to occupy the premises that it purchased in 2009, and in April 2011 evicted the congregation from its rented space. The government has placed some Shouwang church leaders under house arrest and detained members who have attempted to gather outside on Sundays.", "Many Tibetans have long resented PRC political controls and intrusions into their religious beliefs and practices. Other sources of grievance for Tibetans include the loss of their traditional culture and language, the domination of the local economy by Han Chinese (the majority ethnic group in China), limitations on international contacts, and the adverse environmental effects of Beijing's development projects in the region. Han Chinese form a minority in the Tibet Autonomous Region (TAR), about 8% of the total population of roughly 3 million people, but constitute about half of the population of Lhasa, the Tibetan capital. Many Han Chinese believe that the PRC government has brought positive economic and social development to the region.\nOn March 11, 2008, the 49 th anniversary of the 1959 Tibetan uprising against Chinese rule, 300 Buddhist monks demonstrated peacefully to demand the release of Tibetan prisoners of conscience. These demonstrations sparked others by monks and ordinary Tibetans demanding independence from China or greater autonomy, one of the most sensitive political issues for Beijing. On March 15, demonstrations in Lhasa turned violent as Tibetan protesters confronted PRC police and burned Han shops and property. Other Tibetan protests erupted in Tibetan areas of neighboring Gansu, Qinghai, and Sichuan provinces. Official PRC news sources, emphasizing Han Chinese casualties, reported that 19 persons died in the riots. The government blamed the Dalai Lama, the exiled Tibetan spiritual leader, for instigating the riots and labeled his followers \"separatists.\" From India, where he is based, the Dalai Lama denied involvement and appealed to both the Chinese government and his followers to refrain from violence.\nIn the aftermath of the unrest, an estimated 100 to 218 persons were killed in Tibet and other Tibetan areas, likely in conflicts with PRC security forces, and 76 people, mostly Tibetans, were sentenced to prison terms ranging from three years to life. In 2010, there reportedly were 824 known Tibetan prisoners of conscience. The government also expanded and intensified \"patriotic education\" campaigns in monasteries and nunneries.\nChina's leaders have bolstered efforts to spur economic development in Tibet, provide greater economic opportunities for Tibetans, and improve social services. However, they have displayed little, if any, flexibility on the questions of greater autonomy and religious freedom. Some Chinese scholars and lower level officials reportedly have continued to criticize government policies in Tibetan regions.\nThe eighth round of dialogue between Beijing and envoys of the Dalai Lama since 2002, which took place in November 2008, failed to bring about any fundamental progress on the issue of greater autonomy for Tibet. The ninth round took place in January 2010, with the Dalai Lama's representatives pledging respect for the authority of the Chinese central government, but continuing to push for \"genuine autonomy\" for the Tibetan people within China. Both sides indicated that the meetings produced no breakthroughs.\nThe government clampdown on the Kirti Tibetan monastery in Sichuan province reportedly continues following unrest there earlier in the year. In April 2011, PRC security forces sealed off the monastery and cultural center after a monk there set himself on fire in protest against government policies toward Tibetans. Police reportedly detained 300 monks and forcefully dispersed local Tibetans who attempted to prevent them from being taken into custody, resulting in the deaths of two elderly people.\nIn April 2011, Tibetan exiles in India elected a Harvard academic, Lobsang Sangay, as their new prime minister. He is expected to assume some of the political duties of the Dalai Lama, who announced his retirement from his political role in March 2011, although the Dalai Lama's representatives will continue to represent the Tibetan exiles in the dialogue with Beijing. The Chinese government has vowed not to conduct any talks with the new prime minister and his government, arguing that they represent an illegal organization.", "According to some experts, most Muslim communities in the western Ningxia Hui Autonomous Region, and Gansu, Qinghai, and Yunnan Provinces coexist relatively peacefully with non-Muslims and experience little conflict with local authorities. However, social and political tensions and harsh religious policies have long plagued China's far northwestern Xinjiang Uighur Autonomous Region (XUAR), which is home to 8.5 million Uighur Muslims, a Turkic ethnic group. Once the predominant group in the region, they now constitute an estimated 40% of its population as many Han Chinese have migrated there, particularly to the capital, Urumqi. Uighurs and human rights groups have complained of PRC religious policies that restrict the training and role of imams, the celebration of Ramadan, and participation in the hajj . Uighur children are forbidden from entering mosques and government workers and teachers are not allowed to openly practice Islam. Other grievances include a loss of ethnic identity, economic discrimination, and a lack of democracy. Government efforts to demolish the old city of Kashgar, ostensibly to build new housing and improve public safety, have angered many Uighurs. Many long time Kashgar residents, who say they have not been adequately consulted on the redevelopment plans, argue that the policy is aimed at controlling the local population. Many Han Chinese agree with government assertions that PRC policies have benefitted Uighurs, that Muslims receive preferential treatment due to special policies toward minority groups, and that firm policies are necessary to prevent terrorism.\nThe Chinese government fears not only Uighur demands for greater religious freedom but also Uighurs' links to Central Asian countries and foreign Islamic organizations. The Chinese government claims that the East Turkestan Islamic Movement (ETIM), a Uighur organization that advocates the creation of an independent Uighur Islamic state, has been responsible for small-scale terrorist attacks in China and has ties to Al Qaeda. ETIM is on the United States' and United Nations' lists of terrorist organizations. Due to perceived national security-related concerns, the PRC government has imposed stern constraints on the religious and cultural practices of Uighurs in Xinjiang, often conflating them with subversive activities or the \"three evils of religious extremism, splittism, and terrorism.\"\nOn July 5, 2009, an estimated several hundred to a few thousand Uighur demonstrators gathered peacefully in Urumqi to demand that PRC authorities prosecute those responsible for the deaths of two Uighur men involved in a brawl between Han and Uighur factory workers in Guangdong province. Paramilitary police reportedly attacked the demonstrators after they refused to disperse, which eventually provoked a riot and acts of violence against government property, Han residents, and Han shops. In response, bands of Han Chinese sought retribution against Uighurs.\nThe Chinese government blamed Uighur \"separatists\" and exile groups for planning the riots, particularly the World Uygur Congress led by exiled Uighur leader and former PRC political prisoner Rebiya Kadeer. The Xinjiang government reported nearly 200 deaths, about two-thirds of them Han, and 1,700 people injured. The State Department reported that at the end of 2010, 26 people had been sentenced to death and nine received suspended death sentences. Of these individuals, three were Han and the rest Uighur.\nFollowing the July 2009 unrest, the government further restricted speech, assembly, religious activity, information, and international communication in Uighur areas, including blocking Internet access for ten months. The Xinjiang government also has intensified the use of Mandarin in schools. Over 1,000 people in Xinjiang, including Uighur journalists and webmasters who had published sensitive information, reportedly have been arrested in the past two years on charges related to state security. The whereabouts of 20 Uighur asylum seekers repatriated from Cambodia to China remained unknown at the end of 2010. Government efforts to address social instability in Xinjiang have focused upon economic development and cultural preservation, rather than religious and political freedoms.", "Falun Gong combines an exercise regimen with meditation, moral values, and spiritual beliefs. The practice and beliefs are derived from qigong , a set of movements said to stimulate the flow of qi — vital energies or \"life forces\"—throughout the body, and Buddhist and Daoist concepts. The spiritual exercise reportedly gained tens of millions of adherents across China in the late 1990s. On April 25, 1999, thousands of practitioners gathered in Beijing to protest the government's growing restrictions on their activities. Following a crackdown that began in the summer of 1999 and deepened in intensity over a period of roughly two years, the group, which the government labeled a dangerous or \"evil\" cult, ceased to practice or demonstrate in the open. Nonetheless, government efforts to suppress the group continued. Overseas Falun Gong organizations reported that the government intensified its persecution of Falun Gong during the period of the 2008 Olympics and 2009 Shanghai World Expo. Many practitioners who did not renounce their beliefs reportedly were held in reeducation through labor camps and subjected to torture and other abuses.\nAccording to the Congressional-Executive Commission on China, citing CCP documents, the PRC government has launched a three-year campaign (2010-2012) to \"transform\" Falun Gong adherents, calling upon local governments, Party organizations, businesses, and individuals to step up efforts to reeducate practitioners and persuade or compel them to denounce their beliefs. Gao Zhisheng, a rights lawyer who had defended Falun Gong adherents, was apprehended by PRC police in 2009 and remains missing. Another lawyer who had defended Falun Gong practitioners, Wang Yonghang, was sentenced to seven years in prison on the charge of \"using a cult organization to undermine the implementation of the law.\"\nAccording to some sources, Falun Gong adherents constitute an estimated two-thirds of all prisoners and detainees of conscience in China, or roughly 15,000 people. Since 1999, over 6,000 Falun Gong adherents reportedly have served time in prison. During the initial crackdown on the group, the proportion of Falun Gong adherents in reeducation through labor camps may have been as high as one-quarter to one-half of all RTL inmates, or 70,000 to 125,000 people. Estimates of the number of those who died in state custody have ranged from several hundred to a few thousand. Falun Gong groups claim to have documented nearly 3,500 deaths in custody between 1999 and 2011, and they assert that the number of undocumented cases could be much higher. These deaths have been concentrated in seven provinces—Heilongjiang, Hebei, Liaoning, Jilin, Shandong, Sichuan, and Hubei.", "", "Daily incidences of social unrest in China highlight the rising rights consciousness of PRC citizens, widening disparities of income and power stemming from rapid economic change, and the inability of China's political institutions and legal system to adequately resolve social grievances. The government has applied a carrot-and-stick approach toward disgruntled social groups, often sympathizing with them and pressuring local authorities to give in to some demands, while arresting protest leaders, intimidating activists, and thwarting linkages among them. The developing rights awareness of many Chinese citizens, combined with small but passionate networks of lawyers, journalists, and activists, suggests that social pressures for advancing human rights are likely to continue.\nIn the past decade, major types of social unrest have included the following: state-owned enterprise workers demonstrating against layoffs; migrant laborers protesting lack of pay; farmers objecting to unfair taxation and usurious fees, confiscation of land for development projects, and loss of agricultural land due to environmental degradation; and homeowners opposing forcible evictions related to urban development. In cases of land confiscation and home evictions, much popular anger has been directed at collusive deals between local officials and private investors and the lack of fair compensation to ordinary citizens.\nRelatively new sources of social unrest have included farmers claiming ownership of land; the closing of thousands of factories due to climbing labor and energy costs and the rising value of the Chinese currency; consumer price inflation; and coercive enforcement of the one-child policy. Another potential source of unrest is the high unemployment rate among recent college graduates in China, which is estimated to be around 26%. Resentment toward government restrictions of ethnic and religious practices, anger against the economic dominance of Han Chinese, and the lack of political participation remain deep-seated problems in Tibet and Xinjiang. In May 2011, student demonstrations broke out in Inner Mongolia over the deaths of two Mongolians involved in earlier protests.\nSo far, numerous but scattered social protests have not evolved into broad-based political movements. Rather than perceiving local problems in national, political terms, aggrieved citizens generally have demonstrated against local officials and enterprise managers for not acting in accordance with the law, while often viewing central government leaders as well-intentioned. When protest groups have attempted to join forces, China's leaders have quashed such linkages.\nAlthough generally supportive of the status quo, the urban middle class has begun to engage in narrowly targeted demonstrations. The growing involvement of the middle class is potentially significant, given their effectiveness in organizing and articulating interests and their importance to the central government's legitimacy. However, the middle class has demonstrated a reluctance to identify and join forces with other social strata.", "Many political theorists and policy makers have argued that the growth of the middle and entrepreneurial classes in developing market economies creates pressures for democracy. According to these hypotheses, demands for rights and democracy stem from desires to protect economic interests and political influence, a growing sense of entitlement, and confidence in their capacity to affect or participate in decision-making. However, some studies suggest that social groups in China that have benefitted from economic reforms value incremental over dramatic or potentially disruptive political change. Many members of China's rising middle class, who are predominantly educated city dwellers, have displayed either a lack of interest in politics or a preference for political stability rather than rapid reform. They have been careful not to jeopardize their hard-won economic gains, and have expressed some fear of grassroots democracy.\nFindings based upon surveys of urban Chinese indicate that the middle class is assertive about clean and responsive government and politically aware but also dependent upon the state for its economic well-being and somewhat politically conservative. According to one survey, urban residents can be critical of the state regarding economic issues, but they are not prone to agitate for democracy if they perceive their economic needs as being served. Although members of the China's middle class support civil liberties, they are not especially interested in exercising political rights through multi-party elections. They are less inclined than other classes to participate in demonstrations and more inclined to accept government decision-making. However, they are supportive of existing, somewhat informal processes of contacting and petitioning local officials.\nAccording to recent studies conducted by a government think tank, the Chinese Academy of Social Sciences, the Chinese middle class, which comprises nearly 25% of the population according to some estimates, is especially critical of political corruption and crony capitalism which affect their economic opportunities. The middle class wants access to information, to feel that its voice is being heard, and opportunities to engage in social action. But it also is defensive about China's achievements and resentful of international criticism. Similarly, many Chinese youth reportedly are liberal in outlook and assertive regarding their rights, but also are career-oriented, politically pragmatic, and fiercely patriotic. Although Chinese youth often are critical of their own government, many are quick to reject Western criticism of their country.\nRather than asserting its independence from the state, China's business sector has remained heavily dependent upon it. Many entrepreneurs seek close relations with government agencies that ensure their survival. The Chinese Communist Party, in turn, has welcomed business persons into the Party. The PRC government wields influence over the private sector not only through its authority over business transactions, but also through its controls over many other areas of the economy, such as finance and property. Furthermore, the weakness of China's legal system means that many business persons must seek relations with government officials in order to protect their assets or enforce contracts. According to several studies, private entrepreneurs favor strengthening the legal system and support long-term political reform, but also value social stability and are satisfied with the current, slow pace of change.", "In the past two decades, successive U.S. administrations have developed a comprehensive array of tactics and programs aimed toward promoting democracy, human rights, and the rule of law in China, but their effects have been felt primarily along the margins of the PRC political system. The U.S. government has pressured China from without through monitoring and openly criticizing the country's human rights record and calling upon the PRC leadership to honor the rights guaranteed in its constitution, bring its policies in line with international standards, release prisoners of conscience, and undertake political reforms. Washington also has supported programs within China that aim to strengthen the rule of law, civil society, government accountability, and labor rights. It has supported U.S.-based NGOs and Internet companies that monitor human rights conditions in China and help enable Chinese Internet users to access Voice of America, Radio Free Asia, and other blocked websites.\nSome experts argue that diplomatic and economic engagement with China have failed to set any real political change in motion. In this context, some observers believe, U.S. efforts to promote democracy and human rights have been largely ineffectual. Many policy makers suggest that tangible improvements in PRC human rights policies should be a condition for full diplomatic and economic relations with China as well as cooperation on other issues. Other observers counter that Washington has little direct leverage on China's internal policies, and that U.S. engagement and human rights efforts have helped to set conditions in place that are conducive for progress. They contend that sanctions and linking bilateral cooperation to PRC improvements in human rights have not been very effective.", "Many U.S. experts and policy makers have disagreed over the best policy approaches, priorities, and methods to apply toward promoting democracy and human rights in China. Differing U.S. goals include effecting fundamental political change in China, on the one hand, and supporting incremental progress, on the other. Possible approaches range from placing human rights conditions upon the bilateral relationship to inducing change through bilateral and international engagement. Policy tools include private discussions; sanctions; open criticism of PRC human rights policies; coordinating international pressure; support of and contact with dissidents; bilateral dialogue; human rights, democracy, and related programs in the PRC; promoting Internet freedom; public diplomacy efforts; and monitoring and highlighting human rights abuses.", "Many U.S. sanctions on the PRC in response to the Tiananmen military crackdown in 1989 remain in effect, including some foreign aid-related restrictions, such as required \"no\" votes or abstentions by U.S. representatives to international financial institutions regarding loans to China (except those that meet basic human needs). Since 2004, Congress has required that U.S. representatives to international financial institutions support projects in Tibet only if they do not encourage the migration and settlement of non-Tibetans into Tibet or the transfer of Tibetan-owned properties to non-Tibetans. Foreign operations appropriations measures have prohibited assistance to the United Nations Population Fund from being used to support related programs in China.", "Some analysts argue that the U.S. government should take principled stands against China's human rights abuses more frequently, openly, and forcefully, while others believe that such methods can undermine human rights efforts. Many prominent dissidents and former prisoners of conscience have claimed that international pressure or attention protected them from harsher treatment by PRC authorities. While some members of civil society groups have welcomed a more assertive U.S. human rights policy, others have cautioned that the Chinese government often has restricted their activities when they were viewed as tied to foreign democracy efforts.\nIn some cases, the PRC government has made small concessions in order to help reduce or avoid open U.S. or global criticism. Some analysts suggested that Beijing's agreement to restart the U.S.-China human rights dialogue in 2008 was linked to the U.S. State Department's decision not to include the PRC in a list of \"worst human rights violators.\" In other cases, the Chinese leadership has reacted angrily or responded in a \"tit for tat\" manner when the U.S. government has publicly denounced its human rights policies, as when Beijing suspended the human rights dialogue in 2004 after the Bush Administration sponsored an unsuccessful U.N. resolution criticizing China's human rights record.", "Congressional actions publicizing China's human rights violations have included numerous resolutions, bills, hearings, and visits to the PRC. Various resolutions have called attention to the imprisonment and detention of political, religious, and minority figures; persecution of Tibetans, Uighurs, and Falun Gong adherents; censorship of the Internet and other mass media; coercive abortions; and China's deportation of North Korean refugees. Some bills have aimed to restrict U.S.-China trade on the basis of PRC human rights abuses. In July 2008, Representatives Chris Smith and Frank Wolf traveled to Beijing in an effort to discuss human rights issues with PRC and U.S. officials. They also attempted to meet with several Chinese human rights lawyers, whom PRC security personnel prevented from seeing the congressmen.\nIn the 112 th Congress, among other actions, Representative Chris Smith introduced the China Democracy Promotion Act of 2011 ( H.R. 2121 ), \"To deny the entry into the United States of certain members of the senior leadership of the Government of the People's Republic of China and individuals who have committed human rights abuses in the People's Republic of China, and for other purposes.\" Senator Robert Menendez introduced a resolution calling for an end to the persecution of Falun Gong practitioners in China ( S.Res. 232 ). On May 13, 2011, the Subcommittee on Africa, Global Health, and Human Rights of the House Committee on Foreign Affairs held a hearing entitled \"China's Latest Crackdown on Dissent.\" Representative Kevin Brady has publicly called for the release of U.S. citizen Xue Feng, a constituent from Houston, who remains imprisoned in China.", "The PRC remains highly sensitive to foreign criticism, but has often been able to employ its soft power—diplomatic and economic influence—in international fora in order to reduce international pressure to improve its human rights policies. The United Nations Human Rights Council was formed in 2006 to replace the U.N. Commission on Human Rights (UNCHR), which had been faulted for being unduly influenced by non-democratic countries. The United States had sponsored several resolutions at the UNCHR criticizing China's human rights record, but none were successful; China was able to thwart voting on most resolutions through \"no-action motions.\" The Bush Administration had opposed the formation of the Council and declined to become a member, arguing that it did not offer improvements over the UNCHR and that it placed too much focus on Israel. The Obama Administration sought and was granted a seat on the Human Rights Council in June 2009.\nThe United Nations established the Universal Periodic Review (UPR) mechanism by which the Human Rights Council would assess the human rights records of all U.N. members once every four years. The UPR Working Group conducted a periodic review of China in February 2009. Representatives of some countries voiced serious concerns about China's human rights record, while representatives of some developing and non-democratic countries expressed support of China. The United States participated as an observer, but not yet a member, of the Council during China's review.", "The U.S.-China human rights dialogue was established in 1990. It is one of eight government-to-government dialogues between China and other countries on human rights. Beijing formally suspended the process in 2004 after the Bush Administration sponsored an unsuccessful U.N. resolution criticizing China's human rights record. The talks were resumed in May 2008, the first round in six years.\nThe Obama Administration has participated in two rounds, the fourteenth round held in May 2010 in Washington and the fifteenth round in May 2011 in Beijing. Both were co-chaired by U.S. Assistant Secretary of State for Democracy, Human Rights, and Labor Michael Posner and PRC Ministry of Foreign Affairs, Department of International Organizations Director General Chen Xu. In the 2010 meetings, topics included Chinese political prisoners, freedom of religion and expression, labor rights, the rule of law, and conditions in Tibet and Xinjiang. The Chinese delegation also visited the U.S. Supreme Court and were briefed on ways in which human rights issues are handled in the United States. During the 2011 talks, Assistant Secretary Posner raised the Obama Administration's deep concerns about the PRC crackdown on rights defenders and government critics. Discussions of China's \"backsliding\" on human rights reportedly dominated the talks, which the U.S. side described as \"tough\" and Chinese officials portrayed as \"frank and thorough.\" Posner characterized the dialogue process, however, as a forum for candid discussion, not negotiation.\nAlthough no breakthroughs or concrete outcomes were reported during the latest rounds, Administration officials have continued to perceive the dialogue as an important means by which to emphasize and reiterate U.S. positions on human rights issues. They have suggested that, given the deep disagreements on human rights and other contentious issues, the holding of the dialogue and the agreement to continue them represent positive steps. Furthermore, some observers have contended, the absence of the dialogue would undermine other U.S. efforts to promote human rights in China.\nSome analysts have expressed concern that separating the human rights dialogue from the comprehensive Security and Economic Dialogue (S&ED) has marginalized human rights issues. Some human rights experts have argued that the talks, which the PRC government has referred to as serving to \"enhance mutual understanding,\" enable Beijing to deflect international criticism on human rights. They have suggested that the dialogue should be more transparent and made conditional upon measurable human rights improvements in China.", "During the past decade, the U.S. Department of State and the U.S. Agency for International Development (USAID) have administered a growing number and range of programs in China using foreign assistance funds. Between 2001 and 2010, the United States government authorized or made available nearly $275 million for such programs, of which $229 million was devoted to human rights, democracy, rule of law, and related activities, Tibetan communities, and the environment. U.S. program areas include the following: promoting the rule of law, civil society, and democratic norms and institutions; training legal professionals; building the capacity of judicial institutions; reforming the criminal justice system; supporting sustainable livelihoods and cultural preservation in Tibetan communities; protecting the environment; and improving the prevention, care, and treatment of HIV/AIDS in China. The direct recipients of State Department and USAID grants have been predominantly U.S.-based non-governmental organizations and universities.", "Established by the U.S. government in 1983 to promote freedom around the world, the National Endowment for Democracy (NED) is a private, non-profit organization that receives an annual appropriation from Congress. NED has played a major role in promoting democracy in China since the mid-1980s. Activities of NED and its core institutes include supporting Chinese pro-democracy organizations in the United States and Hong Kong, helping to advance the rule of law in China, promoting the rights of workers and women, and assisting the development of Tibetan communities. The Endowment's China programs have received support through the annual foreign operations appropriation for NED (an estimated $118 million in FY2010) and congressional earmarks to NED for democracy-related programs in the PRC and in Tibet. In addition, the Department of State has provided direct grants to NED's core institutes.", "The U.S. government has encouraged PRC adherence to international labor standards. U.S. officials monitor PRC compliance with the 1992 U.S.-China Memorandum of Understanding and 1994 Statement of Cooperation on safeguarding against the export of products made by prison labor. In 2000, the law granting permanent normal trade relations (PNTR) status to China authorized the Department of Labor to establish programs to promote rule of law training and technical assistance related to the protection of worker rights. Since 2002, the Department of Labor has supported the following activities in China: rule of law development, labor rights, legal aid, labor dispute resolution, mine safety, occupational safety and health, and HIV/AIDS education. In addition, the governments of the United States and China, including the U.S. Departments of State and Labor, the PRC Ministry of Human Resources and Social Security, and the All China Federation of Trade Unions, have conducted exchanges and discussions on wage and hour (payroll) administration, unemployment insurance, pension security, labor market statistics, law enforcement, collective bargaining, and other issues.", "The U.S. government has undertaken efforts to promote Internet freedom, particularly in China and Iran. In 2006, the Bush Administration established the Global Internet Freedom Task Force (GIFT). Continued under the Obama Administration, GIFT's duties are to monitor Internet freedom around the world; respond to challenges to Internet freedom; and expand global access to the Internet. Congress appropriated $50 million for global Internet freedom efforts between 2008-2010 and $20 million in 2011. Program areas include censorship circumvention technology, Internet and mobile communications security, media training and advocacy, and public policy. The principal or target countries of such efforts are China and Iran. The Broadcasting Board of Governors supports counter-censorship technologies that help enable Internet users in China, Iran, and other countries to access Voice of America and other censored U.S. governmental and non-governmental websites. In March 2010, representatives Chris Smith and David Wu launched the Global Internet Freedom Caucus to promote online freedom of information and expression, followed by the founding of the Senate Global Internet Freedom Caucus, chaired by Senators Ted Kaufman and Sam Brownback. On April 6, 2011, the Global Online Freedom Act of 2011 ( H.R. 1389 ) was introduced, \"To prevent United States businesses from cooperating with repressive governments in transforming the Internet into a tool of censorship and surveillance, to fulfill the responsibility of the United States Government to promote freedom of expression on the Internet, to restore public confidence in the integrity of United States businesses, and for other purposes.\"", "U.S. public diplomacy programs expose Chinese educated elites and youth to U.S. politics, society, culture, and academia; sponsor exchanges; and promote mutual understanding. According to the Department of State, approximately one-third of all Chinese citizens participating in U.S.-sponsored professional exchange programs work in field related to democracy, rights, and religion. In 2009, 541 U.S. citizens and 948 PRC citizens participated in U.S. educational and cultural and exchange programs.", "The Voice of America (VOA) and Radio Free Asia (RFA) provide external sources of independent or alternative news and opinion to Chinese audiences. The two media services play small but unique roles in providing tastes of U.S.-style broadcasting, journalism, and public debate in China. VOA, which offers mainly U.S. and international news, and RFA, which aims to serve as a source for domestic news that Chinese media are prevented by censorship from covering, often have reported on critical world and local events to Chinese audiences. The PRC government regularly jams and blocks VOA and RFA Mandarin, Cantonese, Tibetan, and Uighur language broadcasts and Internet sites, while VOA English services receive less interference. Both VOA and RFA are making efforts to upgrade their Internet services and circumvention or counter-censorship technologies.\nSurveys commissioned by the Broadcasting Board of Governors (BBG) have confirmed that its reach in China is relatively narrow but significant. Based upon 2009 data, the BBG estimates that roughly 0.1% of China's population listens to or views VOA radio, television, and Internet programs, or about 1.3 million people weekly. VOA \"Special English\" international news programs, aimed at intermediate learners of English, are popular with many young, educated, and professional Chinese. RFA's more targeted, politically oriented audience is estimated to be one-third to one-half of VOA's. Among foreign broadcasters, Phoenix (Hong Kong) satellite television enjoys the greatest public awareness (46%), followed by VOA (12%). RFA is viewed in many dissident and ethnic minority communities in China as a vital source and outlet for news." ], "depth": [ 0, 1, 2, 2, 2, 3, 3, 1, 2, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 2, 3, 3, 3, 4, 3, 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 3, 3, 4, 3, 3, 3, 3, 3, 3, 3, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h3_title h1_full", "h3_full h1_full", "", "h3_full", "", "h3_full", "h2_title h1_title", "h2_full h1_full", "", "", "", "h0_full h2_title", "h0_full h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "h1_full", "", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What does this report examine?", "What human rights problems are in China?", "What groups are the victims of these problems?", "What has driven Chinese resistance to political reform?", "What do surveys suggest about Chinese people?", "How has Chinese society changed?", "What role does the mass media play in the changes in Chinese society?", "How has the PRC government responded to grievances?", "How effective has the PRC response been?", "What does PRC continue to do?", "What is the state of US foreign policy regarding China?", "What efforts has the US made in China?", "What funding has the US appropriated in China?", "How do policy makers feel about US efforts in China?" ], "summary": [ "This report examines human rights conditions in China, including the 2011 crackdown on rights activists and dissent; ongoing human rights abuses; recent PRC efforts to protect human rights; and the development of civil society.", "Ongoing human rights problems in China include the excessive use of violence by public security forces, unlawful detention, torture of detainees, arbitrary use of state security laws against political dissidents, coercive family planning policies, state control of information, and religious and ethnic persecution.", "Tibetans, Uighur Muslims, and Falun Gong adherents have been singled out for especially harsh treatment.", "The Chinese leadership's resistance to major political reform and fuller support of civil liberties has been driven largely by its fears of social unrest and political instability.", "Moreover, some public opinion surveys suggest that many Chinese people, while wanting greater freedoms, do not support rapid political change.", "Nonetheless, Chinese society has become more assertive. Incidents of social protests are frequent, numerous, and widespread. Economic, social, and demographic changes have given rise to labor unrest. PRC citizens have become increasingly aware of their legal rights, while emerging networks of lawyers, journalists, and activists have advanced the causes of many aggrieved individuals and groups.", "The mass media continues to push the boundaries of officially approved discourse, and the Internet has made it impossible for the government to restrict information as fully as before.", "The PRC government has attempted to respond to some popular grievances, develop the legal system, and cautiously support the expansion of civil society, while suppressing activists who attempt to organize mass protests and dissidents who openly question sensitive policies or call for fundamental political change.", "This approach has produced modest improvements in some human rights conditions, but also allowed for continued, serious abuses.", "In recent months, the government has intensified efforts to suppress legal activists, rights defenders, and other individuals and groups whom it has deemed to be threatening to social and political stability.", "The United States government has developed a comprehensive array of policy tools aimed toward promoting democracy, human rights, and the rule of law in China, but their effects have been felt primarily along the margins of the PRC political system.", "U.S. government efforts to promote human rights in China have included sanctions; openly criticizing PRC human rights policies and calling for the release of political prisoners; bilateral dialogue; \"quiet diplomacy;\" and hearings and investigations.", "The U.S. Congress has appropriated funding for democracy, human rights, rule of law, environmental, and other programs in China, including Tibet, and supported Internet freedom and public diplomacy efforts aimed at the PRC.", "Some policy makers contend that U.S. engagement with China has failed to produce meaningful political reform and improvements in human rights conditions. Other experts argue that engagement has helped to advance economic and social change in China, to develop social and legal foundations for democracy and human rights, and to open channels through which to directly communicate U.S. concerns." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 2, -1, 0, 0, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Composition of the Seasonal Farm Labor Force", "A Farm Labor Shortage?", "Underlying Assumptions", "Employment", "Unemployment", "Time Worked", "Hours Worked", "Days Worked", "Wages", "Conclusion" ], "paragraphs": [ "", "Questions often have arisen over the years about (1) whether sufficient workers are available domestically to meet the seasonal employment demand of perishable crop producers in the U.S. agricultural industry and (2) how, if at all, the Congress should change immigration policy with respect to farm workers. Immigration policy has long been intertwined with the labor needs of crop (e.g., fruit and vegetable) growers, who rely more than most farmers on hand labor (e.g., for harvesting) and consequently \"are the largest users of hired and contract workers on a per-farm basis.\" Since World War I, the Congress has allowed the use of temporary foreign workers to perform agricultural labor of a seasonal nature as a means of augmenting the supply of domestic farm workers. In addition, a sizeable fraction of immigrants historically have found employment on the nation's farms.\nMore recently, attention has focused on the growing share of the domestic supply of farm workers that is composed of aliens who are not authorized to work in the United States. The U.S. Department of Labor (DOL) estimated that foreign-born persons in the country illegally accounted for 37% of the domestic crop workforce in FY1994-FY1995. Shortly thereafter (FY1997-FY1998), unauthorized aliens' share of workers employed on crop farms reached 52%. By FY1999-FY2000, their proportion peaked at 55% before retreating somewhat to 53% in the first half of the current decade.\nAlthough a number of studies found that no nationwide shortage of domestic farm labor existed in the past decade, a case has been made that the considerable presence of unauthorized foreign-born workers in seasonal agriculture implies a lack of legal workers relative to employer demand. Arguably, the purported imbalance between authorized-to-work farm labor and employer demand would become more apparent were the supply of unauthorized workers curtailed sufficiently—a fear that has plagued growers for some time.\nCrop producers and their advocates have testified at congressional hearings and asserted in other venues that they believe the latest risk of losing much of their labor force comes from efforts by the Bureau of Citizenship and Immigration Services and the Bureau of Immigration and Customs Enforcement within the Department of Homeland Security (DHS) to step-up employment verification and enforcement activities, in concert with mailings of no-match letters by the Social Security Administration (SSA). Growers have asserted that these activities disrupt their workforces by increasing employee turnover and therefore, decreasing the stability of their labor supply. The perception that government actions negatively affect U.S. agriculture has prompted a legislative response in the past.\nThis report first examines the composition of the seasonal agricultural labor force and presents the arguments of grower and farm worker advocates concerning its adequacy relative to employer demand. The report next analyzes trends in employment, unemployment, time worked, and wages of authorized and unauthorized farm workers to determine whether they are consistent with the existence of a nationwide shortage of domestically available farm workers. The farm labor supply-demand situation by geographic area at peak harvest time is examined as well, to ascertain whether spot shortages might exist.", "Immigration legislation sometimes has been crafted to take into account the purported labor requirements of U.S. crop growers. In 1986, for example, Congress passed the Immigration Reform and Control Act (IRCA, P.L. 99-603 ) to curb the presence of unauthorized aliens in the United States by imposing sanctions on employers who knowingly hire individuals who lack permission to work in the country. In addition to a general legalization program, P.L. 99-603 included two industry-specific legalization programs—the Special Agricultural Worker (SAW) program and the Replenishment Agricultural Worker (RAW) program —that were intended to compensate for the act's expected impact on the farm labor supply and encourage the development of a legal crop workforce. These provisions of the act have not operated in the offsetting manner that was intended, however, as substantial numbers of unauthorized aliens have continued to join legal farm workers in performing seasonal agricultural services (SAS).\nOn the basis of case studies that it sponsored, the Commission on Agricultural Workers concluded in its 1992 report that individuals legalized under the SAW program and other farm workers planned to remain in the agricultural labor force \"indefinitely, or for as long as they are physically able.\" According to the DOL's National Agricultural Workers Survey, two-thirds of so-called SAWs stated that they intended to engage in field work until the end of their working lives.\nFor many SAWs, the end of their worklives—at least their worklives in farming—may now be near at hand. The diminished physical ability generally associated with aging in combination with the taxing nature of crop tasks could well be prompting greater numbers of SAWs to leave the fields. The Commission on Agricultural Workers noted that the typical SAW in 1990 was a 30-year-old male who \"is likely to remain in farm work well into the 21 st century,\" but DOL estimated the average age of SAW-legalized workers in 2007 was 47. Because relatively few farm workers are involved in crop production beyond the age of 44, and even fewer beyond the age of 54, it appears that the 1986 legalization program has become less useful over time in fulfilling the labor requirements of crop producers.\nA combination of factors likely has contributed to the decrease in SAWs' share of agricultural employment. While the share of IRCA-legalized farm workers has been falling over time due to aging and the availability of nonfarm jobs, the leading factor probably is the substantially increased presence of illegal aliens. In the first half of the 1990s, unauthorized workers rose from 7% to 37% of the SAS labor force. Their share climbed to 55% by FY1999-FY2000, before settling at 53% in FY2005-FY2006. Moreover, the number of SAS workdays performed by unauthorized aliens more than tripled between FY1989 and FY2002. In addition, of the many foreign-born newcomers to the sector in FY2000-FY2002, 99% were employed without authorization.\nUnauthorized aliens, arguably, have been displacing legal workers from jobs in the agricultural industry. Farm worker advocates assert that crop producers prefer unauthorized employees because they have less bargaining power with regard to wages and working conditions than other employees. Growers counter that they would rather not employ unauthorized workers because doing so puts them at risk of incurring penalties. They argue that the considerable presence of unauthorized aliens in the U.S. farm labor force implies a shortage of legal workers.\nFarm worker groups and some policy analysts contend that even if the previously mentioned DHS and SSA activities were to deprive farmers of many of their unauthorized workers, the industry could adjust to a smaller supply of legal workers by (1) introducing labor-efficient technologies and management practices, and (2) raising wages which, in turn, would entice more authorized workers into the farm labor force. Grower advocates respond that further mechanization would be difficult to develop for many crops and that, even at higher wages, not many U.S. workers would want to perform physically demanding, seasonal farm labor under variable climactic conditions. Moreover, employer representatives and some policy analysts maintain that growers cannot raise wages substantially without making the U.S. industry uncompetitive in world markets which, in turn, would reduce farm employment. In response, farm worker supporters note that wages are a small part of the price consumers pay for fresh fruits and vegetables and accordingly, higher wages would result in only a slight rise in retail prices. These remain untested arguments as perishable crop growers have rarely, if ever, had to operate without unauthorized aliens in their workforces.", "Trends in the farm labor market generally do not suggest the existence of a nationwide shortage of domestically available farm workers, in part because the government's statistical series cover authorized and unauthorized workers. This overall finding does not preclude the possibility of spot shortages of farm labor in certain areas of the country at various times of the year.\nCaution should be exercised when reviewing the statistics on farm workers' employment, unemployment, time worked and wages that follow. The surveys from which the data are derived cover somewhat different groups within the farm labor force (e.g., all hired farm workers as opposed to those engaged only in crop production or workers employed directly by growers as opposed to those supplied to growers by farm labor contractors), and they have different sample sizes. A household survey such as the Current Population Survey (CPS) could well understate the presence of farm workers because they are more likely to live in less traditional quarters (e.g., labor camps) and of unauthorized workers generally because they may be reluctant to respond to government enumerators. And, some of the surveys have individuals as respondents (e.g., the CPS and DOL's National Agricultural Workers Survey) while others have employers as respondents (e.g., the U.S. Department of Agriculture's National Agricultural Statistics Service Farm Labor Survey, FLS). Surveys that query employers are more likely to pickup unauthorized employment than are surveys that query individuals.", "Estimating whether the number of workers in the United States is sufficient to fulfill employer demand is difficult because there is no agreed-upon definition of a labor shortage. Economists believe labor markets reach a balance between supply and demand, with a lag, absent government policies that prevent a shortage or surplus from occurring. For example, economic theory posits that firms needing more workers to fill jobs in a particular occupation will initially raise wages to attract employees from elsewhere in the economy and thereby restore equilibrium between supply and demand in the occupation. In contrast, businesses tend to think there is a shortage in a given occupation if as many workers as they want cannot be obtained at the current wage being offered.\nEstimating shortages or surpluses also is not straight-forward because the supply of and demand for labor generally cannot be measured directly. There is no proxy for the supply of workers to most occupations. An oft-used measure of demand is employment. Accordingly,\nan increase in an occupation's employment denotes that employers have increased their demand for labor and may be moving toward—but have not reached—a shortfall of workers, while a decrease in an occupation's employment signals that employers either have (1) reduced their demand for labor and may be moving away from a shortage, or (2) maintained or increased their demand but may have exhausted the supply of readily available workers.\nThe trend in wages commonly is used to clarify the latter situation: if employment in an occupation falls despite employers substantially bidding up wages, it is assumed that the number of workers readily available to fill jobs in the occupation may have reached its limit.\nOther measures that can be examined to shed additional light on the relationship between labor supply and demand include unemployment and time worked. Both these indicators are analyzed below to supplement trends in farm employment and wages.", "Although the employment of hired workers engaged in crop or livestock production (including contract workers) has fluctuated erratically over time, the trend overall has been downward (see columns 3 and 7 in Table 1 ). The employment pattern among crop workers hired directly by growers (i.e., excluding those supplied by farm labor contractors and crew leaders) regularly rose and then fell back during the 1990s, but to a higher level through 2000 (column 4). This ratcheting upward of employment produced a 12% gain over the 1990-2000 period. In contrast, other wage and salary workers experienced steady and robust job growth over almost the entire period: from 1990 to 2000, wage and salary employment in nonfarm industries advanced by 18%. These divergent employment patterns suggest that hired farm workers did not share equally in the nation's long economic expansion of the 1990s and appear to be inconsistent with the presence of a nationwide farm labor shortage at that time.\nNonfarm wage and salary employment showed signs of revival from the 2001 recession in 2003. It continued to rise until the decade's second recession began in December 2007. In contrast, the various measures of farm worker employment fluctuated erratically between the two recessions and generally ended the period down from their initial level. The disparate patterns again suggest that hired farm workers did not share equally in the nation's latest economic expansion and appear to be inconsistent with the existence of a nationwide farm labor shortage. (See columns 3 and 7 of Table 1 . )\nFarm employment is subject to considerable seasonal variation, which annual average data masks, however. Demand for crop workers in particular typically peaks in July when many fruits and vegetables are ready to be harvested. Farm employment also varies greatly by geographic area. July data for the past few years disaggregated by geographic area available from the FLS are examined below to assess whether demand at its peak has produced shortages of hired farm workers and agricultural service workers in some parts of the country. Because the FLS provides data for both worker groups only in California and Florida, the data in Table 2 is limited to those states. Recall that the data on hired farm workers are for a broader group than crop workers, covering livestock as well as field workers.\nEmployment of hired farm (field and livestock) workers and agricultural service workers rose in California between July 2006 and July 2007, and again between July 2008 and July 2009. (See Table 2 .) While the rate of increase in total farm employment was below the national average during the latest peak period, the rate of increase was above the national average during the earlier period. The substantial growth rate suggests that California growers faced a tighter labor market in July 2007. In contrast, total farm employment between the two periods fell considerably. As previously noted, a decrease in employment such as occurred in California in July 2008 could indicate that the state's farmers had either reduced their demand for workers or had maintained or increased their demand but were unable to find sufficient workers to meet it.\nVariable climate conditions may explain a good deal of the long-standing yearly fluctuations in farm employment not only in California but also in other states. For example, drought or hurricanes could severely curtail crop production in a given area in one year, which would greatly reduce labor requirements; the following year the same area could have more normal weather conditions that would produce a larger crop and, hence, a greater demand for labor. In the case of California in July 2008, \"lack of available irrigation water caused much acreage to be left fallow. Planted acreage of cotton, dry beans, and sugar beets declined sharply from 2007. Therefore, the demand for field workers was considerably lower.\"\nAnother example involves Washington state. Different weather conditions in 2006 than 2005 affected when demand peaked for harvesting cherries, which in turn affected the supply of labor to other growers in the state. As a result of the delayed surge in demand for labor among cherry producers in 2006, many workers who usually would have switched to working for apple growers in August instead continued to harvest cherries. Their analysis led Ernst W. Stromsdorfer and John H. Wines to conclude that \"dramatic year-to-year seasonal changes explain much of the concern of agricultural producers over the adequacy and timeliness of the supply of seasonal agricultural workers.", "Employment data paint an incomplete picture of the state of the labor market. At the same time that employment in a given occupation is decreasing or increasing relatively slowly, unemployment in the occupation might be falling. Employers would then be faced with a shrinking supply of untapped labor from which to draw. A falling unemployment rate or level would offer some basis for this possibility.\nAs shown in Table 3 , the unemployment rate of hired farm workers engaged in crop or livestock production (including contract labor) is quite high. Even the economic boom that characterized most of the 1990s did not reduce the group's unemployment rate below double-digit levels, or about twice the average unemployment rate in the nation at a minimum. Discouragement over their employment prospects in agriculture or better opportunities elsewhere (e.g., the housing construction industry) may have prompted some unemployed farm workers to leave the sector as evidenced by their reduced number over the years (see column 4 of the table).\nOthers have examined the unemployment rates in counties that are heavily dependent on the crop farming industry. The GAO, for example, found that many of these agricultural areas chronically experienced double-digit unemployment rates that were well above those reported for much of the rest of the United States. Even when looking at monthly unemployment rates for these areas in order to take into account the seasonality of farm work, the agency found that the agricultural counties exhibited comparatively high rates of joblessness. These kinds of findings imply a surplus rather than a shortage of farm workers.\nAnother perspective on the availability of untapped farm labor comes from the DOL's National Agricultural Worker Survey (NAWS). During FY2001-FY2002, the typical crop worker spent two-thirds of the year performing farm jobs. The remainder of the year, these farm workers either were engaged in nonfarm work (10% of the year) or not working (16%) while in the United States, or they were out of the country (7%). This pattern also suggests an excess supply of labor, assuming that the workers wanted more farm employment. Alternatively, grower advocates contend that the pattern is a manifestation of working in a seasonal industry. Even in a month of peak industry demand, however, only a small majority of farm workers hold farm jobs.", "Another indicator of supply-demand conditions is the amount of time worked (e.g., hours or days). If employers are faced with a labor shortage, they might be expected to increase the amount of time worked by their employees.", "Recent data reveal no discernible year-to-year variation in the average number of weekly hours that hired farm workers are employed in crop or livestock production. According to the FLS, the average workweek of hired farm workers has ranged narrowly around 40.0 hours since the mid-1990s. Thus, neither the annual trend in employment nor that in work hours implies the existence of a farm labor shortage.\nThere also is not much variability in demand over the course of a year based on hours worked. In 2008, for example, the average week of hired farm workers was 38.4 hours in mid-January, 40.8 hours in mid-April, 40.5 hours in mid-July and 41.3 hours in mid-October.", "Another measure of time worked available from the FLS is \"expected days of employment\" (i.e., farm operators are asked the number of days they intend to utilize their hired farm workers over the course of a year). As shown in Table 4 , they anticipated a low of 557,000 farm workers on their payrolls for at least 150 days in 2008 and a high of 679,000 (un)authorized workers in 2002. These \"year-round\" workers typically have accounted for at least three-fourths of hired farm workers in the current decade.", "As previously stated, economic theory suggests that if the demand for labor is nearing or has outstripped the supply of labor, firms will in the short-run bid up wages to compete for workers. Consequently, earnings in the short-supply field would be expected to increase more rapidly than earnings across all industries or occupations. The ratio of, in this instance, farm to nonfarm wages would accordingly be expected to rise if the farm labor supply were tight.\nBased upon the data in Table 5 , the average hourly earnings of field (excluding contract) workers typically have increased to the same extent as those of other non-management employees in the private sector. As a result, field workers still earn little more than 50 cents for every dollar paid to other non-management employees in private sector industries.\nAn over-the-year comparison of farm and nonfarm wage data in the peak demand month of July suggests the presence of a tight labor market for California growers in 2007, but not in 2008 or 2009. As shown in Table 6 , California growers raised the hourly wages of field workers (7.6%) and agricultural service workers (5.4%) at rates well above those earned by nonfarm employees in other private sector industries (3.9%) between July 2006 and July 2007. These above-average wage increases likely contributed to the comparatively large increase in farm (field and livestock) employment in the state between July 2006 and July 2007, as previously shown in Table 2 . Between July 2007 and July 2008, however, California growers raised the wages of field workers to a lesser extent than other private sector employers increased their workers' wages (2.6% and 3.6%, respectively); in the case of agricultural service workers, hourly wages in the state were unchanged. The previously discussed reduced demand for farm labor in the state in July 2008, which was related in part to crop land being left fallow due to a lack of water for irrigation, is a likely explanation for the comparatively small wage increase. Between July 2008 and July 2009, California growers raised the wages of field workers about as much as they had between July 2007 and July 2008, and to a slightly lower extent than other private sector employers increased their workers' wages ( 2.5% and 2.7%, respectively); as for agricultural service workers, they experienced an increase compared to the lack of a raise in the prior year. Farmers in California may have found it easier to attract workers from other sectors of the economy because of ongoing deterioration in the construction industry, in particular, and the recession that began in December 2007, in general.", "In summary, indicators of supply-demand conditions generally are inconsistent with the existence of a nationwide shortage of domestically available farm workers in part because the measures include both authorized and unauthorized employment. This finding does not preclude the possibility of farm worker shortages in certain parts of the country at various times during the year. The analysis does not address the adequacy of authorized workers in the seasonal farm labor supply relative to grower demand.\nWhether there would be an adequate supply of authorized U.S. farm workers if new technologies were developed or different labor-management practices were implemented continues to be an unanswered question. Whether more U.S. workers would be willing to become farm workers if wages were raised and whether the size of the wage increase would make the industry uncompetitive in the world marketplace also remain open issues. These matters remain unresolved because perishable crop growers have rarely, if ever, had to operate without unauthorized aliens being present in the domestic farm workforce." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_full h1_full", "h2_full", "", "h2_full", "h2_full", "", "", "", "h2_full", "h1_full" ] }

{ "question": [ "What is the connection between farm labor and immigration?", "What did Congress pass regarding immigration and employers?", "What did this Act include?", "Why has this act not operated in the way it was intended?", "What does the sizable presence of crop grower imply?", "What do grower advocates argue?", "What do farm worker advocates counter?", "What could farmers do if the supply of unauthorized workers were curtailed?", "How do growers feel about this approach?", "Why do trends in labor market not suggest existence of nationwide shortage of domestically available farm workers?", "How has the length of time that farm workers are hired changed?", "How has farm worker unemployment changed?", "How have farm worker earnings changed?" ], "summary": [ "The connection between farm labor and immigration policies is a longstanding one, particularly with regard to U.S. employers' use of workers from Mexico.", "Two decades ago, the Congress passed the Immigration Reform and Control Act (IRCA, P.L. 99-603) to reduce illegal entry into the United States by imposing sanctions on employers who knowingly hire persons who lack permission to work in the country.", "Two decades ago, the Congress passed the Immigration Reform and Control Act (IRCA, P.L. 99-603) to reduce illegal entry into the United States by imposing sanctions on employers who knowingly hire persons who lack permission to work in the country. In addition to a general legalization program, IRCA included legalization programs specific to the agricultural industry that were intended to compensate for the act's expected impact on the farm labor supply and encourage development of a legal crop workforce.", "These provisions of the act have not operated in the offsetting manner that was intended: substantial numbers of unauthorized aliens have continued to join legal farm workers in performing seasonal agricultural services (SAS).", "Crop growers contend that their sizable presence implies a shortage of native-born farm workers.", "Grower advocates argue that farmers would rather not employ unauthorized workers because doing so puts them at risk of incurring penalties.", "Farm worker advocates counter that crop growers prefer unauthorized workers because they are in a weak bargaining position.", "If the supply of unauthorized workers were curtailed, it is claimed, farmers could adjust to a smaller workforce by introducing labor-efficient technologies and management practices, and by raising wages, which, in turn, would entice more U.S. workers to accept farm jobs.", "Growers respond that further mechanization would be difficult for some crops, and that much higher wages would make the U.S. industry uncompetitive in world markets without expanding the legal farm workforce.", "Trends in the agricultural labor market generally do not suggest the existence of a nationwide shortage of domestically available farm workers, in part because the government's databases cover authorized and unauthorized workers. While total nonfarm wage and salary employment generally increased between the two recessions of the current decade, for example, the number of farm jobs fluctuated erratically and ended down for the period.", "The length of time hired farm workers are employed has changed little or fallen over the years as well.", "Their unemployment rate has varied slightly and remains well above the U.S. average.", "In addition, the earnings of farm workers has changed little over time relative to other nonmanagement employees in the private sector." ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, 1, -1, 3, -1, -1, 1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "History and Background of U.S. Drug Enforcement", "Late 19th Century–Early 20th Century", "The Harrison Act", "The Marihuana Tax Act of 1937", "Enforcement Changes", "Mid-20th Century", "Shifting Attitudes", "1970s: War on Drugs and the Controlled Substances Act", "Establishment of the Drug Enforcement Administration (DEA)", "1980s: Rising Enforcement", "The Comprehensive Crime Control Act of 1984", "Anti-Drug Abuse Acts of 1986 and 1988", "1990s-Today", "Methamphetamine", "MDMA and the Illicit Drug Anti-Proliferation Act of 2003", "Scheduling of Synthetic Drugs", "Heroin and Prescription Drug Abuse", "Marijuana", "Overview of Federal Drug Enforcement in the United States", "U.S. Drug Control Policy and Budget", "Federal vs. State Enforcement", "Drug Task Forces", "Organized Crime Drug Enforcement Task Forces (OCDETF) Program", "HIDTA Program", "International Enforcement", "Intelligence Operations and Interdiction", "Enforcement Trends", "Federal Drug Arrests and Seizures", "Arrests", "Seizures", "Prosecutions", "Conclusion" ], "paragraphs": [ "", "Domestic drug enforcement involves controlled substances that are prohibited and controlled substances that are diverted from their intended medical purpose. The federal government prohibits the manufacturing, distribution, and possession of many intoxicating substances that are solely intended for recreational use (notable exceptions are alcohol and tobacco); however, the federal government also allows for and controls the medical use of many intoxicants. Federal authority to control these substances primarily resides with the Attorney General of the United States.\nIn 1970, Congress found that many drugs have a legitimate medical purpose and are necessary to sustain the health and welfare of the American people; however, Congress also found that illegal actions involving and improper use of these drugs have a detrimental effect on the health and welfare of the American people. Among other findings that Congress included in the Controlled Substances Act (CSA; P.L. 91-513), it found that federal control of drug trafficking that occurs within states (i.e., intrastate drug trafficking) is essential to the effective control of drug trafficking that occurs across state lines (i.e., interstate drug trafficking). Congress relies on its power to regulate interstate commerce as a basis for drug control.\nIn order to restrict and reduce availability of illicit drugs in the United States, a practice referred to as \"supply reduction,\" the federal government emphasizes domestic drug enforcement. As a result of enforcement actions, illicit drugs are more difficult, expensive, and risky to obtain. Federal law enforcement agencies cooperate with state and local agencies to dismantle and disrupt criminal organizations involved in illicit domestic drug production and distribution. In practice, federal law enforcement agencies generally target large drug trafficking organizations rather than low-level drug offenders.\nOver the last several years, Congress and the Administration have confronted multiple domestic drug enforcement issues. These issues include state marijuana legalization, prescription drug and heroin abuse, and evolving synthetic drugs. Synthetic compounds have been created across the various classes of drugs, and different synthetic drugs have gained and lost popularity among illicit drug users over the last several decades.\nThis report reviews federal domestic drug enforcement. First, it provides a history and background of drug enforcement in the United States including how drugs came under the control of federal justice authorities and how legislation and administrative actions changed domestic drug enforcement. It then provides a brief overview of drug enforcement in the United States and summarizes U.S. drug policy. Finally, the report presents trends in federal drug enforcement and concludes with a discussion of drug enforcement issues going forward.", "This section outlines historic development and major changes in federal drug enforcement to help provide an understanding of how and why certain laws and policies were implemented and how these developments and changes shaped current drug enforcement policy.", "Both recreational and medical use of drugs, including cocaine and opium, were popular in the 19 th century, but the federal government was not involved in restricting or regulating their distribution and use. During this time, the federal government did not have any agencies that regulated medical and pharmaceutical practice, and doctors freely prescribed cocaine and morphine as treatment for pain. By the end of the 19 th century, abuse of these drugs was a significant social issue, and public concern was growing.\nScholars identify the separation of federal and state power as a major reason for an unregulated U.S. drug market in the 19 th century. Attempts to establish federal control over drugs were met with strong opposition from patent medicine firms and state officials.", "Federal control of drugs began to take shape in the early 20 th century. In response to growing levels of drug abuse, the federal government sought to regulate and control drugs through taxation. The Harrison Narcotics Act of 1914 (Harrison Act; P.L. 63-223), among other things, required importers, manufacturers, and distributors of cocaine and opium to register with the U.S. Department of the Treasury (the Treasury), pay a special tax on these drugs, and keep records of each transaction. Under the Harrison Act, practitioners were authorized to prescribe opiates and cocaine; however, the law was subject to interpretation. The Treasury viewed patient drug maintenance using these substances as beyond medical scope, and many physicians were arrested, prosecuted, and jailed. Under authority of the Harrison Act, the Narcotic Division of the Internal Revenue Bureau closed down state and city narcotic clinics and sent drug violators to federal penitentiaries. Enforcement agents were referred to as \"narcs.\" Ultimately, physicians stopped prescribing drugs covered under the Harrison Act, thereby sending users to the black market to seek out these substances.", "During the 1920s, narcotic enforcement was closely tied to Prohibition enforcement. In 1930, Prohibition enforcement was transferred to the Department of Justice while a standalone federal agency, the Federal Bureau of Narcotics (FBN), was established within the Treasury to handle narcotic enforcement. During Prohibition, a new recreational drug—marijuana—had quickly become unpopular with law enforcement, especially in the southwestern United States. As Prohibition ended, marijuana caught the attention of Congress and the FBN.\nUntil 1937, the growth and use of marijuana was legal under federal law. During the course of promoting federal legislation to control marijuana, Henry Anslinger, the first commissioner of the FBN, and others submitted testimony to Congress regarding the evils of marijuana use, claiming that it incited violent and insane behavior. Of note, Commissioner Anslinger had informed Congress that \"the major criminal in the United States is the drug addict; that of all the offenses committed against the laws of this country, the narcotic addict is the most frequent offender.\"\nThe federal government unofficially banned marijuana under the Marihuana Tax Act of 1937 (MTA; P.L. 75-238). The MTA imposed a strict regulation requiring a high-cost transfer tax stamp for every sale of marijuana. These stamps, however, were rarely issued by the federal government. Shortly after passage of the MTA, all states made the possession of marijuana illegal.", "Enforcement of drug laws was primarily the responsibility of local police, and the FBN occasionally assisted with enforcement. Due to limited and reduced appropriations during the Great Depression, which began in the United States after the stock market crash of 1929 and lasted through the 1930s, the FBN budget and the number of narcotic agents declined and remained low for years. Publicity and warnings of the dangers of narcotics, in particular marijuana, became methods of drug control for the FBN. In seeking federal control of marijuana and uniform narcotic laws, Commissioner Anslinger made personal appeals to civic groups and legislators and pushed for, and received, editorial support in newspapers; many newspapers maintained a steady stream of anti-marijuana propaganda in the 1930s.", "Over the next several decades, Congress continued to pass drug control legislation and further criminalized drug abuse. For example, the Boggs Act (P.L. 82-255), passed in 1951, established mandatory prison sentences for some drug offenses while the 1956 Narcotic Control Act (P.L. 84-728) further increased penalties for drug offenses and established the death penalty as punishment for selling heroin to youth.", "The FBN continued to enforce federal narcotic laws and support local enforcement while the agency remained relatively unchanged until the 1960s. Support for severe punishment for drug offenses, however, waned by this point. Organizations, including the American Bar Association, began to speak out against strict punishments for drug offenders while federal support for a medical approach to drug abuse grew. For instance, methadone maintenance became an acceptable and common treatment for heroin dependence. In 1963, the Presidential Commission on Narcotic and Drug Abuse (the 1963 Presidential Commission) issued a report recommending more funds for narcotic research, less strict punishment for drug offenses, and the dismantling of the FBN.\nCongress also began to support the medical approach to addressing drug abuse. It heeded the recommendations of the 1963 Commission and created the Bureau of Drug Abuse Control within the Department of Health, Education, and Welfare and provided for civil commitment of some drug addicted federal detainees. In the Narcotic Addict Rehabilitation Act, Congress declared its support for rehabilitation through treatment:\nIt is the policy of the Congress that certain persons charged with or convicted of violating Federal criminal laws, who are determined to be addicted to narcotic drugs, and likely to be rehabilitated through treatment, should, in lieu of prosecution or sentencing, be civilly committed for confinement and treatment designed to effect their restoration to health, and return to society as useful members.\nWhile there was a great deal of attention paid to the medical approach to preventing and responding to drug abuse in the 1960s, there was also strong emphasis on law enforcement. The 1963 Presidential Commission, among other findings, had recommended increasing federal drug enforcement personnel and transferring drug enforcement functions from the Treasury to the Department of Justice (DOJ). Subsequently, Congress shifted the constitutional basis for drug control from its taxing authority to its power to regulate interstate commerce, and in 1968 the FBN merged with the Bureau of Drug Abuse Control and was transferred to DOJ. In 1969 President Nixon responded to rising drug abuse, in particular heroin abuse, by making the reduction of drug use one of his top priorities upon taking office. Several years later President Nixon would declare a war on drugs.", "President Nixon's war on drugs involved greater emphasis on law enforcement. He also enhanced international efforts and made a successful push to curb opium production in Turkey. In his efforts to enhance federal control of drugs, Nixon pushed for passage of comprehensive federal drug laws. The Controlled Substances Act (CSA), enacted as Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (P.L. 91-513), placed the control of select plants, drugs, and chemical substances under federal jurisdiction. Congress passed this legislation, in part, to replace previous federal drug laws with a single comprehensive statute.\nThe CSA established the statutory framework through which the federal government regulates the lawful production, possession, and distribution of controlled substances. This comprehensive drug law classified controlled substances under five schedules according to (1) how dangerous they are considered to be, (2) their potential for abuse and addiction, and (3) whether they have legitimate medical use. It became, and remains today, the legal framework through which the Drug Enforcement Administration (DEA) derives its authority.", "In July 1973, President Nixon authorized the creation of a single-mission federal agency to enforce the CSA: the DEA. Several months later, the Senate Committee on Government Operations issued its reorganization plan regarding the establishment of the DEA in DOJ. Both the committee and President Nixon stressed the importance of the DEA's role in assuring cooperation and coordination among the DEA, Federal Bureau of Investigation (FBI), and other DOJ agencies involved in counterdrug operations. In summarizing the benefits expected from the reorganization plan, the committee stated the following:\n(1) It will put an end to the interagency rivalries that have undermined Federal drug law enforcement, especially the rivalry between BNDD [Bureau of Narcotics and Dangerous Drugs] and the Customs Bureau.\n(2) It will give the FBI its first significant role in drug enforcement by requiring that the DEA draw on the FBI's expertise in combatting organized crime's role in the trafficking of illicit drugs.\n(3) The new DEA will provide a single focal point for coordinating Federal drug enforcement efforts with those of State and local authorities as well as with foreign police forces.\n(4) By placing a single Administrator in charge of Federal drug law enforcement, the plan will make the new DEA more accountable than its component parts had ever been, thereby safeguarding against corruption and such enforcement abuses...\n(5) The consolidation of drug enforcement operations in the DEA and the establishment of the Narcotics Division in Justice will maximize coordination between Federal investigation and prosecution efforts and eliminate rivalries within each sphere.\n(6) Establishment of the DEA as a superagency will provide the momentum needed to coordinate all Federal efforts related to drug enforcement outside the Justice Department, especially the gathering of intelligence on international narcotics smuggling.\nIn 1973, the newly formed DEA began its work with 1,470 special agents and an annual budget of $74.9 million (FY1973). By 1975, these numbers grew to 2,135 special agents and an annual budget of $140.9 million (FY1975). At its onset, the DEA also employed chemists, intelligence analysts, diversion investigators, and other personnel involved in drug operations. In FY2014, the DEA had over 9,000 full time employees and its budget was approximately $2.0 billion.", "As heroin abuse had been the primary concern of the Administration in the 1960s and 1970s, the rising popularity of cocaine and a new form of cocaine referred to as \"crack\" led to a renewed demand from the American public that something be done about American drug abuse. By 1989, 27% of the American public felt that drugs, or drug abuse, was the most important problem facing the country as compared to four years prior in 1985 when 2% gave this response.\nLike President Nixon, President Reagan stressed the importance of criminal justice agencies in the federal government's efforts to combat drug abuse. In 1986 President Reagan informed the nation of the federal government's progress in combating drug abuse:\nFrom the beginning of our administration, we've taken strong steps to do something about this horror. Tonight I can report to you that we've made much progress. Thirty-seven Federal agencies are working together in a vigorous national effort, and by next year our spending for drug law enforcement will have more than tripled from its 1981 levels. We have increased seizures of illegal drugs. Shortages of marijuana are now being reported. Last year alone over 10,000 drug criminals were convicted and nearly $250 million of their assets were seized by the DEA, the Drug Enforcement Administration.\nIndeed, the number of federal drug convictions rose sharply between 1980 and 1986. The total number of individuals convicted of federal drug offenses more than doubled from 5,244 in 1980 to 12,285 in 1986. This accounted for 51% of the increase in the total number of persons convicted of all federal offenses, which increased from 29,952 in 1980 to 43,802 in 1986. Of note, most convicted drug offenders were convicted of offenses other than possession, including trafficking, importation, and distribution; however, the number of individuals convicted of simple possession increased sharply from 302 convictions in 1980 to 1,353 in 1982 and remained relatively stable over the next few years. The Bureau of Justice Statistics explained that \"the early increase in convictions for possession of drugs may have been caused by a heightened Federal attention to all drug cases and the rapid expansion of Federal resources for drug prosecutions, which may have resulted in fewer deferrals of simple possession cases to local prosecutors.\"", "In 1984 Congress passed crime legislation (Comprehensive Crime Control Act of 1984; Title II of P.L. 98-473 ) that, among other things, enhanced penalties for CSA violations and amended the CSA to establish general criminal forfeiture provisions for certain felony drug violations. These provisions allow the Attorney General to transfer drug-related forfeited property to federal, state, and local law enforcement agencies and retain forfeited property for official use or for transfer to other federal, state, and local agencies related to federal law enforcement. Also, it amended the CSA to allow the Attorney General to place an uncontrolled substance under temporary control that triggers the CSA's regulatory requirements of registration and recordkeeping, as well as authorized criminal penalties in order to avoid imminent hazard to the public safety. This temporary scheduling authority would prove to be useful in combating the onset of new synthetic drugs.", "The Anti-Drug Abuse Act of 1986 (1986 Act; P.L. 99-570 ) was a significant development in pursuing enforcement action against the illicit synthetic drug trade. Among other things, it amended the CSA to allow for controlled substance analogues (intended for human consumption) to be treated as Schedule I substances. It also established criminal penalties for simple possession of a controlled substance.\nThe 1986 Act is perhaps most well-known for its establishment of mandatory minimum penalties for certain federal drug trafficking offenses; it created two tiers of mandatory prison terms based on the quantity and type of drug involved in the offense. It differentiated \"cocaine base\" from powder cocaine and required 100 times more powder cocaine than crack cocaine to trigger the more severe minimum sentence. Congress later reduced the cocaine disparity from 100:1 to 18:1 through the Fair Sentencing Act of 2010 ( P.L. 111-220 ).\nThrough the Anti-Drug Abuse Act of 1988 (1988 Act; P.L. 100-690 ), Congress aimed to coordinate federal agencies' efforts to reduce drug supply and demand by establishing the Office of National Drug Control Policy (ONDCP) and the Director of National Drug Control Policy (commonly referred to as the \"drug czar\"). ONDCP is responsible for creating policies, priorities, and objectives for the federal Drug Control Program. The 1988 Act, among other things, created new criminal penalties for CSA violations on federal lands and established mandatory minimum penalties for drug offenses involving minors.\nOf note, Congress passed the Chemical Diversion and Trafficking Act (CDTA; Title VI of the 1988 Act) in an effort to restrict access to chemicals used in the illicit manufacture of certain controlled substances in violation of the CSA. The CDTA and its subsequent amendments allow the DEA to control 40 chemicals and restrict their diversion; these chemicals are referred to as \"listed chemicals\" and can be used to illicitly manufacture controlled substances.", "The majority of federal drug legislation over the last 20 years has addressed concern over synthetic drugs. Synthetic compounds have been created across the various classes of drugs, and different synthetic drugs have gained and lost popularity among illicit drug users over the last several decades. Congress and the Administration have responded to the proliferation of these drugs in several ways. In addition, the federal government has faced new concerns over the rise in prescription drug and heroin abuse and state marijuana legalization.", "Along with other amphetamines, methamphetamine first emerged in the United States in the late 1960s. It was added as a Schedule II drug under the CSA in 1970. In the 1990s, as cocaine's popularity waned, methamphetamine abuse rose. In addition to larger clandestine labs that produced methamphetamine (largely in California and Mexico), smaller labs in homes and other private locations thrived by producing and distributing methamphetamine on a smaller scale. Methamphetamine was (and is today) commonly produced with legally purchased items including pseudoephedrine, a non-prescription product used to treat a common cold.\nIn the 1990s, the Clinton Administration implemented strategies and policy initiatives to reduce methamphetamine trafficking, production, and abuse. The DEA dedicated over 200 positions to this purpose, and agencies involved in the High Intensity Drug Trafficking Areas (HIDTA) Program targeted methamphetamine operations in the Southwest, where methamphetamine first gained popularity in the United States. Since the mid-1990s, the DEA has assisted state and local law enforcement with methamphetamine lab cleanups and training.\nDue to the unique nature of producing the drug and the dangers associated with production and abuse, Congress has enacted several pieces of legislation designed to address methamphetamine abuse. These measures have included enhanced criminal penalties for manufacturing and trafficking in the drug (Comprehensive Methamphetamine Control Act of 1996; P.L. 104-237 ), more stringent federal regulation of methamphetamine precursor chemicals such as pseudoephedrine (Combat Methamphetamine Epidemic Act; P.L. 109-177 ), and authorization of additional funding for grants providing methamphetamine-specific law enforcement assistance.", "MDMA (3,4-methylenedioxy-methamphetamine), also known as ecstasy, first gained popularity in the early 1980s, after which it was permanently placed on Schedule I of the CSA by the DEA. It later resurfaced as a popular drug among youth in the nightclub scene and at raves in the 1990s. MDMA has resurfaced in recent years under the street name \"molly.\"\nThe Illicit Drug Anti-Proliferation Act of 2003 amended the CSA to more directly target the producers of raves where synthetic drugs such as MDMA were often used. It shifted emphasis from punishing those who establish places where drugs are made, distributed, and consumed to those who knowingly maintain such places. It also established civil penalties for \"maintaining drug-involved premises.\" This act also authorized appropriations for the DEA to educate youth, parents, and other interested adults about club drugs.", "Temporary scheduling of synthetic drugs has been a key tool in combating the onset of new synthetic drugs. As previously mentioned, in 1984 Congress gave the Attorney General the authority to temporarily place a substance onto Schedule I of the CSA to \"avoid imminent hazards to public safety;\" policy makers were concerned about the effects of pharmaceutically created and other modified drugs. When determining whether there is an imminent hazard, the Attorney General (through the DEA) must consider the drug's history and current pattern of abuse; scope, duration, and significance of abuse; and risk to public health.\nOnce scheduled through this temporary scheduling process, a substance may remain on Schedule I for two years. The Attorney General then has the authority to keep the substance on Schedule I for an additional year before it must be removed or permanently scheduled. The Synthetic Drug Abuse Prevention Act of 2012 extended the DEA's temporary scheduling authority. Prior to enactment of this act on July 9, 2012, the DEA was able to temporarily place a substance on Schedule I of the CSA for one year, with a potential extension of six months.\nOver the past several years the DEA has taken several temporary scheduling actions to place synthetic drugs on Schedule I. Since 2002 the DEA has used this temporary scheduling authority on 33 synthetic substances. Prior to 2002 the most recent time DEA exercised this authority was in 1995.\nCongress has also taken scheduling action in response to the hazardous nature of synthetic drugs. In 2000, for example, Congress passed legislation that provided for emergency scheduling of gamma hydroxybutyric acid (GHB), a synthetic stimulant also known as \"liquid ecstasy.\" In doing so, Congress cited GHB as \"an imminent hazard to public safety that requires immediate regulatory action.\" Concern over the reported increase in use of certain synthetic cannabinoids and stimulants led some to call on Congress to legislatively schedule specific substances. This is, in part, because congressional action could place certain substances onto Schedule I of the CSA more quickly than might occur through administrative scheduling actions by the Attorney General and Secretary of Health and Human Services, as authorized by the CSA. In June 2012, Congress passed the Synthetic Drug Abuse Prevention Act of 2012 to, among other things, permanently schedule selected synthetic stimulants and other synthetic substances.", "Over the last decade, there has been a rise in opioid abuse. From 2004-2011, the number of medical emergencies related to nonmedical use of pharmaceuticals increased 132%. In addition, the number of past-year heroin users increased by approximately 300% between 2004 (166,000 users) and 2013 (681,000 users). Some academic experts have highlighted the connection between the law enforcement crackdown on prescription drug abuse and the subsequent rise in heroin abuse, which has been of growing concern to policy makers. Heroin is a cheaper alternative to prescription drugs that may be more easily accessible to some who are seeking an opiate high.\nUnlike illegal drugs such as heroin, individuals may obtain prescription drugs through lawful channels; however, individuals who abuse prescription drugs often obtain them through unlawful channels. Federal law enforcement has engaged in diversion control to address the unlawful means through which individuals obtain prescription drugs. The DEA's Office of Diversion Control seeks \"to prevent, detect, and investigate the diversion of controlled pharmaceuticals and listed chemicals from legitimate sources while ensuring an adequate and uninterrupted supply for legitimate medical, commercial, and scientific needs.\" In response to prescription drug abuse, the DEA has nearly doubled its number of Tactical Diversion Squads (TDS) over the last three years, from 37 in March 2011 to 66 in March 2014. TDS units combine federal, state, and local resources to investigate and prevent the diversion of controlled pharmaceutical substances or listed chemicals.\nThe Office of Diversion Control also oversees registrations for those who seek to manufacture, import, export, sell, or dispense narcotics. DEA enforcement actions generally have focused on doctors prescribing prescription controlled substances (PCS) or traffickers of PCS (rather than individuals using PCS).", "Under the CSA, marijuana is a Schedule I controlled substance. This officially prohibits the unauthorized manufacture, distribution, dispensation, and possession of marijuana. Despite this, over the last 20 years, states have deviated from strict federal restrictions on marijuana by establishing a range of laws and policies allowing its medical and recreational use. Some states have pursued decriminalization initiatives, legal exceptions for medical use, and legalization of certain quantities for recreational use. This has raised domestic law enforcement questions as to how marijuana can remain strictly prohibited under federal law (except for authorized scientific research) while some state authorities allow for its medical and/or recreational use.\nFederal law enforcement has generally tailored its efforts to target criminal networks rather than individual criminals; its stance regarding drug (particularly marijuana) offenders appears consistent with this position. Deputy Attorney General Cole has stated that while marijuana remains an illegal substance under the CSA, DOJ would focus its prosecutorial resources on the \"most significant threats in the most effective, consistent, and rational way.\"", "", "Over the last decade, the United States has gradually shifted its stated drug policy toward a more comprehensive approach; one that focuses on prevention, treatment, and enforcement. The Obama Administration states that it coordinates \"an unprecedented government-wide public health and public safety approach to reduce drug use and its consequences.\" In practice, however, federal drug control dollars mostly go to law enforcement. According to the most recent drug control budget (FY2015) released by the Office of National Drug Control Policy (ONDCP), approximately 60% of all federal drug control spending is dedicated to supply reduction, with around 37% of the total drug control budget going toward domestic law enforcement. As illustrated in Table 1 , these figures, while fluctuating slightly over the last 10 years, have remained relatively unchanged since FY2005.", "While federal agencies enforce drug laws under the CSA, all states and territories have their own statutory framework through which they enforce drug laws; however, the CSA places drug control under federal jurisdiction regardless of state laws. In other words, federal agencies may enforce the CSA in all states and territories.\nThe majority of drug crimes known to U.S. law enforcement are dealt with at the state level. In the United States in 2012, the U.S. Drug Enforcement Administration (DEA) arrested 30,476 suspects for federal drug offenses while state and local law enforcement arrested 1,328,457 suspects for drug offenses. In many cases, federal agencies assist state and local agencies with drug arrests, and suspects are referred for state prosecution, and vice-versa.\nOther federal agencies aside from the DEA participate and support federal drug investigations and also make drug arrests. These agencies include, but are not limited to, the Federal Bureau of Investigation (FBI), the U.S. Marshals Service (USMS), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), agencies at the U.S. Department of Homeland Security (DHS), and the U.S Postal Inspection Service. As the only single-mission agency charged with the enforcement of the CSA, the DEA is primarily responsible for enforcing the controlled substance laws and regulations of the United States.\nFederal, state, and local law enforcement agencies frequently coordinate drug operations. In establishing administrative and enforcement provisions under the CSA, Congress specifically required that federal law enforcement cooperate with local, state, and tribal agencies in investigative efforts to curb drug abuse and suppress diversion of controlled substances, among other cooperative arrangements. The DEA has 222 offices throughout the United States, and each of these offices partners with state and local authorities, as well as with other federal agencies, to investigate and prosecute drug offenses.", "The Department of Justice has long recognized the need for a coordinated response to drug trafficking and organized crime. Coordination and cooperation with state and local law enforcement agencies is essential to federal counterdrug operations. In 2013, the DEA managed 259 state and local task forces, including program-funded, provisional, HIDTA (High Intensity Drug Trafficking Areas), and Tactical Diversion Squad task forces through their State and Local Task Force Program. These task forces share resources and expertise in their drug enforcement efforts, thereby increasing investigative possibilities. They are staffed by over 2,190 DEA special agents and 2,556 state and local officers.", "The first drug task force was established in 1970 in New York under the guidance of the Bureau of Narcotics and Dangerous Drugs, DEA's predecessor agency. In 1982, the Organized Crime Drug Enforcement Task Forces (OCDETF) Program was established \"to mount a comprehensive attack against organized drug traffickers.\" The OCDETF Program focuses federal resources on reducing the illicit drug trade by identifying and targeting major drug trafficking organizations, eliminating their financial infrastructure by emphasizing financial investigations and asset forfeiture, redirecting federal drug enforcement resources to align them with existing and emerging drug threats, and broadly investigating all the related parts of the targeted organizations. Agencies participating in OCDETF include the DEA, FBI, ATF, USMS, Internal Revenue Service, U.S. Coast Guard, U.S. Immigration and Customs Enforcement, all 94 U.S. Attorneys' Offices, the DOJ Criminal and Tax Divisions, and multiple state and local agencies. In FY2013, OCDETF cases made up approximately 21% of all criminal drug cases filed by U.S. Attorneys.\nThere are 11 OCDETF strike forces around the country as well as an OCDETF Fusion Center. The OCDETFs target those organizations that have been identified on the Consolidated Priority Organization Targets (CPOT) List, which is the \"most wanted\" list for leaders of drug trafficking and money laundering organizations. In FY2013, OCDETF participants initiated 1,074 investigations, and 16% (822 cases) of active OCDETF investigations were linked to valid CPOTs. Between 2003 and 2013, OCDETF participants have dismantled or severely disrupted 75 CPOT organizations and disrupted or dismantled 2,918 CPOT-linked organizations.", "The federal government assists state and local authorities with drug enforcement through financial and personnel support. The HIDTA program primarily supports the law enforcement aspect of the National Drug Control Strategy in providing assistance to law enforcement agencies—at the federal, state, local, and tribal levels—that are operating in regions of the United States that have been deemed critical drug trafficking regions. The program aims to reduce drug production and trafficking through four means: (1) promoting coordination and information sharing between federal, state, local, and tribal law enforcement; (2) bolstering intelligence sharing between federal, state, local, and tribal law enforcement; (3) providing reliable intelligence to law enforcement agencies such that they may be better equipped to design effective enforcement operations and strategies; and (4) promoting coordinated law enforcement strategies that rely upon available resources to reduce illegal drug supplies not only in a given area, but throughout the country. There are 28 designated HIDTAs in the United States and its territories. On the whole, the HIDTA program is administered by ONDCP; however, each of the HIDTA regions is governed by its own Executive Board.", "While an in-depth discussion of international drug enforcement is beyond the scope of this report, it is nonetheless important to mention when discussing drug enforcement operations in the United States. While law enforcement efforts to combat drug abuse largely occur within the geographic boundaries of the United States, federal agencies also pursue drug investigations abroad. The DEA has 86 offices in 67 countries, and maintains \"sole responsibility for coordinating and pursuing drug investigations abroad and works in partnership with foreign law enforcement counterparts.\" Aside from the DEA, the Department of State, the U.S. Agency for International Development, other agencies within DOJ, and the Department of Defense (DOD) also assist with international counterdrug support. For example, DOD detects and monitors aerial and maritime movement of illegal drugs toward the United States and collects, analyzes, and shares intelligence on illegal drugs with U.S. law enforcement and international security counterparts.\nInternational law enforcement cooperation is guided, in part, by international treaties. The United States is a party to the Single Convention on Narcotic Drugs of 1961, which was designed to establish effective control over international and domestic traffic in narcotics, coca leaf, cocaine, and marijuana. The United States is also subject to the Convention on Psychotropic Substances of 1971, which was designed to establish similar control over stimulants, depressants, and hallucinogens. As Congress established under the CSA, treaty obligations may require the Attorney General to control or reschedule a substance if existing controls are less stringent than those required by a treaty.", "The gathering and analyzing of drug-related intelligence is an essential function of federal drug enforcement. Intelligence is used to support tactical operations; arrests, seizures, and interdictions can be based on tactical intelligence. Also, investigative intelligence is used against large criminal organizations in investigations and prosecutions. Finally, strategic intelligence is used to inform policy, administrative decisions, and resource management. Multiple federal agencies, including the U.S. military, as well as state and local law enforcement contribute to and utilize drug intelligence. Drug interdiction is inextricably linked to domestic drug enforcement; both are methods of supply reduction.\nThe El Paso Intelligence Center (EPIC), the federal center for operational tactical intelligence, plays a key role in drug interdiction. EPIC is led by the DEA and staffed by 15 federal agencies from the Departments of Justice, Homeland Security, Transportation, and Defense as well as state and local law enforcement agencies. EPIC has long supported the federal government's drug interdiction efforts and drug trafficking investigations in addition to efforts to combat alien and weapon smuggling, terrorism and other criminal activities.\nIn addition to EPIC, the DEA's Special Operations Division (SOD) also plays a key role in gathering, analyzing, and distributing intelligence in support of domestic and foreign law enforcement operations. Similar to EPIC, SOD coordinates the efforts of multiple federal, state, and local agencies. SOD operates at a classified level and its functions include the following:\ncoordinate special operations and projects targeting trafficker command and control communications; provide funding support, guidance, and technical assistance to all DEA divisions that have Title III operations involving drug trafficking; disseminate investigative data to participating law enforcement partners; develop and support the DEA Analysis and Response Tracking System (DARTS) for DEA users, and the De-Confliction and Information Coordination Endeavour (DICE) system, a similar system utilized by federal, state, and local law enforcement; address financial crime and narcoterrorism related issues and investigations; and support the operations of the National Gang Targeting, Enforcement and Coordination Center (GangTECC).\nGangTECC coordinates information and enforcement activities to disrupt and dismantle regional, national, and international gang threats.\nSince its establishment in 1973, the DEA has relied heavily on drug intelligence to accomplish its mission. At first, the Intelligence Program was staffed by DEA special agents and several intelligence analysts. Over the years, the Intelligence Program has grown significantly, and today, the DEA employs over 700 intelligence analysts.", "Trends in federal drug enforcement may reflect changes in the nation's drug problems and changes in the federal response to these problems. These trends also may reflect the federal government's enforcement priorities. For example, as shown in Figure 4 , the number of drug cases filed by U.S. Attorneys steadily increased in the late 1990s and early 2000s. While this may reflect a higher drug crime incidence rate, it also may reflect a federal enforcement focus on drug crimes. This section provides a snapshot of federal enforcement trends over the last several decades.", "", "Most drug arrests are made by state and local law enforcement, and most of these arrests are for possession rather than sale or manufacturing. In contrast, most federal drug arrests are for trafficking offenses rather than possession. While multiple federal agencies (as previously identified in this report) engage in federal drug enforcement, the DEA is the primary federal agency responsible for the enforcement of federal drug laws; therefore, it is the agency of focus in this section.\nAs shown in Figure 1 , over the last 25 years the majority of the DEA's arrests have been for cocaine-related offenses. Like arrests for amphetamine/methamphetamine and cannabis, arrests for cocaine peaked in the late 1990s (16,947 cocaine arrests in FY1999). With notable exceptions of pharmaceutical narcotics and heroin/opiate-related arrests, most arrests have declined since their peak in FY1999. In FY1989, the total number of DEA arrests was 25,986. This figure rose to 40,278 in FY1999, declined to 29,212 in FY2003, and has remained fairly steady over the last 10 years (between 29,000 and 33,000 arrests each year).", "As illustrated in Figure 2 , over the last 25 years, marijuana seizures have made up the strong majority of the volume of drugs seized by federal agencies. In FY2013, the amount of marijuana seized by federal agencies made up 95% of the total amount of drugs seized that year. This reflects both marijuana's availability and popularity; marijuana is the most widely available and commonly used illegal drug in the United States.\nOver the last several years, there has been an increase in the amount of heroin seized at the southwest border of the United States. According to the DEA, the amount of heroin seized each year in this region has increased 320% from 2008 to 2013. In FY2012 and FY2013, the DEA seized 4,518 and 4,836 kilograms of heroin, respectively, in the United States. This has been coupled with higher availability of heroin in the United States as compared to recent years. The DEA attributes the increase in heroin availability to an increase in Mexican heroin production and trafficking to the United States. According to recent congressional testimony, \"DEA intelligence reveals that heroin trafficking organizations are relocating to areas where non-medical use of prescription drugs [is] on the rise.\"", "U.S. Attorneys are prosecutors under the Attorney General and conduct the trial work for federal drug cases. Currently, drug cases represent the second highest category of criminal cases filed by U.S. Attorneys (see Figure 3 ). Since enactment of the CSA, drug cases have either been the highest or second highest category of criminal cases filed by U.S. Attorneys. Drug offenses represent the largest offense category (31.6% in FY2013) for federal criminal appeals filed by or against the United States.\nAs shown in Figure 4 , and mirroring arrest trends for federal drug offenses, over the last 25 years the number of federal prosecutions for drug offenses peaked in the early 2000s (17,284 cases filed in FY2002), and then steadily declined, with a few exceptions, since FY2002 (13,383 cases filed, 27,106 defendants in FY2013). In FY2013, the U.S. Attorneys recorded 24,307 convictions for all drug offenses. Similar to the DEA and other federal agencies, U.S. Attorneys largely target drug dealing as opposed to drug possession. 1.4% of the 10,542 drug cases filed by U.S. Attorneys in FY2013 were for drug possession, while the rest were categorized under \"drug dealing.\"", "U.S. federal drug enforcement policies will continue to generate debates among policy makers, law enforcement officials, scholars, and the public. Even prior to the federal government's move in 1970 to criminalize the manufacture, distribution, dispensation, and possession of controlled substances, there were significant discussions over the morality and efficacy of criminal drug enforcement. As discussed in this report, federal law enforcement has generally not targeted individuals for drug possession (as state and local law enforcement have), but rather has aimed to disrupt and dismantle organizations involved in illicit drug trafficking.\nDrug trends will evolve along with law enforcement response to drug crimes, but the same fundamental issues will likely continue to confront lawmakers. These issues include the social impact of the criminalization of drugs and federal involvement in domestic drug control. In the coming years, Congress may opt to address current drug uses, including prescription drug and heroin abuse, synthetic drugs, and state legalization of marijuana, through changes to the Controlled Substances Act or other legislative means." ], "depth": [ 0, 1, 1, 2, 3, 3, 4, 2, 3, 2, 3, 2, 3, 3, 2, 3, 3, 3, 3, 3, 1, 2, 2, 3, 4, 4, 2, 2, 1, 2, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h1_title", "h0_full", "h1_full", "", "", "", "", "", "h2_title", "h2_title", "h2_full", "", "", "" ] }

{ "question": [ "How has the US shifted its stated drug control policy?", "How does the US restrict and reduce availability of illicit drugs?", "How is spending towards US drug control split?", "How are drug laws enforced?", "How did arrests by the DEA and state and local law enforcement compare?", "How do the DEA and other federal agencies interact with state and local agencies?", "What does this report focus on?", "What does this report provide understanding of?", "How did government involvement in drug enforcement policies change over time?" ], "summary": [ "Over the last decade, the United States has shifted its stated drug control policy toward a comprehensive approach; one that focuses on prevention, treatment, and enforcement.", "In order to restrict and reduce availability of illicit drugs in the United States, a practice referred to as \"supply reduction,\" the federal government continues to place emphasis on domestic drug enforcement.", "According to the most recent drug control budget (FY2015) released by the Office of National Drug Control Policy (ONDCP), approximately 60% of all federal drug control spending is dedicated to supply reduction, with approximately 37% of the total budget dedicated to domestic law enforcement.", "Federal agencies, primarily the U.S. Drug Enforcement Administration (DEA), enforce federal controlled substances laws in all states and territories, but the majority of drug crimes known to U.S. law enforcement are dealt with at the state level.", "In the United States in 2012, the DEA arrested 30,476 suspects for federal drug offenses while state and local law enforcement arrested 1,328,457 suspects for drug offenses.", "In many cases, federal agencies assist state and local agencies with drug arrests, and suspects are referred for state prosecution, and vice-versa.", "This report focuses on domestic drug enforcement.", "It outlines historic development and major changes in U.S. drug enforcement to help provide an understanding of how and why certain laws and policies were implemented and how these developments and changes shaped current drug enforcement policy.", "In the 19th century federal, state, and local governments were generally not involved in restricting or regulating drug distribution and use, but this changed substantially in the 20th century as domestic law enforcement became the primary means of controlling the nation's substance abuse problems." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Overarching Import Policy Goals", "Legislation in the 114th Congress", "Legislative History of U.S. Customs and Trade Facilitation, Enforcement, and Import Security Policies", "Major Trade Facilitation and Enforcement Legislation", "The \"Mod Act\" of 1993 (Title VI of P.L. 103-182)", "Title IV of the Security and Accountability for Every (SAFE) Port Act of 2006 (P.L. 109-347)", "Major Post-9/11 Import Security Legislation", "Trade Act of 2002 (P.L. 107-210)", "Maritime Transportation Security Act of 2002 (P.L. 107-295)", "Homeland Security Act of 2002 (P.L. 107-296)", "Coast Guard and Maritime Transportation Act of 2004 (P.L. 108-293)", "Security and Accountability For Every (SAFE) Port Act of 2006 (P.L. 109-347)", "Implementing Recommendations of the 9/11 Commission Act of 2007(P.L. 110-53)", "The Import Process", "Pre-Entry: Advanced Cargo Screening, Scanning, and Inspections", "Trusted Trader Programs", "Advance Electronic Cargo Information", "Maritime Cargo: 10 + 2 Importer Security Filing", "Automated Targeting System", "Import Security Scanning and Inspections Abroad", "Secure Freight Initiative (SFI)", "Container Security Initiative (CSI)", "Import Processing At Ports of Entry", "Import Security and Trade Enforcement at U.S. Ports", "Radiation Scanning", "Non-Intrusive Inspection (NII) and Secondary Inspections in U.S. Ports", "Trade Enforcement Inspections", "Cargo Release", "Trade Facilitation", "Automated Commercial Environment (ACE) Cargo Release (formerly \"Simplified Entry\")", "Centers of Excellence and Expertise", "In-bond Transportation", "Post-Entry: Continued Trade Enforcement", "Liquidation", "Recordkeeping and Post-Entry Audits", "Regulatory Audits", "Prior Disclosure", "Issues for Congress", "Trade Facilitation", "Authorization of Existing CBP Trade Facilitation Programs", "Trusted Trader Program Benefits", "Wait Times at Land Ports of Entry", "Trade Enforcement", "Import Security", "100% Scanning Requirement", "100% Scanning Versus Risk-Based Scanning", "Scanning Abroad Versus Scanning in U.S. POEs", "Transportation Worker Identity Credential (TWIC) Card Readers", "Customs Modernization", "Interagency Coordination", "Concluding Comments" ], "paragraphs": [ "", "International trade is a critical component of the U.S. economy, with U.S. goods trade amounting to about $4 trillion in 2014, with merchandise imports of $2.4 trillion and exports of $1.6 trillion (see Appendix B ). The efficient flow of legally traded goods in and out of the United States is thus a vital element of the country's economic security. While U.S. trade in imports depends on the smooth flow of legal cargo through U.S. ports of entry (POE), the goal of trade facilitation often competes with two additional goals: enforcement of U.S. trade laws and import security. How to strike the appropriate balance among these three goals is a fundamental question at the heart of U.S. import policies.\nStriking the appropriate balance among competing import policy goals is made more difficult due to the volume and complexity of trade inflows. U.S. Customs and Border Protection (CBP), the agency charged with managing the import process at the border, admitted about 30.4 million import entries per year through over 300 U.S. POEs, in fiscal year (FY) 2013. The largest volume of imports comes through land (truck and rail) and maritime flows, which together account for over 25 million shipping containers per year. Air cargo consists mainly of lower volume, higher value goods.\nThis report describes and analyzes CBP's role in the U.S. import process. (The report does not cover CBP's role in the U.S. export control system.) The first section of the report describes the three overarching goals of U.S. import policy and the tension among them. Second, the report summarizes recent legislative developments and provides a legislative history of customs laws, followed by an overview of the U.S. import process as it operates today. Third, the import process and CBP's role in it are discussed.\nCongress has a direct role in organizing, authorizing, and defining CBP's international trade functions, as well as appropriating funding for and conducting oversight of its programs. Thus, the final section highlights several policy issues that Congress may consider in its oversight role or as part of customs or trade legislation, including measures seeking to provide additional trade facilitation benefits to importers and others enrolled in \"trusted trader\" programs, to improve enforcement of intellectual property and trade remedy laws, to strengthen cargo scanning practices, and/or to promote modernization of customs data systems, among other issues.", "U.S. import policy seeks to balance three overarching policy goals. First, import policy promotes trade facilitation . Trade facilitation refers to efforts to simplify and streamline international trade procedures to allow for the easier flow of legitimate goods across international boundaries and thereby to reduce the costs of trade. Trade facilitation includes the availability of advanced customs rulings, transparent and efficient procedures, elimination of \"red tape,\" clear information, effective communications, and cooperation between border agencies, among other provisions.\nTrade facilitation is a priority for CBP and the trade community because trade represents a key component of the U.S. economy. International trade accounts for about a quarter of the U.S. economy, with merchandise trade (i.e., cargo) accounting for more than three-quarters of all U.S. trade flows. Most economic research finds that while international trade may impose short-term costs on certain sectors and industries that compete with imports, in the long run, trade promotes efficiency, reduces costs to consumers, and increases economic growth due to competitive advantage. With the production of goods increasingly organized into global supply chains, in which the manufacture and final product assembly often occur in two or more countries, intermediate components during the manufacturing process are a significant percentage of total imports and exports in most countries, and a wide variety of U.S. manufacturers depend on the efficient import and export of these inputs.\nPartly for this reason, trade facilitation has been a priority issue for the United States and its international partners in organizations such as the World Trade Organization (WTO) and the World Customs Organization (WCO), and in free trade agreement negotiations (FTAs). Within the WTO Doha Development Round of multilateral trade negotiations, for example, the United States has pursued \"the shared objective of a rules-based, transparent, and efficient approach to goods crossing the border.\" In the WTO, the United States was instrumental in negotiating binding disciplines on trade facilitation included in the December 2013 multilateral \"Bali Agreement.\" The United States and other members of the WCO are encouraging the use of electronic systems to expedite the clearance of merchandise entries and to ensure effective customs controls, including the adoption of a \"single window\" data system through which multiple cross-border regulatory agencies can clear merchandise entries (see \" Interagency Coordination \").\nThere is an inherent tension between efforts to promote efficient trade flows, and a second goal of U.S. import policy: the enforcement of trade laws designed to protect U.S. consumers and business against illegal imports and to collect customs revenue. In general, U.S. trade laws seek to protect U.S. consumers by enforcing health and safety standards, and to protect U.S. businesses by enforcing patent, trademark, and copyright laws and by collecting anti-dumping and countervailing duties (AD/CVD). Trade enforcement policies also govern the collection of tariffs, fees, and taxes; CBP generated more than $36 billion in revenue in FY2013, including more than $31 billion in customs duties.\nThe third overarching goal of U.S. import policy is import security , or preventing the entry of chemical, biological, radiological, and nuclear (CBRN) weapons and related material; illegal drugs; and other contraband. While customs agencies have always played a role in protecting public safety, including through narcotics enforcement in particular, the terrorist attacks of September 11, 2001 (9/11), caused many Americans to place even greater emphasis on transportation and port security. Thus, security measures enacted after 9/11 placed additional responsibilities on customs officials to pro-actively prevent weapons of mass destruction and other threats to the homeland from entering the United States and have made import security a central feature of U.S. trade policy (see \" Major Post-9/11 Import Security Legislation \"). Import security also has become an important feature of international efforts, and the United States and its partners in the WCO have adopted new security protocols for tracking, inspecting, and screening containerized imports and exports.\nTrade facilitation is in tension with trade enforcement and import security because trade facilitation involves promoting faster and more efficient trade flows, while trade enforcement and import security involve identifying and preventing illegal flows—tasks that often involve slower cargo flows and reduced efficiency for the importer. These competing pressures make the implementation of import policy a complex and difficult task, which CBP addresses through a process of risk management, as described below (see \" The Import Process \").\nMany policy questions with respect to the import process concern how Congress and CBP balance these three goals. Some U.S. importers and some in Congress have criticized CBP for neglecting trade facilitation in favor of import security and trade enforcement. For example, some in the trade community view the paperwork and additional reporting requirements imposed on U.S. importers as overly burdensome, and they assert that these requirements run counter to U.S. interests by threatening America's economic security. Others argue that infrastructure issues, scanning, and inspections at land ports of entry result in unacceptably long and unpredictable border wait times. Delays have been described as particularly onerous at the U.S.-Mexico border, where trade has increased more than sixfold since the North American Free Trade Agreement (NAFTA) was implemented in 1994. Several studies have estimated the economic consequences of border crossing delays, including a 2008 draft report by the Department of Commerce that estimated that crossing delays at the U.S.-Mexico border resulted in $5.8 billion in lost economic output, $1.4 billion in lost wages, 26,000 lost jobs, and $600 million in lost tax revenues—and would result in losses twice this size by 2017. A review of nine additional studies concluded that \"one message comes through quite clearly—long and unpredictable wait times at the POEs are costing the United States and Mexican economies many billions of dollars each year.\"\nAt the same time, others in Congress and in the trade community assert that the United States may remain vulnerable to a terrorist attack against a port of entry—with potentially catastrophic results—and that CBP should place greater emphasis on import security, even if the economic costs are high. Some Members have expressed frustration, for example, that the great majority of cargo containers are not scanned or physically inspected prior to arrival at a U.S. port. Similarly, some manufacturers have alleged that CBP has not adequately investigated allegations of duty evasion, product mislabeling, fraudulent country of origin declarations, or deliberate misclassification of shipments; and some assert that their intellectual property rights (IPR) are being violated by ever growing imports of counterfeit goods, and that CBP efforts in collaboration with the private sector in identifying and enforcing IPR violations have been inadequate. In short, how Congress and CBP balance trade facilitation, trade law enforcement, and import security has important implications for homeland security, public safety, and virtually every sector of the U.S. economy. To varying degrees, this tension underlies most aspects of U.S. import policymaking.", "Several bills have been introduced in the 114 th Congress to reauthorize CBP's customs-related activities, including S. 1269 , the Trade Facilitation and Trade Enforcement Act of 2015 (Hatch; introduced May 11, 2015); related bill H.R. 1907 (Tiberi; introduced April 21, 2015); and H.R. 1916 (Levin; introduced April 21, 2015). S. 1269 was reported by the Senate Finance Committee on May 13, 2015; and H.R. 1907 was marked up and ordered reported by the House Committee on Ways and Means on April 23, 2015.\nIn the Senate, on May 14, 2015, the text of S. 1269 was incorporated into H.R. 644 (which was renamed the Trade Facilitation and Trade Enforcement Act of 2015) and subsequently passed by a vote of 78-20. On June 12, 2015, the House passed an amended version of H.R. 644 by a vote of 240-190. In a joint statement released June 17, 2015, Senate Majority Leader Mitch McConnell and House Speaker John Boehner stated their intent \"to have a conference on the customs bill and complete that in a timely manner so that the President can sign it into law.\"\nTitle I of the House and Senate versions of H.R. 644 would require CBP to, among other things, work with the private sector and other federal agencies to ensure that all CBP partnership programs provide meaningful trade benefits to program participants; require CBP to establish key performance measures on modification; carry out facilitation and trade enforcement functions; require CBP and Immigration and Customs Enforcement (ICE) to establish joint educational seminars (with private sector input authorized) for enforcement personnel at POEs; and require CBP and ICE, in consultation with federal agencies, other law enforcement agencies, international organizations, and other interested parties, to develop and report to Congress on a biennial joint strategic plan for trade facilitation and enforcement.\nTitle I would also authorize existing CBP programs, including customs modernization efforts such as the Automated Commercial Environment (ACE) and the International Trade Data System (ITDS), the Commercial Customs Advisory Committee (COAC), the Centers of Excellence and Expertise (CEEs), and targeting and analysis groups to focus on each of CBP's Priority Trade Issues (PTIs). The Government Accountability Office (GAO) and CBP would also be required to report on CBP improvements in areas including trade enforcement, tracking merchandise in-bond, and drawback simplification. In Section 111, the Senate version would authorize a Commercial Targeting Division (CTG) and National Targeting and Analysis Groups (NTAGS) to target priority trade issues (PTIs). The CTG would establish methodologies for assessing import risk and issuing Trade Alerts to port directors. Section 111 of the House version would authorize the National Targeting Center to perform similar functions. Both versions would allow a port director to determine not to conduct further inspections for certain reasons, provided that other Customs authorities are notified. Additionally, Title I of the House and Senate versions of H.R. 644 would require CBP to strengthen internal controls, in part, by developing criteria for assigning importer-of-record identification numbers; and would provide CBP with the authority to strengthen enforcement controls over new importers, including ensuring collection of duties, fees, and penalties through risk-based bonding. The House-passed version would also require CBP to collect additional information on \"nonresident importers\" and would require customs brokers to collect information on the identity of importers.\nThe House-passed version of H.R. 644 would also require CBP to establish priority trade issues (PTIs), including Agriculture, antidumping and countervailing duties (AD/CVD), Import Safety, Intellectual Property (IPR), Textiles and Wearing Apparel, and Preference Programs. Additionally, for purposes of the Title, the term \"appropriate congressional committees\" is specifically identified as the Committee on Finance and the Committee on Homeland Security and Governmental Affairs of the Senate; and the Committee on Ways and Means and the Committee on Homeland Security of the House of Representatives.\nTitle II of both versions address import health and safety. Title II would establish an interagency import safety working group, chaired by the Secretary of Homeland Security. The group would be responsible for developing a joint import safety rapid response plan to establish protocols and practices that CBP, in conjunction with other federal, state and local authorities, must use when responding to cargo that poses a threat to the health or safety of U.S. consumers. Title II also requires joint exercises with these entities and training for CBP port personnel in enforcement of import health and safety laws.\nTitle III of both versions of H.R. 644 addresses intellectual property rights (IPR) enforcement. First, Title III would amend customs laws to authorize and direct CBP (except in cases that would compromise an ongoing law enforcement or national security investigation) to share information with rights holders so that they could help to quickly identify whether a product entering the United States at a POE is in violation of a copyright or trademark. Second, CBP would be authorized to seize merchandise if it is found to be in circumvention of IPR laws, and would require CBP to notify an injured right holder if they are included on an annually revised, CBP-maintained list. Third, the Secretary of DHS is directed to enforce copyrights on goods for which the owner has submitted a copyright application in the same manner as if the copyright were already registered. Title III would also establish a National Intellectual Property Rights Coordination Center within CBP.\nTitle IV of S. 1269 , and H.R. 1907 , and Title V of H.R. 1916 , address antidumping (AD) and countervailing duty (CVD) evasion. One major difference between the Senate and House versions is that even though both bills would require the investigation of allegations of AD and CVD evasion within specific deadlines and requirements, the Senate version would require CBP to investigate the allegations, while the House version would grant the Department of Commerce authority to carry out investigations. H.R. 1916 would assign primary investigative duties of AD/CVD evasion to CBP.\nAlso related to AD/CVD laws, the House version would establish a Trade Remedy Law Enforcement Division in CBP, direct CBP to identify evasion, authorize increased data sharing between CBP, the Department of Commerce, and the U.S. International Trade Commission for enforcement actions against evasion, and direct CBP to enter into agreements with customs officials in foreign countries to increase cooperation in combatting evasion The House version would also require CBP to assign sufficient personnel to prevent and investigate evasion, require CBP to submit an annual report to Congress detailing evasion policies and activities, terminate the ability of new shippers to post bonds during new shipper AD/CVD reviews, and require the Government Accountability Office (GAO) to submit a report to Congress on the effectiveness of CBP efforts in investigating and preventing AD/CVD duty evasion.\nTitle V of both versions of H.R. 644 seeks to amend AD and CVD laws, in part, by clarifying and expanding the methods that the International Trade Administration of the Department of Commerce (ITA) and the U.S. International Trade Administration (USITC) may use to make determinations in AD/CVD investigations. For example, Title V would clarify that the ITA, in cases in which an exporter, manufacturer or producer of the targeted merchandise fails to cooperate by providing information needed to calculate the duty rate, that the highest applicable dumping or subsidy rate may be used. The amendment would also clarify and expand the calculation methods that the ITA may use to calculate AD/CVD rates if there are particular market situations that may distort prices or costs. Title V would also clarify the authority of the ITA to limit the number of foreign exporters, manufacturers, or producers for which it calculates individual duty rates if it finds that an investigation is unduly burdensome due to the complexity of the issues or information presented, among other factors.\nWith regard to the USITC's injury phase of AD/CVD investigations, Title V would amend the definition of \"material injury\" to provide that a negative determination of material injury may not be found solely on the basis of domestic industry profitability or recently improved performance. The section would further expand the criteria that the USITC must use to evaluate the impact of competing imports to include the effects of \"actual and potential decline in output, sales, market share, gross profits, operating profits, net profits, ability to service debt, productivity, return on investment, return on assets, and utilization of capacity.\" Title V would also revise the \"captive production test\" that the USITC must use to assess injury if the targeted product is a component used in a downstream finished good.\nTitle V of both bill versions would also address additional trade enforcement priorities by requiring the Administration, in close consultation with Congress, to identify these priorities and to more regularly consult with Congress on enforcement strategies. The Administration would be directed to address trade enforcement issues that, if eliminated, would have the most impact on positive U.S. economic growth. The enforcement provisions in these bills would also authorize the Administration to reinstate the suspension of concessions under Article 22 of the WTO dispute settlement agreement under certain conditions. The bills would also require the USITC to provide an Internet-based database to provide information on the volume and value of imports; and would require the Department of Commerce to provide reports on quarterly changes in the volume and value of imports.\nTitle VI of the Senate bill would also establish a Trade Enforcement Trust Fund to be used by the USTR and other agencies to enforce U.S. trade agreements and trade rights under the WTO and U.S. free trade agreements (FTAs). The trust fund could also be used for trade capacity building efforts. Title VI of the Senate version of H.R. 644 would also require CBP and ICE to institute certain measures to stop illegal honey transshipment; and require that the two agencies train and employ sufficient personnel to detect, identify, and seize cultural property, archeological or ethnological materials, and other fish, wildlife or plants that violate U.S. laws. Title VI would also codify the establishment of the Interagency Trade Enforcement Center (ITEC).\nRegarding IPR enforcement, the Senate version would add countries that deny adequate protection of trade secrets to the USTR's priority watch list, and require the USTR to develop an action plan for each country that has been on the list for at least one year. S. 1269 would also establish at USTR a Chief Innovation and Intellectual Property Negotiator with the rank of Deputy USTR.\nTitle VII of the Senate version addresses issues regarding currency undervaluation. Among other things, Title VII would require the ITA to investigate alleged currency undervaluation in AD/CVD investigations and would provide a method for calculating the amount of undervaluation. The bill would also require the Administration to actively engage with those countries found to manipulate exchange rates in order to urge implementation of monetary policies that would address the issue. The House version would provide for engagement with other countries on currency undervaluation, but contains no enforcement provisions. Both bills would also establish an Advisory Committee on Exchange Rate Policy to advise the Treasury Secretary on the impact of international exchange rates on the policies of the United States.\nTitle VIII of the Senate version would provide a process for Congress, in conjunction with the USITC, to receive and consider a miscellaneous trade bill (MTB) containing proposed duty suspensions and reductions in 2015 and 2018. The process would require Congress to post on the Internet a process for submission and consideration of proposed duty suspensions for possible inclusion in the MTB, and also require the USITC to publish in the Federal Register and on the Internet a notice requesting MTB submissions from the public.\nTitle IX of the House and Senate versions of H.R. 644 address miscellaneous customs provisions. All three bills would raise the de minimis value (currently $200) for unaccompanied cargo to $800. The bills would also require DHS to consult with Congress no later than 30 days after proposing and 30 days prior to finalizing, any DHS policies, initiatives, or actions that would have a major impact on trade and customs revenue functions. Other provisions include adding committing or conspiring to commit an act of terrorism to the list of offenses that are grounds for removal of a customs broker's license, amending Harmonized Tariff Schedule chapter 98 to reduce the record-keeping burden on U.S. goods entering without improvement abroad, and allowing for the subtraction of the value of U.S. components assembled in goods that are exported and returned after being improved abroad. Miscellaneous provisions also include making bulk cargo residue exempt from duty and implementing drawback simplification. All three bills would eliminate the \"consumptive demand\" exception to the prohibition on importation of goods made with convict, forced, or indentured labor. The Senate version of H.R. 644 would also provide offsets, in Title X, for the bill by temporarily extending an increased customs user fee, among other things.", "The U.S. Customs Service (USCS), the agency historically responsible for trade facilitation and enforcement, was established by an act of Congress on July 31, 1789 (1 Stat. 29), and on September 2, 1789, was placed under the Secretary of the Treasury. At that time, the primary role of the service was to collect U.S. customs tariffs, which were the major revenue source for the U.S. government until the federal income tax was established in 1913. Key laws establishing and authorizing the trade functions of the USCS included provisions in the Tariff Act of 1930, the Customs Simplification Act of 1953, and the Reorganization Plan of 1965.\nMore recent customs legislation can be categorized into two components. The first is focused on the Customs Service's traditional role of trade facilitation and enforcement, and the second, which emerged following the 9/11 terrorist attacks, has focused on the issue of import security. The Homeland Security Act ( P.L. 107-296 ) placed all or parts of 22 different federal departments and agencies, including the Customs Service, into the Department of Homeland Security (DHS). DHS's bureau of Customs and Border Protection (CBP) has been the lead agency facilitating, enforcing, and securing trade flows since 2003.", "The last time that the then-USCS's trade functions were fundamentally reorganized was in 1993, in Title VI of the North American Free Trade Agreement Implementation Act ( P.L. 103-182 ), also known as the Customs Modernization and Informed Compliance Act, or \"Mod Act.\" Other major legislation addressing these functions was Title IV of the Security and Accountability For Every (SAFE) Port Act of 2006 ( P.L. 109-347 ) that addressed trade facilitation and enforcement by reorganizing DHS's trade functions, requiring increased interaction with the trade community, and providing for greater congressional oversight.", "The Mod Act, implemented on December 8, 1993, amended many sections of the Tariff Act of 1930 that applied to USCS's role in trade enforcement. The law was the culmination of a multi-year effort among Congress, the USCS, and the Joint Industry Group (a coalition of private-sector firms involved in international trade), to develop legislation on Customs modernization. While the main purpose of the law was to streamline, automate, and modernize USCS's commercial operations, the law was also intended to improve compliance with U.S. customs laws, and to provide safeguards, uniformity, and due process rights for importers.\nThe Mod Act addressed the tension between trade facilitation and trade enforcement by replacing the historical \"agency-centric\" model of trade enforcement with a \"shared responsibility\" approach. Thus, whereas USCS previously had monitored imports and determined the level of customs duties owed by each importer, under the shared responsibility approach USCS (now CBP) is required to inform importers of their rights and responsibilities under the customs regulations and related laws; and importers of record are required to be aware of their legal obligations and to make their own duty determinations through the concept of \"informed compliance.\" Importers are also required to exercise \"reasonable care\" when classifying and determining the value of imported merchandise. If importers have questions about the country of origin, classification, or valuation of merchandise, they may apply to CBP for a binding determination (known as a customs ruling) prior to importation.\nThe Mod Act placed a greater administrative burden on the importer, and shifted USCS's focus to the collection of data and post-entry enforcement (i.e., audits) to ensure that all legal requirements have been met. By reducing USCS's role in duty determination, the act freed up agency assets to modernize the import process and improve post-entry enforcement. Private industry stakeholders accepted these increased responsibilities because the law also provided for a quicker and more transparent import process through streamlined and automated customs operations.", "Title IV of the SAFE Port Act addressed the organization, management, and oversight of CBP enforcement functions. Title IV required DHS to designate a senior official to ensure the coordination of the trade and customs revenue functions in DHS and with other federal departments and agencies; and that CBP's trade functions were not diminished and kept pace with the level of trade entering the United States.\nTitle IV also required additional consultation with representatives of the business community, including CPB's Commercial Operations Advisory Committee (COAC) on DHS policies and actions that could have significant impact on international trade and customs revenue functions; and established an Office of International Trade (OIT) within CBP; required DHS, the U.S. Trade Representative (USTR) to work through the World Trade Organization (WTO), the World Customs Organization (WCO), and other international organizations to align customs requirements to the extent possible to facilitate the efficient flow of international trade.\nTitle IV also authorized the establishment of the International Trade Data System (ITDS) as part of the Automated Commercial Environment (ACE), CBP's interactive customs data management system. ITDS is an intergovernmental project to coordinate and standardize the collection of trade enforcement data by creating a single portal for the collection and distribution of import and export data to be used by all 48 federal government agencies that play a role in trade enforcement. The section required all federal agencies involved in trade enforcement to participate in the ITDS.", "While previous customs legislation focused on the tension between trade facilitation and enforcement, the 9/11 attacks focused America's attention on homeland security. With the attacks having been executed by foreign nationals traveling on commercial aircraft, an immediate priority was to reorganize existing law enforcement resources related to immigration, transportation, trade, and border security into a new federal Department of Homeland Security (DHS). At least six laws enacted between 2002 and 2007 included provisions related to the trade process and made import security a central feature of U.S. trade policy.", "Customs reauthorization legislation in the Trade Act of 2002 (Title III of P.L. 107-210 , the Customs Border Security Act of 2002) authorized appropriations for a number of noncommercial and commercial CBP programs as well as CBP's air and marine interdiction program. Funds were also authorized to be appropriated for the Automated Commercial Environment (ACE; see \" Pre-Entry: Advanced Cargo Screening, Scanning, and Inspections \"), for equipment and programs for drug enforcement, and for the detection of terrorists and illicit narcotics along the U.S borders with Mexico and Canada, and in Florida and Gulf Coast seaports.\nThe Trade Act also included one of the most significant additions to the customs clearance process since 9/11: a requirement that importers and exporters submit advance cargo manifest information prior to cargo arriving at a U.S. port of entry (POE). The law authorized the Secretary of the Treasury to publish regulations requiring the submission of this information, and directed the Secretary to consult with a broad range of import and export stakeholders and to base the regulations on the Secretary's determination of what is \"reasonably necessary to ensure aviation, maritime, and surface transportation safety and security.\" CBP uses this advance cargo information to conduct risk-based targeting through the Automated Targeting System (ATS; see \" Automated Targeting System \").", "The Maritime Transportation Security Act of 2002 (MTSA, P.L. 107-295 ) expanded DHS's authority under the Trade Act of 2002 to collect and share advance cargo data, and took several steps to strengthen port security. Section 102 of the MTSA established a new chapter of the U.S. Code (46 U.S.C. 701) to establish DHS's overall role in port security. Among other things, the law required DHS to assess vessel and port security and to develop national and regional maritime transportation security plans, required certain ports and vessels to develop security and incident response plans to be approved by DHS, and established a Department of Transportation grant program to help ports implement their security plans.\nThe MTSA also established new security requirements for U.S. and foreign ports and for ships operating in U.S. waters. Within the United States, the law required DHS to establish regulations to prevent individuals from entering secure areas of vessels or ports unless the individuals hold security cards. The port security cards are known as Transportation Worker Identity Credential (TWIC) cards, and are administered by the Transportation Security Administration (TSA) along with the U.S. Coast Guard. With respect to foreign ports (where Congress has no direct authority), the law required DHS to assess port security at foreign ports and to notify foreign ports if they are found to lack appropriate counter-terrorism measures. DHS is authorized to restrict the entry of vessels arriving from foreign ports that fail to maintain effective counter-terrorism measures. With respect to ships and other vessels operating in U.S. waters, the law required that certain vessels be equipped with an automatic identification system while operating in U.S. waters, and that DHS also develop and implement a long-range automated vessel tracking system for certain vessels.", "The Homeland Security Act of 2002 (HSA, P.L. 107-296 ) created a framework for the transfer of all or part of 22 different federal departments into the Department of Homeland Security (DHS), including the USCS and the U.S. Coast Guard.\nTitle IV of the act created within DHS a Directorate of Homeland Security headed by the Under Secretary for Border and Transportation Security. The directorate was given responsibility for preventing the entry of terrorists and the instruments of terrorism into the United States, and for ensuring the speedy, orderly, and efficient flow of lawful traffic and commerce, among other things. Title IV also established the U.S. Customs Service and the office of the Commissioner of Customs within DHS. The act specified that certain customs revenue functions would be retained by the Secretary of the Treasury, who may delegate the authority to the Secretary of Homeland Security. Although the customs inspection and enforcement authority of the former USCS were transferred to CBP, Section 412(b) of the HSA mandated that DHS could not \"consolidate, discontinue, or diminish\" the trade and customs revenue functions of the USCS, or reduce staffing levels or the resources attributable to these functions.\nThe HSA directed the President, no later than 60 days after enactment of the act, to transmit to the appropriate congressional committees a reorganization plan for the transfer of agencies, personnel, assets, and obligations to the new Department of Homeland Security. The President submitted an initial plan on November 25, 2002, and modified the plan shortly thereafter following consultation with then Secretary of Homeland Security designate Tom Ridge. In the modification plan, the USCS was renamed the Bureau of Customs and Border Protection (CBP), and the Bureau of Border Security was renamed the Bureau of Immigration and Customs Enforcement (ICE).", "The Coast Guard and Maritime Transportation Act of 2004 ( P.L. 108-293 ) contained a number of maritime security provisions that amended the MTSA. Title VIII of the law added security requirements to the import process provisions, including amendments to certain long-range vessel tracking system requirements. DHS was also required to submit a plan for implementation of a maritime intelligence system (previously authorized in the MTSA) to incorporate information on vessel movements and assign incoming vessels a terrorism risk rating.\nSection 808 of the law required the Department of Transportation to \"conduct investigations, fund pilot programs, and award grants\" to examine and develop certain equipment to enhance the investigative ability of CBP, including equipment to accurately detect nuclear, chemical, or biological materials; and tags and seals equipped with sensors that are able to track marine containers throughout their supply chains and to detect hazardous and radioactive materials within containers.\nThe law also required DHS to report on several cargo import security issues, including the costs to the government of vessel and container inspections, plans for implementing secure systems of transportation, progress on the installation of radiation detectors at all major U.S. seaports, the willingness of foreign seaports to utilize non-intrusive inspection (NII) techniques to inspect cargo bound for the United States, and evaluation of the existing cargo inspection targeting system for international intermodal cargo containers.", "On July 22, 2004, the National Commission on Terrorist Attacks Upon the United States (the 9/11 Commission) published its report on the circumstances surrounding the 9/11 attacks and made recommendations to guard against future attacks. The report expressed concern that the United States lacked \"a forward-looking strategic plan\" that devoted adequate attention to maritime and surface transportation.\nCongress responded by passing the Security and Accountability For Every Port Act of 2006 (SAFE Port Act, P.L. 109-347 ) and the Implementing Recommendations of the 9/11 Commission Act of 2007 (The 9/11 Act, P.L. 110-53 ). Title I of the SAFE Port Act focused on port security. The act updated several deadlines from previous legislation, including a deadline of April 1, 2007, for DHS to implement a long-range vessel tracking system, and a deadline of January 1, 2009, for issuing TWIC cards and for all ports to implement TWIC readers. In addition, the act required by December 31, 2008, that all containers entering U.S. ports be subject to radiation detection scanning.\nTitle II of the SAFE Port Act focused on international supply chain security, defined by Section 2 of the act as the \"end-to-end process for shipping goods to or from the United States beginning at the point of origin (including manufacturer, supplier, or vendor) through a point of distribution to the destination.\" The Title includes five main provisions with respect to maritime cargo security, which are summarized here and discussed in greater detail below:\nSection 203 authorized cargo to be screened through CBP's Automated Targeting System (ATS; see \" Automated Targeting System \") and further authorized DHS to require advanced electronic cargo data (see \" Advance Electronic Cargo Information \") as needed to improve ATS targeting. Section 205 authorized the Container Security Initiative (CSI; see \" Import Security Scanning and Inspections \"), designed \"to identify and examine or search maritime containers that pose a security risk before loading such containers in a foreign port for shipment to the United States.\" The section authorized DHS to designate particular foreign seaports to participate in the CSI, and directed DHS to establish criteria and procedures for nonintrusive inspection (NII) and for nuclear and radiological detection systems at CSI ports. Sections 211-223 authorized the Customs-Trade Partnership Against Terrorism (C-TPAT; see \" Trusted Trader Programs \") and set forth C-TPAT program parameters. C-TPAT is a voluntary program that allows certain trade-related firms to be certified by CBP as having secured the integrity of their supply chains. The law established three tiers of C-TPAT membership, and described potential membership benefits associated with each. Section 231 directed DHS to establish pilot programs in three foreign seaports to conduct NII and radiation detection scanning of cargo containers. Beginning one year after enactment of the act (i.e., by October 2007), the section required that DHS scan 100% of containers destined for the United States loaded in the three pilot ports and that questionable or high-risk cargo be identified for further inspection. The program is known as the Secure Freight Initiative (SFI; see \" Import Security Scanning and Inspections \"). Section 232 required that 100% of cargo containers originating outside the United States and imported into the United States be screened by DHS to identify high-risk containers. As enacted, the section required DHS to ensure that containers identified as high risk during the screening process also be scanned through NII and radiation detection equipment before they arrive in the United States (see \" 100% Scanning Requirement \").", "The 9/11 Act of 2007 included two provisions with respect to the import process. Section 1602 of the 9/11 Act required, by August 3, 2010, that 100% of air cargo bound for the United States or traveling within the United States be subject to scanning or inspection commensurate with standards established for passenger checked baggage.\nSection 1701 of the 9/11 Act amended the SAFE Port Act to require by July 1, 2012, that 100% of maritime containers imported to the United States—that is, whether or not they are identified as high-risk during the ATS screening process—be scanned by NII and radiation detection equipment before being loaded onto a vessel in a foreign port. The act authorized the secretary of DHS to extend the deadline by two years, and in additional two-year increments, by certifying that scanning systems are not available, are insufficiently accurate, cannot be installed, cannot be integrated with existing systems, will significantly impact trade and the flow of cargo, and/or do not provide adequate notification of questionable or high-risk cargo (see \" 100% Scanning Requirement \").", "Under the Homeland Security Act of 2002 ( P.L. 107-296 ) as amended in 2003, CBP is the lead agency charged with enforcing the trade laws under the Mod Act and the security measures under the MTSA, the SAFE Port Act, and the other post-9/11 laws. CBP's trade strategy emphasizes risk management , which means that CBP collects advance information about shippers, importers, and cargo to evaluate cargo for potential import security and trade enforcement risks, and focuses enforcement efforts primarily on cargo and shippers identified as relatively high risk. Conversely, those deemed lower-risk imports (including, e.g., shipments of \"trusted traders\") are less likely to be targeted for CBP enforcement and may be eligible for expedited processing—thus advancing CBP's trade facilitation goal and freeing up resources for targeting higher-risk imports.\nCBP's trade strategy also emphasizes layered enforcement , meaning that risk assessment and risk-based enforcement happen at a number of different points in the import process, beginning well before cargo arrives at a U.S. port of entry, and continuing long after cargo has been formally admitted to the United States. CBP attempts to target high-risk flows as early as possible in the import process, but its ability to conduct enforcement activities at different stages of the import process is designed to create multiple opportunities to interdict illegal imports.\nThe import process includes three main stages, as illustrated in Figure 1 . First, prior to entry at a U.S. POE, importers and carriers file paperwork and provide advance electronic cargo information, and all imports are subject to risk-based screening . Based on the results of this screening, certain goods are subject to import security scanning and inspection in foreign ports and/or upon arrival at a U.S. port. Second, importers file \"entry documents\" when cargo reaches a U.S. port, and cargo may be subject to additional scanning and inspection for import security and trade enforcement purposes. Admissible cargo is released from the port, and importers file an additional set of \"entry summary\" documents, which CBP uses to calculate customs duties and to make an initial assessment of taxes, fees, and duties owed. Third, following cargo entry, importers may challenge the assessment for up to a year, or longer under certain circumstances, until the final assessment of taxes and fees, a process known as liquidation . Trade enforcement activities may continue through audits and other post-entry investigations.", "The import process begins well before cargo arrives at a U.S. port of entry (POE). During the pre-entry stage of the process, importers of record submit electronic cargo manifests and other shipment data to CBP. This information may be submitted through CBP's Automated Customs System (ACE) or its Automated Customs Environment (ACE; see \"Text Box: CBP's Data Management Systems,\" below). CBP uses these advanced filing data to pre-clear cargo for admission, facilitate inflows, and target certain cargo for import security and trade enforcement. Cargo may be subject to import security scanning and inspections in foreign ports prior to being loaded on U.S.-bound ships and/or upon arrival at a U.S. port of entry (POE).", "One of CBP's primary tools for risk management is the use of trusted trader programs, including the Customs-Trade Partnership Against Terrorism (C-TPAT), which was established in November 2001, after the 9/11 attacks, and subsequently authorized as part of the SAFE Port Act of 2006 (see \" Security and Accountability For Every (SAFE) Port Act of 2006 ( )\"). Trusted trader programs are voluntary public-private partnership programs that permit certain import-related businesses to register with CBP, follow instructions prescribed by the agency to secure their supply chains, and thereby become recognized as low-risk actors and become eligible for expedited processing and other benefits. These programs are described in greater detail in the text box below.", "Under the Trade Act of 2002, as amended, importers and carriers seeking to import goods to the United States must provide DHS with electronic manifest and other data prior to arrival in U.S. ports. Carriers are required to provide names and addresses of shippers and consignees, detailed descriptions of the goods being imported, information about the carrier, and information about the day, time, and port of arrival. Specific filing requirements differ by mode of entry (truck, rail, maritime, or air) and in some cases by country of origin (see text box below).", "Maritime cargo is subject to additional reporting requirements under Section 203 of the SAFE Ports Act and an interim final rule published by CBP on November 25, 2008. Under the rule, maritime vessels must submit Importer Security Filings (ISF) and Additional Carrier Requirements known collectively as \"10 + 2\" filings—so-called because they include 10 data elements to be submitted by importers of record, plus 2 data elements to be submitted by carriers. The 10 data elements supplied by importers are\n1. importer of record number; 2. consignee number; 3. seller name and address; 4. buyer name and address; 5. ship-to party name and address; 6. manufacturer (supplier) name and address; 7. country of origin; 8. Harmonized Tariff Schedule (HTS) 6-digit classification; 9. container stuffing location; and 10. consolidator (stuffer) name and address.\nThe two data elements provided by carriers are\n1. the vessel stow plan; and 2. daily messages with information about any changes in container status.\nThe first 8 importer data elements must be provided 24 hours prior to lading of the goods on a vessel. Information on the stuffing location and the consolidator must be filed as soon as possible, but no later than 24 hours before arrival in the United States. Regarding the carrier data, the vessel stow plan must be provided no later than 48 hours after departure, and container status messages must begin within 24 hours of creation or receipt of the container.", "Electronic manifests and other advanced data elements (including the 10+2 data elements mentioned above) are forwarded to CBP's Automated Targeting System (ATS). CBP officers screen imports by comparing cargo and conveyance information against intelligence from CBP's National Targeting Center (NTC) and other intelligence and law enforcement databases. The ATS assigns every incoming container a risk-based score related to weapons of mass destruction, narcotics, and other contraband, as well as for the potential for commercial fraud, and other customs violations. The rule-sets for assigning risk scores are designed to identify suspicious activity or behavior and are updated on an ongoing basis in response to changes in intelligence and previous enforcement records.", "The SAFE Port Act of 2006 authorizes a pair of programs to conduct radiation detection and NII scanning in foreign ports: the Secure Freight Initiative and the Container Security Initiative.", "The Secure Freight Initiative (SFI) is a pilot program to test CBP's ability, working with international partners, to conduct radiation detection and NII scanning of 100% of cargo containers being loaded on U.S.-bound ships in certain ports. The SFI employs an integrated scanning system consisting of radiation portal monitors (provided by the Department of Energy) and NII imaging systems (provided by CBP) in a single location. CBP officers review the scanning data to determine which containers should be subject to secondary inspections. Secondary inspections, when called for, are conducted by host-state law enforcement agencies.\nIn 2007, Section 1701 of the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act; P.L. 110-53 ) amended the SAFE Port Act to require that by July 1, 2012, 100% of maritime containers imported to the United States—that is, from all ports, whether or not they are identified as high-risk—be scanned by NII and radiation detection equipment before being loaded onto a U.S.-bound vessel in a foreign port. Pursuant to law, the program began operation operated in three foreign ports in 2007: Port Qasim in Pakistan, Puerto Cortes in Honduras, and Southampton in the United Kingdom. The pilot was also subsequently implemented on a limited basis in the larger ports of Port Salalah in Oman, Port Busan in South Korea, and Singapore. Following DHS's evaluation of the program, however, the program was scaled back and currently operates only in Port Qasim.\nOn May 2, 2012, however, then-DHS Secretary Janet Napolitano notified Members of Congress that she would exercise her authority under the 9/11 Act to extend the deadline for 100% scanning. In May 2014, DHS Secretary Jeh Johnson extended the deadline for an additional two years. In the May 2014 letter, Secretary Johnson added that \"DHS's ability to fully comply with this unfunded mandate of 100 percent scanning, even in [the] long term, is highly improbable, hugely expensive, and in our judgment, not the best use of taxpayer resources to meet this country's port security and homeland security needs.\" The Secretary also stated that he had instructed CBP to fulfill the underlying objective of 100% scanning by, among other things, making refinements to its layered-security/risk-management strategy", "The Container Security Initiative (CSI) is a partnership program among CBP, Immigration and Customs Enforcement, and law enforcement agencies in CSI countries. Under the program, CBP officers and other federal agents at the National Targeting Center–Cargo (NTC-C) in Herndon, VA, review advanced sea cargo data and identify high-risk containers. High-risk containers are targeted for radiation detection and NII scanning within CSI ports. Host state law enforcement agents typically conduct physical scans in the foreign ports, and CBP personnel located in the port or in the United States evaluate the scan results. When an abnormality is detected, host state law enforcement agents conduct a physical inspection before the container is loaded on a U.S.-bound ship. CBP officers and ICE agents participate in such inspections either remotely or as partners within foreign ports.\nAccording to CBP, the CSI is operational in 58 foreign seaports in 30 countries; approximately 80% of all U.S. incoming maritime containerized cargo originates in or transits through a CSI port. About 1% of all cargo passing through CSI ports bound for the United States is scanned using radiation detection technology and NII scanning prior to being shipped to the United States (also see \" 100% Scanning Requirement \"). CBP reported that in FY2013, CBP officers reviewed 11,228,203 bills of lading and conducted 103,999 examinations of high-risk cargo in cooperation with host country counterparts.", "Imported goods are not legally entered until after the shipment has arrived within the port of entry, entry of the merchandise has been authorized by CBP, and all estimated duties have been paid. The importer of record (i.e., the owner, purchaser, or a licensed customs broker) has the option to enter the goods for consumption, enter them into a bonded warehouse at the port of entry, or to transport the cargo in-bond to another port of entry for processing.\nIf goods are being entered for consumption (e.g., going directly into U.S. commerce) importers are typically required to file entry documents within 15 calendar days of a shipment arriving at a U.S. port of entry. These documents may include an entry manifest or other form of merchandise release, evidence of the right to make entry, commercial invoices, packing lists, and other documents necessary to determine admissibility. Since most cargo is released electronically, however, packing lists and invoices are rarely requested.\nImporters also must provide evidence that a bond has been posted with CBP to cover estimated duties, taxes, and charges that may accrue. If the goods are to be released from CBP custody, an entry summary must be filed and estimated duties deposited at the port within 10 days of the entry of the merchandise.\nBased on screening of the cargo and a review of the entry documents, CBP officers at the port make a preliminary determination about cargo admissibility and either release or challenge the shipment. For cargo that is challenged, importers may be required to provide additional documents or take other steps to prove admissibility.", "", "The SAFE Port Act requires that 100% of cargo containers passing through U.S. POEs be scanned for radioactive material prior to being released from the port. Containers typically pass through drive-through portals at about five miles per hour, and radiation detection requires a few seconds per container, apart from congestion. Portals are often placed at natural choke-points, including near port exits or entrances to facilitate 100% radiation scanning. A radiation alarm may be triggered by naturally occurring radiation found in granite and other stone or by radioactive medical or scientific materials. When radiation is detected, further tests are conducted, including more sophisticated scanning or physical inspection, to match the radioactive profile detected against known radioactive materials in the shipment, or to identify and remove illegal radioactive material.\nAs of August 2012, CBP reported that 100% of containerized cargo entering through Northern and Southwest border land ports and 99.8% of containerized sea cargo is scanned through radiation portal monitors (RPMs). According to a 2012 GAO report, however, radiation scanning of international rail cargo mainly is conducted with less powerful portable, hand-held scanners; and scanning may only be triggered when NII scanning indicates a cause for alarm. Another GAO report found that CBP's radiation portal monitors may not detect certain nuclear materials when they are lightly shielded, and that such shielding may not be detected in the absence of NII scanning. GAO also has identified problems with the acquisition of RPMs by CBP and by DHS's Domestic Nuclear Detection Office.", "Within each port, officers in CBP's Advanced Targeting Unit use the ATS to select containers at a high risk for weapons of mass destruction, drugs, or other contraband for NII scanning. Containers with risk scores above a certain threshold are automatically selected for such scans, and officers also may select additional containers for NII scanning and/or physical inspection. Table 1 lists the number of rail, truck, and maritime cargo containers inspected by CBP between FY2005 and FY2013 (i.e., the total number processed for entry), and the number subject to secondary inspection, including NII scanning, physical inspection, or both.\nAs Table 1 indicates, the majority of cargo containers between FY2005 and FY2013 entered by ship (about 101 million out of 220 million containers, or 46%) or by truck (about 95 million, or 44%), with the remainder entering by rail (about 24 million, or 11%). Secondary inspection rates vary greatly by mode of entry, with 91% of all rail containers being scanned or inspected, versus 28% of truck-mounted containers, and 5% of maritime containers. Overall, about 25% of all incoming containers (6.1 million out of 24.3 million) were subject to secondary inspection in FY2011.\nThe different NII scanning percentages may reflect differences in port infrastructure and the shipping process, among other factors. While land ports are naturally structured as choke points with a relatively limited number of trucking or rail lanes, sea ports are larger facilities, and containers from any given ship may flow in multiple directions before being placed on another ship, rail, or truck conveyance. Truck and rail cargo also may be more regular than maritime cargo (i.e., one type of good per container), whereas maritime containers may be more likely to include multiple shipments bundled into a single container, making NII scanning more time consuming. The flow of maritime shipping is also less regular than land-based modes. Whereas truck and rail traffic arrives in a relatively steady stream at ports of entry, maritime cargo arrives in surges, with each incoming ship containing hundreds or thousands of containers that must quickly be processed.\nSome Members have expressed frustration that most cargo is not scanned before entering the United States, including the great majority of maritime cargo. However, while NII scans take less than one minute per container overall, evaluating NII images and comparing them to declared cargo manifests is a labor-intensive process that may involve multiple officers and may require up to several minutes per container, depending on the complexity of the cargo. Thus, substantially increasing the proportion of cargo scanned likely would be resource-intensive, and could slow the flow of goods in and out of the United States. Moreover, CBP estimates that the overwhelming majority of cargo entries are lawful, so that increased scanning may be of limited practical benefit (also see \" 100% Scanning Requirement \").", "CBP trade specialists at POEs also target certain containers for trade enforcement inspections based on ATS risk scores along with other intelligence and local enforcement considerations. Goods may be selected for trade enforcement examinations related to concerns about product safety, intellectual property violations (copyright or trademark infringement), counterfeit goods, labeling violations, or anti-dumping and countervailing duty (AD/CVD) circumvention, among other considerations. Trade enforcement inspections ensure that goods are correctly classified and accurately weighed for duty assessment, and administrative corrections are made as necessary. Trade specialists also look for evidence of trade-related fraud (e.g., false rules of origin labeling or valuation of merchandise), which may trigger an investigation by CBP trade specialists, ICE investigators, or other federal agents.\nCBP's trade enforcement efforts are focused on five priority trade issues (PTIs), or \"high risk areas that can cause significant revenue loss, hurt the U.S. economy, or threaten the health and safety of the American people.\" The five issues are antidumping and countervailing duties; import safety; intellectual property rights; textiles and apparel; and trade agreements. According to CBP, these PTIs serve as the core of CBP's trade enforcement strategy, and CBP focuses considerable resources and personnel on them. CBP's Performance and Accountability Report, Fiscal Year 2013 reported gains in identifying \"threats, challenges, and vulnerabilities in each step\" of the duty collection process, and in targeting textile and apparel manufacturers overseas whose trade preference claims could not be substantiated.\nTrade enforcement examinations can be a time-consuming procedure, especially in the case of containers with diverse contents, because CBP officers must physically unpack the container and examine all of its contents or a sample of contents. In some cases, such as when containers include certain food, plant, or animal products, CBP officers may be required to bring in representatives from other federal agencies (e.g., the U.S. Department of Agriculture) to assist with physical inspections, and to determine whether or not a good may be admitted or how it should be classified. Any storage and transportation costs associated with trade enforcement examinations are borne by the importer, and may also occur outside the port at a centralized examination station. As noted, one benefit of C-TPAT membership is that large shipments subject to secondary inspection may be eligible for stratified exams, minimizing storage costs in these cases (see \"Text Box: CBP Trusted Trader Programs\").\nAs Table 2 indicates, about 2% (3.2 million out of 140.5 million) of all cargo containers seeking admission to the United States were physically examined at a POE in FY2005-FY2013; and slightly less than half (1.5 million out of 3.2 million) of physical examinations were trade-related (as opposed to security-related). These examinations resulted in a total of 157,905 trade-related seizures during this period, meaning that seizures occurred in about 10% of examined containers. Most seizures were related to intellectual property violations (122,355 cases; 77% of trade-related seizures) and import safety violations (24,503 cases; 16% of trade-related seizures).", "Cargo that is found to be admissible and cleared through security and trade enforcement inspections is formally released into U.S. commerce. In these cases, importers must file additional entry summary documentation within 10 days to provide detailed information about the shipment (including customs classification, weight, and duty rates) that CBP will use to determine that all import requirements have been satisfied. Importers must pay storage and transportation costs during the cargo release period, and must pay initial customs duties and fees assessed prior to taking possession of imported goods.", "Several CBP programs are in place that are designed to facilitate lawful trade during and after the entry process, including CBP \"Simplified Entry\" process, its Centers of Excellence and Expertise (CEE), and the in-bond transportation system.", "In April 2011, CBP established a joint industry-CBP working group to establish a simplified entry process intended to reduce the administrative burden for importers, while providing the necessary documentation needed by CBP officials to do their jobs of identifying risks and collecting tariffs, taxes, and fees. The \"Simplified Entry\" process proposed to reduce the number of duplicative data elements required to obtain release of products for cargo. The process allows filers to submit a streamlined data submission of 12 required and 3 optional data elements. These data may be filed early in the import process to allow an expanded window of opportunity to identify potential risks. Filers may also update entry information throughout the import process to provide CBP more accurate data.\nIn December 2011, CPB began a simplified entry pilot program for air cargo. CBP selected 9 customs brokers (out of 40 applicants) operating out of 3 POEs (Chicago, Atlanta, and the Indianapolis Express Consignment Operation). In August 2012, CBP opened the program to all self-filers who hold a Tier-2 or higher C-TPAT status, and all importers who use customs brokers to file simplified entry information. As of September 2013, over 159,000 simplified entries had been filed for more than 1,100 importers.\nIn November 2013, CBP re-named the program the \"ACE Cargo Release Test,\" and dropped the C-TPAT requirement to allow more importers to participate. Eligible applicants are now accepted on a first-come, first-served basis, but if the volume of applicants exceeds CBP's administrative capabilities, CBP reserves the right to select individual participants to ensure a diverse pool. In February 2014, the test was expanded to cargo entries by ocean and rail; and to limited truck entries at 10 POEs on May 2014.", "To facilitate post-entry processing, CBP has launched several Centers of Excellence and Expertise (CEEs or Centers) since October 2011 to serve as industry-specific single points of post-entry processing for certain businesses enrolled in the C-TPAT and ISA trusted trader programs. The Centers are designed as \"one-stop-shops\" to align customs practices with the demands of modern business and to facilitate trade in the targeted industries. CBP-integrated staff in the Centers process entry summaries, post-entry amendment and correction reviews, protests, and other administrative work.\nThe 10 CEEs operating as of November 2012 are as follows:\nElectronics in Los Angeles; Pharmaceuticals, Health and Chemicals in New York; Automotive and Aerospace in Detroit; Petroleum, Natural Gas, and Minerals in Houston; Apparel, Footwear, and Textiles in San Francisco; Agriculture and Prepared Products in Miami; Consumer Products and Mass Merchandising in Atlanta; Industrial and Manufacturing Materials in Buffalo; Base Metals in Chicago; and Machinery in Laredo.\nThe Centers were designed so that the industries would receive fewer cargo delays, reduce costs, and enjoy greater predictability, while CBP would be able to shift its emphasis at the ports of entry to address higher-risk shipments and focus on trade enforcement issues. On a similar track, an Account Executive (AE) pilot was established to work with selected trusted partners in the electronics industry. At the end of these pilots, the two concepts were combined. The Centers also support improved information sharing between industry representatives and CBP staff to lead to more focused trade enforcement efforts.", "In-bond transportation facilitates the efficient flow of goods trade into the United States by allowing imported merchandise to arrive at one U.S. POE and be transported by a bonded carrier to another U.S. POE, where it officially enters into U.S. commerce (duties are paid upon entry), is exported out of the United States (duty payment is not required), enters a bonded warehouse (duties are paid upon release), or is brought into a free trade zone for further processing (duties are paid on the finished product upon entry). According to CBP, the four field offices that process the most in-bond shipments are Los Angeles, New York, Miami, and Seattle.\nMany in the trade community value the flexibility provided by the in-bond system as a way to avoid congestion and delays at U.S. seaports, but a 2007 GAO report raised concerns that CBP collects little information on in-bond shipments, does not know exactly how often the system was used, and performs limited analysis on in-bond flows. As a result, CBP is reportedly unable to identify systemic risks that could lead to revenue losses or to implement appropriate compliance measures to mitigate such risks. GAO also found that many in-bound cargo shipments remained unreconciled, and that regulatory flexibility that benefited the trade community created challenges for CBP's efforts to track in-bond shipments. Some in the trade community have also commented that vulnerabilities in the in-bond system may allow the entry of contraband goods, such as illegal apparel shipments or goods that violate international property rights laws.\nOn February 22, 2012, CPB proposed regulatory changes to the in-bond process. Among other things, the proposed changes would require electronic filing of in-bond applications, that applications contain 6-digit Harmonized Tariff Schedule (HTS) classification of all in-bond merchandise, a 30-day maximum arrival time for all in-bond shipments (except for pipelines), and the disclosure of any information relevant to the safety and security of the shipment. As of this writing, CBP has not made any announcements regarding the adoption or implementation of these proposed rules. A public comment by the National Customs Brokers and Forwarders Association of America pointed out, among other things, that some of the information that CBP proposed to require for in-bond shipments were duplicative, as they were already required pursuant to the Importer Security Filing and other CBP regulations.", "CBP responsibilities do not end when a product has entered the United States. Importers have up to 180 days from the date of entry to challenge CBP's assessment of duties owed, after which CBP makes a final determination of the rate and amount of duty owed, a process known as liquidation, and importers pay additional duties or receive refunds to reconcile any differences between estimated and final duties owed. CBP trade specialists and other federal agencies involved in trade enforcement may conduct additional enforcement activities in the period after cargo enters the United States, including audits of importers' records to ensure compliance with U.S. trade laws.", "Liquidation is \"the final computation or ascertainment of duties on entries for consumption or drawback entries.\" In most cases, the liquidation must take place within one year of the merchandise entry, but may be extended if (1) CBP does not have the documentation for proper appraisement, classification, or to ensure compliance with trade laws; or (2) the importer requests an extension and shows good cause. Liquidation also may be suspended (meaning the final assessment of duties is held open) in certain cases, including cases in which merchandise is affected by a pending court case, products are suspected to be prohibited, or merchandise has not been completely withdrawn from a customs warehouse or otherwise accounted for.\nLiquidation is suspended, for example, if imported merchandise is the subject of an ongoing antidumping (AD) or countervailing duty (CVD) investigation. In AD and CVD investigations, the suspension of liquidation begins as soon as the ITA makes an affirmative preliminary determination of dumping or subsidies. Suspensions end, and final duties are collected, after an administrative review of the investigation is conducted. In a Government Accountability Office (GAO) investigation regarding CBP's collection of AD/CVD duties, GAO investigators noted that the long lag time between cash deposit of estimated duties and the collection of the final duties assessed (on average 3.3 years, and in many cases much longer) made it difficult for CBP to collect the duties. In fact, the longer the lag time and larger the amount of duty owed, the greater the likelihood that CBP would be unable to collect the duties owed.", "As a general rule, CBP requires that all records regarding imports of merchandise be kept for a period of five years after the date of entry. These documents must be made available to CBP officials if they request an audit to determine if any additional duties, fees, and taxes are owed, or to insure that the importer is in compliance with laws administered by CBP.", "CBP conducts two main types of regulatory audits. First, focused assessment (FA) audits are risk-based evaluations of a company's CBP transactions. FAs begin with an assessment of the company's internal controls in order to identify system strengths and weaknesses and help predict future compliance. If certain risk areas are identified, CBP auditors examine those areas. Second, quick response audits (QRAs) are single-issue audits narrowly focused to address a specific objective within a short period of time. Examples of QRAs could include an audit of an importer's operations to determine if unlawful transshipments may have occurred, or an audit of a company's internal controls on intellectual property rights. Both types of audits may result in enforcement action and penalties if discrepancies are found.", "Any party who may have violated U.S. trade laws (including undervaluation, inaccurate description of merchandise, AD/CVD duty evasion, or improper country of origin declarations or markings) may choose to make a prior disclosure of the violation and thereby become eligible for reduced penalties. In order to receive reduced penalties, the party must make a complete disclosure before, or without knowledge of, a formal CBP investigation.", "Reauthorization of CBP's trade, enforcement, and security functions has been the subject of several hearings and legislative proposals in recent years. This section reviews selected issues addressed in previous legislation and hearings related to import policy involving customs issues, including policies related to the competing goals of trade facilitation, trade enforcement, and import security, along with customs modernization and interagency coordination. Many of these issues are also addressed in the customs reauthorization bills being discussed in the 114 th Congress (see \" Legislation in the 114th Congress \").", "Some in Congress have identified trade facilitation as a top priority with respect to U.S. customs law and CBP's import policies. Recent legislative attention has focused on the possible authorization of existing CBP trade facilitation programs, on trusted trader program benefits, and on proposals to reduce wait times at ports-of-entry, including through increases in CBP port-of-entry staffing.", "Several CBP trade facilitation efforts have been initiated as pilot programs without explicit legislative authorization. Examples include the Simplified Entry program (see \" Automated Commercial Environment (ACE) Cargo Release (formerly \"Simplified Entry \"), and the Centers of Excellence and Expertise (see \" Centers of Excellence and Expertise \"). In February 2014, the test was expanded to cargo entries by ocean and rail; and to limited truck entries at 10 POEs in May 2014.\nS. 1269 as reported on May 13, 2015 by the Senate Finance Committee and S. 1907 , as ordered reported by the House Ways and Means Committee on April 23, 2015, seek among other things, to direct CBP to improve the benefits received by trusted trader program participants, and to authorize the Centers of Excellence and Expertise.", "CBP's risk management approach to import policy emphasizes the use of trusted trader programs, such as C-TPAT and FAST, in part, to identify and facilitate the entry of low-risk importers and cargo, while focusing enforcement efforts on higher-risk flows. For this reason, some in Congress and some CBP officials support maximizing participation in C-TPAT and related programs. However, some businesses have described the benefits received by C-TPAT members as inadequate, especially in light of the time and financial investments required to become certified as C-TPAT members. In congressional testimony, some industry representatives have described their constituents as \"particularly unsatisfied\" by CBP's \"one-size-fits-all approach\" to risk management. And while it appears that many large import-related businesses have joined\nC-TPAT, CRS estimates, based on CBP data that only about 6% of all import-related businesses and about 8% of customs brokers have joined the program.\nOne issue for Congress is whether to increase C-TPAT benefits or initiate other steps to strengthen trusted trader programs in an effort to increase C-TPAT participation and to facilitate trade flows.\nIn practice, however, it may be difficult to substantially expand C-TPAT benefits. In the case of land ports, the primary benefit of C-TPAT/FAST membership is access to dedicated lanes where wait times may be shorter and more predictable. However, CBP may have limited capacity to add lanes because many ports are located in urban areas with limited space for expansion. And even if new lanes can be added at the border, carriers may confront ingress and egress bottlenecks that limit the benefits of such investments. In the case of maritime imports, the primary benefit of C-TPAT membership is that low ATS scores reduce the likelihood of an inspection. But with just 4% of all maritime containers selected for secondary inspection (see Table 2 ), C-TPAT membership may offer little practical advantage in this regard. In addition, some CBP officials have told CRS that further reductions in C-TPAT inspections may raise security risks because smugglers may establish clean companies and join the program in order to game the system. For these reasons, the best way to encourage C-TPAT membership may be to increase enforcement against non-members, thereby increasing the relative benefits of C-TPAT membership.", "Some in Congress have expressed concern about delays and unpredictable wait times at land ports of entry, particularly on the U.S.-Mexico border. Several governmental and nongovernmental groups have examined this issue and recommended strategies for reducing wait times. A draft Commerce Department report, for example, identifies three main strategies: (1) optimizing the dispersal of demand across available capacity; (2) improving throughput within the existing system through trusted trader programs and risk-management; and expanding capacity by adding crossing lanes (physical infrastructure); and (3) increasing staffing and operating hours. Similarly, a Department of Homeland Security Southwest Border Task Force made 10 recommendations in 2009 for improving U.S.-Mexico commerce, including enhanced trusted trader programs and risk management systems, faster throughput through improved scanning systems and document reviews, expanded POE infrastructure, and additional POE officers. A third set of taskforce recommendations presented in 2011 included a recommendation that CBP take the lead on adopting best practices related to border inspections, including use of automated risk management, establishing an automated release process, and developing a \"single window\" approach so that all importers and customs brokers to provide all of the necessary data elements at one U.S. government portal.\nWhile many strategies for promoting faster throughput may be in tension with security and trade enforcement goals (i.e., because faster throughput means less time reviewing each case), increasing port of entry personnel levels may speed flows while also increasing enforcement capacity. Moreover, as Figure 2 illustrates, while staffing for enforcement between ports of entry (i.e., U.S. Border Patrol) more than doubled between FY2004 and FY2012 (increasing from 10,819 to 21,394), DHS's Office of Field Operations (OFO) staffing at ports of entry increased just 20% during this period (from 18,110 to 21,790), even as enforcement responsibilities increased substantially in the post-9/11 period.\nOn the other hand, some Members have expressed skepticism about CBP's staffing model, and may oppose efforts to increase OFO personnel. Some have also encouraged CBP to make better use of technology and risk management (i.e., trusted trader programs), among other strategies, to reduce border wait times.", "CBP's role in trade enforcement has been the subject of congressional attention, especially as it relates to CBP's collection of tariffs and fees and its enforcement of trade laws including antidumping (AD) and countervailing (CVD) duty orders, U.S. intellectual property (IPR) laws, textile and apparel trade violations (e.g., transshipment), and import safety regulations. Some in Congress and some U.S. businesses assert that CBP does not adequately enforce these laws. Some manufacturers also allege that CBP has not adequately investigated allegations of duty evasion, product mislabeling, fraudulent country of origin declarations, or deliberate misclassification of shipments. And some assert that their intellectual property rights have been violated by growing imports of counterfeit goods, and that CBP collaboration with the private sector to identify and enforce IPR violations has been inadequate. Manufacturers also have asserted that CBP has not actively investigated alleged violations. CBP officials have responded that although CBP would like to be as transparent as possible, the agency must also honor due process requirements, which may require confidentiality.", "The major policy question with respect to import security is how CBP can minimize the risk that chemical, biological, radiological, and nuclear (CBRN) weapons, illegal drugs, and other contraband will enter through U.S. POEs, while also limiting the costs and delays associated with such enforcement.", "The SAFE Port Act of 2006 ( P.L. 109-347 ), as amended, required that as of July 1, 2012, that 100% of maritime cargo containers admitted into the United States be scanned through non-intrusive inspection (NII) and radiation detection equipment in a foreign port prior to being loaded on a U.S.-bound ship, unless the Secretary of DHS extends this deadline. On May 2, 2012, then-Homeland Security Secretary Napolitano notified Congress that she would exercise her authority to extend the 100% scanning deadline. In May 2014, Homeland Security Secretary Jeh Johnson extended the Department's time to meet the requirement by an additional two years. With just 1% of cargo scanned before being loaded on U.S.-bound ships—and only about 5% of cargo subject to NII scanning at any point (see Table 1 )—some Members have expressed frustration that DHS has made little progress toward implementing 100% scanning, and questioned the department about plans to increase the percentage of cargo scanned.\nThe decision to delay implementation of the 100% scanning program partly reflects the department's findings from the Secure Freight Initiative (SFI) 100% scanning pilot program. In its final report to Congress on the program, CBP identified three main obstacles to implementing 100% scanning at all foreign ports. First, 100% scanning requires significant host state and private sector cooperation, but some foreign governments and business groups do not fully support 100% scanning. Second, 100% scanning would be logistically difficult. Initial pilots were deployed in relatively low-volume ports with natural chokepoints, but many cargo containers pass through large volume ports with more varied port architectures. Logistical challenges are particularly burdensome given the priority that the modern shipping industry places on the rapid and efficient movement of goods. Third, 100% scanning would be costly. In February 2012, the Congressional Budget Office (CBO) estimated that implementing 100% scanning at foreign ports would cost an average of $8 million per shipping lane, or a total of $16.8 billion to implement 100% scanning for all U.S.-bound containers. Port operators and foreign partners also absorb costs associated with fuel and utilities, staffing, and related expenses.", "In light of these challenges, Congress may consider provisions to allow DHS to scan less than 100% of U.S.-bound cargo. Two reasons to scan less than 100% of incoming cargo are to reduce the costs of enforcement and to speed processing time. Some assert that the costs of 100% scanning may be great enough to shift certain trade flows away from U.S. markets, potentially harming the U.S. economy.\nMore generally, 100% scanning conflicts with DHS's general approach to risk management, which seeks to focus scarce inspection resources on the highest-risk containers. By scanning a smaller number of containers, DHS may be able to devote additional resources to each individual scan. This consideration is important because NII is labor-intensive, and scanning fewer containers may allow DHS to subject individual scans to greater scrutiny, and to maintain a lower threshold for opening containers with questionable NII images.\nIf illicit cargo is estimated to be limited to less than 1% of incoming containers, as CBP believes to be the case, focusing enforcement on the likeliest containers may be the most effective enforcement strategy. According to this line of thinking, rather than focus on 100% scanning, people concerned about import security may emphasize risk-based scanning along with investment in CBP intelligence to improve targeting, and/or increased CBP personnel, which would allow ports to conduct a larger number of targeted special enforcement operations.", "If Congress were to revisit the 100% scanning requirement, a second question may be where security scanning takes place. While the SAFE Port Act, as amended, requires cargo containers to be scanned in foreign ports, most NII scanning now occurs within U.S. ports, where CBP and DHS grant programs have supported investments in scanning equipment, and where Congress has direct authority to impose scanning requirements. Efforts to implement 100% scanning abroad may be difficult for the reasons discussed above.\nWith respect to radiation scanning to defend against a WMD attack, however, scanning cargo within U.S. ports may come too late in the process to prevent an attack—that is, the threat that a nuclear weapon or dirty bomb would be detonated within a port prior to being scanned. Given that several major ports are located close to population centers, and given the costs that would be associated with a significant disruption in port activities, a case can be made for conducting radiation detection scanning in foreign ports, before cargo is shipped to the United States. Scanning within foreign ports may be a less urgent priority with respect to NII scanning to detect drugs and other contraband. In this case, detection at any point prior to cargo being released from a U.S. POE may still accomplish the enforcement goals of detection and interdiction.", "Some Members have expressed frustration that DHS has not yet published final regulations governing card readers for the Transportation Worker Identity Credential (TWIC) program. One issue for Congress is whether to encourage DHS through legislation to move ahead more quickly with regulations to require that ports use TWIC card readers to restrict access to secure areas.\nYet Congress may also want to consider the overall effectiveness of the TWIC program. In 2011, a GAO report identified several weaknesses with the TWIC program, including that internal controls in the enrollment process and background checks may not limit cards to eligible individuals or insure that they maintain their eligibility after cards are issued, that facilities were vulnerable to security breaches in GAO's covert testing, and that DHS has not adequately assessed TWIC program effectiveness. DHS's report on its TWIC pilot program also identified strengths and weaknesses of the program, which may have contributed to the delay in publishing regulations. On one hand, DHS found that TWIC readers functioned properly when installed and operated in a manner that was consistent with a port's operational needs, and that certain TWIC readers verified card-holders' credentials more efficiently than visual inspections by security personnel. On the other hand, DHS also identified a number of problems that limited the overall success of the pilot programs. In particular, some card readers were less efficient than visual inspections; TWIC systems required more training than anticipated; some cards and card readers malfunctioned; some facilities had problems installing TWIC readers; some readers had problems scanning cards under certain environmental conditions; and some operators did not use the TWIC readers correctly or consistently. In 2012-2013, GAO conducted a performance audit that identified that many of the same weaknesses cited above persisted. GAO recommended, among other things, that Congress should halt DHS's efforts to promulgate a final regulation until the successful completion security assessment of the effectiveness of using TWIC.", "Customs modernization refers to the transition from CBP's Automated Commercial System (ACS) to its Automated Commercial Environment (ACE) for managing trade-related data (see \" Pre-Entry: Advanced Cargo Screening, Scanning, and Inspections \"), and the development of the International Trade Data System (ITDS). This transition has taken longer than expected and has substantially exceeded its original cost predictions, and not all import-related businesses have established ACE accounts. Some Members of Congress and some business groups have expressed frustration that ACE development lags behind expectations, however, CBP officials report that most have expressed support for the plans that CBP has put forth to develop the remaining core ACE processes in three years.\nIn February 2014, the President issued Executive Order 13659, \"Streamlining the Export Import Process for America's Businesses.\" The Executive Order required the completion of the International Trade Data System (ITDS), and automated \"single window\" through which importers and exporters will be able to transmit data and coordinate with Federal trade-participating government agencies (PGAs) regarding shipments of merchandise in an \"efficient and cost-effective\" manner. The order mandated that by December 31, 2016: (1) PGAs would have \"capabilities, agreements, and other requirements\" in place to utilize the ITDS; and (2) that the Department of Homeland Security (DHS) would confirm the completion of operational capabilities to enable trade community users to transmit import and export data to PGAs to facilitate the release and clearance of goods, and to transition from paper-based to electronic submission of data.\nCBP has designated ACE as the automated system that will become the platform for the \"single window\" required by the Executive Order, and plans to integrate or disable all other electronic functions by the end of December 2016. To that end, CBP has announced to the trade community three key \"mandatory use\" dates in the development process:\nBy May 1, 2015, all import or export manifest data filed electronically must be sent through ACE. This requirement extends to all modes of transportation—air, rail, ocean, and truck. By November 1, 2015, all electronic cargo release and entry summary data must be transmitted to ACE, including any data that extends to the jurisdiction of PGAs. By October 1, 2016, all additional cargo data must be sent to ACE, including protest and liquidation data.\nCBP has initiated ACE as a series of modules that encompass discrete phases of the import process. In general, as new ACE modules are introduced, importers initially are permitted to use either ACS or ACE for the affected task; and once the new ACE component has been tested and proven effective, importers are required to use the ACE components as certain ACS functions are disabled. The ACE development deployment schedule (latest version, December 2014) is available on the CBP website.\nThe ACE \"Monthly Trade Update\" for December 2014 provides a wrap-up of ACE deployment efforts in 2014. The final phase of \"Deployment D,\" completed on January 3, 2015, included the ability to file air import manifests (import manifests can now be filed for all modes of travel); the ability to file and process single transaction and continuous bonds; and integration of capabilities to support the Animal and Plant Health Inspection Service (APHIS), the Drug Enforcement Agency (DEA), and the Office of Foreign Assets Control (OFAC).\nAccording to CBP, the Automated Commercial Environment system is on target to be completed by the end of calendar year 2016. The agency's FY2014 and FY2015 budget for the project amounted to about $141 million each year, and CBP's FY2016 budget request is $154 million. With respect to maintenance costs, CBP projects a per annum budget of $68 million between FY2018–FY2026.\nS. 1269 and H.R. 1907 would address ACE by\nauthorizing the ACE computer system; authorizing funding of $153.7 million from FY2016 through FY2018 to complete ACE development and implementation; requiring several reports from CBP at various stages of ACE development and implementation; and and requiring a GAO report on the costs and effectiveness of CBP's efforts to complete ACE development, establishment, and implementation.", "CBP works with 47 partner government agencies (PGAs) that play a role in trade enforcement, but CBP and its PGAs have different missions and do not always collaborate successfully to implement U.S. import policies. For example, with respect to import security, important partners include the Transportation Security Administration (TSA), which takes the lead on air cargo scanning and TWIC cards, and the Coast Guard, which also plays a role on security and TWIC card enforcement. With respect to trade enforcement, CBP officers rely on the Food and Drug Administration and the Departments of Agriculture and Commerce, in certain cases, to identify health and safety violations, or to rule on other complex import questions. Similarly, while CBP conducts border enforcement of intellectual property rights at the port of entry, CBP relies on partnerships with ICE and other federal agencies to conduct criminal investigations and prosecute intellectual property theft and other trade violations. In this case, CBP's primary mission to detect and prevent illegal entries may conflict, to some degree, with ICE and other agencies' efforts to gather evidence and build cases against suspected trade violators. A DHS Office of the Inspector General report in 2012 found that CBP and ICE do not always share information and intelligence related to investigations, and that their data systems are not designed to allow efficient information sharing.\nCBP and its partner agencies are attempting to advance interagency cooperation, in part, through the Border Interagency Executive Council (BIEC), created in January 2010. The BIEC is comprised of agency leaders at the Assistant Administrator and Assistant Commissioner level and serves as an advisory board on interagency import safety issues. The BIEC also works in collaboration with CBP's Advisory Committee on Commercial Operations (COAC), the International Trade Data System (ITDS), and the National Strategy for Global Supply Chain Security.\nThe ITDS, which is being implemented through ACE, is one tool for improving interagency coordination. ITDS is an intergovernmental project to coordinate and standardize the collection of trade enforcement data by all relevant federal government. The goal is to build a \"single window\" for the electronic collection and distribution of standard government-wide import and export data for the use of government agencies with a role in trade enforcement. Under Section 405 of the SAFE Port Act, all federal agencies that require documentation related to the importation or exportation of cargo are required to participate in the ACE once ITDS is fully operational. As of this writing, all 47 PGAs are involved in ITDS implementation, with the Treasury Department coordinating interagency participation and CBP responsible for building and managing ITDS.\nSome in Congress may favor efforts to require other agencies to work more closely with CBP at various stages of the trade enforcement process. One option might be to require that each agency with responsibility for cargo clearance use the ITDS exclusively for authorizing the documentation, clearing, or licensing of cargo. On the other hand, some Members may be reluctant to delegate additional enforcement powers to CBP because doing so may dilute the enforcement authority of other federal agencies, potentially undermining their own missions.\nS. 1269 and H.R. 1907 would amend the Tariff Act of 1930 by adding a paragraph on information technology infrastructure that would require the Secretary of the Treasury to work with the head of each agency participating in the ITDS and the Interagency Steering Committee to ensure that each agency\ndevelops and maintains the necessary information technology infrastructure to support ITDS operation and submit all data electronically through ITDS; enters into a memorandum of understanding, or take other actions as necessary, to provide for information sharing between the agency and CBP for ITDS operation and maintenance; and identifies and transmits to the Commissioner of Customs the admissibility criteria and data elements necessary to authorize the release of cargo by CBP so that CBP can incorporate them into the operational functionality of ACE.", "An overarching goal of U.S. trade policy is to facilitate the efficient flow of goods in and out of the United States, but there is an inherent tension between the commercial interest in trade facilitation and the often competing goals of enforcing trade laws and import security measures.\nThe Mod Act of 1993 (Title VI of P.L. 103-182 ) sought to address this tension, to a degree, by replacing the previous model of trade enforcement, in which the then-U.S. Customs Service (USCS) was responsible for the classification of goods and assessment of duties, with a \"shared responsibility\" approach, in which importers make their own duty determinations and the customs agency is primarily responsible for revenue collection and oversight of importers. In theory, robust post-entry audits and high penalties for noncompliance should act as a deterrent, and shared responsibility may facilitate legal flows without compromising trade enforcement.\nThe tension is more profound when it comes to import security, however, because post-entry enforcement may be too late to prevent a significant security breach. Post-entry enforcement also may be problematic for certain trade issues, such as consumer safety laws, and in AD/CVD cases where harm may be done to U.S. industries. Thus, while C-TPAT follows a similar logic as the Mod Act by \"outsourcing\" certain security functions from CBP to trusted industry partners, post-9/11 security concerns may limit the benefits that may be offered to trusted traders—a fact that has been a source of frustration to importers who play by the rules but still confront burdensome trade procedures.\nAt the same time, certain programs may strengthen the overall import process without forcing such facilitation-versus-enforcement dynamics. Transition to the Automated Commercial Environment (ACE), for example, should streamline the import process while also enhancing enforcement efforts through the International Trade Data System (ITDS). Similarly, improving POE infrastructure and expanding POE personnel may speed trade flows while also making more resources available for inspections. Yet these types of win-win programs often are expensive to implement, and Congress may be reluctant to make such investments at this time.\nAppendix A. Glossary of Trade-Related Acronyms\nAppendix B. Selected Trade Statistics\nAppendix C. Estimated Expenditures for Selected Cargo Security Programs, FY2004-FY2016" ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 3, 2, 3, 3, 3, 3, 3, 3, 1, 2, 3, 3, 4, 3, 3, 4, 4, 2, 3, 4, 4, 4, 4, 3, 4, 4, 4, 2, 3, 3, 4, 4, 1, 2, 3, 3, 3, 2, 2, 3, 4, 4, 3, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_full h2_full h1_full", "h0_full", "h1_title", "", "", "", "h1_title", "", "", "", "", "h1_full", "", "h2_title h1_full", "h2_title", "", "", "", "", "h2_title", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "h2_title", "", "h2_full", "", "h2_full", "h2_title", "h2_full", "", "", "", "h2_full", "", "" ] }

{ "question": [ "What is the purpose of CBP?", "What are the purposes of CBP's policies?", "What role does Congress have in CBP?", "What bills regarding CBP were dealt with in Congress?", "What principles are laws dealing with the CBP based on?", "What has Congress done since the 9/11 attacks?", "What legislation has Congress introduced since the attacks?", "How do participants in the \"trusted trader\" program feel about CBP?", "What questions have been raised about CBP?", "What do critics of CBP say?", "Why do critics criticize CBP's security functions?" ], "summary": [ "U.S. Customs and Border Protection (CBP), within the Department of Homeland Security (DHS), is the primary agency charged with monitoring, regulating, and facilitating the flow of goods through U.S. ports of entry (POEs).", "CBP's policies are designed to (1) ensure the smooth flow of imported cargo through U.S. POEs; (2) enforce trade and customs laws designed to protect U.S. consumers and business and to collect customs revenue; and (3) enforce import security laws designed to prevent weapons of mass destruction, illegal drugs, and other contraband from entering the United States—a complex and difficult mission.", "Congress has a direct role in organizing, authorizing, and defining CBP's international trade functions, as well as appropriating funding for and conducting oversight of its programs.", "In the Senate, on May 14, 2015, S. 1269 was incorporated into H.R. 644 (renamed the Trade Facilitation and Trade Enforcement Act of 2015) and subsequently passed by a vote of 78-20. On June 12, 2015, the House passed an amended version of H.R. 644 by a vote of 240-190. Senate and House leaders have reportedly committed to resolve the two bill versions in a conference committee.", "Laws currently authorizing the trade facilitation and enforcement functions of CBP (as outlined in the Customs Modernization and Informed Compliance Act, Title VI of P.L. 103-182) emphasize a balanced relationship between CBP and the trade community based on the principles of \"shared responsibility,\" \"reasonable care,\" and \"informed compliance.\"", "Since the 9/11 terrorist attacks of 2001, Congress has placed greater emphasis on import security and CBP's role in preventing terrorist attacks at the border.", "Legislation addressing customs procedures and import security includes the Homeland Security Act of 2002 (P.L. 107-296), the Security and Accountability for Every (SAFE) Port Act of 2006 (P.L. 109-347), and the Implementing Recommendations of the 9/11 Commission Act of 2007 (P.L. 110-53).", "Some participants in CBP's \"trusted trader\" programs argue that the concessions (e.g., expedited processing; fewer container inspections) CBP provides at the border do not adequately justify the effort and expense to certify their supply chains.", "Questions have also been raised about CBP's management of trade facilitation, especially the means through which the Automated Commercial System (ACS) trade data management system is being phased out in favor of the newer Automated Commercial Environment (ACE).", "Some critics also assert that CBP has not adequately fulfilled its trade enforcement role, especially its duties for preventing illegal transshipments, protecting U.S. intellectual property rights, and collecting duties. Still others criticize CBP's performance of its security functions, especially because it does not yet physically scan 100% of maritime cargo as mandated by the SAFE Port Act of 2006, as amended. In May 2014, DHS Secretary Jeh Johnson extended the deadline for an additional two years.", "Still others criticize CBP's performance of its security functions, especially because it does not yet physically scan 100% of maritime cargo as mandated by the SAFE Port Act of 2006, as amended." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Global Health Initiative", "Legislation", "Funding", "Results", "Feed the Future", "Legislation", "Funding", "Results", "Global Climate Change Initiative", "Legislation", "Funding", "Results", "Conclusion" ], "paragraphs": [ "", "The Obama Administration built its foreign assistance programming around the priorities and practices it identified in the 2010 Presidential Policy Directive (PPD) on Global Development. The PPD was the first of its kind and sought to elevate global development as a pillar of American foreign policy, alongside defense and diplomacy. It identified broad-based economic growth and democratic governance as overarching U.S. development priorities and focused on three key initiatives as a means to support those priorities: the Global Health Initiative (GHI), the Global Climate Change Initiative, and the Global Food Security Initiative (Feed the Future). While built on the foundation of existing programs, each initiative was intended to bring new focus, improve coordination, and boost funding to the aid sectors it supports.\nThe Obama Administration followed a particularly active era in U.S. support for global development. Under the George W. Bush Administration, foreign assistance levels more than doubled, a new foreign aid agency was created (the Millennium Challenge Corporation, MCC), and the Bush Administration established, with strong congressional support and involvement, one of the largest foreign aid programs in history—the President's Emergency Plan for AIDS Relief (PEPFAR). The Obama Administration built upon these efforts, although within the context of an increasingly constrained budget and political environment. Within months of the PPD's release in 2010, the Republican Party won majority control in the House of Representatives, with priorities often at odds with the Democratic Administration. Concerns about the budget deficit and enactment of the Budget Control Act the next year reduced spending levels across the federal government, thereby reducing prospects for new investments in development assistance programs. Perhaps as a result of this political dynamic, the Obama Administration did not establish new aid programs, with the arguable exception of Power Africa, but rather sought to reconfigure and refocus existing programs. Some analysts suggest that the Administration was effectively limited after 2010 to efforts that were budget neutral and required little or no support from Congress.\nSpecific funding for the global health, climate change, and food security initiatives was first requested in the FY2011 International Affairs budget, but support through ongoing program funds was provided in FY2010 appropriations. Congress has generally not used the initiatives as funding frameworks but has supported the activities they encompass to varying degrees. The portion of U.S. bilateral development assistance obligated for global health, agricultural development, and environment programs—more than one-third of total economic aid from FY2012 to FY2015—has increased under the Obama Administration, continuing a trend begun under the Bush Administration ( Figure 1 ).\nWhile each of the Obama Administration initiatives is distinct, several common threads run through them, reflecting the Obama Administration's general global development strategy and priorities, as outlined in the PPD:\nFocus on Host Country Capacity . The policy sought to improve aid effectiveness by focusing efforts on partner countries and regions where the conditions seem most amenable to sustained progress. This took the form of \"fast track\" countries in the Global Health Initiative and \"focus countries\" in Feed the Future. One aspect of this focus on building partner capacity was an attempt to shift away from a pattern of emergency response aid toward a preventive posture (e.g., agricultural development aid instead of emergency food aid, or increasing capacity of governments to predict floods and other climate change impacts rather than providing post-disaster response). This selective approach is challenged by diplomatic pressure to spread aid broadly, potential conflict between U.S. priorities in a country or region, and concern that aid may be most needed in places with the least government and institutional capacity. Investment in Innovation and Research. The Obama Administration sought to foster development-focused research as a means to incentivize and identify \"game-changing\" innovations such as new vaccines, weather-resistant crop varieties, and clean energy technology. The U.S. Global Development Lab within USAID is perhaps the most significant manifestation of this PDD priority, but there are initiative specific components as well. For example, a Food Security Innovation Center (FSIC) was established at USAID as part of Feed the Future, which oversees numerous collaborative research programs, many of which predate the initiative. Whole of G overnment . Each initiative, as described in its roll-out and strategy documents, involves several U.S. government agencies beyond the primary international development actors (the U.S. Agency for International Development (USAID), the State Department, and the MCC). The Obama Administration emphasized that this \"whole of government\" approach was intended to bring the full range of U.S. expertise and resources to the challenges addressed by the initiatives, as well as to improve the efficiency and effectiveness of existing, but often uncoordinated, international activities. The whole of government approach may also be a way to identify a broader range of ongoing U.S. government funding that can be attributed to these objectives and related international commitments. In practice, this approach has faced coordination challenges, caused in part by varying congressional committee jurisdictions and lack of legislative or executive authority to compel cross-agency coordination and cooperation. The fractured oversight and lack of coordinating authority has also presented challenges for tracking initiative spending. Results - Oriented . The PPD emphasized the use of metrics by which to measure development progress and the accountability of recipients for achieving results. The initiatives were established with specific goals and, except for the Global Climate Change Initiative (perhaps due to the longer time frames required to return accurate environmental assessments), specific performance indicators. This was not a new concept, but reaffirmed an ongoing whole-of-government effort stemming from the Government Performance and Results Act (GPRA) of 1993, updated in 2010, which established unprecedented statutory requirements for all U.S. government agencies regarding the establishment of goals, performance measurement indicators, and submission of related plans and reports to Congress. The Obama Administration emphasized tracking results and impacts of foreign aid generally, updating the evaluation policies of USAID, State and MCC between 2010 and 2012 to require more frequent and methodologically rigorous evaluation of aid programs. Congress supported this effort as well, passing legislation in 2016, the Foreign Aid Transparency and Accountability Act, that codified many of the new evaluation and reporting requirements. Nevertheless, measuring outcomes that can be attributed to U.S. aid interventions remains a significant challenge. Much of the results information reported for the initiatives is selective and is not the product of evaluations using control groups to identify impact. Global Partnership . All of the initiatives sprang from multilateral efforts such as the G8 food security summit or the U.N Framework Convention on Climate Change, and all have multilateral components, including the Global Fund to Fight AIDS, Tuberculosis and Malaria, the Global Agriculture and Food Security Fund, and the Green Climate Fund, among others. Furthermore, each initiative emphasizes working with private sector partners to bring greater resources and expertise to development challenges, a foreign assistance trend that predated the Obama Administration. The Obama Administration made efforts to expand the multilateral aspects of the initiatives, arguing that U.S. resources can be leveraged for greater impact through partnership with other donors and entities, including private sector actors. Congress has generally been less supportive of the multilateral aspects of the initiatives, citing oversight and governance concerns, among other things. Cross- S ectoral . One theme of the Obama development approach detailed in the PPD was the need to work across sectors and avoid the \"stovepipe\" approach for which foreign assistance, and particularly health aid, has sometimes been criticized. The global health initiative, for example, recognized that nutrition, clean water, and women's empowerment may be as important to healthy communities as vaccines and antiretroviral drugs. Agricultural development activities to promote food security also affect community resilience to climate change. The three initiatives all overlap to some degree in their objectives, creating opportunities for synergies but also confusion over the attribution of funding to one initiative or the other.\nThis report provides a brief overview of these initiatives as they were introduced, how they have evolved over the years, funding trends, reported results, and other areas of particular congressional interest and activity.", "U.S. investments in global health increased significantly under the George W. Bush Administration, primarily as a result of the President's Emergency Plan for AIDS Relief (PEPFAR). Rather than create a new global health program aimed at a particular disease, President Obama emphasized the integration and coordination of ongoing global health efforts through an initiative he called the Global Health Initiative (GHI). The Administration launched the GHI in May 2009, calling on Congress to provide $63 billion over five years to \"improve health outcomes through strengthened health systems, increased and integrated investments in maternal and child health, family planning, nutrition and infectious diseases including HIV/AIDS, tuberculosis, malaria and neglected tropical diseases, and through a particular focus on improving the health of women, newborns and children.\" The approach was sometimes described as treating patients, not diseases, in contrast to the HIV-specific focus of PEPFAR. While GHI became the framework for all U.S. global health programs, the Administration identified eight \"fast-track\" countries (Bangladesh, Ethiopia, Guatemala, Kenya, Malawi, Mali, Nepal, and Rwanda) in which to focus additional technical and management support to enable quick implementation and learning from the new approach.\nThe Administration established a small GHI coordinating office within the State Department, put together GHI country teams in 42 countries, and established GHI country strategies, all with the purpose of streamlining efforts across agencies and program silos. The 2010 Quadrennial Diplomacy and Development Review (QDDR) outlined a plan by which leadership of GHI would shift to USAID when certain conditions were met. This transition never happened, however, and over the course of the Obama Administration the GHI as a distinct structure or strategy faded away. The \"fast-track\" country designation was no longer used. The GHI office closed in 2012, and its activities were integrated into the State Department's Office of Global Health Diplomacy. The Administration reportedly described this change as an elevation and cited the successful integration of GHI principles into country development plans. Others have commented that the office was ineffective and incapable of resolving interagency conflict, largely because it lacked the authority and designated funding to compel the cooperation of other federal entities. Most agency reports on global health stopped mentioning GHI after 2012, though annual congressional justifications for the international affairs budget continue to frame the global health request in the context of GHI.", "The GHI was never established in legislation, and the Administration did not seek authorizing legislation. Instead, it relied on existing authorities in the Foreign Assistance Act of 1961, as amended, and the PEPFAR authorization. It could be argued that by not seeking distinct authorization legislation, the Administration lost an opportunity to establish a stronger interagency coordinating authority.", "GHI exists in 2016 largely as a funding framework within the international affairs budget. The Administration requests GHI funding primarily through the State, Foreign Operations and Related Programs (SFOPS) appropriation. Congress in turn appropriates funds not for GHI, but for Global Health Programs, the account that was established in FY2007 to combine appropriations for PEPFAR and the Maternal Health and Child Survival account. Additional global health funds have been provided over the years through appropriations for the Departments of Health and Human Services and Defense. For a detailed account of global health funding trends by agency, see CRS Report R43115, U.S. Global Health Assistance: FY2001-FY2016 , by Tiaji Salaam-Blyther.\nIt appears from whole-of-government global health spending data that the initial GHI goal of $63 million over five years was not met. However, global health funding continued to grow early in the Obama Administration. In current dollars (adjusted for inflation), total global health funding leveled out after 2010 but remained historically high during a period of intense budget pressure ( Figure 2 ). Congress and the President were largely in agreement over global health funding levels throughout the Obama Administration.\nIn several years of the Administration, Congress provided more funds than the Administration requested for global health, including every year since FY2013. While there were initial disparities between the Administration and Congress when it came to allocations for specific global health priorities—for example, the Administration asked for more than Congress provided for Maternal and Child Health and Family Planning/Reproductive Health in some early years of the Administration—sector requests and appropriations aligned fairy closely throughout much of the Obama Administration. Adjusted for inflation, funding for maternal and child health increased steadily during the Obama Administration, while funding for malaria and tuberculosis programs, and for reproductive health and family planning, increased in the early years of the Administration before leveling or even decreasing slightly. In addition, nutrition programs became a distinct global health programs sub-account as part of GHI, and have received slight but steady funding increases ( Figure 3 ).\nAside from maintaing historically high funding levels for global health programs in general, two specific priorities of the GHI strategy appear to be reflected to a limited degree in the funding trends.\nThe portion of global health funding allocated to HIV/AIDS programs declined slightly but steadily during the administration, from 78% in 2008 to an estimated 70% in FY2016, consistent with the GHI goal of moving beyond the disease-specific focus and supporting broader health systems. A related trend is the increase in multilateral health aid, as represented by U.S. contributions to the Global Fund to Fight HIV, TB, and Malaria. Global Fund contributions increased in both dollar terms and as a portion of the economic assistance budget throughout the Obama Administration, perhaps reflecting the GHI emphasis on partnerships and leveraging the efforts of other donors.", "A focus on health outcomes was a key aspect of GHI, and the GHI strategy listed goals and targets in eight primary areas. A GHI website continued to present data related to the various global health focus areas after the GHI office closed, but the data have not been updated since July 2014. Table 1 compares the key goals detailed in the GHI strategy with recent results reported in a variety of U.S. global health program documents. Although these are not officially \"GHI results,\" they show areas of continued progress in the individual program areas once encompassed by GHI.\nThe GHI strategy and results framework faded away over the course of the Administration, but progress in global health outcomes that began during the Bush Administration was largely sustained, and in some areas accelerated during the Obama Administration. Some assert that implementation of the initiative was poorly managed, while others contend that U.S. global health programs were strong and effective before President Obama took office, and that the scaled back emphasis on GHI as a unique approach reflects a recognition that little change was needed. Strong support from Congress suggests global health will likely continue to be the leading development assistance sector for years to come.", "The Obama Administration's global food security initiative was the U.S. response to the G8 Summit in L'Aquila, Italy, which was held in June 2009 to address the 2007-2008 global food price crisis. The proportion and absolute number of hungry people worldwide had risen to historic levels. At the summit, President Obama pledged U.S. investments of $3.5 billion over three years (FY2010 to FY2012) to a global hunger and food security initiative to address hunger and poverty worldwide. The U.S. commitment was part of a global pledge by the G20 countries and others of more than $20 billion. This represented a return to the U.S. and global development policy agenda of the 1960s and 1970s, which emphasized agricultural and rural development. The United States and other donors channeled a significantly smaller portion of aid funds to agricultural development activities in the 1990s and first decade of the 2000s.\nIn May 2010, the Administration officially launched the Feed the Future initiative and, in November 2010, established a Bureau for Food Security within USAID to lead implementation of the initiative. Also in 2010, a multidonor trust fund called the Global Agriculture and Food Security Program (GAFSP), administered by the World Bank, was established as the multilateral funding mechanism to fulfill the G8 Summit commitments.\nFeed the Future emphasizes accelerating inclusive growth (affecting a broad range of participants, including small-scale farmers and women) in the agriculture sector of partner countries and improving nutritional status, particularly of women and girls. The initiative was built around five principles for sustainable food security first articulated at L'Aquila and endorsed at the 2009 World Summit on Food Security in Rome:\nsupporting comprehensive strategies; investing through country-owned plans; improving stronger coordination among donors; leveraging effective multilateral institutions; and delivering on sustained and accountable commitments.\nThe initiative was also a means of focusing and coordinating previously existing U.S. agricultural development policies. Assistance was to be provided primarily to focus countries, of which there are currently 19, which USAID has identified as having the greatest needs, strongest host-country commitment and resources, potantial for agricultural led growth, and opportunities for regional synergies. For more detailed background information on Feed the Future, see CRS Report R44216, The Obama Administration's Feed the Future Initiative , by Marian L. Lawson, Randy Schnepf, and Nicolas Cook.", "Of the three Obama initiatives discussed in this report, Feed the Future is the only one that has been specifically authorized in law, though this authorization was enacted in the last year of the Obama Administration. The activities that constitute the initiative are authorized under the broad provisions of the Foreign Assistance Act of 1961, but Members of Congress chose to introduce legislation to specifically and permanently authorize an agriculture-focused global food and nutrition security strategy and programs with H.R. 1567 , the Global Food Security Act of 2016, which was enacted by Congress and signed into law as P.L. 114-195 in July 2016. The law established a specific statutory foundation for global food security assistance, required the President to develop a whole-of-government strategy to promote global food security, and authorized funding to support the strategy (just over $1 billion per year) for FY2017 and FY2018. The required strategy was produced by the Administration in September 2016, and includes goals, objectives, and agency implementation plans for FY2017-FY2021.", "The Administration, working with Congress, easily met its Aquila pledge. Congress provides funding for Feed the Future programs primarily through the SFOPS appropriations bill. Congress does not specify a funding level for Feed the Future as a whole. Rather, it allocates funds (sometimes a specific amount and sometimes \"no less than\" a specific amount) for bilateral \"food security and agricultural development\" activities, which are implemented by USAID, MCC, the Peace Corps, and other agencies. In many years, a separate appropriation has been allocated for U.S. contributions to the GAFSP (administered by the Department of the Treasury), but recent appropriations legislation has not made a specific GAFSP allocation, instead stating that bilateral food security and agricultural development funds could be used for such a contribution. A portion of the Food for Peace program, funded through the Agriculture appropriation but implemented by USAID, is also counted in Feed the Future funding totals. The Administration determines whether or how to allocate these appropriated funds within the Feed the Future framework. As a result, it can be difficult to determine Feed the Future funding patterns based on appropriations acts. However, a look at Administration requests for Feed the Future and congressional appropriation for \"food security and agricultural development\" and GAFSP contributions year to year shows some interesting trends.\nIn the early years of the initiative, Administration requests significantly exceeded appropriated amounts, particularly with respect to GAFSP contributions. Since FY2013, however, appropriations have matched or exceeded Administration requests for food security activities, largely because the request for bilateral aid declined each year between FY2010 and FY2013. ( Figure 5 ). In the longer view ( Figure 1 ), agricultural development aid outlays over recent decades suggest that agricultural development became a higher priority within the foreign assistance budget, increasing from 2.2% of total economic aid in FY2005 to 4.5% in FY2015, and notably higher in real dollar terms than a decade prior. This trend began in the later years of the George W. Bush Administration and was maintained by the Obama Administration, even in the face of some early congressional resistance.", "To track the progress of the initiative, Feed the Future established two key impact indicators and several related output indicators. Table 2 summarizes some of the substantial but incomplete data on the two main goals of Feed the Future, as well as select output and outcome indicators that the Administration says can be directly attributed to U.S. government funding. All data are from the most recent report on Feed the Future progress.\nWhile the data on poverty reduction and stunting is limited and shows mixed results, Feed the Future appears to be achieving some measure of success. One independent assessment of the initiative found that the Obama Administration has succeeded in focusing agricultural development aid in select focus countries, consistent with Feed the Future criteria on need and potential for effective partnership. The same assessment pointed out, however, that the initiative is not as transparent as it could be, that country ownership is lacking, and that Feed the Future appears to be more a USAID program than the whole-of-government effort it was proclaimed to be. The GFSA may address these issues, as it calls for presidential coordination for food security activities, not a USAID-led effort, and lists the agencies for which a detailed accounting of food security activities is required by the bill. The authorization of funding in GFSA, however, is for USAID. There is little doubt that Feed the Future and the legislative support provided by the GFSA have given food security and agricultural development a more prominent role in the U.S. development policy and budget. It is unclear, however, if these programs, and the principles by which they have been organized, will be a priority for the new administration and the 115 th Congress.", "As with the other initiatives, the Global Climate Change Initiative (GCCI) built on existing climate related efforts, adapted and scaled up to reflect evolving global efforts. Under the Clinton and George W. Bush Administrations, USAID was already pursuing environmental protection and adaptation activities, and the United States was already contributing to several multilateral climate investment funds, consistent with U.S. commitments stemming from the 1992 U.N. Framework Convention on Climate Change (UNFCCC) and subsequent related international agreements. The CGGI ramped up U.S. climate-related aid to developing countries, reflecting a proposal made jointly by developed countries under the December 2009 Copenhagen Accord, in which the Administration committed to working with other donors to provide \"fast start\" climate financing collectively approaching $30 billion during the period 2010-2012 (both public and private investment). Documents accompanying the 2010 PPD describe the initiative as focused on three key objectives:\nInvesting in Clean E nergy : The initiative sought to accelerate the deployment of clean energy technologies, policies, and practices as a means of reducing greenhouse gas emissions for energy generation and use. Much of the funding for this pillar was anticipated to be channeled through the World Bank's multilateral Climate Investment Funds (CIFs), which include the Strategic Climate Fund and the Clean Technology Fund, to take advantage of large-scale greenhouse gas reduction opportunities. Bilateral aid was focused on shaping policy and regulatory environments to ensure long-term sustainability. Promoting Sustainable Landscapes : As part of the \"fast start financing\" in the Copenhagen Accord, the Obama Administration committed $1 billion from 2010 to 2012 to support country plans to reduce greenhouse gas emissions from deforestation and forest degradation (REDD+). The Administration described this pillar as a cost-effective way to reduce greenhouse gas emissions while providing sustainable development benefits. Supporting Climate Change Resilience and Adaptation : This pillar focused on helping the most vulnerable low-income countries to reduce the social, environmental, and economic impacts of climate change. A key aspect of this effort was integrating climate change considerations and solutions into development activities in all relevant sectors.\nAside from the focus areas, the Administration identified several ways in which the GCCI promoted the Administration's broader development policy, including promoting country ownership, promoting climate solutions that spur economic growth, ensuring sustainability of economic growth gains through actions that protect investments, strengthening governance and inclusive planning processes, and investing in potentially game-changing science and technology. To implement the initiative, an Office of the Special Envoy for Climate Change was established within the State Department in 2009. At USAID, GCCI activities were coordinated through the Environment and Science Policy Office, which was in 2012 renamed the Office for Global Climate Change.", "Several bills supporting aspects of the Obama climate change policy and programs were introduced in the 111 th Congress, early in the Obama Administration. Most notably, then-Senator John Kerry introduced the International Climate Change Investment Act of 2009 ( S. 2835 ) in December 2009, which would have established an interagency board on climate change to assess, monitor, evaluate, and report on the progress and contributions of departments and agencies in supporting funding for international climate change activities and the goals and objectives of the UNFCCC. The bill also would have required the USAID Administrator to establish a program to reduce global greenhouse gas emissions, and the Secretary of State to develop a climate adaptation and global security program, among other things. No action was taken on the legislation or on other legislation that was introduced to support GCCI-related activities in a comprehensive way. However, relevant authority for GCCI programs exists in the Foreign Assistance Act sections on development assistance and the economic support fund, including Section 118 on tropical forests and Section 296(H) with regard to resilience to famine.", "Congress does not designate an annual funding level for the GCCI, though appropriators have made specific allocations in some years for REDD+ and other forestry initiatives, understood as the \"sustainable landscapes\" pillar of GCCI. The Administration typically uses funds from the Development Assistance and other bilateral appropriations accounts that are authorized to support environmental protection activities, among other things. In addition, there are designated Treasury Department accounts for many of the multilateral environmental trust funds, and a portion of annual Millennium Challenge Corporation funding is also counted by the Administration toward the GCCI. Aside from appropriated funds, development finance provided through OPIC and export credits provided through the Export-Import Bank are counted as GCCI resources in recent reporting as well.\nTotal appropriated funding for GCCI, when adjusted for inflation, peaked in FY2011, before falling 34% in FY2012 and rising again FY2015. ( Figure 6 ) Funding for clean energy programs, which has been the highest funded component of the initiative every year, ticked upward again in FY2015, bringing total GCCI funding up 17% between FY2014 and FY2015, but still well below the early years of the initiative, in real terms.\nU.S. contributions to the multilateral components of GCCI are commonly (but not entirely) requested and appropriated as distinct line items, allowing for a comparison of requested and appropriated funds. Comparing requested funds with actual funding for those funds for which data are available (e.g., the Climate Investment Funds), the trend shows the Administration aiming high in its initial years, Congress providing far less than requested, and the President eventually scaling down requests for multilateral GCCI funding to a level in line with congressional support in the second half of his Administration.\nIn the FY2016 budget request, the Administration attempted to ramp up multilateral climate change funding in a new form, requesting $500 million (split between State and Treasury accounts) for a new Green Climate Fund (GCF), to which the Administration pledged $3 billion in November 2014. The fund was intended to be the primary financing mechanism of the UNFCCC, succeeding contributions made to the two multilateral Climate Investment Funds (to which the United States completed a four-year, $2 billion pledge with FY2016 funding). The FY2016 appropriation did not include a specific allocation for a Green Climate Fund, but the accompanying report noted that other funds in the act, or enacted in prior foreign operations appropriations, could be used for this purpose with proper congressional notification. The Administration made a $500 million contribution that year, using the Economic Support Fund account, to the consternation of some Members of Congress. Funding for the GCF remains a contentious issue in Congress. In its FY2017 budget request the Administration proposed $750 million for the GCF and no funding for the CIFs, as the U.S. commitment to the CIFs had been met and the GCF was supplanting them. Congress has yet to finalize appropriations for FY2017 (a long-term continuing resolution is funding most programs at the FY2016 level), but the House SFOPS committee-approved bill ( H.R. 5912 ) included a provision prohibiting the use of funds for a contribution to the GCF, while the Senate committee-approved bill ( S. 3117 ) allowed for a GCF contribution up to $500 million.", "Unlike the Global Health Initiative and Feed the Future, the GCCI did not establish specific numeric goals and metrics by which to measure progress. However, a 2016 State Department Overview of the GCCI lists many examples of the type of support provided through the initiative, though many are not quantified and some report projected impacts rather than results achieved. USAID has also published some results from its GCCI activities in a recent USAID Climate Action Review, 2010-2016. Select results of the initiative, as reported in these State Department and USAID documents, are detailed in Table 3 .\nIn addition to the external results reporting, USAID reports that the GCCI has impacted how the agency approached development. USAID reports that climate change was incorporated into 62% of USAID country and regional strategies between 2011 and 2015, and beginning in 2015 USAID began to assess and address climate risks and consider climate change mitigation opportunities in all new country strategies. Even among activities that received no designated climate change funding, USAID reported that 18.5% integrated climate change elements, compared with 8% in 2009. USAID asserts than more than $1 billion in USAID funding, beyond designated GCCI funding, has contributed to climate change objectives.\nSome consider the conclusion of the 2015 Paris Agreement, through which 195 nations agreed to reduce the effects of climate change by maintaining global temperatures \"well below 2°C above pre-industrial levels,\" a success attributable in part to the GCCI. GCCI bilateral funds have been commonly used to assist partner countries in developing the plans and capacities necessary to support the greenhouse gas abatement commitments that are key to the Agreement. Critics, however, assert that by choosing to make U.S. global policy on climate change almost exclusively through executive action, without seeking the approval and involvement of Congress, the Obama Administration has made any progress in this area vulnerable to dismantlement in a new Administration.", "The Obama Administration's global development initiatives sustained Bush Administration efforts on global health and climate change, and brought new attention to food security and agricultural development. The full potential of these initiatives was perhaps blunted to varying degrees by budget pressures, agency coordination issues, partner country issues, and, in the case of climate change, lack of congressional support. The lasting legacy of the Obama Administration on global development, some say, may be more about the \"how\" than the \"what\" of development. The principles emphasized in the PPD—elevation of development, partnership and accountability, innovation, evaluation, local procurement, data driven development policy, and interagency cooperation—may be the Obama Administration's unique global development legacy, more than choice of development sector priorities. The \"why\" aspect of the initiatives, which the PPD clearly frames in terms of promoting U.S. national security, could be reexamined by the new Administration and the 115 th Congress together with the \"what\" and the \"how\" aspects. Nevertheless, sustained congressional interest in global health and food security, and the coordinated global efforts around climate change, may keep these issues prominent in global development policy discussions beyond the end of the Obama Administration." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h1_full", "", "", "h1_full", "h1_full", "h1_full", "", "h1_full", "h1_full", "", "", "h1_full", "h2_full" ] }

{ "question": [ "What has Congress maintained strong interest in?", "How did the Obama Administration build its foreign assistance programming?", "What key initiatives did the Obama administration focus on?", "What were the purposes of these initiatives?", "What did these initiatives have in common?", "Why was the Global Health Initiative launched?", "How has GHI fared under Obama Administration?", "What is Feed the Future?", "Why does food security and agricultural development have a more prominent role in US development policy?", "What was the result of the Global Climate Change Initiative?", "How has the Obama Administration made the GCCI subject to dismantlement?", "What was the result of the Obama Administration's global development initiatives?", "How has the budget changed under the Obama Administration regarding global development?", "How will the trends with global development continue?" ], "summary": [ "Over the past few Administrations, Congress has maintained strong interest in and support for the broad global development areas of global health, food security, and climate-related aid and investment.", "The Obama Administration built its foreign assistance programming around the priorities and practices it identified in the 2010 Presidential Policy Directive (PPD) on Global Development, which identified broad-based economic growth and democratic governance as overarching U.S. development priorities.", "In particular, the Obama Administration focused on three key initiatives: the Global Health Initiative (GHI), the Global Climate Change Initiative, and the Global Food Security Initiative (Feed the Future).", "While built on the foundation of existing programs, each initiative was intended to bring new focus, improve coordination, and boost funding to the aid sectors it supported.", "The initiatives shared several principles, including an emphasis on building host country capacity, investing in innovation and research, using whole-of-government strategies, being results oriented, leveraging global partnerships, and applying a cross-sectoral approach.", "The Global Health Initiative was launched to improve health outcomes through strengthened health systems and increased and integrated investments in maternal and child health, family planning, nutrition, and infectious diseases.", "GHI as a distinct platform faded away over the course of the Administration, but progress in global health outcomes that began during the George W. Bush Administration have been largely sustained during the Obama Administration, and the role of multilateral programs was elevated.", "Feed the Future aimed to accelerate inclusive growth in the agriculture sector of partner countries and improve nutritional status, particularly of women and girls. Feed the Future is the only original Obama foreign aid initiative specifically authorized in law (the Global Food Security Act of 2016, P.L. 114-195). The law established a specific statutory foundation for global food security assistance, required the President to develop a whole-of-government strategy to promote global food security (released in October 2016), and authorized funding to support the strategy (just over $1 billion per year) for FY2017 and FY2018.", "The initiative and the legislative support provided by the GFSA have given food security and agricultural development a more prominent role in the U.S. development policy and budget.", "The Global Climate Change Initiative ramped up U.S. climate-related aid to developing countries, with a focus on promoting clean energy, sustainable landscapes, and climate change resilience and adaptation.", "However, by promoting its climate agenda primarily through executive action, without seeking the approval of Congress, the Obama Administration has made any progress in this area vulnerable to dismantlement.", "Reported results have been mixed, but the Obama Administration's global development initiatives sustained efforts from the Bush Administration on global health and climate change and brought new attention to food security and agricultural development.", "While budget pressures have tamped down growth in the foreign aid budget, the portion of U.S. bilateral development assistance obligated for global health, agricultural development, and environment programs—more than one-third of total economic aid from FY2012 to FY2015—increased under the Obama Administration, continuing a trend that began under the Bush Administration.", "The incoming Administration and the 115th Congress may examine these initiatives as they consider future U.S. global development policy. Interest in these issues, if not these specific initiatives, can be expected to continue beyond the end of the Obama Administration." ], "parent_pair_index": [ -1, -1, 1, 2, 2, -1, 0, -1, -1, -1, 4, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Background", "Financial Services Regulation", "Regulations and Federal Rulemaking", "Dodd-Frank Act Regulations", "Regulatory Analyses Provide Limited Information about Benefits and Costs of Chosen or Alternative Approaches", "Regulators Were Not Required to Assess Benefits and Costs of Regulatory Alternatives", "Regulators Generally Developed Selected Major Rules in Ways Consistent with the Principles, but not Certain Key Elements, of the OMB Guidance", "Some Agencies’ Guidance on Regulatory Analysis Continues to Omit Key Elements of OMB’s Regulatory Guidance", "Regulators Continue to Coordinate Informally on Rulemakings, but Differences among Related Rules Still Exist", "Dodd-Frank Act and Regulators Recognize the Importance of Interagency Coordination", "Regulators Coordinated as Required, and Such Coordination Involved Around One-Third of Their Dodd-Frank Regulations", "Most Agencies Continue to Lack Formal Policies and Procedures to Guide Interagency Coordination", "Impacts of the Dodd- Frank Act Have Not Yet Fully Materialized and Remain Uncertain", "Indicators Suggest Increased SIFI Resiliency and Provide Baselines for Future Analysis", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Tables Listing Dodd-Frank Act Rules Effective as of July 23, 2012", "Appendix III: Summary of Rulemakings Related to the Dodd-Frank Act Provisions Applicable to Systemically Important Financial Institutions", "Appendix IV: Econometric Analyses of the Impact of Enhanced Regulation and Oversight on SIFIs", "Methodology", "Data", "Results", "Appendix V: Impact Analysis of the Debit Card Interchange Fees and Routing Rule", "Initial Impact on Large and Small Banks", "Impact on Merchants and Consumers", "Impact on Competition and Interchange Fees", "Impact on Networks", "Appendix VI: Econometric Analysis of the Impact the Debit Interchange Fee Standard on Issuer Banks’ Income", "Methodology", "Data", "Results", "Appendix VII: Comments from the Securities and Exchange Commission", "Appendix VIII: Comments from the Department of the Treasury", "Appendix IX: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The U.S. financial regulatory structure is a complex system of multiple federal and state regulators as well as self-regulatory organizations (SRO) that operate largely along functional lines. That is, financial products or activities generally are regulated according to their function, no matter who offers the product or participates in the activity. The functional regulator approach is intended to provide consistency in regulation, focus regulatory restrictions on the relevant functional areas, and avoid the potential need for regulatory agencies to develop expertise in all aspects of financial regulation.\nIn the banking industry, the specific regulatory configuration depends on the type of charter the banking institution chooses. Charter types for depository institutions include commercial banks, thrifts, and credit unions. These charters may be obtained at the state or federal level. The federal prudential banking regulators—all of which generally may issue regulations and take enforcement actions against industry participants within their jurisdiction—are identified in table 1.\nIn addition, the Dodd-Frank Act created CFPB as an independent bureau within the Federal Reserve System that is responsible for regulating the offering and provision of consumer financial products and services under the federal consumer financial laws. Under the Dodd-Frank Act, at the designated transfer date, certain authority vested in the prudential regulators transferred to CFPB.\nThe securities and futures industries are regulated under a combination of self-regulation (subject to oversight by the appropriate federal regulator) and direct oversight by SEC and CFTC, respectively. SEC oversees the securities industry SROs, and the securities industry as a whole, and is responsible for administering federal securities laws and developing regulations for the industry. SEC’s overall mission includes protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation. CFTC oversees the futures industry and its SROs. Under the Dodd-Frank Act, CFTC also has extensive responsibilities for the regulation of swaps and certain entities involved in the swaps markets. CFTC has responsibility for administering federal legislation and developing comprehensive regulations to protect the public from fraud and manipulation, to insure the financial integrity of transactions, and to reduce systemic risk in the marketplace.\nIn addition, the Dodd-Frank Act created FSOC. FSOC’s three primary purposes are to identify risks to the financial stability of the United States, promote market discipline, and respond to emerging threats to the stability of the U.S. financial system. FSOC consists of 10 voting members and 5 nonvoting members and is chaired by the Secretary of the Treasury. In consultation with the other FSOC members, the Secretary is responsible for regular consultation with the financial regulatory entities and other appropriate organizations of foreign governments or international organizations.", "The federal government uses regulation to implement public policy. Section 553 of APA contains requirements for the most common type of federal rulemaking—informal rulemaking or “notice and comment” rulemaking. While there are inter- and intra-agency variations in the informal rulemaking process, federal financial regulators generally share three basic rulemaking steps or phases: Initiation of rulemaking action. During initiation, agencies gather information that would allow them to determine whether rulemaking is needed and identify potential regulatory options. To gather information on the need for rulemaking and potential regulatory options, agencies may hold meetings with interested parties or issue an advanced notice of proposed rulemaking. At this time, the agencies also will identify the resources needed for the rulemaking and may draft concept documents for agency management that summarize the issues, present the regulatory options, and identify needed resources.\nDevelopment of proposed rule. During this phase of the rulemaking process, an agency will draft the notice of proposed rulemaking, including the preamble (which is the portion of the rule that informs the public of the supporting reasons and purpose of the rule) and the rule language. The agency will begin to address analytical and procedural requirements in this phase. The agency provides “interested persons” with an opportunity to comment on the proposed rule, generally for a period of at least 30 days.\nDevelopment of final rule. In the third phase, the agency repeats, as needed, the steps used during development of the proposed rule. Once the comment period closes for the proposed rule, the agency either would modify the proposed rule to incorporate comments or address the comments in the final rule release. This phase also includes opportunities for internal and external review. As published in the Federal Register, the final rule includes the date on which it becomes effective.\nAPA’s notice and comment procedures exclude certain categories of rules, including interpretative rules; general statements of policy; rules that deal with agency organization, procedure, or practice; or rules for which the agency finds (for good cause) that notice and public comment procedures are impracticable, unnecessary or contrary to the public interest.", "Under the Dodd-Frank Act, federal financial regulatory agencies are directed or have the authority to issue hundreds of regulations to implement the act’s provisions. In some cases, the act gives the agencies little or no discretion in deciding how to implement the provisions. For instance, the Dodd-Frank Act made permanent a temporary increase in the FDIC deposit insurance coverage amount ($100,000 to $250,000); therefore, FDIC revised its implementing regulation to conform to the change. However, other rulemaking provisions in the act appear to be discretionary in nature, stating that (1) certain agencies may issue rules to implement particular provisions or that the agencies may issue regulations that they decide are “necessary and appropriate”; or (2) agencies must issue regulations to implement particular provisions but have some level of discretion over the substance of the regulations. As a result, for these rulemaking provisions, the agencies may decide to promulgate rules for some or all of the provisions, and may have broad discretion to decide what these rules will contain and what exemptions, if any, will apply.\nIn many instances, exemptions to Dodd-Frank Act provisions are encompassed in definitions of certain terms that are broadly established in statute and require clarification through regulation. Persons or entities that meet the regulatory definitions are subject to the provision, and those that do not meet the definitions are not. For example, CFTC and SEC promulgated a regulation that defined the terms ‘‘swap dealer,’’ ‘‘security- based swap dealer,’’ ‘‘major swap participant,’’ ‘‘major security-based swap participant,’’ and ‘‘eligible contract participant.’’ Persons that do not meet the definitions of these terms may not be subject to the Dodd- Frank Act provisions concerning swaps and security-based swaps, including registration, margin, capital, business conduct, and other requirements. Similarly, FSOC promulgated a regulation and interpretive guidance regarding the specific criteria and analytic framework FSOC would apply in determining whether a nonbank financial company could pose a threat to the financial stability of the United States. Financial firms that are not designated by FSOC, acting pursuant to the statutory standards, would not be subject to enhanced prudential supervision by the Federal Reserve.", "Federal agencies conducted the regulatory analyses required by various federal statutes for all 54 Dodd-Frank Act regulations that we reviewed. As part of their analyses, the agencies generally considered, but typically did not quantify or monetize, the benefits and costs of these regulations. As independent regulatory agencies, the federal financial regulators are not subject to executive orders that require comprehensive benefit-cost analysis in accordance with guidance issued by OMB. While most financial regulators said that they attempt to follow OMB’s guidance in principle or spirit, we found that they did not consistently follow key elements of the guidance in their regulatory analyses. We previously recommended that regulators should more fully incorporate the OMB guidance into their rulemaking policies.", "As part of their rulemakings, federal agencies generally must conduct regulatory analysis pursuant to the Paperwork Reduction Act (PRA) and the Regulatory Flexibility Act (RFA), among other statutes.RFA require federal agencies to assess various impacts and costs of their rules, but do not require the agencies to formally assess the benefits and costs of alternative regulatory approaches or the reason for selecting one alternative over another. In addition to these requirements, authorizing or other statutes require certain federal financial regulators to consider PRA and specific benefits, costs, and impacts of their rulemakings, as the following describes.\nCFTC, under section 15(a) of the Commodity Exchange Act, is required to consider the benefits and costs of its action before promulgating a regulation under the Commodity Exchange Act or issuing certain orders. Section 15(a) further specifies that the benefits and costs shall be evaluated in light of the following five broad areas of market and public concern: (1) protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk-management practices; and (5) other public interest considerations.\nUnder the Consumer Financial Protection Act (Title X of the Dodd- Frank Act), CFPB must consider the potential benefits and costs of its rules for consumers and entities that offer or provide consumer financial products and services. These include potential reductions in consumer access to products or services, the impacts on depository institutions with $10 billion or less in assets, as directed by 12 U.S.C. § 5516, and the impacts on consumers in rural areas. RFA analysis, CFPB also must describe any projected increase in the cost of credit for small entities and any significant alternatives that would minimize such increases for small entities. In addition to the protection of investors, SEC must consider whether a rule will promote efficiency, competition, and capital formation whenever it is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest. SEC also must consider the impact that any rule promulgated under the Securities Exchange Act would have on competition. This provision states that a rule should not be adopted if it would impose a burden on competition that is not necessary or appropriate to the act’s purposes.\n12 U.S.C. § 5481(6).\nThe Electronic Funds Transfer Act (EFTA), as amended by the Dodd- Frank Act, requires the Federal Reserve to prepare an analysis of the economic impact of a specific regulation that considers the costs and benefits to financial institutions, consumers, and other users of electronic fund transfers. The analysis must address the extent to which additional paperwork would be required, the effect upon competition in the provision of electronic banking services among large and small financial institutions, and the availability of such services to different classes of consumers, particularly low-income consumers.\nHowever, like PRA and RFA, none of these authorizing statutes prescribe formal, comprehensive benefit and cost analyses that require the identification and assessment of alternatives.\nIn contrast, Executive Order 12,866 (E.O. 12,866), supplemented by Executive Order 13,563 (E.O. 13,563), requires covered federal agencies, to the extent permitted by law and where applicable, to (1) assess benefits and costs of available regulatory alternatives and (2) include both quantifiable and qualitative measures of benefits and costs in their analysis, recognizing that some benefits and costs are difficult to quantify. According to OMB, such analysis can enable an agency to learn if the benefits of a rule are likely to justify the costs and discover which of the possible alternatives would yield the greatest net benefit or be the most cost-effective. In 2003, OMB issued Circular A-4 to provide guidance to federal executive agencies on the development of regulatory analysis as required by E.O. 12,866. The guidance defines good regulatory analysis as including a statement of the need for the proposed regulation, an assessment of alternatives, and an evaluation of the benefits and costs of the proposed regulation and the alternatives. It also standardizes the way benefits and costs of federal regulatory actions should be measured and reported. Of the federal agencies included in our review, only FSOC and Treasury are subject to E.O. 12,866. As independent regulatory agencies, the federal financial regulators—CFPB, CFTC, FDIC, the Federal Reserve, OCC, the National Credit Union Administration (NCUA), and SEC—are not subject to E.O. 12,866 and OMB’s Circular A-4.\nOf the 66 Dodd-Frank Act rules within our scope, 54 regulations were substantive—generally subject to public notice and comment under APA—and required the agencies to conduct regulatory analysis. These rules were issued individually or jointly by CFTC, FDIC, the Federal Reserve, FSOC, NCUA, OCC, SEC, or Treasury. (See app. II for a list of the regulations within the scope of our review.) In examining the regulatory analyses conducted for these 54 regulations, we found the following.\nAgencies conducted the required regulatory analyses. The agencies conducted regulatory analysis pursuant to PRA and RFA for all 54 regulations. Agencies also conducted the analyses required under their authorizing statutes. Specifically, CFTC and SEC individually or jointly issued 39 regulations and considered their potential impact, including their benefits and costs in light of each agency’s respective public interest considerations.\nAgencies issued 19 major rules. Of the 54 regulations that were issued and became effective between July 21, 2011, and July 23, 2012, the agencies identified 19 as being major rules—that is, resulting in or likely to result in a $100 million annual impact on the economy. Specifically, CFTC issued 10 major rules; SEC issued 5 major rules; CFTC and SEC jointly issued 2 major rules; the Federal Reserve issued 1 major rule; and Treasury issued 1 major rule.\nOne of the 19 major rules was subject to E.O. 12866 and its benefit-cost analysis requirement. Of the agencies that issued major rules, only Treasury is subject to E.O. 12,866, which requires a formal assessment of the benefits and costs of an economically significant rule. Thus, as required, Treasury analyzed the benefits and costs of its proposed major rule.\nAgencies considered the benefits and/or costs in the majority of their rules, but did not generally quantify them. As part of their regulatory analyses or in response to public comments received on their proposed rules, the agencies frequently discussed the potential benefits and costs of their rules. For instance, CFTC and SEC asked for public comments and data on the benefits and costs in all of their proposed rules, and the other regulators generally asked for public comments on the costs and, in many cases, benefits of their proposed rules. For the 54 substantive Dodd-Frank Act regulations that we reviewed, 49 regulations included discussions of potential benefits or costs. The cost discussions primarily were qualitative except for the PRA analysis, which typically included quantitative data (such as hours or dollars spent to comply with paperwork-related requirements). Other potential costs, however, were less frequently quantified. In comparison, the benefit discussions largely were qualitative and framed in terms of the objectives of the rules.", "Although independent federal financial regulators are not required to follow OMB’s Circular A-4 when developing regulations, they told us that they try to follow this guidance in principle or spirit. As discussed in more detail below, we previously found that the policies and procedures of these agencies did not fully reflect OMB guidance and recommended that they incorporate the guidance more fully in their rulemaking policies and procedures. To assess the extent to which the regulators follow Circular A-4, we examined four major rules (see table 2). Specifically, we examined whether the regulators (1) identified the problem to be addressed by the regulation and the significance of the problem; (2) considered alternatives reflecting the range of statutory discretion; and (3) assessed the benefits and costs of the regulation.\nWhile the regulators identified the problem to be addressed in their rule proposals, CFTC, the Federal Reserve, and SEC did not present benefit- cost information in ways consistent with certain key elements of OMB’s Circular A-4. For example, CFTC and SEC did not evaluate the benefits and costs of regulatory alternatives they considered for key provisions compared to their chosen approach. Also, because of the lack of data and for other reasons, the agencies generally did not quantitatively analyze the benefits and, to a lesser degree, costs in their rules. Agencies’ approaches for calculating a baseline against which to compare benefits and costs of regulatory alternatives in their analysis varied, and agency staffs told us that the lack of data complicated such efforts.\nTwo of the major rules we reviewed did not evaluate alternative approaches for key provisions in their rule proposals, but the final rule releases did evaluate alternatives considered by the agencies. In implementing the Dodd-Frank provisions, the agencies exercised discretion in designing the various requirements that composed their rules, such as defining key terms and determining who will be subject to the regulations and how. In their rule proposals, CFTC and SEC identified alternative approaches for key provisions of their rule proposals. For example, CFTC identified the consolidated tape approach—which is used in the U.S. securities markets to publicly report data on securities—as an alternative method for distributing swap transaction data in real time. SEC considered requiring potential whistleblowers to use in-house complaint and reporting procedures before they make a whistleblower submission to SEC. However, CFTC and SEC generally did not evaluate the benefits and costs of their proposed rules’ requirements compared to such alternative requirements. Instead, their rule proposals only presented the proposed set of requirements composing their rules and discussed the potential benefits and costs of their overall regulatory approaches. As part of their proposed rules, CFTC and SEC asked the public for comments on a number of questions, including about possible alternatives to proposed requirements. In their final rules, CFTC and SEC noted that they considered alternatives provided by commenters on the proposed rules and revised their rules, so as to reduce regulatory burden or improve the effectiveness of the rules. This approach generally is consistent with each agency’s guidance on regulatory analysis. However, OMB guidance notes that good regulatory analysis is designed to inform the public and other parts of the government of the effects of alternative actions. Without information about the agency’s evaluation of the benefits and costs of alternatives for key provisions, interested parties may not have a clear understanding of the assumptions underlying the rule’s requirements, which could hinder their ability to comment on proposed rules.\nOne of the rules we reviewed identified the alternative approaches but did not describe the reasons for choosing one alternative over another in its rule proposal. The Federal Reserve identified several alternative approaches for key provisions in the rule proposal for implementing the interchange fee rule and some of their potential benefits and costs. However, it did not determine which of the alternatives would produce greater net benefits or be more cost-effective. Instead, the Federal Reserve asked the public to comment on which alternatives might be preferable to the others based on several factors, including benefits and costs. Federal Reserve staff told us that they took this approach because it was difficult to predict how market participants would respond to the rule. They said that they had discussions with senior management about alternative approaches and analyzed the costs and benefits of the alternatives, including how alternatives could have different impacts on different market participants, but this information was not contained in the proposed rule. In the final rule, responding to public comments, the Federal Reserve selected one alternative over the other alternatives and provided reasons for the selection. Without information about the rationale for selecting one alternative over another in the proposed rule, interested parties may not know how to effectively gauge the magnitude of the potential effects, which could hinder their ability to comment on the proposed rule.\nOnly one rule that we reviewed identified and evaluated alternative regulatory approaches. In its rule proposal, Treasury determined that the fee assessment rule was a significant regulatory action under E.O. 12,866 and, thus, conducted a regulatory impact assessment. In its proposal, Treasury identified, evaluated, and discussed several alternative regulatory approaches. Treasury evaluated the impact of alternative approaches on interested parties and selected the approach it viewed as equitable and cost-effective, consistent with the OMB guidance.\nThe regulators generally did not quantitatively analyze the benefits and, to a lesser degree, costs of the rules we reviewed. CFTC, the Federal Reserve, and SEC did not quantitatively analyze the benefits of these rules. CFTC and SEC monetized and quantified paperwork-related costs under PRA, but did not quantify any other costs. Federal Reserve staff told us that they monetized some of the direct costs of the debit card interchange fee rule. Specifically, they conducted a survey to determine an average debit card interchange fee in 2009 and used that data to help establish the debit card interchange fee cap under the rule. However, while the debit card interchange fee cap information was included in the proposed rule, measures of revenue loss that could result from the rule were not included. In contrast to the other rules we reviewed, Treasury monetized and quantified some costs of the rule beyond paperwork- related costs. Specifically, Treasury provided a range of estimated assessment amounts that described the approximate size of the transfer from assessed companies to the government.\nAs we have reported, the difficulty of reliably estimating the costs of regulations to the financial services industry and the nation has long been recognized, and the benefits of regulation generally are regarded as even more difficult to measure. Similarly, Circular A-4 recognizes that some important benefits and costs may be inherently too difficult to quantify or monetize given current data and methods and recommends a careful evaluation of qualitative benefits and costs. All of the rules we reviewed included qualitative descriptions of the potential benefits and costs associated with the rules. The agencies also generally included qualitative information on the nature, timing, likelihood, location, and distribution of the benefits and costs. For instance, in discussing the benefits of the reporting and public dissemination requirements, CFTC stated that it anticipates that the real-time reporting rule “will generate several overarching, if presently unquantifiable, benefits to swaps market participants and the public generally. These include: mprovements in market quality; price discovery; improved risk management; economies of scale and greater efficiencies; and improved regulatory oversight.” CFTC then went on to describe the ways in which these benefits might accrue to market participants. However, some of the agencies did not discuss the strengths and limitations of the qualitative information and did not discuss key reasons why the benefits and costs could not be quantified.\nAlso, the regulators did not consistently present analysis of any important uncertainties connected with their regulatory decisions. For instance, the Federal Reserve stated that the potential impacts of the debit card interchange fee rule depended in large part on the reaction of certain market actors to the rule. In contrast, we did not find a discussion of any important uncertainties associated with SEC’s whistleblower rules, but SEC staff told us that the inherent uncertainties in making predictions about human behavior was a key reason why it was not possible to engage in a quantitative analysis of the rule. However, we found that the agencies generally based their analyses on the best reasonably available, peer-reviewed economic information. Treasury described certain direct costs associated with complying with the fee assessment rule. Treasury used economic reasoning to identify some benefits or types of benefits associated with the rule, particularly in considering the choice of assessment methodology, which was the area of discretion left by Congress to the agency.\nWe also found the regulators’ approaches for calculating a baseline against which to compare benefits and costs of regulatory approaches varied. OMB’s Circular A-4 states that the baseline should be the best assessment of the way the world would look absent the proposed action. In cases where substantial portions of the rule may simply restate statutory requirements that would be self-implementing, Circular A-4 provides for use of a prestatute baseline—that is, the baseline should reflect the status quo before the statute was enacted. However, the guidance further states that if the agency is able to determine where it has discretion in implementing a statute, it can use a post-statute baseline to evaluate the discretionary elements of the action. CFTC and SEC both did not establish post-statute baselines and instead evaluated the benefits and costs of the discretionary elements of their rules in terms of statutory objectives. Specifically, CFTC evaluated each discretionary element of the real-time reporting rule based on whether it met the statutory objectives to reduce risk, increase transparency, and promote market integrity. Similarly, SEC evaluated each discretionary element of the whistleblower protection rule according to four broad objectives based on statutory goals and the nature of public comments. We found that the Federal Reserve generally took this approach in developing the debit card interchange fee rule. In contrast, Treasury, which is subject to E.O. 12,866, used a post-statute baseline to evaluate the discretionary elements of the fee assessment rule. SEC staff said they would have described the analysis somewhat differently under their new economic analysis guidance (discussed below), which directs staff to consider the overall economic impacts, including both those attributable to congressional mandates and those that result from an exercise of discretion. SEC’s guidance states that this approach often will allow for a more complete picture of a rule’s economic effects, particularly because there are many situations in which it is difficult to distinguish between the mandatory and discretionary components of a rule.\nAgency staffs told us developing a baseline from which to assess the benefits and costs of what would have happened in the absence of a regulation was complicated by the lack of reliable data to quantify the benefits and costs. For example, CFTC staff told us that they were challenged because little public data were available about the opaque swaps market. Moreover, because the rule created a new regulatory regime, CFTC did not have the data needed for the analysis. Instead, CFTC had to rely on market participants to voluntarily provide it with proprietary data. CFTC staff said that they did receive some proprietary data but that they were incomplete. Similarly, for the whistleblower protection rule, SEC staff said that they asked the public for data in their draft rule but did not receive any. In the absence of data, SEC cited related research in its rule release, but staff noted that they were reluctant to weigh this research too heavily because the programs covered in the research differed in important respects from SEC’s program. In addition, Federal Reserve staff said that quantifying the effects of the debit card interchange fee rule was a major challenge because of the lack of data.", "Although not subject to E.O. 12,866 and, in turn, OMB Circular A-4, most of the federal regulators told us that they try to follow Circular A-4 in principle or spirit. In our previous review, we found that the policies and procedures of these regulators did not fully reflect OMB guidance and recommended that they incorporate the guidance more fully in their rulemaking policies and procedures. For example, each federal regulator has issued guidance generally explaining how its staff should analyze the benefits and costs of the regulatory approach selected, but unlike the OMB guidance, such guidance generally does not encourage staff to identify and analyze the benefits and costs of available alternative approaches. Since we issued our report, OCC and SEC have revised their guidance, but the other agencies have not yet done so. CFTC last revised its guidance in May 2011, and in May 2012 it signed a Memorandum of Understanding with OMB that allows OMB staff to provide technical assistance to CFTC staff as they consider the benefits and costs of proposed and final rules.\nIssued in March 2012, SEC guidance on economic analysis for rulemakings closely follows E.O. 12,866 and Circular A-4. Specifically, SEC’s guidance defines the basic elements of good regulatory economic analysis in a manner that closely parallels the elements listed in Circular A-4: (1) a statement of the need for the proposed action; (2) the definition of a baseline against which to measure the likely economic consequences of the proposed regulation; (3) the identification of alternative regulatory approaches; and (4) an evaluation of the benefits and costs—both quantitative and qualitative—of the proposed action and the main alternatives. In addition, the guidance explains these elements and describes the ways rulemaking teams can satisfy each of the elements borrowing directly from Circular A-4. OCC guidance on economic analysis defines the elements included in a full cost-benefit analysis in a similar fashion and includes citations to specific sections of Circular A-4 to guide staff through the application of each element.\nFor other federal financial regulators, by continuing to omit core elements of OMB Circular A-4, their regulatory guidance may cause staff to overlook or omit such best practices in their regulatory analysis. In turn, the analyses produced may lack information that interested parties (including consumers, investors, and other market participants) could use to make more informed comments on proposed rules. For example, in our review of four major rules, we found that most of the agencies did not consistently discuss how they selected one regulatory alternative over another or assess the potential benefits and costs of available alternatives. Without information about the benefits and costs of alternatives that agencies considered, interested parties may not know which alternatives were considered and the effects of such alternatives, which could hinder their ability to comment on proposed rules. More fully incorporating OMB’s guidance into their rulemaking guidance, as we previously recommended, could help agencies produce more robust and transparent rulemakings.", "Federal financial regulators have continued to coordinate on rulemakings informally, but coordination may not eliminate the potential for differences in related rules. Regulators have coordinated on 19 of the 54 substantive regulations that we reviewed, in some cases voluntarily coordinating their activities and also extending coordination internationally. According to agency staff, most interagency coordination during rulemaking largely was informal and conducted at the staff level. Differences in rules could remain after interagency coordination, because the rules reflected differences in factors such as regulatory jurisdiction or market or product type. While a few regulators have made progress on developing guidance for interagency coordination during rulemaking, most have not.", "Both the Dodd-Frank Act and the federal financial regulators whom we interviewed recognize the importance of interagency coordination during the rulemaking process. In general, coordination during the rulemaking process occurs when two or more regulators jointly engage in activities to reduce duplication and overlap in regulations. Effective coordination could help regulators minimize or eliminate staff and industry burden, administrative costs, conflicting regulations, unintended consequences, and uncertainty among consumers and markets.\nRecognizing the importance of coordination, the act imposes specific interagency coordination and consultation requirements and responsibilities on regulators or certain rules. For instance, section 171 (referred to as the Collins Amendment) requires that the appropriate federal banking agencies establish a risk-based capital floor on a consolidated basis. In addition, while section 619 (referred to as the Volcker Rule) does not require the federal banking agencies (FDIC, the Federal Reserve, and OCC) to issue a joint rule together with CFTC and SEC, it requires that they consult and coordinate with each other, in part to better ensure that their regulations are comparable. Further, the act broadly requires some regulators to coordinate when promulgating rules for a particular regulatory area. For example, under Title VII, SEC and CFTC must coordinate and consult with each other and prudential regulators before starting rulemaking or issuing an order on swaps or swap-related subjects—for the express purpose of assuring regulatory consistency and comparability across the rules or orders. The act also includes specific requirements for CFPB. Title X requires CFPB to consult with the appropriate prudential regulators or other federal agencies, both before proposing a rule and during the comment process, regarding consistency with prudential, market, or systemic objectives administered by such agencies.\nFederal financial regulators also have highlighted the importance of coordination during the rulemaking process. For example, in testifying about the need to coordinate agency rulemakings, FSOC’s chairperson commented on the importance of coordinating both domestically and internationally to prevent risks from migrating to regulatory gaps—as they did before the 2007-2009 financial crisis—and to reduce U.S. vulnerability to another financial crisis. At the same time, we noted in a recent report that the FSOC chairperson has recognized the challenges of coordinating on the Dodd-Frank Act rulemakings assigned to specific FSOC members. He noted that the coordination in the rulemaking process represented a challenge because the Dodd-Frank Act left in place a financial system with multiple, independent agencies with overlapping jurisdictions and different responsibilities. However, the chairperson also noted that certain agencies were working much more closely together than they did before the creation of FSOC. This observation has been repeated by other regulators, whose staffs have told us that interagency coordination in rulemaking has increased since the passage of the Dodd- Frank Act.", "We found documentation of coordination among the rulemaking agency and other domestic or international regulators for 19 of the 54 substantive regulations that were issued and became effective between July 21, 2011, and July 23, 2012. The act required coordination in 16 of the 19 rulemakings. Specifically, 6 of the 19 regulations were jointly issued by two or more regulators and, thus, inherently required interagency coordination (see table 3). The act stipulated coordination for 10 other regulations. In the Federal Register rule releases, we found evidence documenting the coordination required by the act as well as voluntary coordination with additional regulators. For example, FDIC’s regulation on “Certain Orderly Liquidation Authority Provisions” described voluntary coordination with the Federal Reserve. Similarly, CFTC was required to coordinate with SEC on six swaps regulations it issued, but the agency also coordinated with other regulators on two of those regulations. Further, CFTC coordinated with foreign regulators on all six swaps regulations. The act did not require coordination for the other three regulations for which we found documentation of coordination, indicating that the agencies voluntarily coordinated. For the remaining 35 regulations that we reviewed, which did not require interagency coordination, we did not find any documentation of coordination among the agencies.\nOf the 19 regulations that we identified as having interagency coordination, we selected three regulations to review in depth and sought to cover as many regulators as possible that were required to coordinate under the Dodd-Frank Act (see table 4). We examined when, how, and the extent to which federal financial regulators coordinated. We also examined efforts undertaken by the regulators to avoid conflicts in the rulemakings.\nThe regulators held some formal interagency meetings early on in the rulemaking process; however, coordination was mostly informal and conducted through e-mail, telephone conversations, and one-on-one conversations between staff. For example, at the initiation stage of the risk-based capital rulemaking, FDIC, OCC, and the Federal Reserve held a principal-level meeting to discuss the major issues relating to the interpretation of the statutory requirement. After this meeting, staffs formed an interagency working group, comprised of staff from each agency who, according to Federal Reserve staff, continually have worked together on numerous capital rules and therefore have a very close working relationship. Likewise, agency staffs said that after the initial formal meetings on the other rulemakings that we reviewed, coordination revolved around informal staff-level discussions. Coordination during the proposed rule drafting stage typically was characterized by staff-level conversations primarily through telephone calls or e-mails and some face- to-face meetings. Staffs would contact each other as issues arose to work out conflicts or differences in agency viewpoints. When issues could not be resolved at the staff level, they were escalated to senior management, but most issues were resolved and most coordination occurred at the staff level throughout the drafting of the proposed rules, according to agency staffs. For all three rulemakings reviewed, agency staffs coordinated at least weekly through the proposal stage with the frequency of coordination escalating as the proposed rule neared issuance.\nAfter receiving public comments and while preparing the final rule, agency staffs told us that they continued to coordinate with each other, but the need for and level of interagency coordination varied by rule. For instance, OCC, Federal Reserve, and FDIC staffs said that by the time they reached the stage of drafting the final risk-based capital rule, meetings were less frequent because the group already had worked out most of the details. Coordination between CFTC and SEC also decreased during this stage of the real-time reporting rulemaking. Conversely, CFTC and SEC staffs said that interagency coordination continued to be frequent while drafting the final swaps entities rule because after the proposed rule was issued some differences in underlying definitions remained, such as the definition for “highly leveraged.” The commissions used public comments to the proposed rule to help them interpret and come to consensus on the definitions. CFTC and SEC staffs met regularly in this period to refine drafts, resolve issues, and convene an industry roundtable.\nThe extent to which agencies coordinated with international regulators varied in the three rulemakings that we reviewed. For example, CFTC and SEC coordinated with international regulators on swap rulemakings. For the real-time reporting rule, CFTC coordinated with foreign regulators, such as the Financial Services Authority and the European Commission, which provided ideas on data reporting. On the swap entities rule, CFTC and SEC staffs said that they participated in numerous conference calls and meetings with various international regulators.\nIn contrast, the banking regulators did not meet with any international regulators on the risk-based capital rule. The agency staffs said that they were implementing a straightforward statutory provision that required little interpretation and little amendment to the existing rules; therefore, staffs said they did not need to seek input from international regulators as to how to implement U.S. law. Staffs said that for less narrowly scoped rules, where regulators have more discretion, they are more proactive in reaching out to international regulators. FDIC staff cited, as an example, the risk retention rule, for which they reached out to the European Union to understand their approach.\nRegulators who were responsible for the three rulemakings that we reviewed said that they tried to identify potential areas of duplication or conflict involving the rules. For the risk-based capital rule, the banking regulators held discussions on regulatory conflict and duplication and concluded that none would be created by this rule. For the swap entity rule and the real-time reporting rule, CFTC and SEC identified potential areas of conflict, which they were able to address through coordination. For example, when developing the real-time reporting rule, CFTC and SEC initially had different approaches about what type of entity would be in charge of disseminating swap transaction data. SEC proposed that only swap data repositories would be required to disseminate real-time data, and CFTC initially proposed to require several different entities to do so. SEC’s proposal, deciding that only swap data repositories would be required to disseminate real-time swap data. Agency staffs said that this harmonization should help to minimize the compliance cost burden placed on market participants and allow for more efficient operation of systems for the public dissemination of swap and security-based swap market data.\nSwap data repositories are new entities created by the Dodd-Frank Act in order to provide a central facility for swap data reporting and recordkeeping. Under the act, all swaps, whether cleared or uncleared, are required to be reported to registered swap data repositories. Pub. L. No. 111-203, § 727, 124 Stat. 1696 (2010) (codified at 7 U.S.C. 2(a)(13)(G)).\nIn some areas, differences in rules remained after interagency coordination, due to differences in regulatory jurisdiction. In particular, while CFTC and SEC reached consensus on the text for the jointly issued swap entities rule, the regulators outlined different approaches in certain parts of the rule as a result of their regulatory jurisdiction over different product sets. For example, some of the language of the definitions for “major swap participant” and “major security-based swap participant” differs because the agencies each have jurisdiction over different products and some of these products have different histories, markets, and market sizes, according to CFTC and SEC staff. Also, in the real-time reporting rule, CFTC, in its final rule, defined specific data fields to be reported, while SEC, in its proposed rule, outlined broad data categories and required swap data repositories to develop specific reporting protocols. Agency staffs stated that while the approaches were different, they were not inconsistent. The key factors the regulators considered were whether the rules achieved the policy objectives and whether the regulated entities could comply with both agencies’ rules given their differences. It was determined that swap data repositories could develop data reporting protocols that would comply with both agencies’ rules.\nTo document and communicate preliminary staff views on certain issues to senior management, regulators use term sheets throughout the rulemaking process. Although term sheets are primarily internal documents, they were shared with staff at other regulators to communicate views and elicit comments. These term sheets serve as a formal mechanism to help initiate discussions of differences in the regulators’ positions. Term sheets generally are drafted internally by staff at each agency, shared between or among agency staff, and shared with agency principals or senior management. CFTC and SEC created term sheets for both the swap entities rule and the real-time reporting rule. Conversely, for the risk-based capital rule, the banking regulators did not create a term sheet because, according to OCC staff, the statutory requirements for this rule were explicit and therefore a term sheet was not required. However, staff noted that this was different from a standard rulemaking where they typically would draft and share a term sheet.", "While a few agencies have made progress on developing policies for interagency coordination for their rulemaking, most have not. In November 2011, we reported that most of the federal financial agencies lacked formal policies or procedures to guide their interagency coordination in the rulemaking process. Federal financial regulators informally coordinated on some of the final rules that we reviewed, but most of the agencies lacked written policies and procedures to guide their interagency coordination. Specifically, seven of nine agencies did not have written policies and procedures to facilitate coordination on rulemaking. The written policies and procedures that existed were limited in their scope or applicability. The remaining two regulators, FDIC and OCC, had rulemaking policies that include guidance on developing interagency rules. As we previously reported, documented policies can help ensure that adequate coordination takes place, help to improve interagency relationships, and prevent the duplication of efforts at a time when resources are extremely limited.\nSince our November 2011 report, we found that OCC and CFPB have further developed guidance on interagency coordination, but the other agencies have not. CFPB has developed guidance that outlines the agency’s approach to interagency consultation in rulemaking. The document generally describes two rounds of consultation when drafting the proposed rule and two rounds when addressing comments and drafting the final rule. The guidance highlights the points in a rulemaking at which staff should reach out to other regulators, the purpose of consultation, and the length of time to allow for responses from regulators. Similarly, OCC updated its rulemaking policy to include more detail on what steps should be taken in coordination and who should be involved.\nIn our November 2011 report, we recommended that FSOC work with the federal financial regulators to establish formal coordination policies for rulemaking that clarify issues, such as when coordination should occur, the process that will be used to solicit and address comments, and what role FSOC should play in facilitating coordination. While FSOC has not implemented this recommendation, staff told us that they have developed coordination processes around specific areas of the Dodd-Frank Act. For example, FSOC staff said that they have coordinated closely with FDIC on all rulemakings under Title II. In addition, FSOC developed written guidance for coordination on rulemakings for enhanced prudential standards for bank holding companies with $50 billion or more in total consolidated assets and nonbank financial companies designated by FSOC for Federal Reserve supervision under sections 165 and 166 of the act. However, in a September 2012 report, we noted that a number of industry representatives questioned why FSOC could not play a greater In that report, role in coordinating member agencies’ rulemaking efforts.we further noted that the FSOC chairperson, in consultation with the other FSOC members, is responsible for regular consultation with the financial regulatory entities and other appropriate organizations of foreign governments or international organizations. We also reiterated our previous recommendation by stating that FSOC should establish formal collaboration and coordination policies for rulemaking.", "The full impact of the Dodd-Frank Act remains uncertain. Although federal agencies continue to implement the act through rulemakings, much work remains. For example, according to one estimate, regulators have finalized less than half of the total rules that may be needed to implement the act. Furthermore, sufficient time has not elapsed to measure the impact of those rules that are final and effective. As we previously noted, even when the act’s reforms are fully implemented, it will take time for the financial services industry to comply with the array of new regulations.\nThe evolving nature of implementation makes isolating the effects of the Dodd-Frank Act on the U.S. financial marketplace difficult. This task is made more difficult by the many factors that can affect the financial marketplace, including factors that could have an even greater impact than the act.\nRecognizing these limitations and difficulties, we developed a multipronged approach to analyze current data and trends that might be indicative of some of the Dodd-Frank Act’s initial impacts, as institutions react to issued and expected rules. First, the act contains provisions that serve to enhance the resilience of certain bank and nonbank financial companies and reduce the potential for financial distress in any one of these companies to affect the financial system and economy. Specifically, the Dodd-Frank Act requires the Federal Reserve to impose enhanced prudential standards and oversight on bank holding companies with $50 billion or more in total consolidated assets and nonbank financial We developed indicators to monitor companies designated by FSOC.changes in certain SIFI characteristics. Although the indicators may be suggestive of the act’s impact, our indicators do not identify causal links between their changes and the act. Further, many other factors can affect SIFIs and, thus, the indicators. As new data become available, we expect to update and, as warranted, revise our indicators and create additional ones to cover other provisions. Second, we used difference-in-difference analysis to infer the act’s impact on the provision of credit by and the safety and soundness of bank SIFIs. The analysis is subject to limitations, in part because factors other than the act could be affecting these entities. Third, we analyzed the impact of several major rules that were issued pursuant to the Dodd-Frank Act and have been final for around a year or more.", "The 2007-2009 financial crisis demonstrated that some financial institutions, including some nonbank financial companies (e.g., AIG), had grown so large, interconnected, complex, and leveraged, that their failure could threaten the stability of the U.S. financial system and the global economy. Financial institutions, markets, and infrastructure that make up the U.S. financial system provide services to the U.S. and global economies, such as helping to allocate funds, allowing households and businesses to manage their risks, and facilitating financial transactions that support economic activity. The sudden collapses and near-collapses of major financial institutions, including major nonbank financial institutions, were among the most destabilizing events of the 2007-2009 financial crisis. In addition, large, complex financial institutions that are perceived to be “too big to fail” can increase uncertainty in periods of market turmoil and reinforce destabilizing reactions within the financial system.\nAccording to its legislative history, the Dodd-Frank Act contains provisions intended to reduce the risk of failure of a large, complex financial institution and the damage that such a failure could do to the economy. Such provisions include (1) establishing FSOC to identify and respond to emerging threats to the stability of the U.S. financial system; (2) authorizing FSOC to designate a nonbank financial company for Federal Reserve supervision if FSOC determines it could pose a threat to the financial stability of the United States based on the company’s size, leverage, interconnectedness, or other factors; and (3) directing the Federal Reserve to impose enhanced prudential standards and oversight on bank holding companies with $50 billion or more in total consolidated assets (referred to as bank SIFIs in this report) and nonbank financial companies designated by FSOC (referred to as nonbank SIFIs in this report). The Dodd-Frank Act also is intended to reduce market expectations of future federal rescues of large, interconnected, and complex firms using taxpayer dollars. Under the act, bank holding companies with $50 billion or more in total consolidated assets and nonbank financial companies designated by FSOC for Federal Reserve supervision are required to develop plans for their rapid and orderly resolution. Additionally, FDIC is given new orderly liquidation authority to act as a receiver of a troubled financial firm whose failure could threaten financial stability so as to protect the U.S. financial system and the wider economy.\nSome Dodd-Frank Act provisions may result in adjustments to SIFIs’ size, interconnectedness, complexity, leverage, or liquidity over time. We developed indicators to monitor changes in some of these SIFI characteristics. The size and complexity indicators reflect the potential for a single company’s financial distress to affect the financial system and economy. The leverage and liquidity indicators reflect a SIFI’s resilience to shocks or its vulnerability to financial distress. FSOC has not yet designated any nonbank financial firms for Federal Reserve supervision. As a result, we focus our analysis on U.S. bank SIFIs. Our indicators have limitations. For example, the indicators do not identify causal links between changes in SIFI characteristics and the act. Rather, the indicators track or begin to track changes in the size, complexity, leverage, and liquidity of SIFIs over the period since the Dodd-Frank Act was passed to examine whether the changes are consistent with the act. However, other factors—including the economic downturn, international banking standards agreed upon by the Basel Committee on Banking Supervision (Basel Committee), European debt crisis, and monetary policy actions—also affect bank holding companies and, thus, the indicators. These factors may have a greater effect than the Dodd-Frank Act on SIFIs. In addition, some rules implementing SIFI-related provisions have not yet been proposed or finalized. Thus, trends in our indicators include the effects of these rules only insofar as SIFIs have changed their behavior in response to issued rules and in anticipation of expected rules. In this sense, our indicators provide a baseline against which to compare future trends.\nTable 5 summarizes the changes in our bank SIFI indicators. The size indicators do not provide a clear trend between the third quarter of 2010 and the second quarter of 2012. Additionally, we have only one data point in the complexity indicator, but our data suggest that the largest bank SIFIs generally were more complex organizationally than other bank SIFIs. Lastly, the indicators suggest that bank SIFIs, on average, have become less leveraged since the third quarter of 2010, and their liquidity also appears to have improved. Trends in our leverage and liquidity indicators appear to be consistent with an improvement in SIFIs’ resilience to shocks.\nBen S. Bernanke, “Financial Reform to Address Systemic Risk,” (Speech to the Council on Foreign Relations, Washington, D.C., Mar. 10, 2009). size of a financial institution may prevent the institution from growing so large that it is perceived by the market as too big to fail, such limits also may prevent the institution from achieving economies of scale and benefiting from diversification.\nWe developed three indicators of size. The first indicator tracks the number of bank SIFIs. The second indicator measures a SIFI’s size based on the total assets on its balance sheet. The third indicator measures the extent to which industry assets are concentrated among the individual SIFIs, reflecting a SIFI’s size relative to the size of the industry. A limitation of these indicators is that they do not include an institution’s off-balance sheet activities and thus may understate the amount of financial services or intermediation an institution provides. Furthermore, asset size alone is not an accurate determinant of systemic risk, as an institution’s systemic risk significance also depends on other factors, such as its complexity and interconnectedness.\nAs shown in figure 1, seven U.S. bank SIFIs had more than $500 billion in total consolidated assets (referred to as large bank SIFIs in this report) in the third quarter of 2010 and in the second quarter of 2012.bank SIFIs were considerably larger than the other bank SIFIs.", "We provided a draft of this report to CFPB, CFTC, FDIC, the Federal Reserve Board, FSOC, NCUA, OCC, OFR, SEC, and Treasury for review and comment. SEC and Treasury provided written comments that we have reprinted in appendixes VII and VIII, respectively. All of the agencies also provided technical comments, which we have incorporated, as appropriate.\nIn their comments, the agencies neither agreed nor disagreed with the report’s findings. In its letter, Treasury noted that FSOC agrees that successful implementation of the Dodd-Frank Act rulemakings will require member agencies to work together, even if such coordination is not specifically required under the Dodd-Frank Act. Treasury also noted that FSOC has served as a forum for discussion among members and member agencies, through various FSOC meetings, committee meetings, and subcommittee meetings. Finally, the letter describes FSOC’s effort to continue monitor potential risks to the financial stability and implement other statutory requirements.\nIn its letter, SEC noted that it revised its guidance on economic analysis in March 2012, in part in response to a recommendation in our 2011 report that federal financial regulators more fully incorporate OMB’s regulatory analysis guidance into their rulemaking policies. SEC’s letter stated that the revised guidance already has improved the quality of economic analysis in its rulemakings and internal rule-writing processes. SEC also noted that FSOC has fostered a healthy and positive sense of collaboration among the financial regulators. SEC remains amenable to working with FSOC on formal coordination policies, as GAO previously recommended, but noted that FSOC's efforts should fully respect the independence of the respective member agencies regarding the substance of the rules for which they are responsible and the mission of FSOC itself.\nWe are sending copies of this report to CFPB, CFTC, FDIC, the Federal Reserve Board, FSOC, NCUA, OCC, OFR, SEC, Treasury, interested congressional committees, members, and others. This report will also be available at no charge on our website at http://www.gao.gov.\nShould you or your staff have questions concerning this report, please contact me at (202) 512-8678 or clowersa@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 IX.", "Our objectives in this report were to examine (1) the regulatory analyses, including benefit-cost analyses, federal financial regulators have performed to assess the potential impact of selected final rules issued pursuant to the Dodd-Frank Act; (2) how federal financial regulators consulted with each other in implementing selected final rules issued pursuant to the Dodd-Frank Act to avoid duplication or conflicts; and (3) what is known about the impact of the final Dodd-Frank Act regulations on the financial markets.\nTo address the first two objectives, we limited our analysis to the final rules issued pursuant to the Dodd-Frank Act that were effective between July 21, 2011, and July 23, 2012, a total of 66 rules (see app. II). To identify these rules, we used a website maintained by the Federal Reserve Bank of St. Louis that tracks Dodd-Frank Act regulations. We corroborated the data with information on Dodd-Frank Act rulemaking compiled by the law firm Davis Polk & Wardwell LLP.\nTo address our first objective, we reviewed statutes, regulations, GAO studies, and other documentation to identify the benefit-cost or similar analyses federal financial regulators are required to conduct in conjunction with rulemaking. For each of the 66 rules within our scope, we prepared individual summaries using a data collection instrument (DCI). The criteria used in the DCI were generally developed based on the regulatory analyses required of federal financial regulators and Office of Management and Budget (OMB) Circular A-4, which is considered best practice for regulatory analysis. We used the completed summaries to develop a table showing the extent to which the federal financial regulators addressed the criteria for each of the Dodd-Frank Act regulations. We selected 4 of the 66 rules for in-depth review, comparing the benefit-cost or similar analyses to specific principles in OMB Circular A-4. We selected the rules for in-depth review based on whether the rule was deemed a major rule (i.e., whether it is anticipated to have an annual effect on the economy of $100 million or more) by the responsible agency and OMB. We generally found that the financial regulators do not state in the Federal Register notice whether the rule is major. However, we learned that regulators are required to submit major rules to GAO under the Congressional Review Act (CRA) for the purpose of ensuring that the regulators followed certain requirements in conducting the rulemaking, and GAO maintains a database of major rules. Our search of the CRA database showed that federal financial regulators issued 19 major Dodd- Frank Act rules within our scope. To further narrow the list of rules for in- depth review, we determined to include at least one rule from each of the federal financial regulators. We identified major rules issued by only three financial regulators: the Commodity Futures Trading Commission (CFTC), the Board of Governors of the Federal Reserve (Federal Reserve), and the Securities and Exchange Commission (SEC). In addition, the Department of the Treasury (Treasury) issued a major rule during the scope period. The Federal Reserve and Treasury each issued only one major rule during our scope period—the Debit Card Interchange Fee rule and the Assessment of Fees on Large Bank Holding Companies to Cover the Expenses of the Financial Research Fund, respectively. SEC and CFTC issued multiple major rules during the period. To further narrow the list of rules for in-depth review, we determined to include only rules implementing a new regulatory authority rather than amending a preexisting regulatory authority. For SEC, only one rule met this criterion—the Securities Whistleblower Incentives and Protections rule. CFTC issued several major rules that met this criterion so to further narrow the list of rules for in-depth review, we consulted with a former CFTC economist and solicited his opinion whether it would be appropriate for GAO to assess the Real-Time Public Reporting of Swap Transaction Data rule, and he agreed. To compare these rules to the principles in Circular A-4, we developed a DCI with the principles and applied the DCI to all four rules. In conducting each individual analysis, we reviewed the Federal Register notices prepared by the agencies during the course of the rulemaking. We also interviewed officials from CFTC, the Federal Reserve, SEC, and Treasury to determine the extent to which benefit-cost or similar analyses were conducted.\nTo address our second objective, we reviewed the Dodd-Frank Act, regulations, and studies, including GAO reports, to identify the coordination and consultation requirements federal financial regulators are required to conduct in conjunction with rulemaking. For each of the 66 rules in our scope, we reviewed the rule releases to determine the rules on which agencies coordinated with other federal financial regulators and international financial regulators. From our review of the rule releases, we developed a table that shows the rules that involved coordination, agencies involved, nature of coordination, whether coordination was required or voluntary, and whether the agencies coordinated with international regulators. Rules that may have involved interagency coordination in the rulemaking but did not expressly mention such coordination in the rule release are not included in this table. Of the 19 rules that we determined involved interagency coordination, we selected 3 rules to review in depth to assess how and the extent to which federal financial regulators coordinated, focusing on actions they took to avoid conflict and duplication in rulemakings. In selecting rules to review in depth, we sought to include at least one rule that was jointly issued and therefore implicitly required coordination and at least one rule that was issued by a single agency and involved coordination with another agency. We also sought broad coverage of agencies issuing substantive Dodd- Frank Act rules. We ultimately selected two joint rules and one rule issued by a single agency, including rules issued by FDIC, OCC, Federal Reserve, CFTC, and SEC. In reviewing each rule, we reviewed the Federal Register notices for each rule, and we interviewed officials from each agency to determine how and the extent to which coordination took place to avoid duplication and conflict. We also interviewed officials at FSOC and CFPB to get an understanding of their role in interagency coordination for Dodd-Frank Act rulemakings.\nTo address our third objective, we took a multipronged approach to analyze what is known about the impact of the Dodd-Frank Act on the financial marketplace. First, the act contains provisions that serve to enhance the resilience of certain bank and nonbank financial companies and reduce the potential for any one of these companies to affect the financial system and economy. Specifically, the Dodd-Frank Act requires the Federal Reserve to impose enhanced prudential standards and oversight on bank holding companies with $50 billion or more in total consolidated assets and nonbank financial companies designated by FSOC. For purposes of this report, we refer to these bank and nonbank financial companies as bank systemically important financial institutions (bank SIFI) and nonbank systemically important financial institutions (nonbank SIFI), respectively, or collectively as SIFIs. We developed indicators to monitor changes in certain characteristics of SIFIs that may be suggestive of the impact of these reforms. FSOC has not yet designated any nonbank financial firms for Federal Reserve enhanced To supervision. As a result, we focus our analysis on U.S. bank SIFIs.understand the rationale behind the act’s focus on enhanced SIFI regulation and oversight, we reviewed the legislative history of the act, the act itself, related regulations, academic studies, GAO and agency reports, and other relevant documentation. To inform our choice of indicators, we analyzed the provisions and related rulemakings most relevant to bank SIFIs. Our analysis and indicators for this report focus on bank SIFIs’ asset size, interconnectedness, complexity, leverage, and liquidity. We developed our indicators of bank SIFIs’ size, leverage, and liquidity using quarterly data for bank holding companies from SNL Financial and quarterly data on the gross domestic product (GDP) deflator from the Bureau of Economic Analysis, both for the period from 2006 quarter 1 to 2012 quarter 2. We developed our indicators of bank SIFIs’ complexity using data from the Federal Reserve Board’s National Information Center as of October 2012. As new data become available, we expect to update and, as warranted, revise our indicators and create additional indicators to cover other provisions.\nSecond, we use difference-in-difference regression analysis to infer the act’s impact on the provision of credit by and the safety and soundness of U.S. bank SIFIs. The key element of our analysis is that the Dodd-Frank Act subjects some bank holding companies to enhanced oversight and regulation but not other bank holding companies. Specifically, the act requires the Federal Reserve to impose a number of enhanced prudential standards on bank holding companies with total consolidated assets of $50 billion or more (bank SIFI) , while bank holding companies with assets less than $50 billion (non-SIFI banks) are not subject to such enhanced oversight and regulation. As a result, we were able to compare funding costs, capital adequacy, asset quality, earnings, and liquidity for bank SIFIs and non-SIFI banks before and after the Dodd-Frank Act. All else being equal, the difference in the differences is the inferred effect of the Dodd-Frank Act on bank SIFIs. For our analysis, we used quarterly data on bank holding companies from SNL Financial and quarterly data on commercial banks and savings banks from FDIC and the Federal Financial Institutions Examinations Council, all for the period from 2006 quarter 1 to 2012 quarter 2 (see app. IV for details). Lastly, for all of our indicators, we obtained and addressed high-level comments and suggestions from FSOC staff and two other market experts.\nThird, we analyze the impact of several major rules that were issued pursuant to the Dodd-Frank Act and have been final for around a year or more. There were 44 final rules as of July 21, 2011, 7 of which were major rules. We judgmentally selected 4 out of those 7 rules for impact analyses, based largely on data availability. Our selected rules implement provisions that serve specific investor or consumer protection purposes. We first analyzed the Federal Reserve’s Debit Interchange Fees and Routing Rule (Regulation II). As part of that work, we reviewed selected statutes and regulations, analyzed available data and documents from the Federal Reserve, GAO, and market participants and experts, and interviewed agency officials and market experts. Additionally, we analyzed two SEC rules on asset-backed securities (ABS): Issuer Review of Assets in Offerings of ABS and Disclosure for ABS Required by Section 945 and 943 of the Act, respectively. To do this, we reviewed selected statutes and regulations and analyzed data on ABS issuances obtained from the Securities Industry and Financial Markets Association (SIFMA). Lastly, we analyzed SEC’s rule on Shareholder Approval of Executive Compensation and Golden Parachute Compensation. As part of that analysis, we reviewed selected regulations and analyzed available data on shareholder votes on executive compensation that we obtained from Institutional Shareholder Services, Inc., a proxy advisory firm that advises institutional investors on how to vote proxies and provides consulting services to corporations seeking to improve their corporate governance. For all of the data described above, we assessed the reliability of the data and found it to be reliable for our purposes.\nWe conducted this performance audit from December 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.", "The following table lists the Dodd-Frank Act rules that we identified as final and effective during the scope period for this review—July 21, 2011, and July 23, 2012 The following table lists the Dodd-Frank Act rules that we identified as final and effective during the scope period for our first review—July 21, 2010, and July 21, 2011.", "The Dodd-Frank Act contains several provisions that apply to nonbank financial companies designated by the Financial Stability Oversight Council for Federal Reserve supervision and enhanced prudential standards (nonbank SIFI) and bank holding companies with $50 billion or more in total consolidated assets (bank SIFI). Table 12 summarizes those provisions and the rulemakings, including their status, to implement those provisions.", "", "We conducted an econometric analysis to assess the impact of the Dodd- Frank Act’s new requirements for bank SIFIs on (1) the cost of credit they provide and (2) their safety and soundness. Our multivariate econometric model used a difference-in-difference design that exploits the fact that the Dodd-Frank Act subjects bank holding companies with total consolidated assets of $50 billion or more to enhanced regulation by the Federal Reserve but not others, so we can view bank holding companies with total consolidated assets of $50 billion or more (bank SIFIs) as the treatment group and other bank holding companies as the control group. We compared the changes in the characteristics of U.S. bank SIFIs over time to changes in the characteristics of other U.S. bank holding companies over time. All else being equal, the difference in the differences is the impact of new requirements for bank SIFIs primarily tied to enhanced regulation and oversight under the Federal Reserve.\nOur general regression specification is the following: ybq = α + β + γSIFIbq + X’bqΘ + εbq where b denotes the bank holding company, q denotes the quarter, ybq is the dependent variable, α is a bank holding company-specific intercept, β is a quarter-specific intercept, SIFIbq is an indicator variable that equals 1 if bank holding company b is a SIFI in quarter q and 0 otherwise, Xbq is a list of other independent variables, and εbq is an error term. We estimated the parameters of the model using quarterly data on top-tier bank holding companies for the period from the first quarter of 2006 to the second quarter of 2012.\nThe parameters of interest are the γ, the coefficients on the SIFI indicators in the quarters starting with the treatment start date of the third quarter of 2010 through the second quarter of 2012. The Dodd-Frank Act was enacted in July 2010 (the third quarter of 2010), so the SIFI indicator is equal to zero for all bank holding companies for all quarters from the first quarter of 2006 to the second quarter of 2010. The SIFI indicator is equal to 1 for all bank holding companies with assets of $50 billion or more for the third quarter of 2010 through the second quarter of 2012 and the SIFI indicator is equal to zero for all other bank holding companies for those quarters. Thus, for quarters from the third of 2010 to the second of 2012, the parameter γ measures the average difference in the dependent variable between bank SIFIs and other bank holding companies in those quarters relative to the base quarter.\nWe use different dependent variables (ybq) to estimate the impacts of the new requirements for SIFIs on the cost of credit provided by bank SIFIs and on various aspects of bank SIFIs’ safety and soundness, including capital adequacy, asset quality, earnings, and liquidity.\nFunding cost. A bank holding company’s funding cost is the cost of deposits or liabilities that it then uses to make loans or otherwise acquire assets. More specifically, a bank holding company’s funding cost is the interest rate it pays when it borrows funds. All else being equal, the greater a bank holding company’s funding cost, the greater the interest rate it charges when it makes loans. We measure funding cost as an institution’s interest expense as a percent of interest- bearing liabilities.\nCapital adequacy. Capital absorbs losses, promotes public confidence, helps restrict excessive asset growth, and provides protection to creditors. We use two alternative measures of capital adequacy: tangible common equity as a percent of total assets and tangible common equity as a percent of risk-weighted assets.\nAsset quality. Asset quality reflects the quantity of existing and potential credit risk associated with the institution’s loan and investment portfolios and other assets, as well as off-balance sheet transactions. Asset quality also reflects the ability of management to identify and manage credit risk. We measure asset quality as performing assets as a percent of total assets, where performing assets are equal to total assets less assets 90 days or more past due and still accruing interest, assets in non-accrual status, and other real estate owned.\nEarnings. Earnings are the initial safeguard against the risks of engaging in the banking business and represent the first line of defense against capital depletion that can result from declining asset values. We measure earnings as net income as a percent of total assets.\nLiquidity. Liquidity represents the ability to fund assets and meet obligations as they become due, and liquidity risk is the risk of not being able to obtain funds at a reasonable price within a reasonable time period to meet obligations as they become due. We use two different variables to measure liquidity. The first variable is liquid assets as a percent of volatile liabilities. This variable is similar in spirit to the liquidity coverage ratio introduced by the Basel Committee on Banking Supervision and measures a bank holding company’s capacity to meet its liquidity needs under a significantly severe liquidity stress scenario. We measure liquid assets as the sum of cash and balances due from depository institutions, securities (less pledged securities), federal funds sold and reverse repurchases, and trading assets. We measure volatile liabilities as the sum of federal funds purchased and repurchase agreements, trading liabilities (less derivatives with negative fair value), other borrowed funds, deposits held in foreign offices, and large time deposits held in domestic offices. Large time deposits are defined as time deposits greater than $100,000 prior to March 2010 and as time deposits greater than $250,000 in and after March 2010.\nThe second liquidity variable is stable liabilities as a percent of total liabilities. This variable measures the extent to which a bank holding company relies on stable funding sources to finance its assets and activities. This variable is related in spirit to the net stable funding ratio introduced by the Basel Committee on Banking Supervision, which measures the amount of stable funding based on the liquidity characteristics of an institution’s assets and activities over a 1 year horizon. We measure stable funding as total liabilities minus volatile liabilities as described earlier.\nFinally, we include a limited number of independent variables (Xbq) to control for things that may differentially affect SIFIs and non-SIFIs in the quarters since the Dodd-Frank Act was enacted. We include these variables to reduce the likelihood that our estimates of the impact of new requirements for SIFIs are reflecting something other than the impact of the Dodd-Frank Act’s new requirements for SIFIs.\nNontraditional income. Nontraditional income generally captures income from capital market activities. Bank holding companies with more nontraditional income are likely to have different business models than those with more income from traditional banking activities. Changes in capital markets in the period since the Dodd- Frank Act was enacted may have had a greater effect on bank holding companies with more nontraditional income. If bank SIFIs typically have more nontraditional income than other bank holding companies, then changes in capital markets in the time since the Dodd-Frank Act was enacted may have differentially affected the two groups. We measure nontraditional income as the sum of trading revenue; investment banking, advisory, brokerage, and underwriting fees and commissions; venture capital revenue; insurance commissions and fees; and interest income from trading assets less associated interest expense, and we express nontraditional income as a percent of operating revenue.\nSecuritization income. Bank holding companies with more income from securitization are likely to have different business models than those with more income from traditional banking associated with an originate-to-hold strategy for loans. Changes in the market for securitized products in the period since the Dodd-Frank Act was enacted may thus have had a greater effect on bank holding companies with more securitization income. If bank SIFIs typically have more securitization income than other bank holding companies, then changes in the market for securitized products in the time since the Dodd-Frank Act was enacted may have differentially affected the two groups. We measure securitization income as the sum of net servicing fees, net securitization income, and interest and dividend income on mortgage-backed securities minus associated interest expense, and we express securitization as a percent of operating revenue. Operating revenue is the sum of interest income and noninterest income less interest expense and loan loss provisions.\nForeign exposure. Changes in other countries, such as the sovereign debt crisis in Europe, may have a larger effect on bank holding companies with more foreign exposure. If bank SIFIs typically have more foreign exposure than other bank holding companies, then changes in foreign markets may have differentially affected the two groups. We measure foreign exposure as the sum of foreign debt securities (held-to-maturity and available-for-sale), foreign bank loans, commercial and industrial loans to non-U.S. addresses, and foreign government loans. We express foreign exposure as a percent of total assets.\nSize. We include size because bank SIFIs tend to be larger than other bank holding companies, and market pressures or other forces not otherwise accounted for may have differentially affected large and small bank holding companies in the time since the Dodd-Frank Act was enacted. We measure the size of a bank holding company as the natural logarithm of its total assets.\nTARP participation. We control for whether or not a bank holding company participated in the Troubled Asset Relief Program (TARP) to differentiate any impact that this program may have had from the impact of the Dodd-Frank Act.\nWe also conducted several sets of robustness checks:\nWe restricted our sample to the set of institutions with assets that are “close” to the $50 billion cutoff for enhanced prudential regulation for bank SIFIs. Specifically, we analyzed two restricted samples of bank holding companies: (1) bank holding companies with assets between $1 billion and $100 billion and (2) bank holding companies with assets between $25 billion and $75 billion.\nWe examined different treatment start dates. Specifically, we allowed the Dodd-Frank Act’s new requirements for SIFIs to have an impact in 2009q3, 1 year prior to the passage of the act. We did so to allow for the possibility that institutions began to react to the act’s requirements in anticipation of the act being passed.\nWe analyzed alternative measures of capital adequacy, including equity capital as a percent of total assets and Tier 1 capital as a percent of risk-weighted assets.\nWe analyzed commercial banks and savings banks (banks). In this case, we identified a bank as a SIFI if it is a subsidiary of a SIFI bank holding company.", "We conducted our analysis using quarterly data on bank holding companies from the Federal Reserve Board and SNL Financial for the period from the first quarter of 2006 to the second quarter of 2012. We also used quarterly data on commercial banks and savings banks from the Federal Deposit Insurance Corporation (FDIC), Federal Financial Institutions Exanimation Council (FFIEC), and SNL Financial for the same time period for one of our robustness checks.", "The Dodd-Frank Act appears to be associated with an increase in bank SIFIs’ funding costs in the second quarter of 2012, but not in other quarters (see table 13). Over the period from the third quarter of 2010 to the second quarter of 2012, bank SIFIs’ funding costs ranged from about 0.02 percentage points lower to about 0.05 percentage points higher than they otherwise would have been since the Dodd-Frank Act. As a group, the estimates are jointly significant. However, the individual estimates are not significantly different from zero for quarters other than the second quarter of 2012. These estimates suggest that the Dodd-Frank Act’s new requirements for SIFIs have had little effect on bank SIFIs’ funding costs. To the extent that borrowing costs are a function of funding costs, the new requirements for SIFIs likely have had little effect on the cost of credit thus far.\nOur results suggest that the Dodd-Frank Act is associated with improvements in most aspects of bank SIFIs’ safety and soundness. Bank SIFIs appear to be holding more capital than they otherwise would have held since the Dodd-Frank Act was enacted. The quality of assets on the balance sheets of bank SIFIs also seems to have improved since enactment. The act is associated with higher earnings for bank SIFIs in the first four quarters after enactment. It is also associated with improved liquidity as measured by the extent to which a bank holding company is using stable sources of funding. Only liquidity measured by the capacity of a bank holding company’s liquid assets to cover its volatile liabilities has not clearly improved since the enactment of the act. Thus, the Dodd- Frank Act appears to be broadly associated with improvements in most indicators of safety and soundness for bank SIFIs.\nOur approach allows us to partially differentiate changes in funding costs, capital adequacy, asset quality, earnings, and liquidity associated with the Dodd-Frank Act from changes due to other factors. However, several factors make isolating and measuring the impact of the Dodd-Frank Act’s new requirements for SIFIs challenging. The effects of the Dodd-Frank Act cannot be differentiated from simultaneous changes in economic conditions, such as the pace of the recovery from the recent recession, or regulations, such as those stemming from Basel III, that may differentially affect bank SIFIs and other bank holding companies. In addition, many of the new requirements for SIFIs have yet to be implemented. For example, the Federal Reserve has indicated that it will impose a capital surcharge and liquidity ratios on at least some SIFIs, but the exact form and scope of these requirements is not yet known. Nevertheless, our estimates are suggestive of the initial effects of the Dodd-Frank Act on bank SIFIs and provide a baseline against which to compare future trends.\nThe results of our robustness checks are as follows:\nOur results are generally robust to restricting the set of bank holding companies we analyze to those with assets of $1 billion-$100 billion.\nOur results are not generally robust to restricting the set of bank holding companies we analyze to those with assets of $25 billion-$75 billion, but this is likely to be a result of the small number of bank holding companies (29) that fit this criteria.\nOur results are generally robust to starting the “treatment” in 2009 Q3, 1 year prior to the passage of the Dodd-Frank Act. In addition, our estimates suggest that the impact of new requirements for SIFIs of the Dodd-Frank Act may have preceded the enactment of the act itself. This finding is consistent with the theory that bank holding companies began to change their behavior in anticipation of the act’s requirements, perhaps as information about the content of the act became available and the likelihood of its passage increased. However, there may be other explanations, including anticipation of Basel III requirements, reactions to stress tests, and market pressures to improve capital adequacy and liquidity.\nOur results for the impact on capital adequacy are generally similar for alternative measures of capital adequacy.\nOur results for banks’ funding costs, asset quality, earnings, and liquidity as measured by liquid assets as a percent of volatile liabilities were generally similar to our baseline results for bank holding companies, but our results for capital adequacy and liquidity as measured by stable liabilities as a percent of total liabilities were not. The differences may reflect the impact of nonbank subsidiaries on bank holding companies or a number of other factors.", "The Federal Reserve’s adoption of Regulation II (Debit Card Interchange Fees and Routing), which implements section 1075 of the Dodd-Frank Act, generally has reduced debit card interchange fees. However, debit card issuers, payment card networks, and merchants are continuing to adjust strategically to the rule; thus, the rule’s impact has not yet been fully realized. Typically, consumers use debit cards as a cashless form of payment that electronically accesses funds from a cardholder’s bank account. A consumer using a debit card authenticates and completes a transaction by entering a personal identification number (PIN) or a signature. The parties involved in a debit card transaction are (1) the customer or debit cardholder; (2) the bank that issued the debit card to the customer (issuer bank); (3) the merchant; (4) the merchant’s bank (called the acquirer bank); and (4) the payment card network that processes the transaction between the merchant acquirer bank and the issuer bank. In a debit transaction, the merchant receives the amount of the purchase minus a fee that it must pay to its acquirer bank. This fee includes the debit interchange fee that the acquirer bank pays to the issuer bank. Interchange fees generally combine an ad-valorem component, which depends on the amount of the transaction, and a fixed- fee component. Additionally, before Regulation II was implemented, fees varied more widely based on, among other things, the type of merchant.\nAlthough payment card networks do not receive the debit interchange fees, they set the fees. Debit cards represent a two-sided market that involves cardholders and merchants. Cardholders benefit if their cards are accepted by a wide range of merchants, and merchants benefit if their ability to accept cards results in higher sales. In theory, a card network sets its interchange fees to balance the demand on the two sides of the market. It sets interchange fees high enough to attract issuers to issue debit cards processed by the network but low enough for merchants to be willing to accept the debit cards. Before the enactment of section 1075 of the Dodd-Frank Act, debit interchange fees had been increasing, creating controversy in the industry about the appropriate level of debit interchange fees in the United States, which some have stated were among the highest in the world. For example, some merchants stated that network competition led to higher, not lower, interchange fees as networks strived to attract issuer banks (who ultimately receive interchange fee revenue).\nSection 1075 amends the Electronic Fund Transfer Act (EFTA) by adding a new section 920 regarding interchange transaction fees and rules for payment card transactions. As required by EFTA section 920, Regulation II establishes standards for assessing whether debit card interchange fees received by issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions. The rule sets a cap on the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction at $0.21 per transaction, plus 5 basis points multiplied by the transaction’s value. An issuer bank that complies with Regulation II’s fraud-prevention standards may receive no more than an additional 1 cent per transaction. The fee cap became effective on October 1, 2011. However, as required by EFTA section 920, the rule exempts from the fee cap issuers that have, together with their affiliates, less than $10 billion in assets, and transactions made using debit cards issued pursuant to government-administered payment programs or certain reloadable prepaid cards. In addition, Regulation II prohibits issuers and card networks from restricting the number of networks over which electronic debit transactions may be processed to less than two unaffiliated networks. This prohibition became effective on April 1, 2012. The rule further prohibits issuers and networks from inhibiting a merchant from directing the routing of an electronic debit transaction over any network allowed by the issuer.October 1, 2011.", "Thus far, large banks that issue debit cards have experienced a decline in their debit interchange fees as a result of Regulation II, but small banks generally have not. As noted above, issuers that, together with their affiliates, have $10 billion or more in assets are subject to the debit card interchange fee cap. According to the Federal Reserve, 568 banks were Issuers below the $10 subject to the fee cap in 2012 (covered issuers).billion asset threshold are exempt from the fee cap (exempt issuers). According to the Federal Reserve, over 14,300 banks, credit unions, savings and loans, and savings banks were exempt from the fee cap in 2012.\nInitial data collected by the Federal Reserve indicate that covered issuers have experienced a significant decline in their debit interchange fees and fee income as a result of Regulation II. Data published by the Federal Reserve show that 15 of 16 card networks provided a lower interchange fee, on average, to covered issuers after the rule took effect.Specifically, the data show that the average interchange fee received by covered issuers declined 52 percent, from $0.50 in the first three quarters of 2011 to $0.24 in the fourth quarter. During the same period, the interchange fee as a percentage of the average transaction value for covered issuers declined from 1.29 percent to 0.60 percent.\nOur own analysis also suggests that the fee cap is associated with reduced interchange fee income for covered banks. To further assess the impact of the fee cap on covered banks, we conducted an econometric analysis of debit and credit card interchange fee income earned by banks from the first quarter of 2008 through the second quarter of 2012. As discussed, Regulation II subjects covered issuers but not exempt issuers to the fee cap. This allows us to compare the incomes earned by covered and exempt banks before and after the fee cap’s effective date in the fourth quarter of 2011. All else being equal, the post- cap changes in income among the two groups can be inferred as the effect of the fee cap on interchange fee income earned by covered banks. Our estimates suggest that interchange fees collected by covered banks, as a percent of their assets, were about 0.007 to 0.008 percentage points lower than they otherwise would have been in the absence of the fee cap. For a bank with assets of $50 billion, this amounts to $3.5 million to $4 million in reduced interchange fee income.\nIn comparison, Regulation II’s fee cap appears initially to have had a limited impact on exempt issuers. As we recently reported, initial data collected by the Federal Reserve indicate that card networks largely have adopted a two-tiered interchange fee structure after the implementation of Regulation II, to the benefit of exempt issuers. Data published by the Federal Reserve from 16 card networks show 15 of 16 card networks provided a higher interchange fee, on average, to exempt issuers than covered issuers after the rule took effect. The data further showed that the average interchange fee received by exempt issuers declined by $0.02, or around 5 percent, after the rule took effect—declining from $0.45 over the first three quarters of 2011 to $0.43 in the fourth quarter of 2011. Over the same period, the interchange fee as a percentage of the average transaction value for exempt issuers declined from 1.16 to 1.10 percent.\nAlthough the fee cap appeared to have a limited impact on exempt issuers, such issuers remain concerned about the potential for their interchange fee income to decline over the long term. For example, some have noted that (1) the prohibition on network exclusivity and routing restrictions may lead networks to lower their interchange fees, in part to encourage merchants to route debit card transactions through their networks; or (2) economic forces may cause networks not to maintain a two-tiered fee structure that provides a meaningful differential between fees for exempt and covered issuers. However, some merchants and others have noted that major card networks have adopted a two-tiered fee structure and have an incentive to maintain that structure to attract exempt issuers.", "Regulation II’s fee cap generally has reduced debit card interchange fees, which likely has resulted or will result in savings for merchants. According to the Federal Reserve and industry experts, the merchant acquirer market is competitive. Thus, the decrease in interchange fees likely has translated or will translate into lower merchant acquirer fees. Some noted that large merchants likely reaped immediate benefits from the fee cap, because their acquirer fees probably were reduced when interchange fees declined. In contrast, they noted that smaller merchants often opt for blended fee structures under which, for example, the merchants may be charged a flat fee per electronic payment transaction and, thus, not immediately receive the benefit of decreases in interchange fees because merchants may still be locked into contracts that have these fee structures.is expected to cause acquirer banks to adjust the fees they charge to merchants and pass on any savings to avoid losing merchant business.\nIn either case, competition in the supply of acquirer services In its final rule, the Federal Reserve noted that merchants could be negatively affected if large issuers were able to persuade their customers to pay with credit cards rather than debit cards, since credit cards generally have higher interchange fees. While issuers can take this strategy, merchants also can provide incentives to consumers to encourage them to use debit cards instead of credit cards. The Dodd- Frank Act requires networks to allow merchants to offer discounts to consumers based on whether they pay by cash, check, debit card, or credit card. In addition, a recent report stated that an antitrust settlement between the Department of Justice and VISA and MasterCard requires the networks to loosen past restrictions on merchants’ ability to offer discounts to consumers based on the payment method, brand, and product. This allows merchants accepting cards by those networks to provide incentives to encourage customers to complete their debit transactions using their PIN rather than signature.data on whether issuers or merchants are engaging in such strategies.\nSome types of merchants may be adversely affected by Regulation II. As mentioned earlier, the fee cap generally led payment card networks to set their debit interchange fees at the level of the cap for covered issuers. However, the interchange fee for small-ticket transactions, or transactions that are generally under $15, was sometimes below the fee cap before Regulation II became effective. For example, according to the International Franchise Association and the National Council of Chain Restaurants, before Regulation II a $5 transaction could incur 11.75 cents in debit interchange fees. Under the current fee cap of 21 cents plus 0.05 percent of the transaction value, the interchange fee for a $5 covered transaction is 21.25 cents, about 80 percent higher. As a result, merchants that have a high volume of small value transactions, such as quick serving restaurants, transit authorities, and self-service and vending operators, could be worse off after the adoption of Regulation II.\nIt is not practical to measure the extent to which consumers in the many markets where debit transactions are possible have been affected by Regulation II. First, one probable outcome is that at least a fraction of the merchants have passed some of their cost savings onto consumers. As noted by the Federal Reserve, whether merchants reduce their prices as a result of lower interchange fees will depend on the competitiveness of the various retail markets. In a competitive market with low margins, merchants likely have to pass on at least part of their cost savings to consumers. On the other hand, the loss in debit interchange fee income by large banks may lead them to seek ways to recover that lost income. As mentioned by the Federal Reserve, banks may try to recoup lost interchange fee income by introducing new bank service and product fees, possibly making banking services too costly for at least some customers. Our analysis (discussed previously) suggests that covered banks have recovered some of their lost interchange fee revenue, such as through increased revenue from service charges on deposit accounts.", "Historically, issuers have determined which and how many signature and PIN networks may process their debit card transactions. Before and after Regulation II, issuers generally use only one signature network (e.g., VISA or MasterCard) to process their debit card transactions that are completed using a signature. Additionally, as stated in the final rule, before Regulation II issuer banks, or in some cases, networks controlled the merchant routing of debit transactions. For example, an issuer bank could require a PIN transaction to be routed over a particular network, even if other PIN networks were available to route the transaction. The rule also states that, prior to Regulation II, issuer banks were able to limit the networks enabled on their cards through exclusive contracts with networks. For example, some issuers had agreed to restrict their cards’ signature debit functionality to a single signature debit network and their PIN debit functionality to the signature network’s affiliated PIN network. According to the Federal Reserve’s 2009 survey data of large issuers, most debit cards from large bank issuers carried only one PIN network, and the cards’ PIN and signature networks typically were affiliated with each other.\nRegulation II contains two provisions that serve to provide merchants with the option of selecting the network to process their debit card transactions and a greater number of network options. First, the rule prohibits all issuers and networks from inhibiting a merchant from directing the routing of a transaction over any network allowed by the issuer. This provision became effective on October 1, 2011. For example, if an issuer’s debit card has two or more PIN networks, the merchant rather than the issuer can chose which network processes a PIN transaction, such as the one charging the lowest interchange fee. Second, the rule prohibits all issuers and networks from restricting the number of networks over which debit transactions may be processed to fewer than two unaffiliated networks. This provision became effective on April 1, 2012. As a result, issuers no longer may allow only VISA’s or MasterCard’s signature and affiliated PIN networks to process their debit card transactions. Instead, such issuers would need to add an unaffiliated signature or PIN network if they do not already have an unaffiliated network.\nRegulation II’s prohibitions may have a limited impact on increasing competition and, in turn, lowering interchange fees, because issuers largely control which networks may process their debit card transactions. For example, issuers did not likely comply with Regulation II by adding a second unaffiliated signature network because, according to the final rule, networks and issuers stated it would be too costly to reconfigure cards and merchant equipment to enable the processing of two signature networks associated with one card.have only one network option for transactions completed by signature. Additionally, issuers can comply by having an unaffiliated signature network and PIN network, which means that merchants may have only one network routing choice once a customer decides to use her signature or her PIN. Therefore, even though Regulation II provides merchants with the authority to choose the network over which to route debit card transactions, merchants may not have a choice about which network to route the debit card transaction.\nGoing forward, issuers may be able to act strategically to limit competition over debit card interchange fees through their control over which networks may process their debit card transactions. First, for covered transactions subject to the fee cap, both signature and PIN networks have an incentive to set their interchange fees at the fee cap. If a network lowered its fees below the cap, such as to attract merchant routing business, issuers using that network could replace it with a network that sets its fees at the cap. With networks charging similar interchange fees for covered transactions, merchants may not be able to use their network routing decisions to put downward pressure on such fees. Second, for exempt PIN transactions, merchants may be able to exert downward pressure on fees when issuers use two or more PIN networks to process their transactions. In this case, merchants can choose the network with the lowest fees and possibly induce the other networks to lower their fees. However, exempt issuers may be able to counter such pressure by dropping a network whose fees are too low or allowing only the PIN network (along with an unaffiliated signature network) with the highest fees to process their transactions. As discussed, merchants may be able to provide incentives to customers using cards issued by exempt banks to conduct a PIN rather than a signature transaction, so as to allow themselves more routing options.", "In response to Regulation II, VISA is undertaking strategies intended to attract merchant routing. First, VISA recently imposed a new monthly fixed acquirer fee that merchants must pay to accept VISA debit and credit cards. VISA also plans to reduce merchants’ variable fees so that merchants’ total fees associated with VISA transactions likely would be lower after the new fee structure’s implementation. Under its new fee structure, VISA could, for example, lower the interchange fees for VISA’s PIN network, Interlink, to attract merchant routing and make up at least some of its lost revenue by collecting the fixed fees. However, the extent to which VISA will be able to lower PIN debit interchange fees and gain transaction volume is limited. As with any network, if Interlink reduces its interchange fees too much, issuers could replace Interlink with another PIN network that offers higher fees.\nSecond, according to VISA representatives, VISA’s signature network also is able to process PIN transactions, in essence automatically offering an additional PIN routing choice to merchants for cards that carry VISA For example, in the past, a debit card that carried the VISA signature.signature and two other PIN networks usually would process a PIN transaction through one of the PIN networks. Now, the VISA check card signature network can continue to be the only option for routing signature debit transactions on that card but also become a third option for routing PIN debit transactions. For VISA to gain PIN transaction volume through VISA check cards, however, it must set the associated interchange fees at or below the fees set by the other available PIN networks. However, the extent to which VISA can do this is not yet clear. If issuers experienced declining interchange fee revenue from their use of VISA, they could switch signature networks, for example, to MasterCard.", "", "We conducted an econometric analysis to assess the impact of the Dodd- Frank Act’s debit interchange fee standard on covered banks. Our multivariate econometric model used a difference-in-difference design that exploits the fact that some banks are automatically covered by the debit interchange fee requirements but others are not, so we can view covered banks as the treatment group and exempt banks as the control group. We then compared changes in various types of income earned by covered banks over time to changes in those types of income earned by exempt banks over time. All else being equal, the difference in the differences is the impact of the new debit interchange fee requirements.\nOur regression specification is the following: ybq = α + β + γCOVEREDbq + X’bqΘ + εbq, where b denotes the bank, q denotes the quarter, ybq is the dependent variable, α is an institution-specific intercept, β is a quarter-specific intercept, COVEREDbq is an indicator variable that equals 1 if bank b is covered by the debit interchange standard in quarter q and 0 otherwise, Xbq is a list of other independent variables, and εbq is an error term. We estimate the parameters of the model using quarterly data for banks for the period from the first quarter of 2008 to the second quarter of 2012.\nThe parameters of interest are the γ, the coefficients on the covered bank indicators in the quarters after the treatment start date of the fourth quarter of 2011. The debit interchange standard was effective October 1, 2011, (the fourth quarter of 2011), so the covered bank indicator is equal to zero for all banks for all quarters from the first quarter of 2008 to the third quarter of 2011. For all quarters from the fourth quarter of 2011 to the second quarter of 2012, the covered bank indicator is equal to one for all covered banks and equal to zero for all exempt banks. Thus, for quarters from the fourth of 2011 to the second of 2012, all else being equal, the parameter γ measures the average difference in the dependent variable between covered and exempt banks in that quarter relative to the base quarter.\nWe used lists of covered institutions provided by the Federal Reserve to identify which banks in our sample are required to comply with debit card interchange fee standards in each quarter and which are not. We assumed that any institution not explicitly identified as a covered institution was exempt.\nWe used different dependent variables (ybq) in order to estimate the impacts of the debit interchange standard on various sources of income earned by covered banks, including bank card and credit card interchange fees, service charges on deposit accounts in domestic offices, total non-interest income, total interest income, and total income.\nFinally, we included size as an independent variable (Xbq) to control for factors correlated with size that may differentially affect exempt and covered banks in the quarters since debit interchange standard went into effect. We measured the size of a bank as the natural logarithm of its total assets. We included this variable to reduce the likelihood that our estimates of the impact of the debit interchange standard are reflecting something else.", "To assess the impact of debit interchange fee regulation on covered institutions, we analyzed commercial banks and savings banks (banks) for the period from the first quarter of 2008 to the second quarter of 2012 using data from the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Federal Financial Institutions Examination Council (FFIEC). We excluded savings associations and credit unions from our analysis, even though they are subject to the debit card interchange fee standards. For much of the period we analyzed, savings associations filed quarterly Thrift Financial Reports, but these filings did not include the information we required for our analysis, such as income earned from bank card and credit card interchange fees, for every quarter. Similarly, credit union filings also do not include the information we required for our analysis.", "Table 14 shows the estimated differences in fees and income as a percent of assets for covered banks relative to what they would have earned in the absence of the debit interchange fee standard, all else being equal.\nOur estimates suggest that the debit interchange fee standard is associated with:\nLower bank card and credit card interchange fees collected by covered banks. After the effective date, interchange fees collected by covered banks, as a percent of assets, were about 0.007-0.008 percentage points lower than they otherwise would have been. For a bank with assets of $50 billion, this amounts to $3.5 million-4 million in reduced bank card and credit card interchange fees.\nHigher service charges on deposit accounts in domestic offices for covered banks. After the effective date, service charges collected by covered banks, as a percent of assets, were about 0.004-0.007 percentage points higher than they otherwise would have been. For a bank with assets of $50 billion, this amounts to $2 million-3.5 million in additional service charges.\nNo significant change in overall non-interest income for covered banks. Non-interest income—of which both interchange fees and service charges are components—earned by covered banks was about 0.09-0.13 percentage points lower as a percent of assets than it would have been in the first two quarters after the effective date and about 0.03 percentage points higher in the third quarter after the effective date. However, these estimates are not statistically significant at the 5-percent level. Increased interest income in the first two quarters after the effective date but no significant increase since. Interest income earned by covered banks, as a percent of assets, was about 0.03 percentage points higher than it would have been in the first two quarters after the effective date. It was 0.02 percentage points higher in the third quarter after the effective date, but this estimate is not statistically significant at the 5-percent level.\nNo significant change in total income. Total income—which is composed of interest and non-interest income—earned by covered banks after the effective date, as a percent of assets, ranges from 0.10 percentage points lower to 0.05 percentage points higher, but these estimates are not statistically significant at the 5-percent level.\nTo assess the robustness of our estimates, we examined different treatment start dates. Specifically, we allowed the debit fee standard to have an impact starting in the fourth quarter of 2010—1 year prior to the rule’s effective date—on banks that were covered in the fourth quarter of 2011. We did so to allow for the possibility that institutions began to react to the debit fee standard in anticipation of the rule being passed. Our estimates suggest that changes in covered banks’ interchange fee income and service charge income generally did not occur until after the effective date and also that significant changes in non-interest income, interest income, and total income for covered banks generally did not precede the rule’s effective date.\nOur approach allows us to partially differentiate changes in various types of income earned by covered banks associated with the debit interchange fee cap from changes due to other factors. However, several factors make isolating and measuring the impact of the cap for covered banks challenging. In particular, the effects of the cap cannot be differentiated from simultaneous changes in economic conditions, regulations, or other changes that may differentially affect covered banks. Nevertheless, our estimates are suggestive of the initial effects of the cap on covered banks and provide a baseline against which to compare future trends.", "", "", "", "", "In addition to the contact named above, Richard Tsuhara (Assistant Director), Silvia Arbelaez-Ellis, Bethany Benitez, William R. Chatlos, Philip Curtin, Rachel DeMarcus, Timothy Guinane, Courtney LaFountain, Thomas McCool, Marc Molino, Patricia Moye, Susan Offutt, Robert Pollard, Christopher Ross, Jessica Sandler, and Joseph Weston, made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 1, 1, 1, 1, 1, 2, 3, 2, 1, 2, 2, 2, 2, 1, 2, 3, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "", "h2_full", "", "", "", "", "h0_full", "", "h0_full", "h0_full", "h1_full", "h1_full", "", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "Why do federal financial agencies coordinate on rulemakings?", "What did the Dodd-Frank Act require?", "What does GAO's review of selected rules show?", "What is an explanation for GAO's observation?", "What has the FSOC not yet implemented?", "How did GAO assess impact of Dodd-Frank Act?", "What was the first action GAO took?", "What was the second action GAO took?", "What does GAO plan to do?", "What does the Dodd-Frank Act require?", "What is GAO required to do?", "What does this report examine?", "What did GAO analyze for the report?" ], "summary": [ "Federal financial agencies continue to coordinate on rulemakings informally in order to reduce duplication and overlap in regulations and for other purposes, but interagency coordination does not necessarily eliminate the potential for differences in related rules.", "For most of the 19 regulations, the Dodd-Frank Act required the agencies to coordinate, but agencies also voluntarily coordinated with other U.S. and international regulators on some of their rulemakings.", "GAO's review of selected rules shows that differences between related rules may remain even when coordination occurs.", "According to regulators, such differences may result from differences in their jurisdictions or the markets.", "Finally, the Financial Stability Oversight Council (FSOC) has not yet implemented GAO's previous recommendation to work with regulators to establish formal interagency coordination policies.", "Most Dodd-Frank Act regulations have not been finalized or in place for sufficient time for their full impacts to materialize. Recognizing these and other limitations, GAO took a multipronged approach to assess the impact of some of the act's provisions and rules, with an initial focus on the act's systemic risk goals.", "First, GAO developed indicators to monitor changes in certain characteristics of U.S. bank holding companies subject to enhanced prudential regulation under the Dodd-Frank Act (U.S. bank SIFIs).", "Second, empirical results of GAO's regression analysis suggest that, to date, the act may have had little effect on U.S. bank SIFIs' funding costs but may have helped improve their safety and soundness.", "GAO plans to update its analyses in future reports, including adding indicators for other Dodd-Frank Act provisions and regulations.", "The Dodd-Frank Act requires or authorizes various federal agencies to issue hundreds of rules to implement reforms intended to strengthen the financial services industry.", "GAO is required to annually study financial services regulations.", "This report examines (1) the regulatory analyses federal agencies performed for rules issued pursuant to the Dodd-Frank Act; (2) how the agencies consulted with each other in implementing the final rules to avoid duplication or conflicts; and (3) what is known about the impact of the Dodd-Frank Act rules.", "GAO examined the regulatory analyses for the 54 regulations that were substantive and thus required regulatory analyses; conducted case studies on the regulatory analyses for 4 of the 19 major rules; conducted case studies on interagency coordination for 3 other rules; and developed indicators to assess the impact of the act’s systemic risk provisions and regulations." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 0, 0, 0, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "", "Background: Constitutional and Statutory Requirements", "Constitutional Provisions", "Voting Rights Act", "Section 2", "Section 5 Preclearance Rendered Inoperable", "Judicial Interpretation", "Equality Standard: One Person, One Vote", "Equal Protection and the Voting Rights Act", "Voting Rights Act Requirements", "Constitutional Standards of Equal Protection", "Partisan Gerrymandering", "Redistricting Commissions", "Conclusion" ], "paragraphs": [ "C ongressional redistricting involves the drawing of district boundaries from which voters elect their representatives t o the U.S. House of Representatives. Prior to the 1960s, court challenges to redistricting plans were generally considered to present non-justiciable political questions that were most appropriately addressed by the political branches of government, not the judiciary. However, in 1962, in the landmark case of Baker v. Carr , the Supreme Court held that a constitutional challenge to a redistricting plan is not a political question and is justiciable. Since then, in a series of cases and evolving jurisprudence, the U.S. Court has issued rulings that have significantly shaped how congressional districts are drawn.\nRecently, the Supreme Court and lower courts have focused on challenges to district maps. As the 2020 round of redistricting approaches, these decisions are likely to be of particular interest to Congress. For example, in addressing the requirement of population equality among districts, the Court has held that the standard does not require congressional districts to be drawn with precise mathematical equality, but instead requires states to justify population deviation among districts with \"legitimate state objectives.\" During its current term, the Court has decided one case regarding the degree to which racial considerations are permitted to impact how district lines are drawn and is considering another such case. Furthermore, the Supreme Court is currently considering an appeal from a three-judge federal district court ruling involving partisan gerrymandering. This case presents the Court with an opportunity to establish a standard for determining what constitutes unconstitutional partisan gerrymandering. In addition, in 2015, the Court upheld, under the Elections Clause, an Arizona constitutional provision that was enacted by ballot initiative establishing an independent commission for drawing congressional districts.\nThis report first discusses the constitutional and statutory framework of congressional redistricting, including the Elections Clause, the Equal Protection Clause of the Fourteenth Amendment, and the Voting Rights Act. The report then analyzes key foundational and recent Supreme Court and lower court redistricting decisions addressing four general topics: (1) the constitutional requirement of population equality among districts; (2) the intersection between the Voting Rights Act and the Equal Protection Clause, also known as claims of racial gerrymandering; (3) the justiciability of partisan gerrymandering; and (4) the constitutionality of state ballot initiatives providing for redistricting by independent commissions.", "Following and based on each decennial census, the 435 seats in the U.S. House of Representatives are apportioned—or divided up—among the 50 states, with each state entitled to at least one Representative. A federal statute requires that apportionment occurs every 10 years. Accordingly, in order to comport with the constitutional standard of equality of population among districts, discussed below, at least once every 10 years, most states must draw new congressional district boundaries in response to changes in the number of Representatives apportioned to the state or shifts in population within the state.\nIn addition to various state processes, the legal framework for congressional redistricting involves constitutional and federal statutory requirements.", "In recent challenges to redistricting maps, constitutional provisions including the Elections Clause and the Fourteenth Amendment's Equal Protection Clause have been invoked. The Elections Clause provides that \"[t]he Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.\" The Equal Protection Clause ensures that \"[n]o State shall make or enforce any law which shall ... deny to any person within its jurisdiction the equal protection of the laws.\" In addition, redistricting maps are required to comport with the Voting Rights Act of 1965, which was enacted under Congress's authority to enforce the Fifteenth Amendment. The Fifteenth Amendment guarantees that \"[t] he right of citizens of the United States 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,\" and provides Congress with the power to enforce its requirements with appropriate legislation.", "", "Congression al district boundaries in every state are required to comply with Section 2 of the Voting Rights Act (VRA) . Section 2 authorizes the federal government and private citizens to challenge discriminatory voting practices or procedures, including minority vote dilution, (that is, the diminishing or wea kening of minority voting power ) . Specifically, Section 2 prohibits any voting qualification or practice a pplied or imposed by any stat e or political subdivision that results in the denial or abridgement of the right to vote based on race, color, or membership in a language minority . This includes congressional redistricting plans. Section 2 further provides that a violation is established if, based on the totality of circumstances, electoral processes are not equally open to participation by members of a racial or language minority group in that the group's members have less opportunity than other members of the electorate to elect representatives of their choice .", "Until 2013, when the Supreme Court issued its ruling in Shelby County v. Holder , Section 5 of the VRA was construed to require several states and jurisdictions covered under Section 4(b) of the VRA to obtain prior approval or preclearance for any proposed change to a voting law, which included changes to redistricting maps. In order to be granted preclearance, the state or jurisdiction had the burden of proving that the proposed map would have neither the purpose nor the effect of denying or abridging the right to vote on account of race or color, or membership in a language minority group. Moreover, as amended in 2006, the statute expressly provided that its purpose was \"to protect the ability of such citizens to elect their preferred candidates of choice.\" Covered jurisdictions could seek preclearance from either the Department of Justice (DOJ) or the U.S. District Court for the District of Columbia. If preclearance was not granted, the proposed change to election law could not go into effect.\nIn Shelby County , the Court invalidated Section 4(b) of the VRA, holding that the application of the coverage formula to certain states and jurisdictions departed from the \"fundamental principle of equal sovereignty\" among the states without justification in light of current conditions. Although the Court invalidated only the coverage formula in Section 4(b), by extension, Section 5 was also rendered inoperable. As a result of the Court's decision, nine states, and jurisdictions within six additional states, that were previously covered under the formula are no longer subject to the VRA's preclearance requirement. The covered states were Alabama, Alaska, Arizona, Georgia, Louisiana, Mississippi, South Carolina, Texas, and Virginia. The six states containing covered jurisdictions were California, Florida, Michigan, New York, North Carolina, and South Dakota.", "In a series of cases, the Supreme Court has evaluated disputes over redistricting maps. These rulings and evolving jurisprudence have significantly affected how congressional districts are drawn and the degree to which challenges to redistricting plans may succeed. This jurisprudence can be seen to address four general areas: (1) the constitutional requirement of population equality among districts; (2) the intersection between the Voting Rights Act and the Equal Protection Clause; (3) the justiciability of partisan gerrymandering; and (4) the constitutionality of state ballot initiatives providing for redistricting by independent commissions.", "The Supreme Court has interpreted the Constitution to require that each congressional district within a state contain an approximately equal number of persons. This requirement is sometimes referred to as the \"equality standard\" or the principle of \"one person, one vote.\" In 1964, in Wesberry v. Sanders , the Supreme Court interpreted provisions of the Constitution stating that Representatives be chosen \"by the People of the several States\" and \"apportioned among the several States ... according to their respective Numbers\" to require that \"as nearly as is practicable, one man's vote in a congressional election is to be worth as much as another's.\" Later in 1964, the Court issued its ruling in Reynolds v. Sims with regard to state legislative redistricting. In Reynolds , the Supreme Court held that the one person, one vote standard also applied in the context of state legislative redistricting and that the Equal Protection Clause requires all who participate in an election \"to have an equal vote.\"\nIn several cases since 1964, the Supreme Court has described the extent to which precise or ideal mathematical population equality among districts is required. Ideal or precise equality is the average population that each district would contain if a state population were evenly distributed across all districts. The total or \"maximum population deviation\" refers to the percentage difference from the ideal population between the most populated district and the least populated district in a redistricting map. It is important to note that for congressional districts, less deviation from precise equality has been held by the Court to be permissible than is permissible for state legislative districts.\nFor example, in 1969, in Kirkpatrick v. Preisler , the Supreme Court invalidated a congressional redistricting plan where the district with the greatest population was 3.13% over the equality ideal, and the district with the lowest population was 2.84% below it. The Court considered the maximum population deviation of 5.97% to be too great to comport with the \"as nearly as practicable\" standard set forth in Wes berry . Subsequently, in Karcher v. Dagett , the Court held that \"absolute\" population equality is the standard for congressional districts unless a deviation is necessary to achieve \"some legitimate state objective.\" According to the Karcher Court, these objectives can include \"consistently applied legislative policies\" such as achieving greater compactness, respecting municipal boundaries, preserving prior districts, and avoiding contests between incumbents. In Karcher , the Court rejected a 0.6984% deviation in population between the largest and the smallest district.\nMore recently, in its 1983 decision in Tennant v. Jefferson County Commission , the Court further clarified that the \"as nearly as is practicable\" standard does not require congressional districts to be drawn with precise mathematical equality, but instead requires states to justify population deviation among districts with \"legitimate state objectives. Relying on Karcher , the Court in Tennant outlined a two-pronged test to determine whether a congressional redistricting plan passes constitutional muster. First, the challengers have the burden of proving that the population differences could have been practicably avoided. Second, if the challengers succeed in meeting that burden, the burden shifts to the state to demonstrate \"with some specificity\" that the population differences were needed to achieve a legitimate state objective. The Court emphasized that the state's burden here is \"flexible,\" and depends on the size of the population deviation, the importance of the state's interests, the consistency with which the plan reflects those interests, and whether alternatives exist that might substantially serve those interests while achieving greater population equality. In Tennant , the Court determined that avoiding contests between incumbents, maintaining county boundaries, and minimizing population shifts between districts were neutral, valid state policies that warranted the relatively minor population disparities in question. The Court also opined that none of the alternative redistricting plans that achieved greater population equality came as close to vindicating the state's legitimate objectives. Therefore, the Court upheld the 0.79% maximum population deviation between the largest and smallest congressional districts.", "Much of the Supreme Court's redistricting jurisprudence has been prompted by disputes concerning the interplay between the requirements of the VRA and the constitutional standards of equal protection. While the Equal Protection Clause of the Fourteenth Amendment prohibits a state from redistricting based on race without sufficient justification, compliance with the VRA simultaneously demands that \"the legislature always is aware of race when it draws district lines.\" In an evolving line of cases, the Supreme Court has provided guidance to map drawers and the courts evaluating such maps on how to achieve the required \"delicate balancing of competing considerations\" in this complicated area of law.", "Under certain circumstances, the VRA may require the creation of one or more \"majority-minority\" districts in a congressional redistricting plan in order to prevent the denial or abridgement of the right to vote based on race, color, or membership in a language minority. A majority-minority district is one in which a racial or language minority group comprises a voting majority. The creation of such districts can avoid minority vote dilution by helping ensure that racial or language minority groups are not submerged into the majority and, thereby, denied an equal opportunity to elect candidates of their choice.\nIn its landmark 1986 decision Thornburg v. Gingles , the Supreme Court established a three-pronged test for proving vote dilution under Section 2 of the VRA. Under this test, (1) the minority group must be able to demonstrate that it is sufficiently large and geographically compact to constitute a majority in a single-member district; (2) the minority group must be able to show that it is politically cohesive; and (3) the minority must be able to demonstrate that the majority votes sufficiently as a bloc to enable the majority to defeat the minority group's preferred candidate absent special circumstances, such as the minority candidate running unopposed. The Thornburg Court also opined that a violation of Section 2 is established if based on the \"totality of the circumstances\" and \"as a result of the challenged practice or structure, plaintiffs do not have an equal opportunity to participate in the political processes and to elect candidates of their choice.\" The Court further listed the following factors, which originated in legislative history materials accompanying enactment of Section 2, as relevant in assessing the totality of the circumstances:\n1. the extent of any history of official discrimination in the state or political subdivision that touched the right of the members of the minority group to register, to vote, or otherwise to participate in the democratic process; 2. the extent to which voting in the elections of the state or political subdivisions is racially polarized; 3. the extent to which the state or political subdivision has used unusually large election districts, majority vote requirements, anti-single shot provisions, or other voting practices or procedures that may enhance the opportunity for discrimination against the minority group; 4. if there is a candidate slating process, whether the members of the minority group have been denied access to that process; 5. the extent to which members of the minority group in the state or political subdivision bear the effects of discrimination in such areas as education, employment and health, which hinder their ability to participate effectively in the political process; 6. whether political campaigns have been characterized by overt or subtle racial appeals; [and] 7. the extent to which members of the minority group have been elected to public office in the jurisdiction.\nFurther interpreting the Gingles three-pronged test, in Bartlett v. Strickland , the Supreme Court ruled that the first prong of the test—requiring a minority group to be geographically compact enough to constitute a majority in a district—can only be satisfied if the minority group would constitute more than 50% of the voting population in a single-member district. In Bartlett , the state officials who drew the map argued that Section 2 requires drawing district lines in such a manner to allow minority voters to join with other voters to elect the minority group's preferred candidate, even if the minority group in a given district comprises less than 50% of the voting age population. Rejecting this argument, a plurality of the Court determined that Section 2 does not grant special protection to minority groups that need to form political coalitions in order to elect candidates of their choice. To mandate recognition of Section 2 claims where the ability of a minority group to elect candidates of choice relies upon \"crossover\" majority voters would result in \"serious tension\" with the third prong of the Gingles test, the plurality opinion determined, because the third prong requires that the minority be able to demonstrate that the majority votes sufficiently as a bloc to enable it usually to defeat the minority's preferred candidate. Therefore, the plurality found it difficult to envision how the third prong of Gingles could be met in a district where, by definition, majority voters are needed to join with minority voters in order to elect the minority's preferred candidate.\nIn sum, in certain circumstances, Section 2 can require the creation of one or more majority-minority districts in a congressional redistricting plan. By drawing such districts, a state can avoid racial vote dilution, and the denial of minority voters' equal opportunity to elect candidates of choice. As the Supreme Court has determined, minority voters must constitute a numerical majority—over 50%—in such minority-majority districts.", "In addition to the VRA, however, congressional redistricting plans must also conform with standards of equal protection under the Fourteenth Amendment to the U.S. Constitution. According to the Supreme Court, if race is the predominant factor in the drawing of district lines, above other traditional redistricting considerations—including compactness, contiguity, and respect for political subdivision lines—then a \"strict scrutiny\" standard of review is to be applied. To withstand strict scrutiny in this context, the state must demonstrate that it had a compelling governmental interest in creating a majority-minority district and the redistricting plan was narrowly tailored to further that compelling interest. These cases are often referred to as \"racial gerrymandering\" claims because the plaintiffs argue that race was improperly used in the drawing of district boundaries. Case law in this area has revealed that there can be tension between compliance with the VRA, previously discussed, and conformance with standards of equal protection.\nThe Supreme Court has held that, in order to prevail in racial gerrymandering claims, plaintiffs have the burden of proving that racial considerations were \"dominant and controlling\" in the creation of the districts at issue. For example, in 2001, in E asley v. Cromartie , the Supreme Court upheld the constitutionality of a congressional district in North Carolina against the argument that the 47% black district was an unconstitutional racial gerrymander. In this long running litigation, the State of North Carolina appealed a lower court decision holding that the district, as redrawn by the legislature in 1997 in an attempt to cure an earlier violation, was still unconstitutional. In so doing, the Court determined that the basic question presented in Cromartie was whether the legislature drew the district boundaries \"because of race rather than because of political behavior (coupled with traditional, nonracial redistricting considerations).\" Applying its earlier precedents, the Court emphasized that the party challenging the legislature's plan has the burden of proving that racial considerations are \"dominant and controlling.\" In this case, though, the Court held that the challengers had not successfully demonstrated that race, instead of politics, predominantly accounted for the way the plan was drawn. To the contrary, the Court announced that in cases such as this where a majority-minority district is being challenged and racial identification \"correlates highly with political affiliation,\" the challenger must show that there were alternative ways for the legislature to achieve its legitimate political objectives, consistent with traditional redistricting principles. In this case, the Court determined that the appellees had failed to make such a showing.\nMore recently, the Court provided guidance as to the method for analyzing racial predominance. In its 2015 decision in Alabama Legislative Black Caucus v. Alabama , the Court held that in determining whether race is a predominant factor in the redistricting process, and thereby triggering strict scrutiny, a court must engage in a district-by-district analysis instead of analyzing the state as an undifferentiated whole. Further, the Court confirmed that in calculating the predominance of race, a court is required to determine whether the legislature subordinated traditional race-neutral redistricting principles to racial considerations. The \"background rule\" of equal population is not a traditional redistricting principle and therefore should not be weighed against the use of race to determine predominance, the Court held. In other words, the Court explained, if 1,000 additional voters need to be moved to a particular district in order to achieve equal population, ascertaining the predominance of race involves examining which voters were moved, and whether the legislature relied on race instead of other traditional factors in making those decisions. The Alabama Court also determined that the preclearance requirements of Section 5 of the VRA, which the Supreme Court's subsequent decision in Shelby County rendered inoperable, did not require a covered jurisdiction to maintain a particular percentage of minority voters in a minority-majority district. Instead, the Court held that Section 5 requires that a minority-majority district be drawn in order to maintain a minority's ability to elect a preferred candidate of choice. Alabama is notable in that minority voters succeeded in their equal protection challenge to districts that the state maintained were created to comply with the VRA. The decision also represents the Court's most recent interpretation of the requirements of Section 5 of the VRA, which may be of interest to Congress should it decide to draft a new coverage formula in order to reinstitute Section 5 preclearance.\nMost recently, in March 2017, the Supreme Court added clarification to the standard for determining racial predominance in a racial gerrymandering claim. In Bethune-Hill v. Virginia State Board of Elections , the Court held that plaintiffs challenging a state legislative redistricting plan on racial gerrymandering grounds need not prove, as a threshold matter, that the plan conflicts with traditional redistricting criteria. As a result, the Court remanded the case to the federal district court for consideration of whether 11 of the 12 \"majority-minority\" districts created by Virginia in 2011 are permissible. As the Supreme Court observed in Bethune-Hill , following the 2010 census, when the Virginia legislature redrew its state legislative districts, the state was subject to preclearance under Section 5 of the VRA. Accordingly, the drafters \"resolved that the new map must comply with the 'protections against ... unwarranted retrogression' contained in [Section] 5 of the Voting Rights Act\" and drew 12 districts with a \"black voting-age population\" of at least 55%. The Virginia legislature passed the plan in April 2011, and DOJ granted preclearance in June 2011. However, in 2014, 12 registered Virginia voters—one of whom resided in each of the challenged districts—filed suit in federal district court arguing that the districts were racial gerrymanders in violation of the Equal Protection Clause.\nIn Bethune-Hill , a majority of the Supreme Court held that the district court erred in applying, as a \"threshold requirement or mandatory precondition\" for establishing a claim of racial gerrymandering, that the plaintiffs demonstrate \"a conflict or inconsistency\" between the challenged redistricting map and traditional redistricting criteria. While acknowledging that such a conflict or inconsistency may be \"persuasive circumstantial evidence\" of racial predominance, the Court clarified that such a showing is not required. In so doing, the Court rejected an argument made by the Commonwealth of Virginia in defending the redistricting map that the harm of racial gerrymandering arises from grouping together voters of the same race who lack shared interests and not from racially motivated line drawing in and of itself. If an identical redistricting map could have been drawn in accordance with traditional redistricting criteria, the state argued that racial predominance has not been proven. Sharply disagreeing, the Court quoted precedent that it viewed as establishing that \"the 'constitutional violation' in racial gerrymandering cases stems from the 'racial purpose of state action, not its stark manifestation.'\" In other words, according to the Supreme Court, in determining racial predominance, courts must examine the \"actual considerations\" involved in crafting the redistricting map, not \"post hoc justifications\" that the legislature could theoretically have used in crafting the map, but did not.\nAlso during its current term, the Supreme Court is considering another case that may shed further light on the complicated issue of race and redistricting, Cooper v. Harris . In this case, a three-judge federal district court held that the 2011 North Carolina congressional redistricting map was an unconstitutional racial gerrymander in violation of the Equal Protection Clause. Following the 2010 census, the North Carolina legislature redrew its congressional district map to include two new majority-minority districts, Congressional District (CD) 1 and CD 12. In July 2011, the legislature enacted the new map, and in November, DOJ granted preclearance approval. Subsequently, in 2013, the plaintiffs—one of whom is a registered voter in each of the challenged districts—filed suit in federal court, arguing that North Carolina used the VRA's preclearance requirements \"as a pretext to pack African-American voters into North Carolina's Congressional Districts 1 and 12 and reduce those voters' influence in other districts.\" In other words, the plaintiffs maintained that CDs 1 and 12 were unconstitutional racial gerrymanders.\nCharacterizing CD 1 as \"a textbook example of racial predominance,\" the district court determined that traditional redistricting criteria had been subordinated to the goal of achieving a \"racial quota, or floor, of 50-percent-plus-one-person.\" Likewise, the court found that race predominated in creating CD 12 and that its creation was not \"purely political\" as the state had argued. In view of its determination that race predominated in the creation of both CDs 1 and 12, the court applied strict scrutiny. Assuming, without deciding, that compliance with the VRA was a compelling state interest, the court found insufficient evidence to conclude that the creation of CD 1 was \"reasonably necessary\" to comply with the statute. As the court observed, Supreme Court precedent requires that in order to defend the map successfully, the defendants must demonstrate compliance with the Gingles three-prong test. Here, the court determined that the state had failed to prove the third prong of the test: \"that the legislature had a 'strong basis in evidence' of racially polarized voting in CD 1 significant enough that the white majority routinely votes as a bloc to defeat the minority candidate of choice.\" Regarding CD 12, the court similarly determined that the defendants \"completely fail[ed]\" to demonstrate a compelling interest for the legislature's use of race in drawing the district, and accordingly, invalidated it.\nIn conclusion, while the VRA may require, under certain circumstances, the creation of one or more \"majority-minority\" districts in a congressional redistricting plan in order to prevent the denial or abridgement of the right to vote based on race, color, or membership in a language minority, redistricting maps are also subject to the constitutional standards of equal protection. If race is the predominant factor in the drawing of district lines, above other traditional redistricting considerations, then the state must demonstrate that it had a compelling governmental interest in creating a majority-minority district and the redistricting plan was narrowly tailored to further that interest. In its most recent case law, the Court has held that in determining racial predominance in a redistricting map, a court must engage in a district-by-district analysis instead of analyzing the state as an undifferentiated whole. The Court also held that challengers to a redistricting map alleging racial gerrymandering do not need to show, as a threshold requirement, that there is a conflict or inconsistency between the redistricting plan and traditional redistricting criteria. In addition, during its current term, the Supreme Court is considering another case that may shed further light on the standards for determining unconstitutional racial gerrymandering.", "The Supreme Court has defined partisan gerrymandering as \"the drawing of legislative district lines to subordinate adherents of one political party and entrench a rival party in power.\" While leaving open the possibility that a claim of unconstitutional partisan gerrymandering could be within the scope of judicial review, as discussed below, the Supreme Court has been unable to decide on a manageable standard for making such a determination.\nIn its 2004 decision in V ieth v. Jubelirer , the Court addressed a claim of partisan gerrymandering, in which the challengers relied on the Fourteenth Amendment Equal Protection Clause as the source of their substantive right and basis for relief. In Vieth , a plurality of four Justices determined that such a claim presented a non-justiciable political question. The plurality argued that the standard previously articulated by a plurality of the Court in its 1986 decision of Davis v. Bandemer had proved unmanageable. Under that standard, a political gerrymandering claim could succeed only where the challengers showed both intentional discrimination against an identifiable political group and an actual discriminatory effect on that group. However, another plurality of four Justices in Vieth concluded that such claims are justiciable, but could not agree upon the standard for courts to use in assessing such claims.\nThe deciding vote in Vieth , Justice Kennedy, concluded that while the claims presented in that case were not justiciable, he \"would not foreclose all possibility of judicial relief if some limited and precise rationale were found to correct an established violation of the Constitution in some redistricting cases.\" Further, Justice Kennedy observed, that while the appellants in this case had relied on the Equal Protection Clause as the source of their substantive right and basis for relief, the complaint also alleged a violation of their First Amendment rights. According to Justice Kennedy, the First Amendment may be a more relevant constitutional provision in future cases that claim unconstitutional partisan gerrymandering because such claims \"involve the First Amendment interest of not burdening or penalizing citizens because of their participation in the electoral process, their voting history, their association with a political party, or their expression of political views.\" In contrast, Justice Kennedy noted, an analysis under the Equal Protection Clause emphasizes the permissibility of a redistricting plan's classifications. When race is involved, Justice Kennedy reasoned, examining such classifications is appropriate because classifying by race \"is almost never permissible.\" However, when the issue before a court is whether a generally permissible classification—political party association—has been used for an impermissible purpose, the question turns on whether the classification imposed an unlawful burden, Justice Kennedy maintained. Therefore, he concluded that an analysis under the First Amendment \"may offer a sounder and more prudential basis for intervention\" by concentrating on whether a redistricting plan \"burdens the representational rights of the complaining party's voters for reasons of ideology, beliefs, or political association.\"\nSubsequently , in its 2006 decision , League of United Latin American Citizens v. Perry (\"LULAC\") , the Court was again divided on the question of whether partisan gerrymandering claims are within the scope of judicial review. In LULAC , Texas voters challenged a redistricting plan that had been enacted mid-decade, arguing that the plan was motivated by partisan objectives, served no legitimate public purpose, and burdened one group because of its political affiliation, in violation of the First Amendment and the Equal Protection Clause. However, the Supreme Court disagreed. In LULAC , a plurality of four Justices opined that claims of unconstitutional partisan gerrymandering are justiciable, but could not agree upon a standard for adjudicating such claims. An additional two Justices took the view that such claims are not justiciable. However, the two Justices who had joined the Court since its ruling in Vieth, Chief Justice Roberts and Justice Alito, generally agreed with Justice Kennedy's position, leaving open the possibility that the Court might discern a standard for adjudicating unconstitutional partisan gerrymandering claims in a future case. Therefore, in the aftermath of LULAC , it seems possible that a claim of unconstitutional partisan gerrymandering could be judicially reviewable, but the critical standard that a court could use to find such a violation and grant relief remain unresolved.\nRecently, in a potentially significant case, the Supreme Court was presented with another opportunity to craft such a standard. In February 2017, under a provision of federal law providing for direct appeals to the Supreme Court, the State of Wisconsin appealed a three-judge federal district court ruling involving partisan gerrymandering. In this case, Whitford v. Gill , the district court held, by a vote of 2 to 1, that a Wisconsin state legislative redistricting map constituted an unconstitutional partisan gerrymander. Following the 2010 census, the Wisconsin legislature redrew its state legislative redistricting map, which was signed into law by the governor in 2011. In the 2012 election, \"the Republican Party received 48.6% of the two-party statewide vote share for Assembly candidates and won 60 of the 99 seats in the Wisconsin Assembly.\" In the 2014 election, \"the Republican Party received 52% of the two-party statewide vote share and won 63 assembly seats.\" The plaintiffs—registered voters in various counties and districts throughout Wisconsin—are \"supporters of the Democratic party and of Democratic candidates and they almost always vote for Democratic candidates in Wisconsin elections.\" The plaintiffs challenged the Wisconsin state legislative redistricting plan as treating voters \"unequally, diluting their voting power based on their political beliefs, in violation of the Fourteenth Amendment's guarantee of equal protection,\" and \"unreasonably burden[ing] their First Amendment rights of association and free speech.\"\nThe district court agreed, holding that the First Amendment and the Equal Protection Clause prohibit a redistricting map that is drawn with the purpose, and has the effect, of placing a \"severe impediment\" on the effectiveness of a citizen's vote that is based on political affiliation and cannot be justified on other legitimate legislative grounds. While acknowledging that the law of political gerrymandering is \"still in its incipient stages\" and \"in a state of considerable flux,\" the court announced that it is clear that the First Amendment and the Equal Protection Clause protect the weight of a citizen's vote against discrimination based on the political preferences of the voter. Relying on a 1968 Supreme Court ruling that had invalidated a state law that required new political parties to obtain a certain number of signatures in order to appear on the ballot, the court found a \"solid basis\" for considering the associational aspect of the plaintiff's claim of partisan gerrymandering:\nIn the present situation the state laws place burdens on two different, although overlapping, kinds of rights—the right of individuals to associate for the advancement of political beliefs, and the right of qualified voters, regardless of their political persuasion, to cast their votes effectively. Both of these rights, of course, rank among our most precious freedoms. We have repeatedly held that freedom of association is protected by the First Amendment. And of course this freedom protected against federal encroachment by the First Amendment is entitled under the Fourteenth Amendment to the same protection from infringement by the States.\nExamining the evidence presented at trial, the court determined that one purpose of the redistricting plan was \"to secure the Republican Party's control of the state legislature for the decennial period.\" Although the drafters had created several alternative redistricting plans that would have had a less severe partisan impact, the court found that the drafters had opted for the plan that, in comparison with the existing plan, significantly increased the number of districts containing voters who \"lean[ed]\" toward one political party. Based on that and other factors, including numerous reports and memoranda considered by the drafters that addressed the partisan outcomes of various maps, the court concluded that even though the redistricting plan complied with traditional redistricting principles, it nonetheless had a purpose of \"entrenching\" one party in its control of the legislature.\nFurthermore, the court determined that the redistricting plan had the effect of ensuring that one political party would maintain control of the state legislature for a 10-year period. This was accomplished, the court found, by allocating votes among the newly created districts in such a manner as to make it likely that the number of seats held by candidates of one political party would not to drop below 50% in any election scenario. Notably, in this ruling, the court embraced a new measure of calculating asymmetry among districts, proposed by the plaintiffs, termed the \"efficiency gap\" or \"EG.\" As described by its creators, the EG \"represents the difference between the parties' respective wasted votes in an election—where a vote is wasted if it is cast (1) for a losing candidate, or (2) for a winning candidate but in excess of what she needed to prevail.\" In other words, as the court observed, EG measures two redistricting methods that are designed to diminish the electoral power of the voters of one party: \"cracking\" and \"packing.\" As used here, packing refers to the concentration of voters of one party into a limited number of districts so that the party wins those districts by large margins. Cracking refers to the division of voters of one party across a large number of districts so that the party is unable to achieve a majority vote in any district. EG, the court announced, is \"a measure of the degree of both cracking and packing of a particular party's voters that exists in a given district plan, based on an observed electoral result.\" The EG, the court decided, does not impermissibly require that each party receive a share of seats in the legislature in proportion to its vote share, but instead, measures the degree to which a redistricting plan \"deviat[es] from the relationship we would expect to observe between votes and seats.\"\nRelying on the results from 2012 and 2014 elections, academic analyses, and the EG measure, the court held that the plaintiffs had demonstrated that the state legislative redistricting plan created a burden, \"as measured by a reliable standard, on [their] representational rights.\" In particular, the court found that having \"actual election results\" confirmed the reliability of the academic analyses so that the court was \"not operating only in the realm of hypotheticals,\" which was a concern that Justice Kennedy voiced in LULAC . Therefore, the court concluded that neither the Constitution, nor the Supreme Court's rulings in Vieth and LULAC , precluded it from considering the EG in order to ascertain partisan gerrymandering.\nFinally, the court held that the discriminatory effect of the plan is not explained by the political geography of Wisconsin, nor is it justified by a legitimate state interest. Acknowledging the absence of explicit guidance on this question from the Supreme Court, the court determined it most appropriate to evaluate whether the partisan effect of a redistricting plan is justifiable, \"i.e., whether it can be explained by the legitimate state prerogatives and neutral factors that are implicated in the districting process.\" According to the court, although the \"natural political geography\" of Wisconsin played some role in how the redistricting map was drawn, this political geography was inadequate to explain the significant, disparate partisan effect of the plan as evidenced by the results of the 2012 and 2014 elections. The most crucial evidence presented, the court said, was that the drafters had produced multiple alternative plans that would have achieved the same \"valid\" redistricting goals, but with a much smaller partisan advantage to one party, and opted not to use them. After holding that the Wisconsin state legislative plan constituted an unconstitutional partisan gerrymander, the court deferred ruling on an appropriate remedy. However, in January 2017, the court enjoined the State of Wisconsin from using the plan in all future elections and ordered the state to enact a new plan by November 1, 2017, for use in the November 2018 election.\nIn sum, while the Supreme Court has left open the possibility that a claim of unconstitutional partisan gerrymandering could be within the scope of judicial review, it has been unable to decide on a manageable standard for making such a determination. Currently, the Supreme Court is considering an appeal that presents it with an opportunity to craft such a standard if it so chooses.", "In the majority of the states, the legislature has primary authority over congressional redistricting. However, partly because of concerns about partisan gerrymandering, some states have adopted independent commissions for conducting redistricting. For example, Arizona and California created independent redistricting commissions by ballot initiative, thereby removing control of congressional redistricting from the states' legislative bodies and vesting it in such commissions. The ballot initiatives specify how commission members are to be appointed, and the procedures to be followed in drawing congressional and state legislative districts.\nIn its 2015 decision in Arizona State Legislature v. Arizona Independent Redistricting Commission , the Supreme Court upheld the constitutionality of an independent commission, established by ballot initiative, for drawing congressional district boundaries. In this case, the state legislature had filed suit challenging the constitutionality of the initiative creating the independent commission and the congressional maps adopted by the commission. Affirming a lower court ruling, the Supreme Court held that the Elections Clause of the Constitution permits a commission to draw congressional districts instead of a state legislature. As previously noted, the Elections Clause provides that the times, places, and manner of holding congressional elections be prescribed in each state \"by the Legislature thereof,\" but further specifies that Congress may at any time \"make or alter\" such laws. Announcing that \"all political power flows from the people,\" the Court stated that the history and purpose of the Elections Clause do not support a conclusion that the people of a state are prevented from creating an independent commission to draw congressional districts. According to the Court, the use of the term \"legislature\" in the Elections Clause does not mean that only the state's representative body may draw redistricting maps. Instead, in the Court's view, the main purpose of the Elections Clause was to empower Congress to override state election laws, particularly those that involve political \"manipulation of electoral rules\" by state politicians acting in their own self-interest. Thus, the Clause was not designed to restrict \"the way\" that states enact such legislation.\nIn Arizona , the Court reviewed the cases in which it had previously considered the term \"legislature\" in the Constitution and read them to mean that the term differs according to its context. For example, in a 1916 case , the Court had held that the term \"legislature\" was not limited to the representative body alone, but instead, encompassed a veto power held by the people through a referendum. Similarly, in a 1932 case , the Court held that a state's legislative authority included not just the two houses of the legislature, but also the veto power of the governor. However, in a 1920 case, the Court held that in the context of ratifying constitutional amendments, the term \"legislature\" has a different meaning, one that excludes the referendum and a governor's veto. While acknowledging that initiatives were not addressed in its prior case law, the Court saw no constitutional barrier to a state empowering its people with a legislative function. Furthermore, even though the framers of the Constitution may not have envisioned the modern initiative process, the Court ruled that legislating through initiative is in \"full harmony\" with the Constitution's conception that the people are the source of governmental power. The Court further cautioned that the Elections Clause should not be interpreted to single out federal elections as the one area where states cannot use citizen initiatives as an alternative legislative process.\nThe Court also held that Arizona's congressional redistricting process comports with a federal redistricting statute, codified at Section 2a(c) of Title 2 of the U.S. Code, providing that until a state is redistricted as provided \"by the law\" of the state, it must follow federally prescribed congressional redistricting procedures. Examining the legislative history of this statute, the Court determined that Congress clearly intended that the statute provide states with the full authority to employ their own laws and regulations—including initiatives—in the creation of congressional districts. For example, when Congress amended the congressional apportionment statute in 1911, it eliminated the term \"legislature,\" replacing it with the phrase \"the manner provided by the laws.\" The Court determined that, in making this change, Congress was responding to several states supplementing the representative legislature mode of lawmaking with a direct lawmaking role for the people through initiative and referendum. As Congress used virtually identical language when it enacted Section 2a(c) in 1941, the Court concluded that Congress intended the statute to include redistricting by initiative.\nWhile Congress retains the power under the Constitution to make or alter election laws affecting congressional elections, Arizona State Legislature clarifies that states can enact such laws through the initiative process. For example, as discussed above, California has an initiative-established independent commission for drawing congressional district boundaries similar to Arizona. The Court's ruling in Arizona State Legislature suggests that such initiative-established state constitutional provisions regulating the process of congressional redistricting are likely to withstand challenge under the Elections Clause.", "In addition to various state processes, congressional redistricting is governed by the limits and powers of the Constitution and requirements prescribed under federal statutes. Interpreting such requirements, in a series of cases and evolving jurisprudence, the U.S. Supreme Court has issued rulings that have significantly shaped how congressional districts are drawn and the degree to which challenges to redistricting plans may be successful. As a result, the Court's case law has had a significant impact on the process of congressional redistricting. For example, while the Supreme Court has held that each congressional district within a state must contain approximately the same number of people, the Court has also held that the standard does not require congressional districts to be drawn with precise mathematical equality if population deviations are justified with \"legitimate state objectives.\" In addition, although the Voting Rights Act may require the creation of majority-minority districts, the Court has interpreted the Equal Protection Clause to require that if race is the predominant factor in the drawing of district lines, above other traditional redistricting considerations, then a strict scrutiny standard of review is to be applied. To withstand strict scrutiny in this context, the state must demonstrate that it had a compelling governmental interest in creating a majority-minority district and the redistricting plan was narrowly tailored to further that compelling interest. During its current term, the Court has decided one case regarding the degree to which racial considerations are permitted to impact how district lines are drawn and is considering another such case. Furthermore, the Supreme Court is currently considering a direct appeal from a three-judge federal district court ruling involving partisan gerrymandering. This case presents the Court with an opportunity to establish a standard for determining what constitutes unconstitutional partisan gerrymandering if it so chooses. Finally, a 2015 Supreme Court ruling held that the Elections Clause of the Constitution permits states to create, by ballot initiatives and referenda, nonpartisan independent commissions for drawing congressional districts." ], "depth": [ 0, 1, 2, 2, 3, 3, 1, 2, 2, 3, 3, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_title", "", "h0_title", "h0_full", "", "h0_title h1_title", "", "h0_full", "h0_full", "h0_full", "h1_full", "", "h0_full h1_full" ] }

{ "question": [ "What does Section 2 of the Voting Rights Act prohibit?", "What can VRA require under special circumstances?", "How can the state withstand strict scrutiny when race is a predominant factor in drawing district lines?", "What has the Supreme Court's redistricting jurisprudence been triggered by?", "What gerrymandering-related cases is the Supreme Court considering?", "What is the case the Supreme Court is considering appealing?", "What is important about the case the Court is considering?", "What has the Court not yet decided on?" ], "summary": [ "In addition, congressional districts are required to comply with Section 2 of the Voting Rights Act (VRA), which prohibits any voting qualification or practice that results in the denial or abridgement of the right to vote based on race, color, or membership in a language minority. This includes congressional redistricting plans.", "Under certain circumstances, the VRA may require the creation of one or more \"majority-minority\" districts, in which a racial or language minority group comprises a voting majority.", "To withstand strict scrutiny in this context, the state must demonstrate that it had a compelling governmental interest in creating a majority-minority district and the redistricting plan was narrowly tailored to further that compelling interest.", "Much of the Supreme Court's redistricting jurisprudence has been triggered by disputes involving the intersection between requirements under the VRA and the constitutional standards of equal protection.", "While racial gerrymandering claims have been a recent focus of litigation, the Supreme Court is also currently considering an appeal of a case involving partisan gerrymandering.", "In February 2017, a state appealed a three-judge federal district court ruling that invalidated a redistricting map as an unconstitutional partisan gerrymander.", "This case presents the Court with an opportunity to establish a standard for determining what constitutes unconstitutional partisan gerrymandering.", "While leaving open the possibility that such claims may be justiciable (that is, within the scope of judicial review), to date, the Supreme Court has yet not decided on a standard for assessing such claims." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "GSA Has Largely Met Its Lead-Agency Responsibilities and Has Begun Implementing the Act for Its Own Employees", "GSA Has Completed Most of Its Requirements for Government-wide Implementation and Is Drafting an Interagency Framework for Collaboration", "GSA Has Begun Implementation of the Act for Its Own Employees", "GSA Is Still Planning Its Implementation Approach for Contractors", "Selected Agencies Have Taken Some Action, but Overall Response to the Act Has Been Limited", "Various Factors Have Contributed to Limited Implementation of the Act", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the U.S. General Services Administration", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "GSA has identified the core competencies—knowledge, skills, and abilities—and related training to meet the government-wide requirements of the Act for federal and contract employees and has begun implementing the requirements for its own personnel but has not yet finalized compliance methods for contractors. In 2011, GSA began working to create an approach for federal buildings personnel to use to satisfy the Act’s requirements by demonstrating proficiency in the core competencies. To develop the core competencies, GSA contacted more than 20 federal agencies and subagencies that hold and operate buildings and coordinated meetings with officials as well as with representatives from professional societies, industry associations, non- profit organizations, and private training groups. GSA held follow-on consultations with agencies it identified as holding large amounts of federal real property, since those agencies cover the vast amount of federal real property holdings.\nIn June 2012, GSA published a set of core competencies for federal buildings personnel, began creating software tools for demonstrating and documenting proficiency in the core competencies, and announced a list of GSA-recommended training courses linked to the core competencies and covering the topics of facility management and the operation of high- performance buildings. Although 7 core-competency areas are called for in the Act, in developing them, GSA expanded them to 12. In addition to the 7 categories of building operations, building maintenance, energy management, sustainability, water efficiency, safety, and building performance measures, GSA identified 5 more: technology; design; project management; business, budget and contracting; and leadership and innovation as core competency areas. Under these 12 areas, GSA identified 43 core competencies and 232 specific demonstrations of each core competency that GSA called “performances.” Employees demonstrate proficiency in the core competencies relevant to their positions by completing performances that show they have gained skills and knowledge through experience and training. GSA laid out all these elements in what it calls a competency model. Under GSA’s approach, the individual agency defines what actual compliance means for its own particular employees. GSA envisions employees working with their supervisors to document the tasks and training. In addition, GSA developed—along with DOE officials and in consultation with representatives of other federal departments and agencies, industry, and academia—a recommended curriculum related specifically to the fields of facility management and the operation of high-performance buildings.\nTo help agencies prioritize training efforts, GSA has since streamlined this approach by designating as high-priority 9 competency areas, 21 core competencies, and 88 performances that could potentially have the most impact on building operating efficiency and cost. GSA—working with an informal body of facility representatives from various landholding agencies—identified 3 career areas of responsibility most closely aligned with the core competencies: facility management, energy management, and facilities operations and maintenance. GSA did this to develop consistent guidance that could help agencies whose employees may have similar titles but perform different functions assign the appropriate performances to the appropriate personnel. See figure 1 for a visual representation of GSA’s competency model.\nAs required by the Act, GSA made annual updates to the core competencies and recommended curriculum in 2013 and 2014. In the 2014 update, GSA created a new, more rigorous process requiring independent subject matter experts to review potential private and government training offerings and assess how well they aligned with the core competencies. This effort resulted in an increase of courses in the recommended curriculum from 12 no-cost government courses to 135 government and private courses. Currently, 107 of 135 courses—almost 80 percent—are provided by private training organizations, and 28 are provided by or in collaboration with government agencies.\nAlso in the 2014 update, GSA announced recommended methods for buildings personnel who are federal employees to both demonstrate proficiency in the core competencies and take steps to improve professional development. To assist in this approach, GSA has launched two software tools, which were described and partially demonstrated for us by the GSA official responsible for leading GSA’s implementation efforts. The first is a basic assessment tool agencies can use to determine whether buildings personnel have demonstrated the core competencies related to their positions, and are therefore in compliance with the Act. Through an online exam format, the official said the tool allows workers to demonstrate knowledge by answering a series of questions about the 88 high-priority performances related to their positions. The tool was designed to take into account any existing certificates or advanced training the employee may have already earned. According to the official, the other tool is a professional development system that moves beyond basic compliance by allowing employees to plan and accomplish advanced training related to the core competencies through creating individual training plans linked to GSA-approved government and private training options.\nAccording to the official responsible for leading GSA’s implementation efforts, to potentially help coordinate government-wide implementation, GSA has drafted a charter for an interagency advisory board composed of facilities operations and maintenance personnel and human capital executives at federal landholding agencies. The official said that to date no such group has championed the implementation of the Act’s requirements across the federal government. While GSA shares internal guidance and procedures informally on its www.fmi.gov website and through presentations to industry associations, the Federal Facilities Council, and individual agencies, GSA could expand its advisory role through such a group and, according to the official, provide examples of best practices and guidelines for implementation, and seek consensus on them. However, according to GSA officials, previous experience suggests that without being formally established in law or by executive order, participation by other agencies would likely be too low to be effective. There is no planned GSA completion date for creating this interagency advisory board.", "GSA has taken steps to implement the requirements of the Act for its employees using its core competency approach but has yet to complete all its planned work. In 2014, GSA directed its Public Buildings Service (PBS) personnel in occupational series covered by the Act to take a web- based inventory of their completed training. GSA then assessed their training against the high-priority performances for their occupational series and identified areas where the employees needed improvement. Specifically, GSA found that collectively, the 1,142 employees who participated in the inventory had completed 36 percent of the required performances for their positions. In a July 2014 report on the assessment effort, GSA specified seven methods for PBS workers to voluntarily improve their proficiency levels in the core competencies. For example, GSA encouraged workers to use individual development plans to guide their training and identified free online training for energy management and water efficiency, which the official responsible for leading GSA’s implementation efforts indicated were two competency areas revealed in the PBS assessment as areas in which employees needed additional training. In addition, GSA developed a formal on-the-job training program that includes a guide, mentoring activities, and checklists to help reinforce knowledge gained. GSA also updated PBS’s building manager job descriptions for existing and new staff by (1) rewriting them to include high-priority performances related to the core competencies and (2) including the high-priority performances in each employee’s performance review criteria.\nGSA has started—but has yet to complete—the following tasks to continue its implementation of the Act for its own employees:\nAlthough GSA has rewritten job descriptions and performance assessment criteria for approximately 640 PBS employees to include high-priority performances, GSA has yet to determine whether the agency is ready to transfer the employees to the new job descriptions and performance assessment criteria. GSA plans to update previously identified gaps in Act-related training for PBS employees by requiring them to complete a new inventory of their training, which GSA’s official in charge of implementation estimated will be completed after September 2015. GSA will then assess their training against the high- priority performances for their positions.\nAccording to the official responsible for leading GSA’s implementation efforts, GSA is still exploring a way for PBS employees participating in structured on-the-job training to have the training verified in person by GSA’s subject matter experts. However, according to this official, while the technical content for the training is complete, GSA is still finalizing its process to select, vet, and monitor the performance of subject matter experts, and GSA has not specified a completion date.", "GSA has not yet determined how many GSA contract staff are subject to the Act and is still in the planning stages for implementing potential methods for contractor compliance. GSA officials said they have discussed—but have not yet begun—a number of tasks related to contractor training. GSA has drafted standard contract language requiring companies bidding for facility operations and maintenance work to provide documentation. The companies would be required to describe how certain contract employees subject to the Act who could work in GSA-held buildings have either demonstrated the core competencies relevant to their positions or are currently participating in continuing education related to them. According to the GSA official responsible for leading GSA’s implementation efforts, GSA plans to conduct a pilot project to test the proposed language and approach using a GSA contract, and if successful, the language could be applied later to Federal Supply Schedule contracts and incorporated by other agencies into their own internal operations and maintenance contracts for buildings personnel. In addition, the official noted that GSA is committed to implementing this approach but has not determined a target completion date. Similarly, he said GSA has considered using contract language related to the core competencies as a compliance mechanism for contract workers in federally leased buildings, but added that GSA has focused on buildings personnel who are federal and contract employees working in federally owned facilities because the agency considers those employees a higher priority than contractors working in leased federal facilities.", "Of the five agencies we reviewed—two, the Departments of Defense (DOD) and Energy (DOE)—have taken some actions to respond to the Act while three—the Departments of Justice (DOJ), the Interior (DOI), and Veterans Affairs (VA)—have not yet determined how to respond. While all five agencies encourage or provide training for their facilities management staffs and participated in GSA’s early planning sessions on government-wide implementation, three have not taken additional action. For example, they have issued no written plans or guidance memorandums, and none of them has moved beyond the initial discussion phase into the planning or execution phase. As a result, at this time little is known about the numbers of federal and contractor employees covered by the Act at these agencies or the status of their compliance with the Act. According to the official responsible for leading GSA’s implementation efforts, while agencies are in charge of defining what individual compliance means for their own employees, to fully respond, they should be engaging in a continual process of assessing employees’ training levels, determining where there are gaps in training, and outlining ways to improve training for employees.\nDOD is the largest holder of federal real property and because of its ongoing efforts to comply with earlier workforce realignment mandates and to ensure that implementation of the Act is consistent across DOD, officials decided to embark on a pilot program with the Defense Health Agency (DHA). For the pilot, a DOD contractor surveyed DHA employees in five positions that had the most significant impact on the finances and operations of facilities—central utility plant supervisor; energy manager; facility manager; heating, ventilation, and air- conditioning (HVAC) controls technician; and project engineer—to determine how well the competencies for those positions aligned with GSA’s core competencies and job performances and whether there are gaps in training. DOD completed the initial pilot at two installations in June 2015 and published a final report of its results in July 2015. Next, according to DOD’s program analyst for implementation of the Act, DOD plans to integrate the applicable competencies and related training opportunities for DHA’s employees in the five key positions into GSA’s professional development tool. Beyond DOD’s DHA effort, the official said DOD plans to conduct pilots for facility management positions at several Army, Navy, and Air Force installations, and he stated that DOD has not made any changes to position descriptions. According to officials representing the three military services, they are waiting for the results of these pilots before embarking on any implementation actions of their own.\nDOE has identified approximately 5,500 federal and contractor employees who are subject to the Act’s requirements and has taken steps to assess their proficiency in the 12 competency areas. In 2013, DOE directed program offices to report and track employees’ compliance, identify gaps in training, and assign supervisors to document employees’ compliance. DOE surveyed these federal and contractor employees to determine their existing training, assessed their training against the 12 competency areas, identified gaps in proficiencies, and identified training opportunities for them. DOE provided us with the results of its summary assessments for 41 sites, and according to the assessments, most sites employed at least one person proficient in each competency area. However, because DOE defined a site-level demonstration of proficiency in a competency area to mean that at least one individual representing that site is proficient in the competency area, the results of DOE’s summary assessments did not provide us enough detail to determine how many individuals were proficient in each of the 12 competency areas.\nThree of our selected agencies—DOI, DOJ, and VA—have not yet determined how to respond to the Act as none of them has moved beyond the initial discussion phase into the planning or execution phase.\nDOI delegates management of DOI’s real property to six bureaus, the largest of which is the National Park Service (NPS). While senior DOI officials in Facilities and Property Management and Human Resources were generally unaware of any departmental response to the Act, a senior NPS official told us that NPS has had internal discussions about the Act and was trying to determine how to achieve compliance.\nSenior DOJ officials in the Justice Management Division noted that most of the department’s buildings are correctional institutions that are held by the Bureau of Prisons (BOP) and that the officials had not yet determined how many staff would be subject to the Act. These DOJ officials were awaiting a briefing and further clarification from GSA, and senior BOP officials indicated that they were just becoming aware of the Act.\nVA holds and operates 167 medical centers through its Veterans Health Administration (VHA). VHA officials said they participated in a pilot project with GSA to develop competencies for professional and trade staff in three positions at VA medical centers. The goal was to use GSA’s competencies to help VHA develop standardized competencies for each position and then determine if staff met them. However, VHA officials indicated they were not able to complete this effort before the pilot project ended. In part because officials said they are awaiting more formal guidance or direction from GSA, VA at the departmental level is not currently planning or executing specific responses to the Act. However, GSA officials stated that the Act does not provide GSA a role in providing more formal government-wide guidance.\nAlthough we found limited progress at the five agencies we reviewed, officials from four of the five agencies recognized the potential benefits from implementation of the Act. For example, DOD officials shared a DOD memorandum that noted that DOD’s components could benefit from an expanded training catalog, more affordable training, and stronger justification of the need for more training funds. Officials from DOD and VA agreed that identifying additional training and strengthening employee competency could benefit facility operations. In addition, officials from VA said that the Act could produce a stronger workforce and attract more competent staff.", "We found that the pace of implementation has been limited by four factors that make federal buildings personnel compliance with the Act’s requirements essentially voluntary.\nNo agency has the authority to enforce government-wide compliance. Because the Act does not give any agency the authority to enforce compliance of the Act government-wide, GSA sees its role as advisory. For example, an official from GSA’s Office of Government-wide Policy said that while GSA shares its internal guidance and procedures informally with other agencies, GSA is not authorized to issue official government-wide guidance on implementation. In addition, no agency monitors government-wide compliance with the Act’s requirements. We asked officials from the Office of Personnel Management (OPM) why the agency has not been involved in implementing the Act, and were given two reasons: (1) the Act did not direct OPM to do so and (2) GSA did not request OPM’s implementation assistance for any changes that would affect policies administered under OPM’s authorities, such as the management of government-wide position classifications. Federal internal control standards emphasize that a good control environment requires clearly defining key areas of authority and responsibility and establishing appropriate lines of reporting.\nAgencies are not required to report progress. The Act does not require federal agencies to submit specific buildings personnel training improvement plans or progress reports to GSA, or to Congress, as has been mandated in other workforce improvement legislation. For example, legislation enacted in 2009 included a provision aimed at improving DOD’s civilian workforce and also included a list of specific reporting requirements for DOD, such as assessments of the current and future critical skills and competencies of its civilian workforce. A U.S. Army official said that without a similar reporting requirement, there is no “trigger” to prompt compliance with the Act’s requirements. Furthermore, since the language in the Act directs individuals—not agencies—to comply with the requirements, there is no clear mandate for agencies on exactly how to achieve individual compliance. Without a requirement for federal agencies to report on their efforts related to the Act, there is little incentive for them to account for how many of their employees are subject to the Act and whether those covered employees are complying. Federal internal control standards state that an agency’s ongoing monitoring of its internal controls should assess the quality of its performance over time. This assessment would include monitoring the progress of initiatives to establish appropriate practices for training and evaluating personnel.\nAgencies report having limited training and implementation funds. Officials generally agreed that implementation has been limited by the current fiscal environment—including mandatory spending cuts required by the sequestration. This fiscally constrained environment has impacted agency training budgets, an impact that has resulted in increased internal competition for limited training resources. A VA official said the Act’s lack of dedicated funding has limited large-scale implementation and resulted in an uncoordinated, inconsistent approach. VA officials responsible for facilities operations guidance and policies requested $15 million in additional funding for fiscal year 2013 to fund VA’s response to the Act but were unable to secure the funds. The VA official said that in contrast, an earlier VA facilities workforce improvement effort included dedicated funding targeted for specific training and education, allowing the agency to place energy managers in field facilities and improve the knowledge and skills of employees in leadership positions, such as maintenance and operations supervisors and chief engineers. While there are free training options available, the GSA official responsible for leading the agency’s implementation efforts agreed that the Act’s lack of dedicated funding acts as a “braking” mechanism as some agencies may be delaying assessing employee skill levels for fear of not having sufficient funding to provide the required training identified as a result of these assessments. However, according to federal internal control standards, the management of an agency’s human capital is essential to achieving results and is an important part of internal control. This management includes continually assessing employee skill levels and providing training opportunities that allow employees to develop and maintain required skills.\nNo interagency mechanism exists for guiding implementation.\nNo interagency group has been created to ensure consistent implementation of the Act across the government, a situation that has resulted in a lack of coordinated implementation policy and guidance. This lack has also hindered the development of a potential formal collaboration mechanism for sharing leading practices. We have previously found that agencies can benefit from considering government-wide reforms when planning their training and development programs. In addition, our past work has shown that one attribute of effective training and development programs is the extent to which an agency compares its training methods with those of other organizations, and we found that agencies benefit when they continuously look to others to identify innovative approaches that may relate to training and development efforts as well as lessons learned. Furthermore, we have previously reported that many of the meaningful results that the federal government seeks to achieve require the coordinated efforts of more than one federal agency. Our past work found that interagency groups are mechanisms that can be used to develop policy, guide program implementation, and conduct oversight and monitoring. GSA has taken steps to create such a group, but this process is still in the development stage.", "Since passage of the Act in 2010, GSA has largely met its lead-agency responsibilities, which were designed to strengthen government-wide training for federal buildings personnel so they can operate federal buildings more efficiently and effectively. In consulting with others, identifying core competencies, and supplying approved training opportunities and a recommended method for employees to demonstrate their proficiency levels, GSA has provided a road map for implementation government-wide. In addition, by seeking an interagency mechanism to further government-wide collaboration, GSA has shown a willingness to actively encourage further federal agency participation, which is essential to the successful implementation of the Act.\nNevertheless, the pace of implementation government-wide remains slow because, among other things, no agency monitors or enforces compliance of the Act government-wide, and the Act does not effectively place responsibility for action directly on federal agencies. GSA has already conducted extensive outreach and created a core competency approach that agencies could use. Further steps could be taken to: (1) provide one agency with the authority to enforce compliance of the Act and monitor the actions agencies take to comply; (2) place responsibility directly on agencies to report progress on implementing the Act, including how they assess employees’ skills and improve their training; and (3) provide agencies with a mechanism for collaboration. Such measures could provide effective incentives for agencies to take the proactive steps necessary to attain individual employee compliance. Until such steps are taken, Congress cannot know the basic measures of the Act’s effectiveness, including how many employees are subject to the Act, the progress of its implementation, and the extent to which covered employees are complying.", "We recommend that the Administrator of the General Services Administration develop a legislative proposal to enhance accountability for government-wide implementation of the Act. GSA should consider including the following in its proposal: establishing authorities for a single agency to monitor and enforce implementation of the Act; establishing agency responsibilities for reporting progress on implementation of the Act; establishing agency responsibilities for assessing employee skill levels related to the Act and identifying training that allows employees to develop and retain skills required by the Act; and establishing an interagency group to further government-wide collaboration on implementation of the Act.", "We provided a draft of this report for review and comment to GSA, OPM, and the Departments of Defense, Energy, the Interior, Justice, and Veterans Affairs. GSA stated it agreed with the report’s findings and that it would work with the appropriate agencies to address these findings (see app. II). OPM and the Departments of Defense, Energy, the Interior, and Justice had no comments. The Department of Veterans Affairs 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 14 days from the report date. At that time, we will send copies to the Administrator of GSA, the Acting Director of OPM, the Attorney General, and the Secretaries of Defense, Energy, the Interior, and Veterans Affairs. 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) 512-2834 or wised@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.", "Our objective was to review the status of the implementation of the Federal Buildings Personnel Training Act of 2010 (the Act). To do so, we addressed the following questions: 1. What progress has GSA made in implementing the requirements of the Act? 2. What actions have selected federal agencies taken in response to the Act? 3. What factors have affected implementation of the Act?\nTo determine the progress GSA has made in responding to the provisions of the Act, we reviewed the Act, congressional committee and Congressional Budget Office reports, and GSA’s web sites and documents—including GSA’s required annual update of its core competencies and recommended curriculum, its www.fmi.gov web site, and a report on the implementation of the Act by GSA’s Public Buildings Service. We did not evaluate the effectiveness of the core competencies and recommended curriculum that GSA developed. In addition, we interviewed officials in GSA’s Office of Government-wide Policy, Office of Federal High-Performance Green Buildings, Office of Human Resources Management, and Public Buildings Service as well as representatives of several industry groups. (See table 1.)\nTo determine what actions agencies have taken in response to the Act, we selected five federal agencies—the Departments of Defense (DOD), Energy (DOE), the Interior (DOI), Justice (DOJ), and Veterans Affairs (VA)—on the basis of the gross square footage of federal real property they occupy, according to 2014 Federal Real Property Profile data, and because they were included in initial meetings about the Act that GSA held in 2011. Together with GSA, the agencies we selected occupy about 90 percent of federal real property gross square footage, according to the 2014 Federal Real Property Profile. Our determination of agency actions in response to the Act included interviews of agency program and human capital officials (see table 1) and reviews of agency documentation and reports. For example, we reviewed DOD’s report from the first phase of its Act-related pilot at the Defense Health Agency and DOE’s report documenting its assessment of staff’s compliance with the core competencies. We did not assess the effectiveness or results of selected agencies’ use of the core competencies.\nTo determine the factors that have affected implementation of the Act, we reviewed the Act and agency studies and reports, including DOD’s phase 1 pilot report and DOE’s summary analysis of the proficiency of its workforce in the 12 competency areas. We also reviewed prior GAO work on internal controls and human capital related to enhancing agency accountability and planning and developing training programs and interviewed agency officials and representatives from professional societies, industry associations, non-profit organizations, and private and government training groups. We also discussed with the Office of Personnel Management (OPM) OPM’s role in implementing the Act government-wide. For the agency interviews, we used standardized data collection instruments to maintain consistency across the interviews.", "", "", "", "In addition to the contact named above, Steve Cohen, Assistant director; Gary Guggolz, Analyst-in-Charge; Hannah Laufe; Malika Rice; Kelly Rubin; Pamela Vines; and Michelle Weathers made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h3_title", "h0_full h3_full", "h0_full", "", "h3_full h2_full h1_full", "h3_full h2_full", "h0_full", "", "", "h4_full", "", "", "", "" ] }

{ "question": [ "To what extent has GSA met its lead-agency responsibilities?", "How has the GSA met its responsibilities?", "How is GSA still working to meet its responsibilities?", "Why has GSA drafted a charter for an interagency advisory board?", "How have agencies responded to the Act?", "What specifically have agencies done?", "What is the result of these responses?", "What has been the result of the Act not providing any agency authority to enforce compliance government wide?", "What problem is brought up by agencies not being required to report the status of their employees' compliance with the act?", "What has been the result of not having an interagency group?", "What factors make compliance with the act voluntary?", "What do federal standards call for?", "How could agencies benefit from enforcing these standards?", "What has been on GAO's High Risk List?", "What was GAO asked to report regarding this?", "Why are some agencies unable to fulfill supervisory needs?", "What does this report examine?", "How did GAO get information for the report?", "How did GAO interact with officials and agencies?" ], "summary": [ "The General Services Administration (GSA) has largely met its lead-agency responsibilities for implementing the Federal Buildings Personnel Training Act of 2010 (the Act) government-wide.", "For example, it has identified core competencies and a recommended curriculum for federal buildings personnel.", "GSA has identified affected personnel, directed them to inventory their qualifications, and assessed their skills. GSA must still align job descriptions and performance reviews with the Act's requirements and implement contractor compliance efforts.", "While not required by the Act, GSA has also drafted a charter for an interagency advisory board to help coordinate government-wide implementation and has developed software tools to assist agencies with compliance efforts.", "Of the five selected agencies GAO reviewed, the Departments of Defense (DOD) and Energy (DOE) have taken some actions to respond to the Act, while the Departments of Justice (DOJ), Interior (DOI), and Veterans Affairs (VA) have not yet determined how to respond.", "For example, DOD is conducting a pilot program through its Defense Health Agency to align five positions with the core competency model GSA developed, while DOI's National Park Service has only discussed potential responses to the Act.", "As a result, little is known about the numbers of federal and contractor employees at these agencies covered by the Act or the status of their compliance with the Act.", "According to GSA, it is not authorized to issue official government-wide guidance on implementation, and it has come to see its role as advisory.", "Second, agencies are not required to report the status of their employees' compliance with the Act, a circumstance that leaves agencies with little incentive to determine how many employees are affected or complying.", "Fourth, no interagency group has been established that ensures consistent implementation of the Act government-wide. This gap has resulted in a lack of coordinated implementation policy and guidance.", "First, the Act does not provide any agency with the authority to enforce compliance government-wide. According to GSA, it is not authorized to issue official government-wide guidance on implementation, and it has come to see its role as advisory. In addition, the Act does not provide an implementation role for the Office of Personnel Management, the agency generally responsible for government-wide personnel related issues. Second, agencies are not required to report the status of their employees' compliance with the Act, a circumstance that leaves agencies with little incentive to determine how many employees are affected or complying. Third, the Act did not provide funding for additional training, and according to agency officials, many other priorities compete for limited training resources. Fourth, no interagency group has been established that ensures consistent implementation of the Act government-wide.", "Federal internal control standards emphasize that establishing good human capital policies and practices, including ensuring that personnel are properly trained, is critical for achieving results and improving organizational accountability. These standards also call for assessing the quality of performance over time. Such an assessment would include monitoring training practices.", "Further, prior GAO work has found that agencies can benefit from considering government-wide reforms when planning training programs and that the coordinated efforts of several agencies through interagency groups can help develop policy, guide program implementation, and conduct oversight and monitoring.", "The federal government's management of its real property holdings costs billions of dollars and has been on GAO's High Risk List since 2003.", "GAO was asked to report on the status of the implementation of the Act, which directed GSA to, among other things, consult with the training industry to identify core competencies for federal buildings personnel and required these personnel to demonstrate proficiency in these competencies.", "Some agencies lack the staff expertise needed to oversee building management activities.", "This report examines (1) the progress GSA has made in implementing the Act's requirements, (2) the actions selected agencies have taken to respond to the Act, and (3) the factors that have affected implementation of the Act.", "To conduct this study, GAO reviewed the Act and agency documentation and studies. GAO also interviewed officials from GSA as well as DOD, DOE, DOI, DOJ, and VA. Together with GSA, the agencies GAO interviewed occupy about 90 percent of federal real property gross square footage.", "GAO also interviewed officials from GSA as well as DOD, DOE, DOI, DOJ, and VA." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, 0, -1, -1, -1, -1, -1, 4, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Overview of the FHLBanks", "FHLBank Board of Directors", "FHFA’s Diversity-Related Requirements and Oversight of FHLBanks", "Our Previous Work on Diversity", "FHFA Has Taken Steps Since 2015 to Encourage Board Diversity at FHLBanks", "FHLBank Boards Increased Share of Female Directors Since 2015, but Trends for Minority Directors Were Less Clear", "Share of Female Board Directors Increased from 2015 to October 2018, and Varied by FHLBank", "FHLBank Data Showed the Share of Minority Directors Increased Since 2015, but Data Are Incomplete", "Reported Data Showed Increases in Minority Directors", "Varying Collection Processes May Contribute to Data Gaps", "FHLBanks Report Some Challenges, but Have Taken Steps to Increase Their Board Diversity", "FHLBank Boards Report Some Ongoing Challenges in Their Efforts to Increase Diversity, Especially among Member Directors", "FHLBanks Developed Practices and Strategies to Help Increase Board Diversity", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Number of Board Directors at Federal Home Loan Banks, by Gender and by Race/Ethnicity", "Appendix III: Comments from the Federal Housing Finance Agency", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The FHLBank System comprises 11 federally chartered banks. The FHLBanks represent 11 districts and are headquartered in Atlanta, Boston, Chicago, Cincinnati, Dallas, Des Moines, Indianapolis, New York City, Pittsburgh, San Francisco, and Topeka (see fig. 1). Each FHLBank is cooperatively owned by its members––such as commercial and community banks, thrifts, credit unions, and insurance companies.\nAs of December 31, 2017, the number of member institutions in each district varied widely, as did the total amount of assets each FHLBank held (see table 1).", "Each FHLBank has a board of directors made up of member directors and independent directors. As shown in figure 2, the Federal Home Loan Bank Act (as amended by HERA) and its regulations set forth a number of requirements for FHLBank board directors.\nAs of October 2018, each FHLBank board had 14–24 directors, for a total of 194 directors (see table 2). Of the 194, 108 were member directors and 86 were independent directors, including 24 public interest directors.\nEach board elects a chair and vice chair who serve 2-year terms. As of October 2018, of the 11 board chairs, six were member directors and five were independent directors, including two public interest directors (see table 3). Each FHLBank has a president who reports to the bank’s board of directors, but no representatives from bank management may serve on the boards.", "To implement requirements in HERA, in December 2010 FHFA issued the Minority and Women Inclusion rule to set forth minimum requirements for FHLBank diversity programs and reporting. Among other things, the 2010 rule required each bank to create its own Office of Minority and Women Inclusion (OMWI) or designate an office to perform duties related to the bank’s diversity efforts, and establish policies related to diversity and inclusion, including policies on nominating board directors. The 2010 rule also requires FHLBanks to submit an annual report to FHFA on their diversity efforts.\nFHFA also evaluates the quality of corporate governance by board directors as part of its on-site annual examinations and off-site monitoring of FHLBanks. For example, FHFA’s examination includes reviewing the bank boards’ responsibilities, board and committee meeting minutes, and the boards’ oversight of the banks’ operations and corporate culture.", "Our previous work on diversity includes reports on Federal Reserve Banks’ board diversity, FHLBank board governance, women on corporate boards, and diversity in the financial services sector. In 2011, we found limited diversity among the boards of the 12 Federal Reserve Banks. We recommended that the Board of Governors of the Federal Reserve System encourage all Reserve Banks to consider ways to help enhance the economic and demographic diversity of perspectives on boards, including by broadening potential candidate pools. The recommendation was implemented in December 2011.\nIn a 2015 report on FHLBank board governance, we found that FHFA and FHLBanks had taken steps to increase board diversity, including creating regulations that encouraged the banks to consider diversity in board candidate selection and developing processes to identify and nominate independent directors. In a 2015 report on women on corporate boards, we found that while the share of women on boards of U.S. publicly traded companies had increased, reaching complete gender balance could take many years. We identified factors that might hinder women’s increased representation on boards, including boards not prioritizing recruiting diverse candidates and low turnover of board seats. In addition, in 2017 we reported that representation of women and minorities at the management level in the financial services sector showed marginal or no increase during 2007–2015.", "Since our 2015 report on FHLBank board governance, FHFA has taken additional actions to encourage diversity on FHLBank boards, including adding a requirement for the banks to report board demographics, clarifying expectations for board elections outreach, requesting the creation of a system-wide board diversity task force, and allowing some banks to add an independent director.\nFHFA has a limited role in overseeing FHLBanks’ board diversity, according to FHFA staff, because that is not part of the agency’s statutory responsibilities. While FHFA reviews the list of independent director nominees for FHLBank boards to ensure that the nominees meet all eligibility and qualification requirements, board directors are not FHLBank employees. Rather, they form the oversight body of each bank. In contrast, FHFA has a larger role in monitoring diversity efforts related to the workforce and suppliers of the banks. For example, the agency’s annual examination manual contains a section that covers such efforts.\nFHFA oversight of diversity efforts also includes reviewing the FHLBanks’ annual reports on diversity efforts, which the banks are required to submit under HERA. In adopting its Minority and Women Inclusion rule of 2010 to implement this requirement, FHFA stated that it would analyze and include information from the banks’ annual reports in the agency’s own annual report to Congress. The banks’ annual reports initially included data related to their workforce and supplier diversity efforts.\nIn May 2015, FHFA amended the 2010 rule and added two reporting requirements for the annual reports: (1) data on gender and race/ethnicity of board directors (which the directors would voluntarily self-report), and (2) information on the banks’ outreach efforts (such as to promote diversity when nominating and soliciting director candidates). FHFA stated in its 2015 amendments that it intended to use the director data to analyze future trends in board diversity and the effectiveness of each bank’s policies and procedures to encourage board diversity.\nFHFA also clarified expectations on FHLBank diversity efforts in a 2016 amendment to its regulation related to bank board directors as well as in guidance and communications to FHLBanks.\nClarifying scope of election outreach activities. According to FHFA staff, FHLBanks had inquired if the existing regulation would prohibit the banks from conducting outreach to or recruiting of diverse board candidates in the nomination or solicitation process. FHFA regulation restricts FHLBanks from advocating for a particular member director candidate or influencing the board election for member and independent directors. According to FHFA staff, to address these concerns, the agency amended the regulation in 2016 to clarify that the banks may conduct outreach to find diverse board director candidates. FHFA staff added that the regulation amendment also made clear that the banks may fulfill the regulatory requirement to encourage consideration of diversity in nominating or soliciting candidates for board director positions without violating restrictions on advocating for particular director candidates.\nGuidance. FHFA provided FHLBanks with guidance related to diversity, including board diversity. For example, the agency provided guidance on the roles and duties of the banks’ OMWI officers and the scope of diversity regulations. FHFA provided the banks a template to report newly required data on the gender and race/ethnicity of board directors. To help banks prepare their annual reports, in June 2018 FHFA also developed an annual report template that outlines and describes the contents of the required reporting elements. The template includes sections for individual FHLBanks to present data on board composition by diversity categories and to describe past and future outreach activities and strategies to promote board diversity and outcomes from the bank’s activities.\nCommunications. FHFA has communicated guidance and discussed board diversity issues with FHLBank boards and with staff involved in the banks’ board diversity efforts. For example, FHFA staff gave presentations at meetings during which FHLBank board directors shared information on board diversity efforts. The staff noted FHFA’s OMWI director generally attends the semi-annual conferences of the banks’ OMWI officers, during which she discusses diversity issues such as the roles and responsibilities of these officers and the scope of the FHFA regulations.\nFurthermore, FHFA OMWI and other offices developed and implemented some strategies to help FHLBanks maintain or increase board diversity. In 2016, FHFA OMWI staff met with FHLBanks and requested that the banks create a Bank Presidents Conference Board Diversity Task Force to share practices to promote board diversity. The staff said that they act as facilitators and informal advisors and may provide technical assistance to the system-wide task force—for example, by developing a list of practices related to board diversity. Also, as encouraged by FHFA, starting in 2017, each bank has a representative (a board director or the bank president) on the task force.\nAlso, based on FHFA’s 2016 annual FHLBank board analysis, the FHFA Director approved requests from three FHLBanks to add an independent director seat for their 2017 boards to help maintain or increase board diversity. FHFA extended the offer to the other banks (except Des Moines, as its board was undergoing restructuring after the merger with Seattle). FHFA staff said in preparation for their 2017 FHLBank board analysis, they informally monitored the gender and minority status of the additional independent director seats filled by the seven banks that accepted the offer. Six of the seats were filled by women (of whom two were minorities) and one seat was filled by a minority male, according to FHFA staff. FHFA staff also told us the FHFA Director has some discretion on the number of director seats based on an individual bank’s circumstances, including the request to maintain diversity. For example, in 2018, one FHLBank requested to retain its female board vice chair to help preserve diversity and institutional knowledge on its board. FHFA granted the bank’s request to keep the director for another year.\nFHFA staff told us that FHFA has considered issuing guidance in two areas, but that these areas do not represent immediate priorities for their diversity efforts. Specifically, FHFA OMWI staff stated that the office intended to develop an examination module on board diversity, but this is not the office’s high priority for 2019. As previously noted, FHFA’s current examination manual includes a section that covers FHLBanks’ workforce and supplier diversity efforts. But, the manual does not consider board diversity-related issues in as much detail as the supplier and workforce section. For example, it covers FHFA’s review of the quality of corporate governance by board directors and mentions the consideration of diversity for potential board director candidates. Also, the 2015 rule amendments noted that the agency intended to develop guidance to further elaborate on its expectations related to outreach activities and strategies for the banks’ board directors. FHFA staff told us that they would like to focus on ongoing diversity efforts and gather more information before starting new efforts.", "", "At the overall FHLBank board level, the share of female directors increased from 18 percent (34 directors) in 2015 to 23 percent (44 directors) in October 2018 (see fig. 3). This represented a continuation of an upward trend. For example, we previously reported a 16 percent share (31 female directors) in 2014.\nEach FHLBank had at least two female board directors in October 2018, but some boards had higher shares of female directors than others. As shown in figure 4, four banks—Chicago, Des Moines, Dallas, and Pittsburgh—had four or more female board directors (representing 22–38 percent of the boards). In comparison, seven banks had two or three female directors (representing 14–20 percent). Additionally, FHLBanks varied in how many female directors were added from 2015 to October 2018—one bank added two, six each added one, and four added none. For additional information on the number of board directors by bank and by gender from 2015 to October 2018, see appendix II.\nWomen have some representation in board leadership positions. In October 2018, two FHLBanks—Des Moines and Pittsburgh—had female vice chairs of their respective board. Another bank (San Francisco) had a female vice chair of its board in 2016 and 2017. In 2015, we reported that one bank (Atlanta) had a female board chair. Additionally, each bank’s board has committees (such as the Audit Committee and the Risk Management Committee) with committee chairs and vice chairs. Ten of the 11 banks had board committees with at least one female chair or vice chair in October 2018. The share of women who chaired board committees was the same as the share of women on the overall FHLBanks boards in October 2018—23 percent.\nWe compared female representation on FHLBank boards to that of other corporate boards and that of senior management in the financial services sector. Women constituted 23 percent of FHLBank boards in October 2018 and 22 percent of boards of the companies in the Standard and Poor’s 500 in 2017, as reported by Institutional Shareholder Services. Our analysis of the most recently available EEOC data found that the share of women in senior management positions in the financial services industry in 2016 was 29 percent. The share of women on FHLBank boards was 19 percent in the same year. Senior management in the financial services sector represents a pool of comparable candidates that could provide directors for FHLBank boards.", "The share of directors who self-identified as racial/ethnic minorities increased from 2015 to 2017, but the size of the increase is unclear due to the number of directors who did not report this information. Board directors voluntarily submit demographic information, including race/ethnicity. Some directors might have chosen not to self-identify their race/ethnicity.", "At the overall FHLBank board level, the share of directors who self- identified as racial/ethnic minorities increased from 2015 to 2017 (see fig. 5).\nEleven percent (20 directors) of FHLBank board directors self- identified as racial/ethnic minorities in 2015 and 15 percent (30 directors) in 2017.\nFour percent (7 directors) did not self-identify in 2015 and 8 percent (15 directors) in 2017.\nThe increase in the number of directors who identified as racial/ethnic minorities shows an upward trend from 10 percent (19 directors) in 2014, as we reported in 2015.\nThe number of directors who self-identified as racial/ethnic minorities varied by bank. As shown in figure 6, all 11 FHLBanks had at least one minority director on the board in 2017, and six banks had three or more minority directors. Ten of the 11 banks each added one minority director during 2015–2017. For additional information on the number of board directors by bank and by race/ethnicity in 2015–2017, see appendix II.\nMore specifically, as seen in table 4, in 2017, 9 percent (18 directors) identified as African-American, 4 percent (8 directors) identified as Hispanic, 2 percent (3 directors) identified as Asian, and 1 percent (1 director) identified as “other.”\nRacial/ethnic minorities have limited representation in board leadership positions. As of October 2018, one FHLBank had a vice chair of its board who identified as a minority. In 2017, another bank had one vice chair of its board who identified as a minority.\nWe compared the FHLBank boards’ share of racial/ethnic minorities to those of corporate boards and senior management in the financial services sector. In 2017, 15 percent of the FHLBank board directors identified as racial/ethnic minorities, as previously noted. This compares to 14 percent on boards of directors of companies in the Standard and Poor’s 500 in 2017, according to Institutional Shareholder Services, and 12 percent in senior management of the financial services industry in 2016, based on our analysis of EEOC data. In 2016, the share of minority directors on FHLBank boards was 13 percent.", "Board demographic data collection processes vary by FHLBank, which may contribute to the differences in the number of directors who did not self-identify their gender, race/ethnicity, or both. FHFA has not reviewed the banks’ varying processes to determine whether some processes were more effective, such as whether the practices allowed banks to more effectively identify and follow up with directors who may have forgotten to respond. All directors at three banks self-reported their gender and race/ethnicity in 2015–2017, but some directors at the other eight banks did not self-identify this information. However, we could not determine whether those directors deliberately chose not to self-report this information or inadvertently did not respond to the data collection forms or questions.\nAs allowed by FHFA regulation, FHLBanks varied in the data collection forms they used, questions they asked, and methods they used to distribute forms to board directors to obtain self-reported gender and race/ethnicity information. For example, the three banks with complete data from all directors each used different data collection forms. One bank collected gender and race/ethnicity as a voluntary section of its annual board director skills assessment, which was filled out by each director. Two banks distributed a separate data collection form at a board director meeting or through an online survey, which might have included a mechanism for tracking which directors had not responded to the survey. The other eight banks, which had incomplete demographic data, also used varying data collection processes. Of these, four banks distributed their data collection forms during a board meeting or through an e-mail, and the other four banks used online surveys. Of the 11 banks, six included an option on their forms to mark “opt not to self-identify,” while five included similar language as part of the form indicating that completing the form is voluntary. Although some banks had similar approaches to data collection, such as using an online survey, it is unclear whether certain approaches helped some banks to obtain more complete data despite directors’ right to opt out of self-reporting demographic information.\nFHFA has implemented some efforts on improving the quality of the data FHLBanks report to the agency, but FHFA staff told us that such efforts have not included a review of how the banks collect board director demographic data. For example, FHFA created templates to help banks report board data and board-related content, and its data reporting manual focused on reporting data related to the banks’ workforce, supplier base, and financial transactions. However, none of these documents discussed processes for collecting board director demographic data. According to FHLBank staff, FHFA’s instructions on board director data collection are limited to what is stated in the regulation. That is, banks should collect data on their board directors’ gender and race/ethnicity using EEOC categories, and such data should be voluntarily provided by the directors without personally identifiable information.\nFHFA’s 2015 regulation amendments require FHLBanks to compare the board demographic data with prior year’s data and provide a narrative of the analysis. FHFA also stated in the amendments that it intended to use the director data to establish a baseline to analyze future trends of board diversity. Additionally, federal internal control standards state that agency management should use quality information to achieve their objectives. Quality information would include complete and accurate information that management can use to make informed decisions in achieving key objectives. By obtaining a better understanding of the different processes FHLBanks use to collect board demographic data, FHFA and the banks could better determine which processes or practices could contribute to more complete data. For example, there may be practices that could help banks more effectively follow up with directors who might have missed the data collection forms or questions. More complete board demographic data could help FHFA and the banks more effectively analyze data trends over time and demonstrate the banks’ efforts to maintain or increase board diversity.", "FHLBanks report some challenges that may slow or limit their efforts to increase board diversity, which include low levels of diversity in the financial sector; member institutions not prioritizing diversity; balancing the need for diversity with retaining institutional knowledge; and competition for women and minority candidates. Despite these challenges, the banks have taken several steps to help increase board diversity.", "According to FHLBank representatives, including board directors, the FHLBank boards face challenges that may slow or limit their efforts to increase diversity, including the following: Low levels of diversity in the financial sector. Twelve representatives from nine FHLBanks told us that the pool of eligible women and minority board candidates is small in the banking and financial sector. For example, five representatives emphasized that the majority of member institutions have chief executive officers (CEO) who are white males. In particular, one director told us that out of the hundreds of member institutions affiliated with his FHLBank, he knew of only six female CEOs. Directors representing five banks also noted that the pool of eligible, diverse candidates in senior management positions in the financial services sector can be even smaller in certain geographic areas. As a result, it can be particularly challenging for some banks to fill member director seats because, by statute, candidates for a given FHLBank board must come from member institutions in the geographic area that the board seat represents. For example, one director said that the pool of such candidates is especially small in rural areas. In 2015, FHFA told us that the overall low levels of diversity in the financial services sector, including at FHLBank member institutions, increased the challenges for improving board diversity.\nHowever, representatives of corporate governance organizations with whom we spoke told us that the financial services sector does not face unique challenges. Representatives also said that qualified women and minority candidates are present in the marketplace. Our analysis of 2016 EEOC data found that the representation of women in senior management in the financial services sector was within 1 percentage point of the share of women in senior management in the private sector overall, and minority representation was within 4 percentage points.\nMember institutions may not always prioritize diversity in director elections. As previously discussed, member institutions nominate member director candidates and vote for the member director and independent director candidates. Ten representatives from eight FHLBanks stated that member institutions may prioritize other considerations over diversity when they nominate and vote on board candidates, such as name recognition or a preference for candidates who are CEOs. One director told us that the member banks may not be as interested in diversity as the FHLBanks. Another director emphasized that FHLBanks are trying to change attitudes and embed diversity in the member institutions’ operations. He characterized this process as a marathon, not a sprint.\nBoard directors with whom we spoke also stressed that FHFA regulations do not allow the FHLBank boards to exert influence over how member institutions vote. Board directors can emphasize the importance of diversity to member institutions but cannot in their official capacity campaign for specific candidates.\nBalancing the need for diversity with retaining institutional knowledge. Directors from five banks told us that they aim to balance bringing in new women or minority directors with retaining the valuable institutional knowledge of incumbent directors. One director added that new board directors face a steep learning curve. Thus, the directors at some banks will recruit new directors only after allowing incumbent directors to reach their maximum number of terms (which could translate to several years). As we reported in 2015, FHFA staff acknowledged that low turnover, term lengths, and the need to balance diversity with required skills posed challenges to the FHLBank board diversity. In our 2016 report on women on corporate boards, relevant stakeholders acknowledged this as a challenge because directors with longer tenure possess knowledge about a company that newer directors cannot be expected to possess.\nCompetition for women and minority candidates. Board directors from five FHLBanks told us that they face competition as they seek to recruit women and minority candidates. For example, a director from one bank told us that his board encouraged a potential female candidate to run for a director seat. However, the candidate felt she could not accept the opportunity because of her existing responsibilities on the boards of two publicly traded companies.\nWhile these challenges can apply to member and independent directors, representatives from all 11 FHLBanks emphasized that it can be particularly challenging to find and elect female or minority member directors. Our analysis of FHLBank board director data confirmed that across 11 FHLBank boards, female representation was lower among member directors (13 directors or 12 percent) than independent directors (31 directors or 36 percent) in October 2018. FHFA stated in this review and in 2015 that they are aware of the potential difficulty of identifying diverse candidates for member directors and that greater board diversity likely would be achieved with independent directors.", "Since 2015, FHLBanks have taken actions to help increase board diversity, including developing and implementing practices and strategies that target board diversity in general and member directors specifically. As previously discussed, at the request of FHFA, the banks established the Bank Presidents Conference Board Diversity Task Force. The purpose of the task force is to develop recommendations for advancing board diversity and to enhance collaboration and information sharing across FHLBank boards. Each bank is represented by a board director or the bank president. Representatives meet regularly to discuss challenges, recommend practices, and receive training. One task force representative told us that her participation on the taskforce has helped demonstrate to her board and bank that diversity matters. Others mentioned that the ability to share practices and learn from other banks was a great benefit.\nAs part of its work, the task force developed a list of practices that FHLBanks have used or could use to improve board diversity (see text box). According to bank staff, the list was approved by the presidents of each bank and distributed to bank staff. The practices can be generally summarized into three categories—emphasizing the importance of diversity; assessing skills diversity; and seeking new ways to find candidates—which are generally similar to the commonly cited practices for improving board diversity we identified in 2015.\nSummary of Practices Developed by Bank Presidents Conference Board Diversity Task Force of the Federal Home Loan Banks Include references to diversity on the bank website, in appropriate publications, in presentations about the bank, and particularly in all election materials. Educate current board members on the business case for diversity. Educate member institutions on the business case for diversity through member meetings, newsletter articles, etc. to help develop a more diverse member base and help groom new leaders. Perform a skills assessment of current board skills and areas of expertise and determine skill sets and expertise needed.\nReview the term limits of current directors and determine the possible loss of continuity if multiple incumbent directors leave the board in a short period of time. Build a pool of diverse member and independent candidates.\nConduct outreach to regional and national business organizations, such as trade associations, women and minority business groups, and professional organizations, to ask for referrals of possible candidates and form relationships prior to a board election. Seek an additional independent board seat from the Federal Housing Finance Agency.\nExample of Diversity Statement in an Election Announcement for a Federal Home Loan Bank The Federal Home Loan Bank of New York (FHLBNY) included the following statement in its 2017 director election announcement package: “The FHLBNY’s Board of Directors consists of a talented group of dedicated individuals that benefits from, among other things, demographic (including gender and racial) diversity, and we expect that this will continue in the future. As you consider potential nominations for Member Directorships and give thought to persons who might be interested in Independent Directorships, please keep diversity in mind. Your participation in this year’s Director Election process is greatly appreciated, and will help continue to keep the Board and the FHLBNY diverse and strong.”\nEmphasizing the importance of diversity. All 11 FHLBanks included statements in their 2017 election announcements that encouraged voting member institutions to consider diversity during the board election process. Six banks expressly addressed gender, racial, and ethnic diversity in their announcements. One female director with whom we spoke said that she was encouraged to run for a board seat after reading an election announcement in 2013 that specifically called for candidates with diverse backgrounds. All 11 FHLBanks also referenced their commitment to diversity on their websites, including posting diversity and inclusion policies, describing diversity missions, or including board statements on diversity.\nDirectors we interviewed from all 11 FHLBanks told us that their bank conducted or planned to conduct diversity training for board directors. The training sessions covered topics such as the business case for diversity and unconscious bias. Additionally, board directors from two banks discussed efforts to encourage member institutions to increase diversity, such as holding a panel on the importance of diversity at the annual member conference. In 2015, we found that demonstrating a commitment to diversity in ways similar to these is a first step towards addressing diversity in an organization.\nAssessing skills diversity. Nine FHLBanks performed board skills assessments annually or biennially. These assessments asked directors to evaluate their knowledge of specific topic areas. FHFA regulation allows each bank to annually conduct a skills and experience assessment and, if applicable, inform members before elections of particular qualifications that could benefit the board. In 2015, we found that conducting a skills assessment was a commonly cited practice for boards seeking to increase representation of women and minorities. The other two FHLBanks conducted board self-assessments annually, focused on board effectiveness and organization, but did not evaluate the skills of their individual directors. All 11 FHLBanks also reported regularly reviewing the remaining terms of current directors to determine the possible loss of continuity.\nSeeking new ways to find candidates. Representatives from 10 FHLBanks noted that their banks maintain a pool of diverse director candidates for future open positions. FHLBanks described using various methods to build these pools. All 11 banks described outreach to trade organizations, industry groups, universities, and nonprofit organizations when looking to identify women and minority candidates. For example, FHLBank of Pittsburgh identified 15 organizations in its district that actively promote diversity and the inclusion of women and minorities in business to specifically target in 2017. Directors from seven banks also reported hiring a search firm or consultant to help them identify women and minority candidates. These activities are consistent with commonly cited practices described in our 2015 work that boards can use to reach out beyond the typical pool of applicants.\nAs previously mentioned, seven FHLBanks requested or were offered an additional independent director seat by FHFA. According to FHFA staff, four of the seats were filled by white females, two were filled by minority females, and one was filled by a minority male.\nExample of a Diversity Practice Focused on Member Directors In 2017, the Federal Home Loan Bank of San Francisco developed a Member Director Diversity Outreach Plan. The plan included eight steps that provide timelines and specific assignments for directors and bank management. For example, steps include conducting early outreach to trade organizations where women and minority directors might participate, individual director outreach to potential candidates, and developing a list of prospective candidates in case of vacancy appointments. Following the implementation of this plan, member institutions elected one female director and one minority director to fill the vacant member director seats.\nFill interim seats with women and minority candidates. FHLBanks can appoint women or minority candidates to fill interim member director seats. By regulation, when a director leaves the board in mid- term, the remaining board directors may elect a new director for the remaining portion of the term. For example, the FHLBank of Pittsburgh reported electing a minority director in 2017 to fill a vacant member director seat. One director told us that when a female or minority director is elected for an interim term, the election increases the likelihood of the director being elected by the member institutions for a following full term.\nConduct mentoring and outreach. FHLBank board directors also can use their personal networks to conduct outreach and mentor potential candidates. Current directors can pledge to identify and encourage potential women and minority candidates to run for the board. For example, one director told us that his board emphasizes the need for directors to pay attention to potential women and minority candidates they meet. This director said he had personally contacted qualified potential candidates and asked them to run. Another director noted that women and minority directors are likely to know other qualified candidates with diverse backgrounds. These directors can identify and refer individuals in their networks. Another director emphasized the importance of member directors conducting outreach to member institutions. Member directors have the most interaction with the leadership of member institutions and can engage and educate them on the importance of nominating and electing diverse member directors.\nLook beyond CEOs. Additionally, FHLBanks can search for women and minority candidates by looking beyond member bank CEOs. By regulation, member directors can be any officer or director of a member institution, but there is a tendency to favor CEOs for board positions, according to board directors, representatives of corporate governance organizations, and academic researchers with whom we spoke. The likelihood of identifying a woman or minority candidate increases when member institutions look beyond CEOs to other officers, such as chief financial officers or board directors. For example, the FHLBank of Des Moines expanded its outreach to women and minority candidates to include board directors at member institutions. In 2017, a female director who is a board member of her member institution was elected.", "The Housing and Economic Recovery Act of 2008 emphasized the importance of diversity at the FHLBank System, and FHFA and FHLBanks have undertaken efforts to encourage diversity at the banks’ boards. In particular, FHFA plans to use data it collects on the gender and race/ethnicity of board directors as a baseline to analyze trends in board diversity. While FHFA regulation allows directors to choose not to report this information, the banks’ varying data collection processes did not always allow banks to accurately account for missing information (as in the case of directors forgetting to respond to the data questions or fill out forms). Reviewing the processes the banks use to collect the demographic data could help FHFA and the banks identify practices to produce data that would better allow FHFA to track trends in board diversity. FHFA could work with FHLBanks (potentially through the system-wide Board Diversity Task Force) to conduct such a review.", "The Director of FHFA’s Office of Minority and Women Inclusion, in consultation with FHLBanks, should conduct a review on each bank’s processes for collecting gender and race/ethnicity data from boards of directors and communicate effective practices to FHLBanks. (Recommendation 1)", "We provided a draft of this report to FHFA and each of the 11 FHLBanks for review and comment. In its comments, reproduced in appendix III, FHFA agreed with our recommendation. FHFA commented that it intends to engage with FHLBanks’ leadership in 2019 to discuss board data collection issue and address our recommendation. FHFA also stated that it plans to request that the Board Diversity Task Force explore the feasibility and practicability for FHLBanks to adopt processes that can lead to more complete data on board director demographics. In addition, four FHLBanks provided technical comments, which we incorporated as appropriate. The other seven FHLBanks did not have any comments.\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, the Acting Director of FHFA, 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 have any questions about this report, please contact me at (202) 512-8678 or ortiza@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 the (1) extent to which the Federal Housing Finance Agency (FHFA) has taken steps to encourage board diversity at the Federal Home Loan Banks (FHLBank); (2) trends in diversity composition (gender, race, and ethnicity) for the boards of individual FHLBanks; and (3) challenges FHLBanks face and practices they use in recruiting and maintaining a diverse board. While diversity has many dimensions, this report focuses on gender, race, and ethnicity.\nTo understand the steps FHFA has taken to encourage FHLBank board diversity, we reviewed relevant laws and regulations related to FHLBank boards, including FHFA regulations on director elections and diversity reporting requirements. For example, we reviewed the relevant sections in the Housing and Economic Recovery Act of 2008 pertaining to FHFA and the banks and FHFA’s 2010 Minority and Women Inclusion rule and its 2015 amendments. We also reviewed other FHFA and bank documentation related to board director elections and diversity considerations. For example, we reviewed FHFA’s annual board director analysis for 2016–2018 to identify actions the agency took to help maintain or increase the number of female or minority directors at the FHLBank boards. Additionally, we interviewed FHFA staff to understand the agency’s role in overseeing FHLBank board diversity and the agency’s efforts in helping the banks maintain or increase board diversity.\nTo describe trends in FHLBank board diversity, we analyzed gender and race/ethnicity data self-reported by board directors in FHLBanks’ annual reports to FHFA as of the end of 2015, 2016, and 2017. The banks’ annual reports use the gender and race/ethnicity classifications from the Employer Information Report (EEO-1) of the Equal Employment Opportunity Commission (EEOC). The EEO-1 report race/ethnicity categories are Hispanic or Latino, White, Black or African-American, Native Hawaiian or Other Pacific Islander, Asian, Native American or Alaska Native, and Two or More Races. The Hispanic or Latino category in EEO-1 incorporates Hispanics or Latinos of all races. For our report, we used the following categories: Hispanic, White, African-American, Asian, and “Other.” We included only non-Hispanic members under White, African-American, Asian, and “Other.” We included Asian American, Native Hawaiian or Pacific Islander under the Asian category, and we included Native American or Alaskan Native, and Two or More Races under “Other.”\nTo provide more recent data on gender composition, we also analyzed data on the gender of directors who were on boards as of October 17, 2018. Specifically, we compiled a list of board directors who started or continued their terms on the boards in 2018, based on board director information from the banks’ 2017 Form 10-K filings with the Securities and Exchange Commission (SEC). The filings include the names and brief biographies of board directors, which we used to derive the gender data for directors. For example, if directors were referred to as “Mr.” in the Form 10-Ks, we counted them as male. If they were referred to as “Ms.,” we counted them as female. We then confirmed with each FHLBank the compiled list of board directors, as of October 17, 2018. Because some directors did not self-identify their gender in 2015–2017 annual reports, we also used information in the banks’ 2014–2016 Form 10-Ks to derive data on the gender of the banks’ board directors. As a result, we were able to report the gender information for all FHLBank board of directors from 2015 through October 2018. We separately requested the names of the chairs and vice chairs for the committees of each bank’s board as of October 26, 2018. We then derived the gender of the chairs and vice chairs for these committees based on the information in the banks’ Form 10-Ks.\nTo analyze data on board director race/ethnicity, we relied on FHLBanks’ 2015–2017 annual reports. However, we were not able to use banks’ Form 10-Ks to derive data on race/ethnicity for board directors who did not self-identify race/ethnicity in the annual reports because the 10-Ks do not include such information. We also requested and analyzed from each bank data on the gender and race/ethnicity of their board chair and vice chair as of October 17, 2018. We assessed the reliability of the data from the banks’ annual reports and Form 10-Ks through electronic testing, a review of documentation, and interviews with knowledgeable agency staff, and we determined these data to be sufficiently reliable for describing the overall trends and composition of gender and race/ethnicity at the FHLBank boards, except the data for directors who did not self- identify their race/ethnicity, as discussed in the report.\nWe also compared the most recently available demographic information on FHLBank board directors with the demographic composition of senior management in the financial services industry and the overall private sector (excluding financial services), based on data from the 2016 EEO-1 report from EEOC. Senior management in the financial services industry represents a pool of comparable candidates that could provide directors for FHLBank boards. The EEO-1 report data are annually submitted to EEOC by most private-sector firms with 100 or more employees. The data include gender and race/ethnicity of the employees by job category. We included workforce from all sites of multi-establishment companies (companies with multiple locations). Consequently, the analysis included in this report may not match the analysis found on EEOC’s website, which excludes workforce from sites of multi-establishment companies with less than 50 employees. In our analysis of senior management-level diversity in the financial services sector, we included companies in the finance and insurance industry categorized under code 52 of the North American Industry Classification System. We assessed the reliability of the data from the EEO-1 report through electronic testing, a review of documentation, and interviews with knowledgeable agency staff. We determined these data to be sufficiently reliable for comparing the composition of gender and race/ethnicity in the financial services sector and the overall private sector with that of the FHLBank boards. Furthermore, to provide a general comparison of FHLBank board diversity composition with corporate boards of U.S. companies, we reviewed research that discussed data related to diversity at corporate boards of U.S. companies in recent years.\nIn addition, from each FHLBank, we requested and reviewed the instrument they used to collect gender and race/ethnicity information from their board directors. We also obtained and reviewed information on the methods the banks used to distribute and collect the data collection instruments, and any instructions FHFA provided to the banks or that the banks provided to the board directors on collecting this information. We reviewed relevant information from the banks’ annual reports and relevant regulations on collecting and submitting board directors’ gender and race/ethnicity information. We also compared the banks’ data collection processes with relevant federal internal control standards.\nTo determine the challenges the FHLBanks face and practices they use to recruit and maintain a diverse board, we interviewed staff at FHLBanks and FHFA to learn about the Bank Presidents Conference Board Diversity Task Force and the list of diversity practices compiled by the task force. We reviewed and analyzed the banks’ 2017 annual reports to learn about the most recent practices the banks implemented. We also reviewed the banks’ websites and bank documents, such as election materials and skills assessments for all 11 banks. In addition, we conducted semi- structured interviews with 10 board directors and one bank president, who act as representatives on the system-wide board diversity task force. We also conducted semi-structured interviews with a nongeneralizable sample of FHLBank board chairs from six banks (Atlanta, Boston, Des Moines, Pittsburgh, San Francisco, and Topeka). We selected these banks to achieve variation in board diversity composition (share of women and minority directors), asset size, and geographic locations. In these interviews, we asked directors and staff about the challenges their banks faced as they sought to increase or maintain diverse boards. We also asked about their participation on the task force, the task force diversity practices, and any other practices their banks had implemented related to board diversity efforts.\nTo determine if the task force diversity practices generally followed commonly cited practices used to improve board diversity, we compared the task force practices against commonly cited practices we identified in previous work in 2015. To verify that the practices we identified in 2015 were still relevant and useful, we interviewed three academics and representatives of four organizations that advocate for board diversity, including gender and racial/ethnic diversity. We selected these external stakeholders based on their research and experience related to increasing board diversity and referrals from others knowledgeable in the field. In our interviews with external stakeholders, we also asked about the challenges that financial organizations or other publicly traded companies may face as they work to increase or maintain board diversity. We compared these answers to the challenges that FHLBank representatives described.\nWe conducted this performance audit from July 2018 to February 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.", "", "", "", "Anna Maria Ortiz, (202) 512-8678, ortiza@gao.gov.", "In additional to the individual named above, Kay Kuhlman (Assistant Director), Anna Chung (Analyst in Charge), Laurie Chin, Kaitlan Doying, Jill Lacey, Moon Parks, Barbara Roesmann, Jessica Sandler, and Jena Sinkfield made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 1, 2, 2, 3, 3, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title", "h2_full", "h2_full", "", "h0_full", "h2_full", "h0_title", "h0_full", "h0_title", "", "h0_full", "h2_title h1_title", "h2_full h1_full", "h2_full h1_full", "h3_full", "", "", "h3_full", "", "", "", "", "" ] }

{ "question": [ "How has the share of women and minority directors on the boards of FHLBanks changed?", "Why are trends in the share of minority directors less well known than that of women directors?", "What does FHFA plan to use the board data for?", "To what extend could the completeness of the data be improved?", "To what extent have FHLBanks's efforts to promote board diversity gone smoothly?", "What challenges have FHLBanks faced?", "What have FHLBanks accomplished through these efforts?", "What do FHLBanks prioritize in its effort to promote board diversity?", "What is the FHLBank System?", "What kind of board do the FHLBanks have?", "How are FHLBank directors selected?", "What ensures consumer or community interests are heard by FHLBank boards?", "How are FHLBanks regulated?", "What was GAO asked to review?", "What does the GAO report examine?", "What data did GAO analyze in its report on FHLBanks diversity and inclusion?", "What interviewing did GAO conduct for its report on FHLBanks diversity and inclusion?" ], "summary": [ "Since 2015, the share of women and minority directors on the boards of FHLBanks increased (see figure). The number of women directors increased from 34 in 2015 to 44 in October 2018, and the number of minority directors increased from 20 in 2015 to 30 in 2017, based on most recently available data.", "Trends for minority directors were less clear, because the banks' varying data collections processes did not always allow them to determine the extent to which directors opted out or forgot to answer data collection forms.", "FHFA stated that it planned to use board data to establish a baseline to analyze diversity trends.", "A review of the banks' data collection processes would help identify whether practices exist that could help improve the completeness of the data.", "FHLBanks reported they continued to face some challenges to their efforts to promote board diversity, especially among member director seats.", "The challenges include (1) balancing the addition of new women or minority directors with retaining the institutional knowledge of existing directors; and (2) competing with other organizations for qualified female and minority board candidates.", "Despite reported challenges, FHLBanks have taken measures to promote board diversity, such as establishing a task force to promote board diversity through information sharing and training.", "Individually, the FHLBanks emphasized the importance of diversity in election materials, built pools of diverse candidates, and conducted outreach to industry and trade groups. They also took actions to increase diversity specifically among member directors, including filling interim board seats with women and minority candidates and encouraging directors to personally reach out to potential women and minority candidates.", "The FHLBank System consists of 11 regionally based banks cooperatively owned by member institutions.", "In 2018, each FHLBank had a board of 14–24 directors.", "Member directors are nominated from member institutions and independent directors from outside the system. Member institutions vote on all directors.", "At least two independent directors on a board must represent consumer or community interests.", "FHFA is the regulator of the FHLBanks.", "GAO was asked to review FHLBanks' implementation of board diversity and inclusion matters.", "This report examines (1) steps FHFA took to encourage board diversity at FHLBanks; (2) trends in gender, race, and ethnicity on FHLBank boards; and (3) challenges FHLBanks face and practices they use to recruit and maintain diverse boards.", "GAO analyzed FHLBank data on board demographics, reviewed policies and regulations, and reviewed previous GAO work on diversity at FHLBanks and the financial services industry.", "GAO interviewed FHFA and FHLBank staff and a nongeneralizable sample of FHLBank board directors and external stakeholders knowledgeable about board diversity." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, -1, 0, -1, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "Types and Locations of Oil and Gas Reservoirs", "Federal Environmental and Public Health Laws Apply to Unconventional Oil and Gas Development but with Key Exemptions", "Eight Federal Environmental and Public Health Laws Apply to Unconventional Oil and Gas Development", "Exemptions Are Related to Preventive Programs", "States in Our Review Implement Additional Requirements and Recently Updated Some Requirements", "States in Our Review Implement Additional Requirements and Certain Federal Requirements", "Regional Commission Implements Additional Requirements", "States Have Recently Updated Some Requirements", "Additional Requirements Apply on Federal Lands", "Requirements for Federally Owned Mineral Rights", "Requirements for Privately Owned Mineral Rights under Federal Surface Lands", "Federal and State Agencies Reported Several Challenges Regulating Unconventional Oil and Gas Development", "Conducting Inspection and Enforcement Activities", "Limited Legal Authorities", "Hiring and Retaining Staff", "Public Education", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Key Requirements and Authorities under the Safe Drinking Water Act", "Underground Injection Control Program", "Class II UIC Requirements", "Class II UIC Programs and Hydraulic Fracturing", "Enforcement", "Imminent and Substantial Endangerment Authorities", "Appendix III: Key Requirements and Authorities under the Clean Water Act", "National Pollutant Discharge Elimination System Program", "Existing Effluent Limitations Guidelines for Oil and Gas Extraction", "Anticipated Rulemaking to Develop Effluent Limitations Guidelines for Oil and Gas Extraction from Coalbed Methane Formations", "Generally Applicable Pretreatment Standards and POTW Obligations", "Anticipated Rulemaking to Develop Pretreatment Standards for Gas Extraction from Shale Formations", "NPDES for Stormwater Discharges", "NPDES Enforcement", "Imminent and Substantial Endangerment Authorities", "Oil and Hazardous Substances Spill Prevention, Reporting, and Response", "Spill Prevention and Response Plans", "Spill Prohibition and Reporting", "Spill Response Authority", "Enforcement of SPCC and Spill Prohibition and Reporting Requirements", "Imminent and Substantial Endangerment Authority for Spills", "Appendix IV: Key Requirements and Authorities under the Clean Air Act", "National Emission Standards for Hazardous Air Pollutants", "Hazardous Air Pollutants", "NESHAPs Overview and Statutory Provisions Restricting Aggregation of Oil and Gas Production Sources", "NESHAPs for Oil and Natural Gas Production Facilities", "Other NESHAPs", "New Source Performance Standards", "April 2012 Amendments to NSPS", "Other NSPS", "New Source Review", "Title V Operating Permits", "Source Determinations and Aggregation Issues for Title V and NSR", "Greenhouse Gas Reporting Rule", "Accidental Releases", "Accidental Release Prevention (Risk Management Program)", "General Duty to Prevent Accidental Releases", "Imminent and Substantial Endangerment Authority Respecting Accidental Releases", "Chemical Safety Board", "EPA Enforcement Authorities", "Imminent and Substantial Endangerment Authority", "Appendix V: Key Requirements and Authorities under the Resource Conservation and Recovery Act", "Subtitle C – Hazardous Waste", "Exemption of Certain Oil and Gas Production Wastes from Regulation as Hazardous Waste under RCRA Subtitle C", "Oil and Gas Exploration and Production Wastes That Are Not Exempt from Regulation", "Subtitle D – Solid Waste", "Enforcement", "Imminent and Substantial Endangerment Authority", "Appendix VI: Key Requirements and Authorities under the Comprehensive Environmental Response, Compensation, and Liability Act", "Relevant Exclusions and Definitions", "CERCLA Hazardous Substance Release Reporting", "Relevant EPA Authorities", "Appendix VII: Key Requirements and Authorities under the Emergency Planning and Community Right-to-Know Act", "Generally Applicable Chemical Information, Inventory, and Release Reporting", "Requirements under EPCRA That May Be Triggered at Well Sites", "Toxic Release Inventory", "Enforcement", "Appendix VIII: Key Requirements and Authorities under the Toxic Substances Control Act", "Appendix IX: Selected State Requirements", "Appendix X: Crosswalk between Selected Requirements from EPA, States, and Federal Lands", "Appendix XI: Comments from the Department of Agriculture", "Appendix XII: Comments from the Department of the Interior", "Appendix XIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Oil and gas reservoirs vary in their geological makeup, location, and size. Regardless of the reservoir, unconventional oil and gas development involves a number of activities, many of which are also conducted in conventional oil and gas drilling. This section describes the types and locations of oil and gas reservoirs and the key stages of oil and gas development.", "Oil and natural gas are found in a variety of geologic formations. In conventional reservoirs, oil and gas can flow relatively easily through a series of pores in the rock to the well. Shale and tight sandstone formations generally have low permeability and therefore do not allow oil and gas to easily flow to the well. Shale and tight sandstone formations can occur at varying depths, including thousands of feet beneath the surface. For example, the Bakken shale formation in North Dakota and Montana ranges from 4,500 to 11,000 feet beneath the surface. Coalbed methane formations, often located at shallow depths of several hundred to 3,000 feet, are generally formations through which gas can flow more freely; however, capturing the gas requires operators to pump water out of the coal formation to reduce the pressure and allow the gas to flow. Shale, tight sandstone, and coalbed methane formations are located within basins, which are large-scale geological depressions, often hundreds of miles across, which also may contain other oil and gas resources. There is no clear and consistently agreed upon distinction between conventional and unconventional oil and gas, but unconventional sources generally require more complex and expensive technologies for production, such as the combination of horizontal drilling and multiple hydraulic fractures. See figure 1 for a depiction of conventional and unconventional reservoirs.\nUnconventional reservoirs are located throughout the continental United States on both private lands and federal lands that are administered by BLM, Forest Service, Park Service, and FWS (see fig. 2).\nDeveloping unconventional reservoirs involves a variety of activities, many of which are also conducted in conventional oil and gas drilling.\nSiting and site preparation. The operator identifies a location for the well and prepares the area of land where drilling will take place—referred to as a well pad. In some cases, the operator will build new access roads to transport equipment to the well pad or install new pipelines to transport the oil or gas that is produced. In addition, the operator will clear vegetation from the area and may place storage tanks (also called vessels) or construct pits on the well pad for temporarily storing fluids (see fig. 3). In some cases, multiple wells will be located on a single well pad.\nDrilling, casing, and cementing. The operator conducts several phases of drilling to install multiple layers of steel pipe—called casing—and cement the casing in place. The layers of steel casing are intended to isolate the internal portion of the well from the outlying geological formations, which may include underground drinking water supplies. As the well is drilled deeper, progressively narrower casing is inserted further down the well and cemented in place. Throughout the drilling process, a special lubricant called drilling fluid, or drilling mud, is circulated down the well to lubricate the drilling assembly and carry drill cuttings (essentially rock fragments created during drilling) back to the surface. After vertical drilling is complete, horizontal drilling is conducted by slowly angling the drill bit until it is drilling horizontally. Horizontal stretches of the well typically range from 2,000 feet to 6,000 feet long but can be as long as 12,000 feet in some cases.\nHydraulic fracturing. Operators sequentially perforate steel casing and pump a fluid mixture down the well and into the target formation at high enough pressure to cause the rock within the target formation to fracture. The sequential fracturing of a well can use between 2 million and 5.6 million gallons of water. Operators add a proppant, such as sand, to the mixture to keep the fractures open despite the large pressure of the overlying rock. About 98 percent of the fluid mixture used in hydraulic fracturing is water and sand, according to a report about shale gas development by the Ground Water Protection Council. The fluid mixture—or hydraulic fracturing fluid—generally contains a number of chemical additives, each of which is designed to serve a particular purpose. For example, operators may use a friction reducer to minimize friction between the fluid and the pipe, acid to help dissolve minerals and initiate cracks in the rock, and a biocide to eliminate bacteria in the water that cause corrosion. The number of chemicals used and their concentrations depend on the particular conditions of the well. After hydraulic fracturing, a mixture of fluids, gases, and dissolved solids flows to the surface (flowback), after which production can begin, and the well is said to have been completed. Operators use hydraulic fracturing in many shale and tight sandstone formations (see fig. 4). Some coalbed methane wells are hydraulically fractured (see fig. 5), but operators may use different combinations of water, sand, and chemicals than with other unconventional wells. In addition, operators must “dewater” coalbed methane formations in order to get the natural gas to begin flowing—a process that can generate large amounts of water.\nWell plugging. Once a well is no longer producing economically, the operator typically plugs the well with cement to prevent fluid migration from outlying formations into the well and to prevent downward drainage from inside the well. In some cases, wells may be temporarily plugged so that the operator has the option of reopening the well in the future. In some states with a long history of oil and gas development, wells drilled decades ago may not have been properly plugged—or the plug may have deteriorated.\nSite reclamation. Once the well is plugged, the operator takes steps to restore the site to make it acceptable for specific uses, such as farming. For example, reclamation may involve removing equipment from the well pad, closing pits, backfilling soil, and restoring vegetation. Sometimes, when a well starts production, operators reclaim the portions of a site affected by the initial drilling activity.\nWaste management and disposal. Throughout the drilling, hydraulic fracturing, and subsequent production activities, operators must manage and dispose of several types of waste. For example, operators must manage produced water, which, for purposes of this report includes flowback water—the water, proppant, and chemicals used for hydraulic fracturing—as well as water that occurs naturally in the oil- or gas-bearing geological formation. Operators temporarily store produced water in tanks or pits, and some operators may recycle it for reuse in subsequent hydraulic fracturing. Options for permanently disposing of produced water vary and may include, for example, injecting it underground into wells Operators also generate solid wastes designated for such purposes. such as drill cuttings and could potentially generate small quantities of hazardous waste. See table 1 for additional methods for managing and disposing of waste.\nWe recently issued a report on the quantity, quality, and management of water produced during oil and gas production. See GAO, Energy-Water Nexus: Information on the Quantity, Quality, and Management of Water Produced during Oil and Gas Production, GAO-12-156 (Washington, D.C.: Jan. 9, 2012).", "Requirements from eight federal laws apply to the development of oil and gas from unconventional sources. In large part, the same requirements apply to conventional and unconventional oil and gas development. There are exemptions or limitations in regulatory coverage for preventive programs authorized by six of these laws, though EPA generally retains its authorities under federal environmental and public health laws to respond to environmental contamination. States may have regulatory programs related to some of these exemptions or limitations in federal regulatory coverage; state requirements are discussed later in this report.", "Parts of the following eight federal environmental and public health laws apply to unconventional oil and gas development:\nSafe Drinking Water Act (SDWA)\nClean Water Act (CWA)\nClean Air Act (CAA)\nResource Conservation and Recovery Act (RCRA)\nComprehensive Environmental Response, Compensation, and Liability Act (CERCLA)\nEmergency Planning and Community Right-to-Know Act (EPCRA)\nToxic Substances Control Act (TSCA)\nFederal Insecticide, Fungicide, and Rodenticide Act (FIFRA)\nThere are exemptions or limitations in regulatory coverage related to the first six laws listed above. In large part, the same requirements apply to conventional and unconventional oil and gas development. This section discusses each of these laws in brief; for more details about seven of these laws, please see appendixes II through VIII.\nSDWA is the main federal law that ensures the quality of drinking water.Two key aspects of SDWA that are part of the regulatory framework governing unconventional oil and gas development are the Underground Injection Control (UIC) program and the imminent and substantial endangerment provision.\nUnder SDWA, EPA regulates the injection of fluids underground through its UIC program, including the injection of produced water from oil and gas development. The UIC program protects underground sources of drinking water by setting and enforcing standards for siting, constructing, and operating injection wells. Injection wells in the UIC program fall into six different categories based on the types of fluids being injected. The wells used to manage fluids associated with oil and gas production, including produced water, are Class II wells.\nEPA officials estimate there are approximately 151,000 permitted Class II UIC wells in operation in the United States. Two types of wells account for nearly all the Class II UIC wells in the United States (see fig. 7), as follows:\nEnhanced recovery wells inject produced water or other fluids or gases into oil- or gas-producing formations to increase the pressure in the formation and force additional oil or gas out of nearby producing wells. EPA documents estimate that about 80 percent of Class II wells are enhanced recovery wells.\nDisposal wells inject produced water or other fluids associated with oil and gas production into formations that are intended to hold the fluids permanently. EPA documents estimate that about 20 percent of Class II wells are disposal wells.\nUIC regulations include minimum federal requirements for most Class II UIC wells; these requirements are generally applicable only where EPA implements the program. For example, for most new Class II UIC wells, an operator must, among other things (1) obtain a permit from EPA or a state, (2) demonstrate that casing and cementing are adequate, and (3) pass an integrity test prior to beginning operation and at least once every 5 years. In addition, when proposing a new Class II UIC well, an operator must identify any existing water or abandoned production or injection wells generally within one-quarter mile of the proposed well. During the life of the Class II UIC well, the operator has to comply with monitoring requirements, including tracking the injection pressure, rate of injection, and volume of fluid injected.\nSDWA authorizes EPA to approve by rule a state to be the primary enforcement responsibility—called primacy—for the UIC program, which means that a state assumes responsibility for implementing its program, including permitting and monitoring UIC wells. Generally, to be approved for primacy, state programs must be at least as stringent as the federal program for each of the well classes for which primacy is sought; however, SDWA also includes alternative provisions for primacy related to Class II wells whereby, in lieu of adopting requirements consistent with EPA’s Class II regulations, a state can demonstrate to EPA that its program is effective in preventing endangerment of underground sources of drinking water. Five of the six states in our review (Colorado, North Dakota, Ohio, Texas, and Wyoming) have been granted primacy for Class II wells under the alternative provisions. Pennsylvania has not applied for primacy, so EPA directly implements the program there. Please see appendix IX for more information about UIC requirements in the six states in our review.\nAs discussed, the UIC program regulates the injection of fluids underground. Historically, the UIC program was not used to regulate hydraulic fracturing, even though fracturing entails the injection of fluid underground. In 1994, in light of concerns that hydraulic fracturing of coalbed methane wells threatened drinking water, citizens petitioned EPA to withdraw its approval of Alabama’s Class II UIC program because the state failed to regulate hydraulic fracturing. The case ended up before the United States Court of Appeals for the Eleventh Circuit, which held that the definition of underground injection included hydraulic fracturing. The court’s decision was made in the context of hydraulic fracturing of a coalbed methane formation in Alabama but raised questions about whether hydraulic fracturing would be included in UIC programs nationwide.\nUIC regulations at the time and now provide that ‘‘ny underground injection, except into a well authorized by rule or except as authorized by permit issued under the UIC program, is prohibited.’’ 40 C.F.R. 144.11 (2005) (2011). The Energy Policy Act provision did not exempt injections of diesel fuel during hydraulic fracturing from the definition of underground injection. EPA’s position is that underground injection of diesel fuel as part of hydraulic fracturing requires a UIC permit or authorization by rule. program. The guidance is directed at EPA permit writers in states where EPA directly implements the program; the guidance does not address state-run UIC programs (including five of the six states in our review). EPA’s draft guidance is applicable to any oil and gas wells using diesel in hydraulic fracturing (not just coalbed methane wells). The draft guidance provides recommendations related to permit applications, area of review (for other nearby wells), well construction, permit duration, and well closure.\nSDWA also gives EPA authority to issue orders when the agency receives information about present or likely contamination of a public water system or an underground source of drinking water that may present an imminent and substantial endangerment to human health. In December 2010, EPA used this authority to issue an emergency administrative order to an operator in Texas alleging that the company’s oil and gas production facilities near Fort Worth, Texas, caused or contributed to methane contamination in two nearby private drinking water wells. EPA contended that this methane contamination posed an explosion hazard and therefore was an imminent and substantial threat to human health. EPA’s order required the operator to take six actions, specifically: (1) notify EPA whether it intended to comply with the order, (2) provide replacement water supplies to landowners, (3) install meters to monitor for the risk of explosion at the affected homes, (4) conduct a survey of any additional private water wells within 3,000 feet of the oil and gas production facilities, (5) develop a plan to conduct soil and indoor air monitoring at the affected dwellings, and (6) develop a plan to investigate how methane flowed into the aquifer and private drinking water wells. The operator disputed the validity of EPA’s order and noted that the order does not provide any way for the company to challenge EPA’s findings. Nevertheless, the operator implemented the first three actions EPA listed in the order. In January 2011, EPA sued the operator in federal district court, seeking to enforce the remaining three provisions of the order. In March 2011, the regulatory agency that oversees oil and gas development in Texas held a hearing examining the operator’s possible role in the contamination of the water wells and issued an opinion in which it concluded that the operator had not caused the contamination. In March 2012, EPA withdrew the original emergency administrative order, and the operator agreed to continue monitoring 20 private water wells near its production sites for 1 year. According to EPA officials, resolving the lawsuit allows the agency to shift its focus away from litigation and toward a joint EPA-operator effort in monitoring.\nFor more details about SDWA, please see appendix II.\nTo restore and maintain the nation’s waters, CWA authorizes EPA to, among other things, regulate pollutant discharges and respond to spills affecting rivers and streams. Several aspects of CWA are applicable to oil and gas well pad sites, but statutory exemptions limit EPA’s regulatory authority. Several elements of CWA and implementing regulations are relevant to oil and gas development from onshore unconventional sources. First, the National Pollutant Discharge Elimination System (NPDES) program regulates industrial sites’ wastewater and stormwater discharges to waters of the United States (surface waters). Second, spill reporting and spill prevention and response planning requirements pertain to certain threats to U.S. navigable waters and adjoining shorelines. In addition, under certain circumstances, EPA has response authorities; for example, it can generally bring suit or take other actions to protect the public health and welfare from actual or threatened discharges of oil or hazardous substances to U.S. navigable waters and adjoining shorelines.\nEPA’s NPDES program limits the types and amounts of pollutants that industrial sites, industrial wastewater treatment facilities, and municipal wastewater treatment facilities (often called publicly-owned treatment works or POTWs) can discharge into the nation’s surface waters by requiring these facilities to have and comply with permits listing pollutants and their discharge limits. As required by CWA, EPA develops effluent limitations for certain industrial categories based on available control technologies and other factors to prevent or treat the discharge. EPA established multiple subcategories for the oil and gas industry; relevant here are: (1) onshore, (2) agricultural and wildlife water use, and (3) stripper wells—that is, wells that produce relatively small amounts of oil.\nFor the onshore and agricultural and wildlife water use subcategories, EPA established effluent limitations guidelines for direct dischargers that establish minimum requirements to be used by EPA and state NPDES permit writers. Specifically, the onshore subcategory has a zero discharge limit for discharges to surface waters, meaning that no direct discharges to surface waters are allowed. EPA documents explain that this is because there are technologies available—such as underground injection—to dispose of produced water generated at oil and gas well sites without directly discharging them to surface waters. Given that the NPDES permit limit would be “no discharge,” EPA officials said that they were unaware of any instances in which operators had applied for these permits. EPA officials did mention, however, an instance in which an operator discharged produced water to a stream and was fined by EPA under provisions in CWA. For example, in 2011, EPA Region 6 assessed an administrative civil penalty against a company managing an oil production facility in Oklahoma for discharging brine and produced water to a nearby stream. The company ultimately agreed to pay a $1,500 fine and conduct an environmental project, which included extensive soil remediation near the facilities.\nEffluent limitations guidelines for the agricultural and wildlife water use subcategory cover a geographical subset of wells in the westthe quality of produced water from the wells is good enough for watering crops and livestock or to support wildlife in streams. The effluent limitations guideline for this subcategory allows such discharges of produced water for these purposes as long as the water meets a minimum quality standard for oil and grease. EPA officials identified 349 facilities with discharge permits in this subcategory. Officials also stated in which that individual permits may contain limits for pollutants other than oil and grease.\nEPA has not established effluent limitations guidelines for stripper wells, and EPA and state NPDES permit writers currently use their best professional judgment to determine the effluent limits for permits on a case-by-case basis. EPA explained in a 1976 Federal Register notice that unacceptable economic impacts would occur if the agency developed effluent limitations guidelines for stripper wells and that the agency could revisit this decision at a later date. In July 2012, EPA officials confirmed that the agency currently has no plans to develop an effluent limitations guideline for stripper wells.\nEPA also has not established effluent limitations guidelines for coalbed methane wells and EPA and state NPDES permit writers currently use their best professional judgment to determine the effluent limits for permits on a case-by-case basis. EPA officials explained that the process of extracting natural gas from coalbed methane formations is fundamentally different from traditional oil and gas development, partly because of the large volume of water that must be removed from the coalbed methane formation prior to production. Given these differences, coalbed methane wells are not included in any of EPA’s current subcategories. EPA announced in 2011 that, based on a multiyear study of the coalbed methane industry, the agency will develop effluent limitations guidelines for produced water discharges from coalbed methane formations. In the course of developing these guidelines, EPA officials told us that they will analyze the economic feasibility of each of the available technologies for disposing of the large volumes of produced water from coalbed methane wells and that EPA plans to issue proposed guidelines in the summer of 2013.\nIn addition to setting effluent limitations guidelines for direct discharges of pollutants to surface waters, CWA requires EPA to develop regulations that establish pretreatment standards. These standards apply when wastewater is sent to a POTW before being discharged to surface waters, and the standards must prevent the discharge of any pollutant that would interfere with, or pass through, the POTW. To date, EPA has not set pretreatment standards specifically for produced water, though there are some general requirements; for example, discharges to POTWs cannot cause the POTW to violate its NPDES permit or interfere with the treatment process. In October 2011, EPA announced its intention to develop pretreatment standards specific to the produced water from shale gas development. EPA officials told us that the agency intends to conduct a survey and use other methods to collect additional data and information to support this rulemaking. Officials expect to publish the first Federal Register notice about the survey by the end of 2012 and to publish a proposed rule in 2014.\nIn addition to CWA’s requirement for NPDES permits for discharges from industrial sites, the 1987 Water Quality Act amended CWA to establish a specific program for regulating stormwater discharges, such as those related to rainstorms, though oil and gas well sites are largely exempt from these requirements. EPA generally requires that facilities get NPDES permits for discharges of stormwater associated with industrial and construction activities, but the Water Quality Act of 1987 specifically exempted oil and gas production sites from permit requirements for stormwater discharges, as long as the stormwater was not contaminated by, for example, raw materials or waste products. exemption and EPA’s implementing regulations, oil and gas well sites are only required to get NPDES permits for stormwater discharges if the facility has had a discharge of contaminated stormwater that includes a reportable quantity of a pollutant or contributes to the violation of a water quality standard. The 2005 Energy Policy Act expanded the language of the exemption to include construction activities at oil and gas well sites, meaning that uncontaminated stormwater discharges from oil and gas construction sites also do not require NPDES permits. So while other industries must generally obtain NPDES permits for construction activities that disturb an acre or more of land, operators of oil and gas well sites are generally not required to do so.\nThe 1987 Water Quality Act also exempted oil and gas processing, treatment, and transmission facilities from permit requirements for stormwater discharges.\nNational Response Center, which is managed by the U.S. Coast Guard and serves as the sole federal point of contact for reporting oil and chemical spills in the United States. Oil discharges must be reported if they cause a film or sheen on the surface of the water or shorelines or if they violate water quality standards. The National Response Center shares information about spills with other agencies, including EPA Regional offices, which allows EPA to follow up on reported spills, as appropriate.\nCWA also authorized spill prevention and response planning requirements as promulgated in the Spill Prevention, Control, and Countermeasure (SPCC) rule. Facilities that are subject to SPCC rules are required to prepare and implement a plan describing, among other things, how they will control, contain, clean up, and mitigate the effects of any oil discharges that occur. Onshore oil and gas well sites, among others, are subject to this rule if they have total aboveground oil storage capacity greater than 1,320 gallons and could reasonably be expected, based on location, to discharge oil into U.S. navigable waters or on adjoining shorelines. The amount of oil storage capacity at oil and gas well sites tends to vary based on whether the well is being drilled, hydraulically fractured, or has entered production. For example, during drilling at well sites located near these waters, operators generally have to comply with SPCC requirements if fuel tanks for the drilling rig exceed the 1,320 gallon threshold. According to EPA officials, nearly all drill rigs have fuel tanks larger than 1,320 gallons, and so most well sites are subject to the SPCC rule during drilling if they are near these waters. Oil and gas well sites that are subject to the SPCC rule were required to comply by November 2011 or before starting operations.\nIn accordance with CWA, EPA directly administers the SPCC program rather than delegating authority to states. EPA regulations generally do not require facilities to report SPCC information to EPA, including whether or not they are regulated. As a result, EPA does not know the universe of SPCC-regulated facilities. To ensure that regulated facilities are meeting SPCC requirements, EPA Regional personnel may inspect these facilities to evaluate their compliance. EPA officials said that some of these inspections were conducted as follow-up after spills were reported and that most inspections are conducted during the production phase, since drilling and hydraulic fracturing are of much shorter durations, making it difficult for inspectors to visit these sites during those times. According to EPA officials, Regional personnel inspected 120 oil and gas well sites nationwide in fiscal year 2011 and found noncompliance at 105 of these sites. These violations ranged from paperwork inconsistencies to more serious violations, such as a lack of secondary containment around stored oil or failure to implement an SPCC plan (though EPA officials were unable to specifically quantify the number of more serious violations). EPA officials said that EPA has addressed some of the 105 violations through enforcement actions.\nCWA also provides EPA with authorities to address the discharge of pollutants and to address actual or threatened discharges of oil or hazardous substances in certain circumstances. For example, under one provision, EPA has the authority to address actual or threatened discharges of oil or hazardous substances into U.S. navigable waters or on adjoining shorelines upon a determination that there may be an imminent and substantial threat to the public health or welfare of the United States, by bringing suit or taking other action, including issuing administrative orders that may be necessary to protect public health and welfare. Under another provision, EPA has authority to obtain records and access to facilities, among other things, in order to determine if a person is violating certain CWA requirements. For example, EPA conducted initial investigations in Bradford County, Pennsylvania, following a 2011 spill of hydraulic fracturing and other fluids that entered a stream. Citing its authority under CWA and other laws,from the operator about the incident, including information about the chemicals involved and the environmental effects of the spill. Meanwhile, the Pennsylvania Department of Environmental Protection signed a consent order and agreement with the operator in 2012 that required the operator to pay fines and implement a monitoring plan for the affected stream.\nFor more details about CWA, please see appendix III.\nCAA, a federal law that regulates air pollution from mobile and stationary sources, was enacted to improve and protect the quality of the nation’s air. Under CAA, EPA sets national ambient air quality standards for the six criteria pollutants––ground level ozone, carbon monoxide, particulate matter, sulfur dioxide, nitrogen oxides, and lead––at levels it determines are necessary to protect public health and welfare. States then develop state implementation plans (SIP) to establish how the state will attain air quality standards, through regulation, permits, policies, and other means. States must obtain EPA approval for SIPs; if a SIP is not acceptable, EPA may assume responsibility for implementing and enforcing CAA in that state. CAA also authorizes EPA to regulate emissions of hazardous air pollutants, such as benzene. In addition, under CAA, EPA requires reporting of greenhouse gas emissions from a variety of sources, including oil and gas wells.\nIn accordance with CAA, EPA has progressively implemented more stringent diesel emissions standards to lower the amount of key pollutants from mobile diesel-powered engines since 1984. These standards apply to a variety of on- and off-road diesel-powered engines, including trucks used in the oil and gas industry to move materials to and from well sites and compressors used to drill and hydraulically fracture wells. Diesel exhaust contains nitrogen oxides and particulate matter. Emissions standards may set limits on the amount of pollution a vehicle or engine can emit or establish requirements about how the vehicle or engine must be maintained or operated, and generally apply to new vehicles. For example, the most recent emissions standards for construction equipment began to take effect in 2008 and required a 95 percent reduction in nitrogen oxides and a 90 percent reduction in particulate matter from previous standards. EPA estimates that millions of older mobile sources—including on-road and off-road engines and vehicles—remain in use. It is projected that over time, older sources will be taken out of use and be replaced by the lower-emission vehicles, ultimately reducing emissions from mobile sources.\nNew Source Performance Standards (NSPS) apply to new stationary facilities or modifications to stationary facilities that result in increases in air emissions and focus on criteria air pollutants or their precursors. For the oil and gas industry, the key pollutant is volatile organic compounds, a precursor to ground level ozone formation. Prior to 2012, EPA’s NSPS were unlikely to affect oil and gas well sites because (1) EPA had not promulgated standards directly targeting well sites and (2) to the extent that EPA promulgated standards for equipment that may be located at well sites, the capacity of equipment located at well sites was generally too low to trigger the requirement. For example, in 1987, EPA issued NSPS for storage vessels containing petroleum liquids; however, the standards apply only to tanks above a certain size, and EPA officials said that most storage tanks at oil and gas sites are below the threshold.\nIn April 2012, EPA promulgated NSPS for the oil and natural gas production industry which, when fully phased-in by 2015, will require reductions of volatile organic compound emissions at oil and gas well sites, including wells using hydraulic fracturing.\nSpecifically, these new standards are related to pneumatic controllers, well completions, and certain storage vessels as follows:\nPneumatic controllers. According to EPA, when pneumatic controllers are powered by natural gas, they may release natural gas and volatile organic compounds during normal operations. The new standards set limits for the amount of gas (as a surrogate for volatile organic compound emissions) that new and modified pneumatic controllers can release per hour. EPA’s regulatory impact analysis for the NSPS estimates that about 13,600 new or modified pneumatic controllers will be required to meet the standard annually; EPA also estimates that the oil and gas production sector currently uses about 400,000 pneumatic controllers.\nWell completions for hydraulically fractured natural gas wells. EPA’s NSPS for well completions focus on reducing the venting of volatile organic compounds during flowback after hydraulic fracturing. According to EPA’s regulatory impact analysis, natural gas well completions involving hydraulic fracturing vent approximately 230 times more natural gas and volatile organic compounds than natural gas well completions that do not involve hydraulic fracturing. The regulatory impact analysis attributes these emissions to the practice of routing flowback of fracture fluids and reservoir gas to a surface impoundment (pit) where natural gas and volatile organic compounds escape to the atmosphere. To reduce the release of volatile organic compounds from hydraulically fractured natural gas wells, EPA’s new rule will require operators to use “green completion” techniques to capture and treat flowback emissions so that the captured natural gas can be sold or otherwise used. EPA’s regulatory impact analysis for the rule estimates that more than 9,400 wells will be required to meet the new standard annually.\nStorage vessels. Storage vessels are used at well sites (and in other parts of the oil and gas industry) to store crude oil, condensate, and produced water. These vessels emit gas and volatile organic compounds when they are being filled or emptied and in association with changes of temperature. EPA’s NSPS rule will require storage vessels that emit more than 6 tons per year of volatile organic compounds to reduce these emissions by at least 95 percent. EPA’s regulatory impact analysis for the rule estimates that approximately 300 new storage vessels used by the oil and gas industry will be required to meet the new standards annually. EPA officials said they anticipate that most of these storage vessels will be located at well sites.\nEPA also regulates hazardous air pollutants emitted by stationary sources. In accordance with the 1990 amendments to CAA, EPA does this by identifying categories of industrial sources of hazardous air pollutants and requiring those sources to comply with emissions standards, such as by installing controls or changing production practices. These National Emission Standards for Hazardous Air Pollutants (NESHAP) for each industrial source category include standards for major sources, which are defined as sources with the potential to emit 10 tons or more per year of a hazardous air pollutant or 25 tons or more per year of a combination of pollutants, as well as for area sources, which are sources of hazardous air pollutants that are not defined as major sources. Generally, EPA or state regulators can aggregate emissions from related or nearby equipment to determine whether the unit or facility should be regulated as a major source. However, in determining whether the oil or gas well is a major source of hazardous air pollutants, CAA expressly prohibits aggregating emissions from oil and gas wells (with their associated equipment) and emissions from pipeline compressors or pumping stations.\nEPA initially promulgated a NESHAP for oil and natural gas production facilities for major sources in 1999 and promulgated amendments in April 2012. NESHAPs generally identify emissions points that may be present at facilities within each industrial source category. The source category for oil and natural gas production facilities includes oil and gas well sites and other oil and gas facilities, such as pipeline gathering stations and natural gas processing plants. The NESHAP for the oil and natural gas production facilities major source category includes emissions points (or sources) that may or may not normally be found at well sites at sizes that would tend to meet the major source threshold. EPA officials in each of the four Regions we contacted were unaware of any specific examples of oil and natural gas wells being regulated as major sources of hazardous air pollutants before the April 2012 amendments. These amendments, however, changed a key definition used to determine whether a facility (such as a well site) is a major source. Specifically, EPA modified the definition of the term “associated equipment” such that emissions from all storage vessels and glycol dehydrators (used to remove water from gas) at a facility will be counted toward determining whether a facility is a major source. EPA’s regulatory impact analysis and other technical support documents for the April 2012 amendments did not estimate how many oil and natural gas well sites would be considered major sources under the new definition.\nEPA also promulgated a NESHAP for oil and natural gas production facilities for area sources in 2007. The 2007 area source rule addresses emissions from one emissions point, triethylene glycol dehydrators, which are used to remove water from gas. Triethylene glycol dehydrators can be located at oil and gas well sites or other oil and gas facilities, such as natural gas processing plants. Area sources are required to notify EPA that they are subject to the rule, but EPA does not track whether the facilities providing notification are well sites or other oil and natural gas facilities, so it is difficult to determine to what extent oil and gas well sites are subject to the area source NESHAP.\nIn addition to specific programs for regulating hazardous air pollutants, CAA establishes that operators of stationary sources that produce, process, store, or handle listed or extremely hazardous substances have a general duty to identify hazards that may result from accidental releases, take steps needed to prevent such releases, and minimize the consequences of such releases when they occur. Methane is one of many hazardous substances of concern due to their flammable properties. Some EPA Regional officials said that they use infrared video cameras to conduct inspections to identify leaks of methane from storage tanks or other equipment at well sites. For example, EPA Region 6 officials said they have conducted 45 inspections at well sites from July 2010 to July 2012 and issued 10 administrative orders related to violations of the CAA general duty clause. said that all well sites are required to comply with the general duty clause but that EPA prioritizes and selects sites for inspections based on risk.\nEPA Region 6 includes the states of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas.\nCAA also requires EPA to publish regulations and guidance for chemical accident prevention at facilities using substances that pose the greatest risk of harm from accidental releases; the regulatory program is known as the Risk Management Program. The extent to which a facility is subject to the Risk Management Program depends on the regulated substances present at the facility and their quantities, among other things. EPA’s list of regulated substances and their thresholds for the Risk Management Program was initially established in 1994 and has been revised several times. The regulated chemicals that may be present at oil and gas well sites include components of natural gas (e.g., butane, propane, methane, and ethane). However, a 1998 regulatory determination from EPA provided an exemption for naturally-occurring hydrocarbon mixtures (i.e., crude oil, natural gas, condensate, and produced water) prior to entry into a natural gas processing plant or petroleum refinery; EPA explained at the time that these chemicals do not warrant regulation and that the general duty clause would apply in certain risky situations. Since naturally-occurring hydrocarbons at well sites generally have not entered a processing facility, they are not included in the threshold determination of whether the well site should be subject to the Risk Management Program. EPA officials said that generally, unless other flammable or toxic regulated substances were brought to the site, well sites would not trip the threshold quantities for the risk management regulations. In September 2011, the U.S. Chemical Safety and Hazard Investigation Board (Chemical Safety Board) released a report describing 26 incidents involving fatalities or injuries related to oil and gas storage tanks located at well sites from 1983 through 2010. The report found that these accidents occurred when the victims—all young adults—gathered at rural unmanned oil and gas storage sites lacking fencing and warning signs and concluded that such sites pose a public safety risk. The report also noted that exploration and production storage tanks are exempt from the Risk Management Program requirements of CAA and recommended that EPA publish a safety alert to owners and operators of exploration and production facilities with flammable storage tanks advising them of their CAA general duty clause responsibilities, and encouraging specific measures to reduce these risks. The Chemical Safety Board requested that EPA provide a response stating how EPA will address the recommendation. EPA responded in June 2012, stating its intent to comply with the recommendation.\nAs of 2012, oil and natural gas production facilities are required to report their greenhouse gas emissions to EPA on an annual basis as described in EPA’s greenhouse gas reporting rule. According to EPA documents, oil and gas well sites may emit greenhouse gases, including methane and carbon dioxide, from sources including: (1) combustion sources, such as engines used on site, which typically burn natural gas or diesel fuel, and (2) indirect sources, such as equipment leaks and venting.greenhouse gas reporting rule requires oil and gas production facilities (defined in regulation as all wells in a single basin that are under common ownership or control) that emit more than 25,000 metric tons of carbon dioxide equivalent at the basin level to report their annual emissions of carbon dioxide, methane, and nitrous oxide from equipment leaks and venting, gas flaring, and stationary and portable combustion. EPA documents estimate that emissions from approximately 467,000 onshore wells are covered under the rule.\nFor more details about CAA, please see appendix IV.\nRCRA, passed in 1976, established EPA’s authority to regulate the generation, transportation, treatment, storage, and disposal of hazardous wastes. Subsequently, the Solid Waste Disposal Act Amendments of 1980 created a separate process by which oil and gas exploration and production wastes, including those originating within a well, would not be regulated as hazardous unless EPA conducted a study of wastes associated with oil and gas development and then determined that such wastes warranted regulation as hazardous waste, followed by congressional approval of the regulations. EPA conducted the study and, in 1988, issued a determination that it was not warranted to regulate oil and gas exploration and production wastes as hazardous. Based on this EPA determination, drilling fluids, produced water, and other wastes associated with the exploration, development, or production of oil or gas are not regulated as hazardous. According to EPA guidance issued in 2002, these exempt wastes include wastes that come from within the well, as well as wastes generated from field operations. Conversely, wastes generated from other activities at well sites may be regulated as hazardous. For example, discarded unused hydraulic fracturing fluids and painting wastes, among others, may be present at well sites and are “non-exempt,” and could be regulated as hazardous, depending on the specific characteristics of the wastes. Facilities that generate more than 100 kilograms (220 pounds) of hazardous waste per month are regulated as generators of hazardous waste and, among other things, are required to have an EPA identification number and to use the RCRA manifest system for tracking hazardous waste. Facilities generating smaller quantities of hazardous waste are not subject to these requirements. EPA headquarters officials said they do not have data on how many well sites may be hazardous waste generators, but that states may have more information about quantities of hazardous wastes at well sites. As such, we asked state officials responsible for waste programs whether they were aware of well sites being classified as small-quantity hazardous waste generators, and officials in all six states we reviewed indicated that they were unaware of well sites having sufficient quantities of hazardous wastes to be subject to those regulations.\nIn September 2010, the Natural Resources Defense Council submitted a petition to EPA requesting that the agency regulate waste associated with oil and gas exploration and production as hazardous. The petition asserts that EPA should revisit the 1988 determination not to regulate these wastes as hazardous because, among other things, EPA’s underlying assumptions concerning the availability of alternative disposal practices, the adequacy of state regulations, and the potential for economic harm to the oil industry are no longer valid. According to EPA officials, the agency is currently reviewing the information provided in the petition but does not have a time frame for responding.\nRCRA also authorizes EPA to issue administrative orders, among other things, in cases where handling, treatment, or storage of hazardous or solid waste may present an imminent and substantial endangerment to health or the environment. EPA has used RCRA’s imminent and substantial endangerment authorities related to oil and gas well sites. For example, EPA Region 8 issued RCRA imminent and substantial endangerment orders to operators in Wyoming after discovering that pits near oil production sites were covered with oil and posed a hazard to birds.\nFor more details about RCRA, please see appendix V.\nCongress passed CERCLA in 1980 to protect public health and the environment by addressing the cleanup of hazardous substance releases. CERCLA establishes a system governing the reporting and cleanup of releases of hazardous substances and provides the federal government the authority to respond to actual and threatened releases of hazardous substances, pollutants, and contaminants that may endanger public health and the environment. CERCLA requires operators of oil and gas sites to report certain releases of hazardous substances and gives EPA authority to respond to certain releases but excludes releases of petroleum (e.g., crude oil and other petroleum products) from these provisions. As previously discussed, releases of petroleum products are covered by CWA if the release threatens U.S. navigable waters or adjoining shorelines. EPA officials identified some instances of petroleum spills in dry areas that did not reach surface waters and explained that EPA had no role related to the investigation or cleanup of these incidents. We identified regulatory provisions in five of six states requiring cleanup of oil spills even if they do not reach surface waters.\nFor hazardous substances, CERCLA has two key elements relevant for the unconventional oil and gas industry: release reporting and EPA’s investigative and response authority. Similar to the requirements to report oil spills under CWA, CERCLA requires operators to report releases of hazardous substances above reportable quantities to the National Response Center. The National Response Center shares information about spills with other agencies, including EPA Regional offices, which allows EPA the opportunity to follow up on reported spills. EPA also has investigative and response authority under CERCLA, including provisions allowing EPA broad access to information and the authority to enter property to conduct an investigation or a removal of contaminated material. EPA has the following authorities, among others: Investigative. EPA may conduct investigations—including activities such as monitoring, surveying, and testing—in response to actual or threatened releases of hazardous substances or pollutants or contaminants. EPA can also require persons to provide information about alleged releases or threat of release. EPA officials described several instances in which the agency used CERCLA’s investigative and information gathering authorities relating to alleged hazardous substance releases from oil and gas well sites. For example, EPA used CERCLA authority to investigate private water well contamination potentially related to nearby shale gas well sites in Dimock, Pennsylvania. In addition, EPA is currently using the same authority to investigate private water well contamination potentially related to tight sandstone well sites in Pavillion, Wyoming.\nResponse. EPA has the authority to respond to releases of hazardous substances itself and to issue administrative orders requiring a company potentially responsible for a release of hazardous substances, which may pose an imminent and substantial endangerment, to take response actions, as well as to seek relief in a federal court. EPA officials could not provide a recent example where the agency used this authority to issue an administrative order at a well site, but EPA used the response authority to conduct sampling and to provide temporary drinking water to residents with contaminated wells in Dimock, Pennsylvania.\nFor more details about CERCLA, please see appendix VI.\nAmong other things, EPCRA provides individuals and their communities with access to information regarding storage or release of certain chemicals in their communities. Two provisions of EPCRA—release notification and chemical storage reporting—apply to oil and gas well sites. The release notification provisions require companies that produce, use, or store certain chemicals to notify state and local emergency planning authorities of certain releases that would affect the community. Spills that are strictly on-site would not have to be reported under EPCRA but may still have to be reported to the National Response Center under provisions of CWA or CERCLA. In addition, companies would have to comply with EPCRA’s chemical storage reporting provisions, which require facilities storing or using hazardous or extremely hazardous chemicals over certain thresholds to submit an annual inventory report including detailed chemical information to state and local emergency planning authorities and the local fire department. When asked whether oil and gas well sites would commonly trigger EPCRA’s release notification and chemical storage reporting requirements, EPA officials said these requirements could be triggered at every well site.\nEPCRA also established the Toxics Release Inventory (TRI)––a publicly available database containing information about chemical releases from more than 20,000 industrial facilities––but EPA regulations for the TRI do not require oil and gas well sites to report to TRI. Specifically, these provisions of EPCRA generally require certain facilities that manufacture, process, or otherwise use any of more than 600 listed chemicals to report annually to EPA and their respective states on chemicals used above threshold quantities; the amounts released to the environment; and whether they were released into the air, water, or soil. EPCRA specified certain industries subject to the reporting requirement—which did not include oil and gas exploration and development—and also provided authority for EPA to add or delete industries going forward. EPA issued regulations to implement the TRI in 1988 and chose not to change the list of industries subject to the provision at that time. In 1997, EPA promulgated a rule adding seven industry groups to the list of industries required to report releases to the TRI, including coal mining and electrical utilities that combust coal and/or oil. In developing the 1997 rule, EPA considered including oil and gas exploration and production but did not do so because, according to EPA’s notice in the Federal Register for the final rule, there were concerns about how “facility” would be defined for this industry. At that time, EPA’s stated rationale was that the oil and gas exploration and production industry is unique in that it may have related activities over a large geographic area and, while together these activities may involved the management of chemicals regulated by the TRI program, taken at the smallest unit—an individual well—the chemical and other thresholds are unlikely to be met. According to EPA officials, EPA is in the preproposal stage of developing a new rule to add additional industrial sectors into the TRI program but is not planning to include the oil and gas exploration and production industry. EPA officials said that adding oil and gas well sites would likely provide an incomplete picture of the chemical uses and releases at these sites and would, therefore, be of limited utility in providing information to communities.\nFor more details about EPCRA, please see appendix VII.\nTSCA authorizes EPA to regulate the manufacture, processing, use, distribution in commerce, and disposal of chemical substances and mixtures. TSCA provides EPA with several authorities by which EPA may assess and manage chemical risks, including the authority to (1) collect information about chemical substances, (2) require companies to conduct testing on chemical substances, and (3) take action to protect adequately against unreasonable risks. TSCA allows chemical companies to assert confidentiality claims on information provided to EPA; if the information provided meets certain criteria, EPA must protect it from disclosure to the public.\nEPA maintains a list of chemicals that are or have been manufactured or processed in the United States, called the TSCA inventory. Of the over 84,000 chemicals currently in the TSCA inventory, about 62,000 were already in commerce when EPA began reviewing chemicals in 1979. Since then, EPA has reviewed more than 45,000 new chemicals, of which approximately 20,000 were added to the inventory after chemical companies began manufacturing them. As part of EPA’s Study on the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources, EPA is currently analyzing information provided by nine hydraulic fracturing service companies, including a list of chemicals used in hydraulic fracturing operations. EPA officials said that they expect most of the chemicals disclosed by the service companies to appear on the TSCA inventory list, provided that chemicals are not classified solely as pesticides. EPA officials do not expect to be able to compare the list of chemicals provided by the nine hydraulic fracturing service companies to the TSCA inventory until the release of a draft report of the Study on the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources for peer review, expected in late 2014.\nIn August 2011, EPA received a petition from the environmental group Earthjustice and 114 others asking the agency to exercise TSCA authorities and issue rules to require manufacturers and processors of chemicals used in oil and gas exploration and production to develop and provide certain information to EPA. According to the petition, EPA and the public currently lack adequate information about the health and environmental effects of chemicals used in oil and gas exploration and production, and EPA should exercise its TSCA authorities to ensure that chemicals used in oil and gas exploration and production do not present an unreasonable risk of harm to health and the environment. In a letter to the petitioners, EPA granted the petition in part, stating there is value in beginning a rulemaking process under TSCA to obtain data on chemical substances used in hydraulic fracturing. EPA’s letter also stated that the TSCA proposal would focus on providing an aggregate picture of the chemical substances used in hydraulic fracturing, which would complement and not duplicate well-by-well disclosure programs that exist in some states. The letter also indicates that the agency is drafting an Advance Notice of Proposed Rulemaking on this issue. As of August 31, 2012, EPA has not released a publication date for this proposed rulemaking. EPA also intends to convene a stakeholder process to gather additional information for use in developing a proposed rule.\nFor more details about TSCA, please see appendix VIII.\nFIFRA, as amended, mandates that EPA administer pesticide registration requirements and authorizes EPA to regulate the use, sale, and distribution of pesticides to protect human health and preserve the environment. FIFRA requires that EPA register new pesticides; pesticide registration is a very specific process that is not valid for all uses of a particular chemical. Instead, each registration describes the chemical and its intended use (i.e., the crops/sites on which it may be applied), and each use must be supported by research data. According to EPA officials, some pesticides registered under FIFRA are used in hydraulic fracturing, and EPA has approved registrations of some pesticides for this purpose. According to a report about shale gas development by the Ground Water Protection Council, operators may use pesticides to kill bacteria or other organisms that may interfere with the hydraulic fracturing process. For example, glutaraldehyde may be used by operators to eliminate bacteria that produce byproducts that cause corrosion inside the well and was reregistered for this purpose by EPA in 2007.", "As discussed above, in six of the eight federal environmental and public health laws identified, there are exemptions or limitations in regulatory coverage related to the oil and gas exploration and production industry (there are two exemptions related to CAA). All of these exemptions are related to programs designed to prevent pollution (see table 2). For example, under CWA, EPA generally requires permits for stormwater discharges at construction sites, which prevents sediment from entering nearby streams. However, the Water Quality Act of 1987 and Energy Policy Act of 2005 largely exempted the oil and gas exploration and production sector from these stormwater permitting requirements. Four of the exemptions are statutory (related to SDWA, CWA, CAA, and CERCLA), and three are related to regulatory decisions made by EPA (related to CAA, RCRA, and EPCRA). States may have regulatory programs related to some of these exemptions or limitations in federal regulatory coverage. For example, although oil and gas exploration and production wastes are not regulated under RCRA as hazardous, which reduces the federal role in management of such wastes, they are nonetheless solid wastes. State regulations may govern management of solid waste, and certain EPA regulations address minimum requirements for how solid waste disposal facilities should be designed and operated.\nThe exemptions do not limit the authorities EPA has under federal environmental and public health laws to respond to environmental contamination. Table 3 lists EPA authorities that may be applicable when conditions or events at a well site present particular risk to the environment or human health. As noted throughout this report, EPA has used several of these authorities at oil and gas wells. For example, as discussed above, EPA Region 8 has used RCRA’s imminent and substantial endangerment authorities to issue RCRA imminent and substantial endangerment orders to operators in Wyoming after discovering that pits near oil production sites were covered with oil and posed a hazard to birds. Similarly, as discussed above, EPA is using CERCLA’s response authority to investigate private water well contamination in Pavillion, Wyoming.\nWhether an authority is available depends on requisite conditions being met in a given instance. EPA officials said that, in some instances, response authorities of multiple federal environmental laws could be used to address a threat to public health or the environment. In 2001, EPA and the Department of Justice developed a memo advocating that officials consider the specifics of a situation and use the most appropriate authority. See appendixes II through VI for a more detailed discussion of these authorities.", "The six states in our review implement additional requirements governing a number of activities associated with oil and gas development. One of the states—Pennsylvania—is also part of the Delaware River Basin Commission—a regional commission that implements additional requirements. All six states have updated some aspects of their requirements in recent years.", "In addition to implementing and enforcing certain aspects of federal requirements with EPA approval and oversight, the six states in our review implement additional requirements governing a number of activities associated with oil and gas development. State requirements often do not explicitly differentiate between conventional and unconventional development but, in recent years, states have begun to promulgate some requirements that apply specifically to unconventional development. States have regulatory requirements related to a variety of activities involved in developing unconventional reservoirs, including siting and site preparation; drilling, casing, and cementing; hydraulic fracturing; well plugging; site reclamation; waste management and disposal; and managing air emissions. Table 4 compares selected state requirements and related federal environmental and public health requirements; a more comprehensive table is available in appendix X. Several studies noted that development practices and state requirements may vary based on a number of factors, including geology, climate, and the type of resource being developed. We did not assess whether all requirements are appropriate for all states as part of this review.\nAll six states we reviewed have state requirements regarding site selection and preparation, though the specifics of their requirements vary. Specifically, states have requirements for baseline testing of water wells, required setbacks from water sources, and stormwater management, among others. For example, three of the six states—Colorado, Ohio, and Pennsylvania—have requirements that encourage or require operators to conduct baseline water testing in certain cases. Colorado requires testing of certain nearby wells when a proposed coalbed methane well is located within a quarter-mile of a conventional gas well or a plugged and abandoned well. In Ohio, baseline water well sampling is required within 1,500 feet of any proposed horizontal well or within 300 feet of any kind of well proposed in an urban area. Pennsylvania does not require baseline testing, but state law presumes operators to be liable for any pollution of water wells within 2,500 feet of an unconventional well that occurs within 12 months of drilling activities, including hydraulic fracturing. Operators in Pennsylvania can defend against this presumption if they have predrilling tests conducted by an independent certified laboratory showing that the pollution predated drilling. State regulators in Pennsylvania said that nearly all companies in Pennsylvania conduct baseline testing of nearby water wells, in many cases up to 4,000 feet from the drilling site.\nFive of the six states—Colorado, North Dakota, Ohio, Pennsylvania, and Wyoming—we reviewed have requirements related to setbacks for well sites or equipment from certain water sources. For example, in Ohio, oil and gas wells and associated storage tanks generally may not be within 50 feet of a stream, river, or other body of water. In Pennsylvania, unconventional wells may not be drilled within 500 feet of water wells without written owner consent unless the operator cannot otherwise access its mineral rights and demonstrates that additional protective measures will be utilized. In Pennsylvania, there are also setbacks from public water supplies and certain other bodies of water such as springs and wetlands.\nOil and gas operations are generally not subject to certain stormwater permitting requirements under the Clean Water Act, but four of the six states we contacted—Colorado, North Dakota, Pennsylvania, and Wyoming—have their own stormwater permitting requirements. For example, the Wyoming Department of Environmental Quality requires permit coverage for stormwater discharges from all construction activities disturbing 1 or more acres. These permits require the operator to develop a stormwater management program, including best management practices, that can be reviewed by the Wyoming Department of Environmental Quality. In North Dakota, operators must obtain a permit for construction activities that disturb 5 or more acres, and state officials said that nearly all oil and gas drilling projects meet this threshold. This permit also requires the operator to develop a stormwater management program and implement best management practices for managing stormwater, such as using straw bales or dikes to manage water runoff. We did not identify any stormwater permitting requirements for Ohio and Texas, but their state regulations address stormwater in other ways. For example, operators in Ohio are required to comply with the state’s best management practices during construction, such as design guidelines for constructing access roads. Texas regulations prohibit operators from causing or allowing pollution of surface water and encourage operators to implement best management practices to minimize discharges, including discharges of sediment during storm events.\nStates have additional requirements relating to erosion control, site preparation, and surface disturbance minimization. For more details about state siting and site preparation requirements, see appendix IX.\nAll of the six states in our review have requirements related to how wells are to be drilled and casing should be installed and cemented in place, though the specifics of their requirements vary. For example, states have different requirements regarding how deep operators must run surface casing to protect groundwater. In Pennsylvania, operators are required to run surface casing approximately 50 feet below the deepest fresh groundwater or at least 50 feet into consolidated rock, whichever is deeper. Generally, the surface casing may not be set more than 200 feet below the deepest fresh groundwater unless necessary to set the casing in consolidated rock. Different casing and cementing requirements apply in Pennsylvania when drilling through coal formations, which state regulators said is common in the southwest part of the state. In Texas, operators are required to run surface casing to protect all usable quality water, as defined by the Texas Commission on Environmental Quality. The depth of the surface casing may be specified in a letter by the commission or in rules specific to a particular oil or gas field, which account for local considerations. In no case may surface casing be set deeper than 200 feet below the specified depth without prior approval from the Texas Railroad Commission, the oil and gas regulator in Texas. Operators in Wyoming are generally required to run surface casing to reach a depth below all known or reasonably estimated usable groundwater as defined in regulations and generally 100 to 120 feet below certain permitted water supply wells within a quarter-mile, but certain coalbed methane wells are exempt from these requirements. Until 2012, Ohio did not specify a depth to which surface casing was required to be set but according to state regulators, the depth of the casing used to protect groundwater was dictated through the permitting process, and regulators and operators were generally following the same casing and cementing requirements for unconventional wells as they would for Class II UIC wells. Ohio adopted new regulations effective August 2012 that generally require operators to run surface casing at least 50 feet below the base of the deepest underground source of drinking water or at least 50 feet into bedrock, whichever is deeper.\nAmong the six states we contacted, North Dakota and Ohio are the only states with specific casing and cementing provisions for horizontal wells. However, all six states have some requirements—whether through law, regulation, or the permitting process—that generally require operators to provide regulatory officials with information about the vertical and horizontal drilling paths. For example, an application for a permit to drill a horizontal well in Wyoming must include information about the vertical and horizontal paths of the well, and operators must provide notice to owners within a half-mile of any point on the entire length of the well. In addition, operators must (1) provide notification and obtain approval from the Wyoming Oil and Gas Conservation Commission before beginning horizontal drilling and (2) file a description of the exact path of the well, known as a directional survey, within 30 days of well completion. North Dakota requires a different permit to drill a horizontal well than it does for a vertical well, and the horizontal permit contains information about the horizontal path of the well.\nFor more details about state drilling, casing, and cementing requirements, see appendix IX.\nAll six states we reviewed have requirements for disclosing the chemicals used in hydraulic fracturing, but the specific requirements vary (see table 5). Four states—Colorado, North Dakota, Pennsylvania, and Texas— require disclosure through the website FracFocus, which is a joint project of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission. For example, operators that perform hydraulic fracturing in Texas are required to upload certain information to the website FracFocus within 30 days after completion of the well or 90 days after the drilling operation is completed, whichever is earlier. Information required to be uploaded to FracFocus includes, among other things, the operator’s name; the date of completion of hydraulic fracturing; the well location; the total volume of water used to conduct fracturing; and chemicals used, including their trade names, suppliers, intended use, and concentration. In Ohio, companies have options as to how to disclose information, including through FracFocus. Wyoming’s chemical disclosure requirements were developed prior to the development of FracFocus, and the state does not require operators to disclose information through the website. Among the six states we contacted, Wyoming is the only state that requires operators to disclose certain chemical information prior to conducting hydraulic fracturing. Specifically, as part of their application for permit to drill, operators are required to submit information on the chemicals proposed to be used during hydraulic fracturing.\nFive of the six states—Colorado, Ohio, Pennsylvania, Texas, and Wyoming—have specific provisions for protecting information on hydraulic fracturing fluids that is claimed as confidential business information or trade secrets. Four of the six states—Colorado, Ohio, Pennsylvania, and Texas—specifically require that the information must be provided to health professionals for diagnosis or treatment and to certain officials responding to a spill or a release. For example, in Texas, if an operator claims that a chemical is subject to trade secret protection, the chemical family or other similar description must generally be provided. Operators in Texas may not withhold information, including trade secrets, about chemicals used during hydraulic fracturing from health professionals or emergency responders who need the information for diagnostic, treatment, or other emergency response purposes, but health professionals and emergency responders must hold the information confidential except as required for sharing with other health professionals, emergency responders, or accredited laboratories for diagnostic or treatment purposes. Texas’ regulations also allow for certain entities—including the owner of the land on which the well is located, an adjacent landowner, and relevant state agencies—to challenge a claim to trade secret protection.\nFive of the six states—Colorado, North Dakota, Ohio, Pennsylvania, and Wyoming—have additional requirements specifically related to hydraulic fracturing. For example, Colorado, North Dakota, Ohio, and Wyoming require operators to continuously monitor certain pressure readings during hydraulic fracturing and to notify the state if pressure exceeds a certain threshold. Ohio also requires the suspension of operations when anticipated pressures are exceeded. North Dakota has mechanical integrity requirements specific to hydraulic fracturing, including requirements for specific types of casing, valves, and other equipment, which vary based on different fracturing scenarios. In addition, Colorado, Ohio, Pennsylvania, and Wyoming require operators to notify state regulators prior to conducting hydraulic fracturing, which provides state regulators the opportunity to conduct inspections during the hydraulic fracturing. Colorado requires notice 48 hours prior to conducting hydraulic fracturing, and Ohio and Pennsylvania require notice 24 hours prior. Wyoming does not require a specific period of notice. In Wyoming, benzene, toluene, ethylbenzene, and xylene (BTEX compounds) and petroleum distillates may only be used for hydraulic fracturing with prior authorization from state oil and gas regulators. Pennsylvania law requires blowout preventers to be used when drilling into an unconventional formation.\nFor more details about state hydraulic fracturing requirements, see appendix IX.\nAll six states in our review have requirements regarding well plugging, such as notifying the state prior to plugging or using specific materials or methods to do so. For example, operators in Colorado must obtain prior approval from state regulators for the plugging method and provide notice of the estimated time and date of plugging. Colorado regulations specify that the material used for plugging must be placed in the well in a manner that permanently prevents migration of oil, gas, water, or other substances out of the formation in which it originated. Cement plugs must be a minimum of 50 feet in length and must extend a minimum of 50 feet above each zone to be protected. After plugging the well, operators must submit reports of plugging and abandonment to the Colorado Oil and Gas Conservation Commission and include information specifying the fluid used to fill the wellbore, information about the cement used, date of work, and depth of plugs. In Pennsylvania, operators must follow (1) specific provisions for well plugging based on whether the well is located in a coal area or noncoal area or (2) an alternate approved method. Prior to plugging a well in an area underlain by a workable coal seam, the oil and gas operator must notify the state and the coal company to permit representatives to be present at the plugging.\nIn addition, all six states have programs to plug wells that were improperly plugged and have been abandoned, though their level of activity varies. For example, state regulators in Texas said that the primary objective of their program, which began in 1983, is to plug abandoned oil and gas wells that are causing pollution or threatening to cause pollution for which a responsible operator does not exist; the responsible operator failed to plug the well; or the responsible operator failed to otherwise bring the wells into compliance. As of 2009, Texas state regulators had plugged 30,000 wells, and approximately 8,000 potentially abandoned wells remained throughout the state. Officials stated, however, that many of these abandoned wells may be re-used for development of previously overlooked reservoirs. State regulators in North Dakota said that the number of abandoned wells in the state is very low compared with other states because the state was fairly late to oil and gas development—with major development starting in the 1950s—and that the state had a good tracking system in place during the early days of development. State regulators in North Dakota used funds from its well plugging program to plug two wells in the last year.\nFor more details about state well plugging requirements, see appendix IX.\nAll six states in our review have requirements for site reclamation, though the extent of the requirements varies. Five states—Colorado, Ohio, North Dakota, Pennsylvania, and Wyoming—have requirements both for backfilling soil and for revegetating areas. For example, in Colorado, final reclamation must generally be complete within 3 months of plugging a well on crop land and within 12 months on noncrop land. Reclamation in Colorado involves returning segregated soil horizons to their original relative positions; returning crop land to its original contour; as near as practicable, returning noncrop land to its original contour to achieve erosion control and long-term stability; and adequately tilling to establish a proper seedbed. In Wyoming, operators must begin reclamation within 1 year of permanent abandonment of a well or last use of a pit and in accordance with the landowner’s reasonable requests, or to resemble the original vegetation and contour of adjoining lands. In addition, where practical, topsoil must be stockpiled during construction for use in reclamation. Texas has requirements for contouring soil, but we did not identify requirements for revegetating the area.\nFor more details about state site reclamation requirements, see appendix IX.\nAll six states in our review have some requirements regarding waste management and disposal, though specific requirements and practices vary across and within states. For example, regulators in Colorado said that the method of waste disposal varies based on the geological formation being exploited and the location of the production well. In some parts of the state, they said that the produced water generated is very salty and is therefore generally disposed of in a Class II UIC well. In contrast, in the Raton Basin—a coalbed methane formation near the border with New Mexico—the produced water is of sufficiently good quality that much of it is discharged to surface waters, according to state regulators.\nAll six states we reviewed have requirements regarding the use of pits for storage of produced water, drill cuttings, and other substances. For example, in North Dakota, a lined pit may be temporarily used to retain solids or fluids generated during activities including well completion, but the contents of the pits must be removed within 72 hours after operations have ceased and must be disposed of at an authorized facility. Pennsylvania requires that certain pits be lined and requires the liners to meet certain permeability, strength, thickness, and design standards; the pit itself must also be constructed so that it will not tear the liner and can bear the weight of the pit contents. In addition, Colorado and Wyoming require pitless drilling systems (tanks) to be used in certain circumstances. For example, Colorado requires pitless drilling systems for produced water from new oil and gas wells within a specified distance of certain drinking water supply areas, and Wyoming requires pitless drilling systems in areas where groundwater is less than 20 feet below the surface.\nUnderground injection of produced water in Class II UIC wells is a common method of disposal of produced water in five of the six states we reviewed. For example, state regulators in Ohio said that there are 177 Class II UIC disposal wells currently in operation, and 98 percent of the fluid waste from oil and gas wells in Ohio is disposed of in these Class II UIC wells. As noted previously, five out of the six states we reviewed have primary responsibility for regulating injection wells, whereas EPA implements the program in Pennsylvania. The five states in our review that have been granted primacy for their Class II UIC programs obtained it under the alternative provisions in which they demonstrate to EPA that their program is effective in preventing endangerment of underground sources of drinking water, in lieu of adopting all Class II UIC requirements in EPA regulations. All states have requirements for Class II UIC wells relating to casing and cementing, operating pressure, mechanical integrity testing, well plugging, and the monitoring and reporting of certain information, among other requirements. For example, North Dakota requires the operators of all new Class II UIC wells to demonstrate the mechanical integrity of the well and requires existing Class II UIC wells to demonstrate continued mechanical integrity at least once every 5 years. In North Dakota, mechanical integrity is demonstrated by showing that there is no significant leak in, for example, the casing; and there is no significant fluid movement into an underground source of drinking water through vertical channels adjacent to the injection well. Texas also requires operators to demonstrate the mechanical integrity of Class II UIC wells generally by conducting specified pressure tests before commencing injection, after conducting maintenance, and every 5 years. With regard to monitoring and reporting, Ohio requires operators to monitor injection pressures and volumes for each disposal well on a daily basis and to report annually on maximum and monthly average pressure and volumes.\nAside from underground injection, there are several other options for disposal of produced water, though the specifics vary across and within states. For example, regulatory agencies issue NPDES permits in Colorado, Texas, and Wyoming for direct discharges to surface waters in certain cases; in doing so, the states must apply, where applicable, EPA’s effluent limitations guidelines discussed above. According to state regulators in Wyoming, the state has about 1,000 currently active permits for discharges of produced water from coalbed methane formations and 500 permits for produced water from conventional formations. In contrast, state regulators in North Dakota said that there are no direct surface discharges of produced water in their state because the produced water is too salty.\nSome states, such as Colorado and Pennsylvania, also have commercial facilities, which treat produced water before discharging it to surface waters. In addition, disposal to a POTW is an option in Ohio and Pennsylvania, but there have been some recent efforts to restrict such disposal. One concern regarding disposal to POTWs is that these facilities may not have the technology necessary to remove key pollutants, including total dissolved solids, from the waste stream. In 2010, Ohio’s Environmental Protection Agency (OEPA) approved a permit modification that allowed a POTW in Warren, Ohio, to accept 100,000 gallons per day of produced water with concentrations of less than 50,000 milligrams per liter of total dissolved solids, which was then diluted and discharged to surface waters. However, the Director of OEPA subsequently issued a determination in 2011 that the permit had been unlawfully issued because Ohio law does not generally permit the disposal of produced water through a POTW. In response, OEPA did not reauthorize the POTW to accept produced water when its NPDES permit came up for renewal in 2012. In July 2012, however, OEPA’s decision was reversed by an administrative review commission, which held that the matter was outside of OEPA’s jurisdiction. Instead, the power to prohibit disposal to a POTW lies with the Ohio Department of Natural Resources. Accordingly, the commission removed the NPDES permit’s prohibition on accepting produced water. Prior to 2011, POTWs in Pennsylvania also accepted produced water from oil and gas well sites. The Pennsylvania Department of Environmental Protection issued administrative orders to POTWs in Pennsylvania requiring, among other things, that the POTWs restrict the volume of oil and gas wastewater they were accepting, evaluate the impacts of oil and gas wastewaters on their treatment process, and submit certain samples of oil and gas wastewater accepted for treatment. In addition, the state of Pennsylvania requested that operators of Marcellus shale gas wells stop delivering produced water to POTWs and began revising the POTWs’ NPDES permits. State officials later reported that POTWs in Pennsylvania were no longer accepting produced water from the Marcellus shale, and EPA Regional officials said that they believe that POTWs are accepting less produced water.\nIn addition to permanent disposal of produced water, all six states in our review allow for recycling or other reuses of produced water. For example, according to a 2011 report, over 50 percent of the produced water in Colorado is recycled. In addition, state regulators in Pennsylvania said that the best option for dealing with produced water in the state is recycling, and the Department of Environmental Protection can track what percentage of recycled water was used in hydraulic fracturing based on information required on well completion reports. Approximately 90 percent of produced water in Pennsylvania is recycled, according to state regulators. The Texas Railroad Commission has approved several recycling projects in the Barnett Shale to reduce the amount of fresh water used in development activities there. Four of the six states—Colorado, North Dakota, Ohio, and Wyoming—also allow operators to reuse certain types of fluid waste for road applications. For example, in Ohio, produced water, excluding flowback from hydraulic fracturing, may be used for dust and ice suppression on roads with the approval of local governments; approximately 1 percent of produced water is used in this way. In Wyoming, road and land applications may be permitted as reuses of produced water. North Dakota allows road but not land application of produced water.\nRegulatory agencies in all six states implement requirements for the disposal of waste such as drill cuttings. For example, in Colorado, drill cuttings may be buried in pits at the well site, an activity which is regulated by the Colorado Oil and Gas Conservation Commission. Drill cuttings taken off site for disposal at a commercial waste facility must comply with the regulations of the state’s Department of Public Health and Environment that govern those facilities. Texas allows drill cuttings to be landfarmed on the well site where they were generated with the written permission of the surface owner of the site if they were obtained using drilling fluids with a chloride concentration of 3,000 milligrams per liter or less. Texas allows on-site burial of drill cuttings that were obtained using drilling fluids with a chloride concentration in excess of 3,000 milligrams per liter. In North Dakota, operators frequently bury drill cuttings on-site where the North Dakota Industrial Commission’s Oil and Gas Division has authority, but, in some cases, the drill cuttings may be disposed of at a landfill under the jurisdiction of the Department of Health due to shallow groundwater or permeable subsoil.\nAs discussed earlier in this report, officials in the six states we reviewed were not aware of any oil or gas well sites that would be regulated as small-quantity generators of hazardous waste under RCRA. Pursuant to RCRA, regulation of waste that is not considered hazardous is largely a state responsibility. Some states have special categories of waste and associated additional requirements that apply to industrial wastes generally, or oil and gas wastes specifically. For example, waste from crude oil and natural gas exploration and production in North Dakota is called special waste. Special waste landfills must be permitted and comply with specific design standards. Currently, there are four special waste landfills in North Dakota with another five proposed special waste landfills at the beginning stages of the permitting process. State regulators said that special waste consists mostly of drill cuttings but can also include other things such as contaminated soil. In Pennsylvania, oil and gas waste falls into a category of waste called residual waste that applies to, among other things, certain wastes from industrial, mining, or agricultural operations. Residual waste disposal must be permitted and is subject to processing and storage rules.\nAll six states in our review have requirements for managing and disposing of wastes, such as oilfield equipment, drilling solids, and produced water that have been exposed to or contaminated with naturally-occurring radioactive material (NORM) or technologically-enhanced NORM.occurs naturally in some geologic formations that also contain oil or gas and when NORM is brought to the surface during drilling and production, it remains in drill cuttings and produced water and, under certain conditions, creates scales or deposits on pipes or other oilfield equipment. Officials at the Colorado Department of Public Health and Environment said that they set tiers for how to manage materials that contain NORM based on their level of radioactivity. In addition, they said that the department is working with the Colorado Oil and Gas Conservation Commission to require operators to perform certain tests on produced water before allowing produced water to be used for road application. Texas officials said that the state requires operators to identify NORM-contaminated equipment with the letters “NORM” by securely attaching a clearly visible waterproof tag or marking with a legible waterproof paint or ink. In addition, Texas requires operators to dispose of oil and gas NORM waste by methods that are specifically authorized by rule or specifically permitted. State regulators in Wyoming said that a lot of NPDES permits for direct discharges to surface waters have limits on radioactivity that would probably lead the operator to dispose of produced water contaminated with NORM in a Class II UIC well.\nFor more details about states waste management and disposal requirements, see appendix IX.\nFive of the six states we reviewed have permitting or registration requirements for managing air emissions from oil and gas production sites. In addition, all six states have requirements related to venting and flaring of gas and limiting or managing emissions of hydrogen sulfide—a hazardous and deadly gas—at drilling sites.\nFive of the six states we reviewed —Colorado, North Dakota, Ohio, Texas, and Wyoming—have developed permitting or registration requirements that apply to oil and gas development. For example, according to state regulators, the vast majority of production wells in Colorado require air permits. Operators with certain condensate tanks and tank batteries are required to obtain a permit if the tanks have uncontrolled actual emissions of volatile organic compounds greater than or equal to 2 tons per year in areas which are not attaining certain air quality standards (nonattainment areas) or greater than or equal to 5 tons per year in an attainment area. As part of the permit requirements, operators in nonattainment areas must reduce emissions of volatile organic compounds by 90 percent from uncontrolled actual emissions during certain times of the year, and by 70 percent during other times, and reduce emissions by 90 percent for dehydration systems. In Ohio, an operator meeting certain requirements must obtain an air permit that lists each source of emissions; all applicable rules that apply to the sources, including federal and state requirements; operational restrictions; monitoring; recordkeeping; reporting; and testing requirements. Wyoming officials noted that oil and gas facilities are subject to general state permitting requirements but did not identify any permitting requirements specific to air emissions from oil and gas development. In Wyoming, state regulators have worked with industry to achieve voluntary reductions from mobile sources in certain parts of the state that may soon not meet air quality standards for ozone. Specifically, officials at the Wyoming Department of Environmental Quality said that they have asked operators in certain areas to agree to implement voluntary reductions in volatile organic compounds and nitrogen oxides and to install controls on diesel engines on mobile drilling rigs; regulators then include these requirements in the air permit issued to the operator. North Dakota and Texas also have permitting or registration requirements, and Pennsylvania is in the process of developing an inventory for oil and gas emissions information.\nAll six states have some requirements for flaring excess gas encountered during drilling and production, which may otherwise pose safety hazards and contribute to emissions. For example, operators in Pennsylvania who encounter excess gas during drilling or hydraulic fracturing must capture the excess gas, flare it, or divert it away from the drilling rig in a manner that does not create a hazard to public health and safety. According to state regulators in Wyoming, the Oil and Gas Conservation Commission has jurisdiction for flaring prior to production when the primary concern with flaring is safety. For flaring that occurs after production has begun, the Department of Environmental Quality requires 98 percent combustion efficiency.\nAll six states have safety requirements to limit and manage emissions of hydrogen sulfide—a hazardous and deadly gas—at drilling sites. For example, in Texas, operators are subject to detailed requirements in areas where exposure to hydrogen sulfide could exceed a certain threshold if a release occurred, taking into consideration whether the area of potential exposure includes any public areas such as roads. Requirements relate to posting warning signs, using fencing, maintaining protective breathing equipment at the well site, installing a flare line and a suitable method for lighting the flare, and conducting training. In some cases, hydrogen sulfide requirements overlap with flaring requirements. For example, flares used for treating gas containing hydrogen sulfide in North Dakota must be equipped and operated with an automatic ignitor or a continuous burning pilot, which must be maintained in good working order, including flares that are used for emergency purposes only.\nFor more details about state requirements for managing air emissions, see appendix IX.", "One of the states in our review—Pennsylvania—is also part of a regional commission that implements additional requirements governing several aspects of natural gas development. Specifically, the Delaware River Basin Commission is a regional body whose members include the governors of Delaware, New Jersey, New York, Pennsylvania, as well as the U.S. Army Corps of Engineers’ Division Engineer for the North Atlantic Division. The commission regulates water quantity and quality within the basin, which spans approximately 13,500 square miles.\nIn December 2010, the Delaware River Basin Commission published draft Natural Gas Development Regulations, which are currently under consideration for adoption, and the commission will not issue any permits for shale gas wells within the basin until the final regulations have been adopted. The draft regulations propose a number of requirements related to the protection of certain landscapes and waters and how to handle wastewater generated by natural gas development. For example, the proposed regulations require that produced water stored on the well pad be kept in enclosed tanks. In addition, operators of treatment and/or discharge facilities proposing to accept natural gas wastewater would be required to provide the commission with information on the contents of the proposed discharge and submit a study showing that the proposed discharge could be adequately treated. Natural gas well operators would also be required to have natural gas development plans for projects that exceed certain thresholds for acreage or number of wells. According to commission officials, the natural gas development plans would allow the commission to consider the cumulative impacts of development from numerous well pads, associated roads, and pipeline infrastructure, and to minimize and mitigate disturbance on lands most critical to water resources, such as core forests and steep slopes. The plans will also help protect water resources for approximately 15 million people, including residents of New York City and Philadelphia.", "All six states in our review have updated some aspects of their requirements in recent years. Key examples include the following:\nColorado made extensive amendments to its oil and gas regulations in 2008, which included, among other things, restrictions on locating wells near drinking water sources, measures to manage stormwater, and requirements to consult with the Colorado Division of Wildlife in certain cases to minimize adverse impacts on wildlife. According to state officials, these regulatory updates served three primary purposes: (1) address the growing impacts of increased oil and gas development; (2) implement state legislation passed in 2007 directing the Colorado Oil and Gas Conservation Commission to work with the Colorado Department of Public Health and Environment and the Colorado Division of Wildlife to update its regulations; and (3) update existing rules to enhance clarity, respond to new information, and reflect current practices and procedures.\nIn 2012, North Dakota implemented 26 rule changes, including the requirement for operators to drain pits and properly dispose of their contents within 72 hours after well completion, servicing, or plugging operations have ceased. According to state officials, this change was implemented in response to a number of pit overflows that occurred during the spring melt in 2010 and 2011.\nIn 2012, Ohio adopted new oil and gas well construction regulations to implement state legislation passed in 2010. The new regulations include casing and cementing requirements and requirements to disclose the chemicals used in hydraulic fracturing.\nPennsylvania passed legislation in 2012 which, among other things, requires unconventional wells to be sited at greater setback distances from existing buildings and water wells than was previously required for all wells and requires chemical disclosure through FracFocus. In addition, the new legislation increases the distance from which an operator of an unconventional well may be presumed liable in the event of pollution of nearby water wells from 1,000 feet to 2,500 feet.\nThe Texas Commission on Environmental Quality updated its air emissions regulations for oil and gas facilities in 2011, including emissions limitations for nitrogen oxide and volatile organic compounds. Texas officials told us that changes included requirements for operators to install controls on stationary compressor engines and storage tanks. In addition, operators in the Dallas-Fort Worth area have agreed to voluntarily reduce emissions of volatile organic compounds by replacing pneumatic valves with no-bleed or low-bleed valves which helps to address nonattainment issues in the area while also reducing emissions of hazardous air pollutants. Texas also adopted a regulation in December 2011 regarding chemical disclosure requirements in order to implement state legislation passed several months earlier.\nIn 2010, Wyoming updated its chemical disclosure requirements. According to state regulators, operators were always required to provide notification to the Wyoming Oil and Gas Conservation Commission before conducting hydraulic fracturing, but recent regulatory changes clarified these requirements and also added detailed requirements on what information was required to be disclosed.\nIn the last 3 years, Colorado, Ohio, and Pennsylvania volunteered to have parts of their regulations reviewed by the State Review of Oil and Natural Gas Environmental Regulations (STRONGER) program, which is administered by the Ground Water Protection Council and brings together state, industry, and environmental stakeholders to review state oil and gas environmental regulations and make recommendations for improvement. Ohio and Pennsylvania have made regulatory changes that reflect STRONGER’s recommendations. For example, STRONGER completed a review of Pennsylvania’s regulations in September 2010. The review team commended the state for encouraging baseline groundwater testing in the vicinity of wells but also recommended that the state consider whether the testing radius should be expanded to take into account the horizontal portions of fractured wells. As discussed above, in 2012, Pennsylvania passed legislation that increases the distance from which an operator of an unconventional well may be presumed liable in the event of pollution of nearby water wells from 1,000 feet to 2,500 feet.\nState regulators said that the addition was in response to the state’s September 2010 STRONGER review and the Governor’s Marcellus Shale Advisory Commission. State regulators are also considering additional regulatory changes in response to the remaining recommendations of the Governor’s Marcellus Shale Advisory Board.", "Federal land management agencies, including the Bureau of Land Management (BLM), Forest Service, National Park Service, and Fish and Wildlife Service (FWS) manage federal lands for a variety of purposes. Specifically, both the Forest Service and BLM manage their lands for multiple uses, including oil and gas development; recreation; and provision of a sustained yield of renewable resources, such as timber, fish and wildlife, and forage for livestock. By contrast, the Park Service manages its lands to conserve the scenery, natural and historical objects, and wildlife so they remain unimpaired for the enjoyment of present and future generations. Similarly, FWS manages national wildlife refuges for the benefit of current and future generations, seeking to conserve and, where appropriate, restore fish, wildlife, plant resources, and their habitats.\nEach of these agencies imposes additional requirements for oil and gas development on its lands to meet its obligations with respect to its mission. These additional federal requirements are the same for conventional and unconventional oil and gas development. In some cases, the surface rights to a piece of land and the right to extract oil and gas—called mineral rights—are owned by different parties. For example, private mineral rights might underlie lands where the surface is managed by a federal agency. Requirements for developing mineral rights vary based on whether the mineral rights are owned by the federal government or by a private entity.", "Requirements for operators developing federally owned mineral rights are imposed by federal agencies during planning and leasing processes carried out by federal agencies. Operators must also meet specific requirements during several of the activities involved in oil and gas development.\nBLM has primary authority for issuing leases and permits for federal oil and gas resources even in cases when surface lands are managed by other federal agencies or owned by private landowners. The majority of federal oil and gas leases underlie lands managed by BLM or the Forest Service, but there are some federal oil and gas resources available for leasing under lands managed by other federal agencies or private landowners. Altogether, BLM oversees oil and gas development on approximately 700 million subsurface acres.\nPub. L. No. 91-190 (1970), codified as amended at 42 U.S.C. §§ 4321-4347 (2012). either an environmental assessment or environmental impact statement.After the planning process, BLM takes the lead in preparing the NEPA analysis for leases when the surface lands are managed by BLM or owned by a private landowner (see table 6). For Forest Service lands, the Forest Service takes the lead in preparing the NEPA analysis and coordinates with BLM so that BLM’s subsequent leasing decision can be supported by the same analysis. At both agencies the NEPA review focuses on how the sale of leases may affect the environment and public health and, according to BLM officials, often includes mitigation measures that ultimately become stipulations on leases and permits for that tract of federal land. After the environmental impact statement is completed, BLM sells the lease to an operator through an auction or by other means.\nAfter acquiring a lease for the development of federal oil and gas, an operator is required to submit an application for permit to drill (APD) for individual wells to BLM. According to BLM officials, the APD is a comprehensive plan for drilling and related activities, which is approved by BLM. Prior to permit issuance for the proposed drilling activity, BLM is required to document that needed reviews under NEPA have been conducted. According to officials, at this step BLM conducts site-specific NEPA analysis, often drawing on the previous NEPA analysis conducted prior to the lease sale, but supplemented with more specifics about the proposed well site and related facilities, such as access roads or pipelines. The environmental review may also identify mitigation measures that could be used to reduce the environmental effects of drilling. The APD includes two key components: (1) the drilling plan, which describes the plan for drilling, casing, and cementing the well; and (2) the surface use plan of operations, which describes surface disturbances, such as road construction to the well pad and installation of any needed pipelines or other infrastructure. BLM is responsible for reviewing and approving the APD as a whole but gets input from the surface land management agency regarding the surface use plan of operations. For example, the Forest Service is responsible for review and approval of the surface use plan of operations component of the APD. After reviewing the operator’s APD, BLM approves the APD, often by attaching conditions of approval and requiring the operator to take mitigation measures as described in the environmental review or recommended by the surface land management agency. Once the APD is approved, and any state or local approvals are obtained, the operator can begin work.\nBLM has overall responsibility for ensuring compliance with approved APDs but coordinates with other surface land management agencies as appropriate. According to BLM officials, BLM is responsible for inspections and enforcement related to drilling operations, including running tests on casing and cementing. In addition, BLM officials said that they coordinate with surface land management agencies regarding surface conditions. Forest Service officials said that the Forest Service is responsible for conducting inspections relative to surface uses authorized by the surface use plan of operations. These officials said that if Forest Service personnel note possible noncompliance related to drilling or production operations, they notify and coordinate with BLM. Similarly, officials said that, if BLM conducts an inspection and notices potential violations of the surface use plan of operations, they contact the Forest Service.\nOperators of wells accessing federal oil and gas also face requirements related to activities involved in oil and gas development. Specifically, these requirements are related to siting and site preparation; drilling, casing, and cementing; well plugging; site reclamation; waste management and disposal; and managing air emissions. Requirements are as follows:\nSiting and site preparation. BLM requires an operator to identify all known oil and gas wells within a 1-mile radius of the proposed location. BLM does not require baseline testing of groundwater near the proposed well site. BLM generally prohibits an operator from conducting operations in areas highly susceptible to erosion, such as floodplains or wetlands, and recommends that operators avoid steep slopes and consider temporarily suspending operations when weather-related conditions, such as freezing or thawing ground, would cause excessive impacts.\nDrilling, casing, and cementing. As discussed above, operators must submit detailed drilling plans as part of their APD. The drilling plan must be sufficiently detailed for BLM to appraise the technical adequacy of the proposed project and must include, among other things: (1) geologic information about the formations that the operator expects to encounter while drilling; (2) whether these formations contain oil, gas, or useable water and, if so, how the operator plans to protect such resources; (3) a proposed casing plan, including details about the size of the casing and the depths at which each layer of casing will be set; (4) the estimated amount and type of cement to be used in the well; and (5) a description of any horizontal drilling that is planned.\nWell plugging. Operators are required to provide notice to and get approval from BLM prior to plugging a well and to comply with specific technical standards in plugging the well.\nSite reclamation. Operators describe their plans for reclamation in the surface use plan of operations submitted as part of the APD. BLM requires operators to return the disturbed land to productive use. All well pads, pits, and roads must be reclaimed and revegetated. Interim and final reclamation generally must be completed within 6 months of the well entering production and being plugged, respectively.\nWaste management and disposal. In the surface use plan of operations, operators must describe the methods and locations proposed for safe disposal of wastes, such as drill cuttings, salts, or chemicals that result from drilling the proposed well. The description must also include plans for the final disposition of drilling fluids and any produced water recovered from the well.\nManaging air emissions. For operations in formations that could contain hydrogen sulfide, BLM requires a hydrogen sulfide operations drilling plan, which describes safety systems that will be used, such as detection and monitoring equipment, flares, and protective equipment for essential personnel.\nIn some cases, BLM and states may regulate similar activities; in such cases, operators must comply with the more stringent regulation. For example, North Dakota state requirements allow the use of pits only for short-term storage of produced water. BLM generally allows the use of pits for longer-term storage of produced water, but operators cannot do so on federal lands in North Dakota due to state requirements. See appendix X for a comparison of federal environmental requirements, state requirements, and additional requirements that apply on federal lands.\nBLM recently proposed new requirements for oil and gas development on federal lands. Specifically, in May 2012, BLM proposed regulations that update and add to its current requirements related to hydraulic fracturing. As proposed, these regulations would require operators of wells under federal leases to (1) publicly disclose the chemicals they use in hydraulic fracturing; (2) take certain steps to ensure the integrity of the well, including complying with certain cementing standards and confirming through mechanical integrity testing that wells to be hydraulically fractured meet appropriate construction standards; and (3) develop plans for managing produced water from hydraulic fracturing and store flowback water from hydraulic fracturing in a lined pit or a tank. According to BLM officials, BLM’s proposed rule is intended to improve stewardship and operational efficiency by establishing a uniform set of standards for hydraulic fracturing on public lands. According to BLM officials, a final rule is expected in the fall of 2012.", "Subject to some restriction, owners of mineral rights that underlie federal lands have the legal authority to explore for oil and gas and, if such resources are found, to develop them. Federal land management agencies’ authorities to control the surface impacts of drilling for privately owned minerals underlying federal lands vary based on a variety of factors, including which federal agency is responsible for managing the surface lands.\nAccording to BLM officials, private mineral owners seeking to develop oil and gas would need to obtain a right-of-way grant from BLM for any surface disturbance, including the well pad, but otherwise BLM has limited authority over the private owners’ use and occupancy of the BLM- managed surface lands. Officials said that BLM would have the same rights as a private surface owner under state law to hold a mineral rights owner to “reasonable surface use.” BLM officials explained that BLM would perform a NEPA analysis prior to issuing the right-of-way grant. According to officials, the agency applies its general regulations for granting rights of way, but BLM did not have specific guidance regarding oversight of private mineral operations on BLM lands.\nAccording to Forest Service officials, Forest Service authority related to the development of privately owned minerals is limited because private mineral owners have the legal right to develop such resources. The Forest Service manages a large number of wells accessing privately owned minerals. Specifically, Forest Service officials said that, of the 19,000 operating oil and gas wells on Forest Service lands, about three- fourths are producing privately owned minerals. Forest Service officials explained that the Forest Service evaluates the effects of the development and, through negotiations with the operator, tries to reach agreement on certain mitigation measures. Officials explained that these mitigation measures are generally not as stringent or specific as mitigation measures used on federal leases. In addition, Forest Service officials explained that enforcement options are limited for environmental damage from development of privately owned minerals. Generally, the Forest Service can work with state oil and gas agencies to have them enforce any relevant state requirements regarding surface impacts, or the Forest Service can seek an injunction from the court to stop damaging actions and then pursue possible damages or restitution via the court. According to Forest Service officials, development of privately owned minerals has been a particular challenge in the Alleghany National Forest in Pennsylvania where privately owned minerals underlie more than 90 percent of the forest. Forest Service officials stated that there are approximately 1,000 new wells drilled in this forest each year, most of which are shallow conventional oil development. Officials said that the pace of this development has made it difficult for the Forest Service to manage other forest uses, such as recreation and timber extraction.\nSee GAO, National Wildlife Refuges: Opportunities to Improve the Management and Oversight of Oil and Gas Activities on Federal Lands, GAO-03-517 (Washington, D.C.: Aug. 28, 2003). partly because FWS does not currently have regulations that directly address oil and gas development. FWS officials said that the agency is developing a proposed rule that will set requirements for operators developing privately owned minerals. Officials expect an Advance Notice of Proposed Rulemaking to be issued in calendar year 2012. FWS officials said that, despite having minimal requirements for operators drilling for privately owned minerals, they can use other federal authorities and work with federal and state agencies to minimize or remediate injury to FWS lands. For example, FWS worked with EPA to respond to a spill of produced water into a stream on a National Wildlife Refuge in Louisiana in 2005, in violation of CWA. EPA, the Coast Guard, and the Department of Justice worked together on the case, and the operator ultimately paid $425,000 to FWS for the two affected wildlife refuges. According to agency officials, however, without specific regulations, FWS faces challenges conducting daily management and oversight of oil and gas activities on FWS lands.\nThe Park Service’s 9B regulations govern potential impacts to all park system resources and values resulting from exercise of private oil and gas rights within Park Service administered lands. These regulations require an operator to submit a proposed plan of operations to the Park Service, which outlines the activities that are proposed for Park Service lands, including drilling, production, transportation, and reclamation. The regulations also outline certain requirements for operators, including that operations be located at least 500 feet from surface waters, that fences be used to protect people and wildlife, and that during reclamation the operator reestablish native vegetation. The Park Service analyzes the operator’s proposed plan of operations to ensure that the proposed plan complies with the 9B regulations. Also, in determining whether it can approve an operation, the Park Service undertakes an environmental analysis under NEPA. Once the Park Service approves the proposed plan of operations, the operator can begin drilling. The Park Service continues to have access to the site for monitoring and enforcement purposes. In November 2009, the Park Service issued an Advance Notice of Proposed Rulemaking to update its 9B regulations; a proposed rule is expected in September 2013, according to agency officials.", "Federal and state agencies reported facing several challenges in regulating oil and gas development from unconventional reservoirs. Specifically, EPA officials reported that their ability to conduct inspection and enforcement activities and limited legal authorities are challenges. In addition, BLM and state officials reported that hiring and retaining staff and educating the public are challenges.", "Officials at EPA reported that conducting inspection and enforcement activities for oil and gas development from unconventional reservoirs is challenging due to limited information, as well as the dispersed nature of the industry and the rapid pace of development. More specifically, according to EPA headquarters officials, enforcement efforts can be hindered by a lack of information in a number of areas. For example, in cases of alleged groundwater contamination, EPA would need to link changes in groundwater quality to oil and gas activities before taking enforcement actions. However, EPA officials said that often no baseline data exist on the quality of the groundwater prior to oil and gas development. These officials also said that linking groundwater contamination to a specific activity may be difficult even in cases where baseline data are available because of the variability and complexity of geological formations.\nAs discussed earlier in this report, in 2005, the Energy Policy Act amended SDWA to specifically exempt hydraulic fracturing from the UIC program, unless diesel fuel is used in the hydraulic fracturing process. the agency does not know which operators are using diesel. Similarly, with respect to CWA, EPA officials said it is difficult to assess operators’ compliance with the SPCC program, which establishes spill prevention and response planning requirements in accordance with CWA, because EPA does not know the universe of operators with tanks subject to the SPCC rule. In addition, related to CAA, EPA headquarters officials said that it would be difficult for EPA to find oil and gas wells that are subject to but noncompliant with NESHAPs because EPA does not have information on the universe of oil and gas well sites with the equipment that are significant to air emissions. Also, according to EPA Region 8 officials, these requirements are “self-implementing,” and EPA would only receive notice from a facility that identifies itself as subject to the rules.\nSeveral EPA officials also mentioned that the dispersed nature of the industry and the rapid pace of development make conducting inspections and enforcement activities difficult. For example, officials in EPA Region 5 said that it is a challenge to locate the large number of new well sites across Ohio and to get inspectors out to these sites because EPA generally does not receive information about new wells or their location. EPA headquarters officials also mentioned that many oil and gas production sites are not continuously staffed, so EPA needs to contact operators and ensure that someone will be present before visiting a site to conduct an inspection. Officials in EPA Region 6 said that the dispersed nature of the industry, the high level of oil and gas development in the Region, and the cost of travel have made it difficult to conduct enforcement activities in their Region.\nEPA officials in headquarters said that SDWA is a difficult statute to enforce because of the variation across states. Specifically, SDWA authorizes EPA to approve, for states that elect to assume this responsibility, individual states’ programs as alternatives to the federal UIC Class II regulatory program. As a result, EPA’s enforcement actions have to be specific to each state’s program, which increases the complexity for EPA. In addition, SDWA requires that EPA approve each state’s UIC program by regulation rather than through an administrative process, and many of the federal regulations for state UIC programs are out of date. EPA officials said that this has hindered enforcement efforts, and some cases have been abandoned because EPA can only enforce those aspects of state UIC regulations that have been approved by federal regulation.", "EPA officials also reported that the scope of their legal authorities for regulating oil and gas development is a challenge. For example, EPA officials in headquarters and Regional offices told us that the exclusion of exploration and production waste from hazardous waste regulations under RCRA significantly limits EPA’s role in regulating these wastes. For example, if a hazardous waste permit was required, then EPA would obtain information on the location of well sites, how much hazardous waste is generated at each site, and how the waste is disposed of; however, operators are not required to obtain hazardous waste permits for oil and gas exploration and production wastes, limiting EPA’s role. As discussed earlier in this report, EPA is currently considering a petition to revisit the 1988 determination not to regulate these wastes as hazardous, but according to officials, has no specific time frame for responding. In addition, as we described earlier in this report, officials in Region 8 noted that EPA cannot use either its CERCLA or CWA emergency response authority to respond to spills of oil if there is no threat to U.S. navigable waters or adjoining shorelines because those statutory authorities do not extend to such situations.", "Officials at BLM, Forest Service, and state agencies reported challenges hiring and retaining staff. For example, BLM officials in North Dakota said recruiting is a challenge because the BLM pay scale is relatively low compared with the current cost of living near the oil fields in the Bakken formation. Similarly, BLM officials in North Dakota and headquarters both said that retaining employees is difficult because qualified staff are frequently offered more money for private sector positions within the oil and gas industry. BLM officials in Wyoming told us that their challenges related to hiring and retaining staff have made it difficult for the agency to keep up with the large number of permit requests and meet certain inspection requirements. We previously reported that BLM has encountered persistent problems in hiring, training, and retaining sufficient staff to meet its oversight and management responsibilities for oil and gas operations on federal lands. For example, in March 2010, we reported that BLM experienced high turnover rates in key oil and gas inspection and engineering positions responsible for production verification activities. We made a number of recommendations to address this and other issues—and the agency agreed—but we reported in 2011 that the human capital issues we identified with BLM’s management of onshore oil and gas continue.\nState oil and gas regulators in two of the six states we reviewed—North Dakota and Texas—also reported challenges with employees leaving their agencies for higher paying jobs in the private sector. Officials from the North Dakota Industrial Commission––which regulates oil and gas development––said they have partially mitigated this challenge by removing state geologists and engineers from the traditional state pay scale and offering signing and retention bonuses. In addition, state environmental regulators in three of the six states—North Dakota, Pennsylvania, and Wyoming—also mentioned challenges related to hiring or retaining staff. For example, air regulators in the Wyoming Department of Environmental Quality said that retaining qualified staff is challenging, as staff leave for higher-paying private sector positions. These officials said that 6 of their 22 air permit-writing positions are vacant as of June 2012. State regulators in Colorado and Ohio did not report facing this challenge.\nIn addition, FWS officials reported that they have inadequate staffing for oil and gas development issues and noted that additional regional and field positions could help FWS implement a more comprehensive oil and gas program.", "BLM and state officials reported that providing information and education to the public is a challenge. Specifically, BLM headquarters officials mentioned that hydraulic fracturing has attracted the interest of the public and that BLM has been fielding many information requests about its use in oil and gas development. In addition, officials in five of the six states— Colorado, Ohio, Pennsylvania, Texas, and Wyoming—reported challenges related to public education. For example, regulators in Ohio said that their agency has conducted more public outreach in the last year than in the past 20 years and, in response to this public interest in shale drilling and hydraulic fracturing, they will be adding more communications staff. Similarly, oil and gas development is moving into areas of Colorado that are not accustomed to this development, and state officials in both the Department of Public Health and Environment and the Oil and Gas Conservation Commission said that they have spent a lot of time providing the public with information on topics including hydraulic fracturing. State regulators in Wyoming said that educating the public has been a challenge since coalbed methane and tight sandstone development in Wyoming is very different than, for example, shale gas development in Pennsylvania, but the media do not always make this clear. State regulators in North Dakota did not report public education as a challenge.", "We provided a draft of this report to EPA and to the Departments of Agriculture and the Interior for review and comment. The Departments of Agriculture and Interior provided written comments on the draft, which are summarized below and appear in their entirety in appendixes XI and XII, respectively. In addition, both Departments and EPA provided technical comments, which we incorporated as appropriate.\nIn its written comments, the Department of Agriculture agreed with our findings and noted that the Forest Service also faces challenges hiring and retaining qualified staff. In response, we added this information to the report.\nIn its written comments, the Department of the Interior provided additional clarifying information on its efforts concerning BLM’s proposed rule on hydraulic fracturing and steps BLM is taking to hire and retain skilled technical staff. In response, we included additional information in the report about BLM’s proposed rule on hydraulic fracturing.\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 of this report to the appropriate congressional committees, the EPA Administrator, the Secretaries of Agriculture and the Interior, the Director of the Bureau of Land Management, 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 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 major contributions to this report are listed in appendix XIII.", "To identify federal and state environmental and public health requirements governing onshore oil and gas development from unconventional reservoirs, we analyzed federal and state laws, regulations, and guidance, as well as reports on federal and state requirements. We defined unconventional reservoirs as including shale gas deposits, shale oil, coalbed methane, and tight sandstone formations. We focused our analysis on requirements that apply to activities on the well pad and wastes or emissions generated at the well pad rather than on downstream infrastructure such as pipelines or refineries. In particular, we identified and reviewed eight key federal environmental and public health laws, specifically the Safe Drinking Water Act; Clean Water Act; Clean Air Act; Resource Conservation and Recovery Act; Comprehensive Environmental Response, Compensation, and Liability Act; Emergency Planning and Community Right-to-Know Act; Toxic Substances Control Act; and Federal Insecticide, Fungicide, and Rodenticide Act. We also reviewed corresponding regulations such as the Environmental Protection Agency’s (EPA) New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants for the Oil and Gas Industry and guidance such as EPA’s Guidance for Implementation of the General Duty Clause of the Clean Air Act.\nTo identify state requirements, we identified and reviewed laws and regulations in a nonprobability sample of six selected states—Colorado, North Dakota, Ohio, Pennsylvania, Texas and Wyoming. We selected states with current unconventional oil or gas development and large reservoirs of unconventional oil or gas. In addition, we ensured that the selected states included a variety of types of unconventional reservoirs, differing historical experiences with the oil and gas industry, and that some of the selected states have significant oil and gas development on federal lands. Because we used a nonprobability sample, the information that we collected from those states cannot be generalized to all states but can provide illustrative examples.\nTo complement our analysis of federal and state laws and regulations, we interviewed officials in federal and state agencies to discuss how federal and state requirements apply to the oil and gas industry (see table 7). In particular, we interviewed officials in EPA headquarters and four Regional offices where officials are responsible for implementing and enforcing programs within the six states we selected, including Region 3 for Pennsylvania, Region 5 for Ohio, Region 6 for Texas, and Region 8 for Colorado, North Dakota, and Wyoming. We also interviewed state officials responsible for implementing and enforcing requirements governing the oil and gas industry and environmental or public health requirements in each of the six states we selected. For three of these states—Colorado, North Dakota, and Wyoming—we conducted these interviews in person. We also interviewed officials from the Delaware River Basin Commission—a regional body that manages and regulates certain water resources in four states, including Pennsylvania. We also contacted officials from environmental, public health, and industry organizations to gain their perspectives and to learn about ongoing litigation or petitions that may impact the regulatory framework. We selected environmental organizations that had made public statements about federal or state requirements for oil and gas development and public health organizations representing state and local health officials and communities. The selected organizations are a nonprobability sample, and their responses are not generalizable. In addition, we visited drilling, hydraulic fracturing, and production sites in Pennsylvania and North Dakota and met with company officials to gather information about these processes and how they are regulated at the federal and state levels. We selected these companies based on their operations in the six states we selected.\nTo identify additional requirements that apply to unconventional oil and gas development on federal lands, we reviewed laws, such as the National Environmental Policy Act (NEPA), as well as regulations and guidance promulgated by the Bureau of Land Management (BLM), Fish and Wildlife Service (FWS), Forest Service, and National Park Service. We also interviewed officials responsible for overseeing oil and gas development on federal lands, including officials in BLM headquarters and in field offices in the states we selected where there is a significant amount of oil and gas development on federal lands, including Colorado, North Dakota, and Wyoming; and in National Park Service, Forest Service, and FWS headquarters. Oil and gas development may also be subject to tribal or local laws, but we did not include an analysis of these laws in the scope of our review.\nTo determine challenges that federal and state agencies face in regulating oil and gas development from unconventional reservoirs, we reviewed several reports conducted by environmental and public health organizations, industry, academic institutions, and government agencies that provided perspectives on federal and state regulations and associated challenges. We also collected testimonial evidence, as described above, from knowledgeable federal and state officials, as well as industry, environmental, and public health organizations.\nWe conducted this performance audit from November 2011 to September 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.", "The Safe Drinking Water Act (SDWA or the Act) was originally passed by Congress in 1974 to protect public health by ensuring a safe drinking water supply. Under the act, EPA is authorized to set standards for certain naturally-occurring and man-made contaminants in public drinking water systems, among other things. Key aspects of SDWA for unconventional oil and gas development include provisions regarding underground injection and EPA’s imminent and substantial endangerment authority.", "SDWA also regulates the placement of wastewater and other fluids underground through the Underground Injection Control (UIC) program.This program provides safeguards to ensure that wastewater or any other fluid injected underground does not endanger underground sources of drinking water; these sources are defined by regulation as an aquifer or its portion: 1) (i) Which supplies any public water system; or (ii) Which contains a sufficient quantity of groundwater to supply a public water system; and (A) Currently supplies drinking water for human consumption; or (B) Contains fewer than 10,000 mg/l total dissolved solids; and 2) Which is not an exempted aquifer.\nThus, the program is intended to protect not only those aquifers (or portions thereof) that are currently used for drinking water, but those that possess certain physical characteristics indicating they may be viable future drinking water sources.\nEPA regulations establish criteria for exempting aquifers.the regulations establish that the criterion that an aquifer “cannot now and In particular, will not in the future serve as a source of drinking water” may be met by demonstrating that the aquifer is mineral, hydrocarbon or geothermal energy producing, or demonstrated by a permit applicant as having commercially producible minerals or hydrocarbons. States or EPA typically initially identified exempt aquifers when UIC programs were established, and according to EPA, states may have added exempt aquifers since then. While EPA has the information from the initial applications, the agency does not have complete information for the additional exemptions, although under EPA regulations certain of these subsequent exemptions are considered program revisions and must be approved by EPA. EPA is currently collecting information about the location of all exempted aquifers, and an official estimated that there are 1,000-2,000 such designations (including portions of aquifers).\nThere are six classes or categories of wells regulated through the UIC program. Class II wells are for the management of fluids associated with oil and gas production, and they include wells used to dispose of oil and gas wastewater and those used to enhance oil and gas production.\nSDWA § 1422(b)(2), 42 U.S.C. § 300h-1(b)(2) (2012). See also SDWA §§ 1421(b)(1), 1422(b)(1), (3), 42 U.S.C. §§ 300h(b)(1), 300h-1(b)(1), (b)(3) (2012) (establishing requirements and responsibilities for states with primacy). permitting, monitoring, and enforcement for UIC wells within the state. Generally, to be approved as the implementing authority (primacy), state programs must be at least as stringent as the federal program and show that their regulations contain effective minimum requirements for each of the well classes for which primacy is sought. Alternately, SDWA section 1425 provides that to obtain this authority over Class II wells only, a state with an existing oil and gas program may, instead of meeting and adopting the applicable federal regulations, demonstrate that its program is effective in preventing endangerment to underground sources of drinking water. With respect to the six states in this review, Texas, North Dakota, Colorado, Wyoming, and Ohio have each been granted primacy for Class II wells under the alternative provisions (SDWA section 1425). EPA directly implements the entire UIC program in Pennsylvania.\nClass II wells include saltwater (brine) disposal wells, enhanced recovery wells, and hydrocarbon storage wells. These wells are common, particularly in states with historical oil and gas activity. EPA officials estimate there are approximately 151,000 Class II UIC wells in operation in the United States; about 80 percent of these wells are for enhanced recovery, about 20 percent are for disposal, and there are approximately 100 wells for hydrocarbon storage. In Pennsylvania, the one state in our review in which EPA directly implements the Class II program, EPA Region 3 officials stated that there are five active Class II disposal wells. Recently, Region 3 issued permits for two Class II disposal wells in Pennsylvania, which were appealed. On appeal, the Environmental Appeals Board remanded the permits back to EPA for further consideration, finding that the Region failed to clearly articulate its regulatory obligations or compile a record sufficient to assure the public that the Region relied on accurate and appropriate data in satisfying its obligations to account for and consider all drinking water wells within the area of review of the injection wells. The Environmental Appeals Board denied all other claims against EPA. Under the remand, EPA may take further action consistent with the decision, which could include such actions as additions or revisions to the record and reconsideration of the permits. With respect to applications, according to Region 3 officials, until recently EPA did not receive many applications for new Class II brine disposal wells in Pennsylvania. EPA officials said that they have received five permit applications for such wells in the last 4 months and expect continued interest in the future.", "Under SDWA, UIC programs are to prohibit underground injection, other than into a well that is authorized by rule or permitted. Class II UIC wells must meet requirements contained in either EPA regulations, or relevant state regulations. Federal regulations for Class II wells include construction, operating, monitoring and testing, reporting, and closure requirements. For example, one requirement of federal regulations is that all of the preexisting wells located in the area of review, and that were drilled into the same formation as the proposed injection well must be identified. For such wells which are improperly sealed, completed, or abandoned, the operator must also submit a plan of actions necessary to prevent movement of fluid into underground sources of drinking water— known as ‘‘corrective actions,’’ such as plugging, replugging, or operational pressure limits—which are considered in permit review. Permits may be conditioned upon a compliance schedule for such corrective actions. According to EPA, in Pennsylvania many old wells have had to be replugged in order to ensure they cannot present a potential pathway for migration.\nRegarding seismicity concerns, the federal regulations for Class II UIC wells require applicants for Class II UIC wells to identify faults if known or suspected in the area of review. requirement that a well must be sited to inject into a formation that is separated from any protected aquifer by a confining zone that is free of known open faults or fractures within the area of review. In a permit process, EPA (in direct implementation states) or the state can require additional information (including geology) to ensure protection of underground sources of drinking water. For example, Region 3 officials said the Region routinely determines whether there is the potential for fluid movement out of the injection zone via faults and fractures, as well as abandoned wells, by calculating a zone of endangering influence around the injection operation. Under the general standard, if a proposed or ongoing injection was, due to seismicity, believed to endanger underground sources of drinking water, EPA or the state could act, as the burden is on the applicant to show the injection well will not endanger such sources.line that was not identified or known at the time of the UIC permit approval, EPA (in direct implementation states) or the state can go back to the well owner or operator and ask for additional information, which the owner or operator would be obligated to provide.\nIn addition there is a general Officials said that if a seismic event occurs along a fault For additional information on the Class II UIC requirements applicable under EPA’s program in Pennsylvania, see appendix IX.\n40 C.F.R. §§ 146.24, 146.24(a)(2) (2012).", "Historically, UIC programs did not include hydraulic fracturing injections as among those subject to their requirements. In 1994, in light of concerns that hydraulic fracturing of coalbed methane wells threatened drinking water, the Legal Environmental Assistance Foundation petitioned EPA to withdraw its approval of Alabama’s Class II UIC program. EPA denied the petition, but on appeal, the United States Court of Appeals for the Eleventh Circuit held that the definition of underground injection included hydraulic fracturing and ordered EPA to reconsider the issue. Subsequently, Alabama revised its program to include injection of hydraulic fracturing fluids, and EPA approved it pursuant to SDWA section 1425 in 2000. The Legal Environmental Assistance Foundation appealed the approval and, in 2001, the Eleventh Circuit partially remanded the approval, directing EPA to regulate hydraulic fracturing as Class II UIC wells rather than a Class II-like activity. Alabama amended its regulations in 2001 and 2003. EPA issued a determination in 2004 addressing the question on remand and found that the hydraulic fracturing portion of Alabama’s UIC program relating to coalbed methane production, which was previously approved under the alternative effectiveness provision, complied with the requirements for Class II UIC wells.\nEPA initiated a study in 2000 to further examine the issue of fracturing in coalbed methane in areas of underground sources of drinking water. EPA officials said the study showed diesel fuel was the primary risk. Subsequently, in 2003, EPA entered into a memorandum of agreement with three major fracturing service companies in which the companies voluntarily agreed to eliminate diesel fuel in hydraulic fracturing fluids injected into coalbed methane production wells in underground sources of drinking water. According to EPA officials, the agreement is still in effect insofar as the agency has not received any termination notices.\nEPA officials did not know of any permits issued by Alabama, or any other state, for hydraulic fracturing injections during this time frame. EPA also did not modify its direct implementation of Class II UIC programs to expressly include hydraulic fracturing.\nOn December 7, 2004, EPA’s Assistant Administrator for Water responded to a congressional request for information on EPA’s actions on this issue. The letter summarizes EPA’s study findings—that the potential threat to underground sources of drinking water posed by hydraulic fracturing of coalbed methane wells is low, but there is a potential threat through the use of diesel fuel as a constituent of fracturing fluids where coalbeds are colocated with an underground source of drinking water.\nPub. L. No. 109–58 § 322, 119 Stat. 594 (2005) (modifying SDWA § 1421(d)(1), 42 U.S.C. § 300h(d)(1) (2012)). fluids other than diesel fuel in connection with hydraulic fracturing is not subject to federal UIC regulations, including both EPA direct implementation requirements and federal minimum requirements for state programs. The provision, however, did not exempt injection of diesel fuels in hydraulic fracturing from UIC programs.\nEPA has prepared a draft guidance document to assist with permitting of hydraulic fracturing using diesel fuels under SDWA UIC Class II; a public comment period for this draft guidance closed in August 2012. EPA explained that the guidance does not substitute for UIC Class II regulations, rather the guidance focuses on specific topics useful for tailoring Class II requirements to the unique attributes of hydraulic fracturing when diesel fuels are used. EPA’s draft guidance is applicable to any oil and gas wells using diesel in hydraulic fracturing (not just coalbed methane wells). The draft guidance provides recommendations related to permit applications, area of review (for other nearby wells), well construction, permit duration, and well closure. The guidance states that it does not address state UIC programs, although states may find it useful.\nEPA officials told us that they recently identified wells for which publicly available data suggest diesel was used in hydraulic fracturing. EPA officials stated the agency also has some information on diesel use in hydraulic fracturing of shale formations from a 2011 congressional investigation. EPA officials said there are no EPA-issued permits authorizing diesel to be used in hydraulic fracturing, and they believe no applications for such permits have been submitted to EPA to date. EPA officials also said that they were not aware of any state UIC programs that had issued such permits.", "Generally, EPA is authorized to enforce any applicable requirement of a federal or state UIC program as promulgated in 40 C.F.R. pt. 147, including Class II UIC programs approved under the alternative provision. However, according to officials, EPA has not promulgated all of the states’ modifications to UIC programs, and the federal regulations are out-of-date, hindering EPA’s ability to directly enforce some state program provisions.\nEPA may issue administrative orders or, with the Department of Justice, initiate a civil action when a person violates any requirement of an applicable UIC program. Where a state has primacy, EPA must first notify the state, and may act after 30 days if the state has not commenced an appropriate enforcement action. SDWA also provides EPA with authority to access records, inspect facilities, and require provision of information. Specifically, EPA has authority, for the purpose of determining compliance, to enter any facility or property of any person subject to an applicable UIC program, including inspection of records, files, papers, processes, and controls.\nUnder EPA’s UIC program enforcement authorities, EPA has issued administrative compliance orders and administrative penalty orders relating to SDWA UIC Class II Wells. According to officials, most cases are administrative and handled at the Regional level. Officials said that there were more than 200 administrative orders related to the UIC program from 2004-2008 and that it is likely that a majority of these were related to Class II wells.\nFor example, EPA Region 3 signed a consent agreement in Venango County, Pennsylvania, where injections of produced water were made into abandoned wells not permitted under the UIC program.\nIn another case, Region 3 told us it has issued an administrative order against an operator for failure to conduct mechanical integrity tests. According to EPA, the order requires the operator to plug many of these wells, and to bring the wells they plan to continue to operate into compliance with their financial responsibility. Region 3 also took a penalty action against an operator for failure to report a mechanical integrity failure and continued operation after the failure. According to officials, EPA was able to confirm during well rework that there was no fluid movement outside the well’s casing and no endangerment to an aquifer.", "While SDWA generally does not directly regulate land use activities that may pose risk to drinking water supplies, SDWA gives EPA authority to issue imminent and substantial endangerment orders or take other actions deemed necessary “upon receipt of information that a contaminant which is present in or is likely to enter a public water system or an underground source of drinking water…which may present an imminent and substantial endangerment to the health of persons, appropriate State and local authorities have not acted to protect the health of such persons.” As noted above, the term “underground source of drinking water” includes not only active water supplies but also aquifers (or portions thereof) with certain physical characteristics.\nEPA has used this imminent and substantial endangerment authority in several incidents where oil or gas wells have been alleged to contaminate drinking water. For example, EPA Region 8 has conducted long-term investigation and monitoring of groundwater contamination from an oilfield in Poplar, Montana, of a water supply serving Poplar, as well as the Fort Peck Indian Reservation. EPA determined that there are several plumes of produced water (brine) in the East Poplar aquifer, which supplies private and public drinking water wells. Several pathways of contamination have been identified, including unlined pits, spills, and a leaking plugged oil well.\nEPA issued a SDWA imminent and substantial endangerment order in 2010 to three companies operating wells in the oilfield, each of which challenged the order in federal court. Following mediation, EPA and the parties entered an administrative order on consent in which the parties agreed to monitor the public drinking water supply for specified parameters and, if certain triggers are met or exceeded, to take actions to ensure the public water system meets water quality standards and pay reimbursement costs to the public water system.\nIn another case, on December 7, 2010, EPA issued an administrative order to a well operator in Texas alleging methane contamination affecting private wells and directly related to its oil and gas production EPA subsequently filed a complaint in U.S. District Court facilities. seeking injunctive relief to enforce the order’s requirements and civil penalties for the operator’s noncompliance with the order. A few days later, the operator filed a petition for review of the order with the Fifth Circuit Court of Appeals. The operator’s position was that the order is not a final agency action and that EPA has the burden of proving its claim in the district court enforcement action, and its enforcement would violate due process. On March 29, 2012, EPA withdrew its administrative order, and the parties moved for voluntary dismissal of both cases. In a letter to EPA, the operator agreed to conduct sampling of 20 private water wells for 1 year.", "Under the Clean Water Act (CWA), EPA regulates discharges of pollutants to waters of the United States; for the purpose of this document, we generally refer to such waters, including jurisdictional rivers, streams, wetlands, and other waters, as surface waters. Discharges may include wastewater, including produced water, and stormwater. In addition, together with the U.S. Army Corps of Engineers, EPA regulates discharge of dredged or fill material into these waters.\nUnder CWA section 311 and the Oil Pollution Act, establish, in relevant part, requirements for the prevention of, preparedness for, and response to oil discharges at certain facilities, including among others oil drilling and production facilities.requirements may include Facility Response Plans and Spill Prevention, Control, and Countermeasure (SPCC) Plans. EPA also has certain response and enforcement authorities relevant to these requirements.\nThis review focuses on EPA regulatory activities under these programs relevant to unconventional oil and gas development activities.\nCWA § 311, 33 U.S.C. § 1321 (2012); Oil Pollution Act of 1990, Pub. L. No. 101-380, 104 Stat. 484 (classified as amended at 40 U.S.C. ch. 40, §§ 2701 – 2761 (2012) and amending sections of CWA). See also Exec. Order 12,777, 56 Fed. Reg. 54,757 (1991).", "CWA is the primary federal law designed to restore and maintain the chemical, physical, and biological integrity of the nation’s waters. Among other things, EPA and delegated states administer CWA’s National Pollutant Discharge Elimination System (NPDES) program, which limits the types and amounts of pollutants that facilities such as industrial and municipal wastewater treatment plants may discharge into the nation’s surface waters. Facilities such as municipal wastewater treatment plants and industrial sites, including oil and gas well sites, need a permit if they have a point source discharge to surface waters. Other than stormwater runoff as discussed below, discharges of pollutants from an oil or gas well site to surface water require an NPDES permit. According to EPA, wastewater associated with shale gas extraction can include total dissolved solids, fracturing fluid additives, metals, and naturally occurring radioactive materials, and may be disposed by transport to publicly- owned or other wastewater treatment plants, particularly in some locations where brine disposal wells are unavailable. According to EPA, produced water from coalbed methane gas extraction can include high salinity and pollutants such as chloride, sodium, sulfate, bicarbonate, fluoride, iron, barium, magnesium, ammonia, and arsenic, and some produced water is discharged to surface water in certain geographical areas.\nEPA and delegated states issue discharge permits that set conditions in accordance with applicable technology-based effluent limitations guidelines that EPA has established for various industrial categories, and may also include water-quality based effluent limitations. When EPA issues effluent limitations guidelines for an industrial category, it may include both limitations for direct dischargers (point sources that introduce pollutants directly into waters of the United States) and pretreatment standards applicable to indirect dischargers (facilities that discharge into publicly-owned wastewater treatment plants).", "EPA has developed effluent limitations guidelines for several subcategories of the oil and gas extraction industry. The guidelines generally apply to facilities engaged in the production, field exploration, drilling, well completion, and well treatment in the oil and gas extraction industry. The guidelines applicable to the wells in the scope of this review—essentially, oil and gas wells located on land and drilling unconventional reservoirs—include those for the onshore subcategory, agricultural and wildlife water use subcategory, and stripper wells. The guidelines for these subcategories were finalized in 1979.\nFor the onshore and agricultural and wildlife water use subcategories, EPA established effluent limitations guidelines for direct dischargers. EPA did not establish guidelines for stripper wells, explaining that unacceptable economic impacts would occur from use of the then- evaluated technologies, and that the agency could revisit this decision at a later date. EPA officials we spoke with said that they are not aware of any reconsideration of this decision, and that this is not an issue on the current regulatory agenda. EPA also did not establish pretreatment requirements for either onshore or stripper well subcategories.\nExisting effluent limitations guidelines do not apply to wastewater discharges from coalbed methane extraction. As EPA subsequently explained, because there was no significant coalbed methane production in 1979, the oil and gas extraction rulemakings did not consider coalbed methane extraction in any of the supporting analyses or records. EPA officials also told us that the coalbed methane process is fundamentally different than traditional oil and gas exploration because of the volume of water that must be removed from the coalbed before production can begin, which they see as a significant distinction for potentially applicable technology. As will be discussed later in this appendix, in October 2011, EPA announced its intention to develop effluent limitations guidelines and standards for wastewater discharges from the coalbed methane industry.\nWhen an oil and gas well proposing to discharge pollutants to a surface water is not covered by the existing guidelines, effluent limitations included in the permit are determined on a case-by-case basis by the relevant permitting authority, using best professional judgmentapplicable state rules or guidance. EPA officials were not aware of any other unconventional oil and gas extraction processes, besides coalbed methane extraction, that are not covered by the existing effluent limitations guidelines.\nTable 8 summarizes the coverage and key requirements of the existing guidelines. there shall be no discharge of waste water pollutants into navigable waters from any source associated with production, field exploration, drilling, well completion, or well treatment (i.e., produced water, drilling muds, drill cuttings, and produced sand).\nBecause an NPDES permit is only required where a facility discharges or proposes to discharge a pollutant, and as the technology-based requirement of “no discharge” must be applied in the permit, facilities subject to a “no discharge” limit are not required to apply for such permits.\nAccording to the 1976 Federal Register Notice of the Proposed Rule, technologies for managing produced water to achieve no discharge to surface waters were expected to include evaporation ponds, or underground injection, either for enhanced recovery of oil or gas in the producing formation or for disposal to a deep formation. Further, EPA indicated that drilling muds, drill cuttings, well treatment wastes, and produced sands would be disposed by land disposal so as not to reach navigable waterways.\nThe effluent limitations guideline for the Oil and Gas Extraction point source category also established a subcategory for Agricultural and Wildlife Water Use to cover a geographical subset of operations in which produced water is of good enough quality to be used for wildlife or livestock watering or other agricultural uses and that the produced water is actually put to such use during periods of discharge. This subcategory guideline is only applicable to facilities located west of the 98th meridian, which extends from approximately the eastern border of North Dakota south through central Texas. EPA explained in the preamble to this rule that “t is intended as a relatively restrictive subcategorization based on the unique factors of prior usage in the Region, arid conditions and the existence of low salinity, potable water.” “no discharge of waste pollutants into navigable waters from any source (other than produced water) associated with production, field exploration, drilling, well completion, or well treatment (i.e., drilling muds, drill cuttings, and produced sands),” and for produced water discharges a daily maximum limitation of 35 milligrams per liter of oil and grease.\nAt oil and gas well sites meeting the conditions of location, produced water quality, and use of produced water for wildlife or livestock watering or agricultural use, the produced water may be discharged to waters of the United States. In terms of water quality, the produced water must be and must not exceed the daily maximum for “good enough” for this use, oil and grease. States generally issue these permits, and are responsible for determining whether the water is of appropriate water quality for the beneficial use.guidance on this topic.\nEPA is responsible for oversight and has not issued EPA has not revised the guildeines, such as to add limitations for additional pollutants, to define “good enough” water quality, or to establish potentially more stringent guidelines. EPA officials stated that it has not done so because in certain locations the produced water from oil and gas development is high quality, and because treatment would cost more than injection, thus discouraging the beneficial use of this water.\nWith respect to the subcategories of oil and gas wells covered by the effluent limitations guidelines, discharges are authorized only for oil and gas wells under the Agricultural and Wildlife Water Use and Stripper well subcategories. These well sites that discharge wastewater to surface waters must, as noted above, obtain a NPDES permit from the permitting authority (state, tribe, or EPA). The permit is to incorporate the applicable effluent limitations guideline, if one exists, and include effluent monitoring and reporting requirements. Officials also stated that individual permits may contain limits for pollutants other than oil and grease.\nAccording to EPA, 349 discharge permits in the Agricultural and Wildlife Water Use subcategory have been issued. Most of these permitted discharges are located in Wyoming, Montana, and Colorado.", "On October 26, 2011, EPA announced in its Final 2010 Effluent Limitations Program Plan that the agency will develop effluent limitations guidelines and standards for wastewater discharges from the coalbed methane extraction industry.\nWith respect to coalbed methane extraction, as noted above, there is no existing effluent limitations guideline applicable to associated wastewaters. Coalbed methane operations discharging wastewaters to surface waters must nonetheless obtain a NPDES permit, but in the absence of a federal effluent limitations guideline, the permitting authority determines the permit limits based on best professional judgment, as well as any applicable state rules or guidelines. EPA had identified the industry for consideration in prior years, and initiated work leading to a detailed study beginning in 2007. found that states are primarily issuing individual permits, but they are also issuing some general permits and watershed permits covering one or more wells through a streamlined process. According to EPA officials, eastern states have generally based effluent limitations in permits on the coal mining effluent limitations guideline, although that guideline does not have limitations for total dissolved solids or chlorides that are key components of produced water. In the six states reviewed, EPA identified 861 coalbed methane discharge permits.most coalbed methane wastewater discharges have NPDES permits. initiate rulemaking. EPA is in the preproposal stage of rulemaking for the coalbed methane effluent guidelines and standards.indicates the projected date for publication of the proposed rule is June 2013.", "Facilities discharging industrial wastewater to publicly-owned treatment works (POTW) treatment plants are subject to general pretreatment requirements. In addition, the POTW receiving such industrial wastewaters also has responsibilities related to its own permit and to receiving these wastewaters.\nEPA has issued general pretreatment requirements applicable to all existing and new indirect dischargers of pollutants (other than of purely domestic, or sanitary, sewage) to a POTW, including any dischargers of wastewaters associated with oil and gas wells. Notably, such discharges are subject to a general requirement that the pollutants do not cause pass through or interference with the POTW. For a discharge to cause pass through, it must contribute to violation of the POTW’s NPDES permit; to cause interference, it must contribute to the noncompliance of its sewage sludge use or disposal.\nOther standard provisions for indirect discharges involve a prohibition on corrosive discharges. According to EPA officials, in produced water, concerns for corrosivity would be related to high chlorides and sulfides which could adversely affect pipes and gaskets in the POTW.\nEPA has stated that NPDES permits for POTWs typically do not contain effluent limits for some of the pollutants of concern from shale gas wastewater, and that some of these pollutants may be harmful to aquatic Specifically, if a POTW did not include information in its NPDES life. permit application indicating that the POTW would receive oil and gas wastewater, or did not otherwise adequately characterize the incoming wastewater as including certain pollutants of concern, the permit may not include limits for these pollutants, as permits generally only contain limits for those pollutants reasonably expected to be present in the wastewater.\nRegarding pass through, in which an indirect industrial discharger contributes to violation of the receiving POTW’s NPDES permit, Region 3 officials said that POTW operators had not indicated that NPDES violations were caused by oil and gas wastewaters received at the plant, with the following exception. In 2011, EPA issued an administrative order for compliance and request for information to a POTW in New Castle, Pennsylvania, in relation to permit effluent limit violations. The POTW experienced violations of its suspended solids limits spanning over a year, and attributed the violations to salty wastewater from natural gas production it was receiving. The order required the POTW to take several actions including to cease accepting oil and gas exploration and production wastewater until completing an evaluation and sampling, and to eliminate and prevent recurrence of the violations.\nGenerally, local governments operating POTWs are responsible for ensuring that indirect dischargers comply with any applicable national pretreatment standards. Certain POTWs are required to develop pretreatment programs, which set out a facility’s approach to developing, issuing, and enforcing pretreatment requirements on any indirect dischargers to the particular plant. EPA or states may be responsible for ensuring these POTWs meet their obligations and for approving the POTW’s pretreatment plans.\nAccording to EPA, regardless of pass through or interference, POTWs should not accept indirect discharges of produced water if the wastewaters have different characteristics than those for which the POTW was originally permitted, without providing adequate notice to the permitting authority. If a POTW accepts oil and gas wastewater with characteristics that were not considered at the time of the permit issuance, then the permit may not adequately protect the receiving water from potential violations of water quality standards. In other words, a POTW may meet its permit limits, yet still contribute to a violation of water quality standards, if the permit does not reflect consideration of all the pollutants actually present, and their concentrations, in the incoming wastewater and in the discharge. According to Region 3 officials, EPA has conducted several investigations of whether discharges from POTWs accepting oil and gas wastewater have prevented receiving waters from meeting water quality standards. Region 3 officials stated that a major impediment to this evaluation was that the NPDES permits reviewed did not have effluent limits or monitoring requirements for the pollutants of concern. EPA also stated that it has data from a 2009 Pennsylvania Department of Environmental Protection violation report documenting a fishkill attributed to a spill of diluted produced water in Hopewell Township, PA.\nIn March 2011, EPA’s Office of Water issued to the Regions a set of questions and answers that provide state and federal permitting authorities in the Marcellus shale region with guidance on permitting treatment and disposal of wastewater from shale gas extraction. guidance states that POTWs must provide adequate notice to the permitting authority (EPA or the authorized state) of any new introduction of pollutants into the POTW from an indirect discharger, if the discharger would be subject to NPDES permit requirements if it were discharging directly to a surface water, among other things. EPA officials indicated that if a POTW is accepting types of wastewater that were not on its original application, EPA could require a modification of the POTW’s NPDES permit, or object to a NPDES renewal that did not address these wastewaters and the facility’s ability to treat them. POTWs may also initiate inclusion of these wastewaters in their permits or permit renewals. For example, EPA Region 3 officials stated that four POTW operators in Pennsylvania in the NPDES renewal process have indicated the intent to continue accepting oil and gas wastewater. In addition, in cases with pass through or interference, EPA could require a POTW to develop a pretreatment program.\nEPA’s website indicates the agency plans to supplement the existing Office of Water questions and answers document with additional guidance directed to permitting authorities, pretreatment control authorities and POTWs, to provide assistance on how to permit POTWs and other centralized wastewater treatment facilities by clarifying existing CWA authorities and obligations. Specifically, EPA plans to issue two guidance documents, one for permit writers and another for POTWs.", "With respect to shale gas extraction, the effluent limitations guideline for the onshore subcategory in effect since 1979 has prohibited direct discharges of associated wastewaters; however, EPA has not established pretreatment standards for indirect discharges of such wastewaters. EPA requested and received comments on whether to initiate a rulemaking for the industry in recent years.\nIn 2011, EPA announced it will initiate a rulemaking to develop such pretreatment standards. EPA reviewed existing data, but did not conduct a study to develop data as it had for coalbed methane. EPA found that pollutants in wastewaters associated with shale gas extraction are not treated by the technologies typically used at POTWs or many centralized treatment facilities. the potential to affect drinking water supplies and aquatic life. On this basis, EPA concluded that pretreatment standards are appropriate and decided to initiate a rulemaking. EPA intends to conduct a survey, among other things, to collect information on management of produced water to support the rulemaking. Finally, EPA noted that if it obtains information indicating that POTWs are already adequately treating shale gas wastewater, the agency could adjust the rulemaking plans accordingly.operators of Marcellus shale gas wells stop delivering produced water to POTWs, potentially avoiding the issue. EPA officials stated that other states may nonetheless have a need to utilize POTWs to address these wastewaters and hence could benefit from pretreatment standards.\nFurther, EPA stated that resulting discharges have For example, the state of Pennsylvania requested that EPA is in the preproposal stage of this rulemaking, and EPA’s website indicates the projected date for publication of the proposed rule is 2014.\n76 Fed. Reg. at 66,295-96. According to EPA, POTWs typically have permits that do not contain limits for the pollutants of concern in shale gas wastewater; the secondary treatment requirements do not address such pollutants, and is it uncommon for these permits to contain water quality based limitations for such pollutants. Id. at 66,297. Thus, such wastewaters likely pass through the POTWs receiving such wastewaters and the POTWs may not monitor for these pollutants in their effluent.\nId. at 66,297.", "In 1987, the Water Quality Act amended CWA to establish a specific program for regulating stormwater discharges of pollutants to waters of the United States. Among other things, the amendments clarified EPA authority to require an NPDES permit for discharges of stormwater from several categories, including in relevant part those associated with industrial activity and construction activity. EPA subsequently issued regulations that address stormwater discharges from several source categories, including certain industrial activities and construction activities.\nGenerally, industrial sites obtain coverage for stormater through a general permit, such as the multisector general permit or construction general To do so, the facility operator submits a notice of intent, and permit. agrees to meet general permit conditions. For example, conditions for the construction general permit include applicable erosion and sediment control, site stabilization, and pollution prevention requirements. oil and gas exploration, production, processing, or treatment operations or transmission facilities composed entirely of flows which are from conveyances or systems of conveyances (including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying precipitation runoff and which are not contaminated by contact with, or do not come into contact with, any overburden, raw material, intermediate products, finished product, byproduct, or waste products located on the site of such operations.\nInterpreting the provision exempting oil and gas facilities, EPA issued regulations requiring permits for contaminated stormwater from oil and gas facilities. To determine whether a discharge of stormwater from an oil or gas facility is contaminated, EPA regulations establish that if a facility has had a stormwater discharge that resulted in a discharge exceeding an EPA reportable quantity requiring notification under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) or section 311 of CWA, or which contributes to violation of a water quality standard, the permit requirement is triggered for that facility.\nRegarding stormwater at oil and gas well sites, officials said it is unlikely there is a permit requirement because it is rare that stormwater would come into contact with raw materials. Nonetheless, if a facility anticipates having a stormwater discharge that includes a reportable quantity of oil or may result in a violation of water quality standards, then the facility would be obligated to apply for a NPDES permit. In applying for the permit, however, the facility has to agree not to discharge pollutants in a reportable quantity and not to discharge pollutants so as to cause a water quality violation. Given this, it is unclear whether facilities would apply for such a permit after they have had a release of a reportable quantity or contributing to a water quality violation. Furthermore, according to officials, EPA relies upon operators self-identifying based on reportable quantities or water quality violations.\nDespite these factors, EPA reviewed available data for the five states in which EPA administers the NPDES program, including Texas, and identified some stormwater general permit notifications for facilities that could be well sites.\nEPA regulations require permits for stormwater discharges from construction activities including clearing, grading, and excavating that result in land disturbance. Beginning in 1990, EPA began regulating stormwater discharges from construction sites disturbing more than 5 acres of land under its Phase I rule. Under Phase II rules issued in 1999, EPA regulated stormwater discharges from construction sites disturbing between 1 and 5 acres of land, with initial permit applications due in 2003.\nWith respect to oil and gas well sites, under the statutory provisions and EPA’s Phase 1 stormwater regulations, discharges of stormwater from construction activity would have required a permit only for sites disturbing more than 5 acres and where the stormwater is contaminated by contact with, or comes into contact with, any overburden, raw material, intermediate products, finished product, byproduct, or waste products located on the site of such operations. According to EPA officials, the agency believed few oil and gas sites met these conditions. They further explained that when EPA conducted the Phase II rulemaking for the smaller 1 to 5 acre sites, the agency assumed incorrectly that oil and gas well sites would be smaller than 1 acre and thus did not include oil and gas well sites in their economic analysis of the rule. After the rule’s issuance as it became aware that such sites would fall under the rule, and in light of industry objections over the lack of economic analysis, EPA delayed Phase II implementation at oil and gas well sites until 2006.\nBefore implementation of Phase II regulations at oil and gas well sites began, the Energy Policy Act of 2005 was enacted. The Energy Policy Act of 2005 amended CWA to specifically define the activities included in the oil and gas stormwater exemption. Where the law already exempted from NPDES permit requirements discharges of stormwater from “oil and gas exploration, production, processing, or treatment operations or transmission facilities,” the Energy Policy Act of 2005 added a definition of this term as “all field activities or operations associated with exploration, production, processing, or treatment operations, or transmission facilities, including activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities.”\nIn response to these amendments, in 2006, EPA revised a key provision of the regulations concerning oil and gas stormwater discharges. The revision provided that discharges of sediment from oil or gas facility construction activities and contributing to a water quality standard violation would not trigger a permit requirement. This revision was vacated and remanded by the Ninth Circuit in 2008. EPA has not subsequently revised the regulations applicable to stormwater discharges from oil and gas facilities; the pre-2006 regulations remain in effect as to this industry. EPA officials said the agency intends to revise its regulations to address the court’s vacatur in an upcoming stormwater rulemaking, with the proposal expected in 2013.\nAccording to EPA officials, during construction, oil and gas well sites would have no permit requirement because of the statutory exemption.", "For violations of the law, or applicable regulations or permits, EPA has authority to issue administrative orders requiring compliance, impose administrative penalties, as well as to bring suit and, in conjunction with the Department of Justice, to impose civil penalties. Among other things, EPA can take such actions if a well operator violates the CWA prohibition on unauthorized discharges of pollutants to surface waters. EPA also has information-gathering and access authority relative to point source owners and operators, which could include certain oil and gas well site operations. For example, EPA has authority to inspect facilities where an effluent source is located.\nAs an example of enforcing the prohibition of unauthorized discharges, in 2011, EPA Region 6 assessed an administrative civil penalty against a company managing an oil production facility in Oklahoma for discharging brine and produced water to a nearby stream. entered a consent agreement with an oil production company in Colorado for unauthorized discharges of produced water from a multiwell site due to a failed gas eliminator valve in a produced water transportation pipeline. The produced water travelled overland for 333 feet, then entered a stream tributary to an interstate river. The company agreed to pay a civil penalty and to conduct a macroinvertebrate study for the affected watershed.", "American Petroleum & Environmental Consultants, Inc., Cease and Desist Administrative Order, EPA Docket No. CWA-06-2012-1760 (Dec. 12, 2011). take such other action as may be necessary, upon receipt of evidence that a pollution source or combination of sources is presenting an imminent and substantial endangerment to the health of persons or to the livelihood of persons. Unlike the analogous provisions of several other major environmental laws, however, CWA section 504 does not expressly mention administrative orders.", "", "EPA’s Oil Pollution Prevention regulations, promulgated and amended pursuant to CWA and the Oil Pollution Act, impose spill prevention and response planning requirements on oil and gas well sites that meet thresholds. Specifically, the Spill Prevention, Control, and Countermeasure (SPCC) Rule applies to sites with underground and/or aboveground storage tanks above certain thresholds and where oil could be discharged into or upon navigable waters.production facilities, among others, generally are subject to the rule if they (1) have an aggregate oil storage capacity of greater than 1,320 gallons in aboveground oil storage containers or a total oil storage capacity greater than 42,000 gallons in completely buried storage tanks and (2) could reasonably be expected, due to their location, to discharge harmful Onshore oil and gas quantities of oil into or upon U.S. navigable waters or adjoining shorelines.\nThe SPCC rule, as amended, requires each owner or operator of a regulated facility to prepare and implement a plan that describes how the facility is designed, operated, and maintained to prevent oil discharges into or upon U.S. navigable waters and adjoining shorelines. The plan must also include measures to control, contain, clean up, and mitigate the effects of these discharges.\nEPA regulations specify requirements for SPCC plans for onshore oil drilling and oil production facilities. Onshore drilling facilities must meet the general requirements for such plans, as well as meet specific discharge prevention and containment procedures: (1) position or locate mobile drilling or workover equipment so as to prevent a discharge; (2) provide catchment basins or diversion structures to intercept and contain discharges of fuel, crude oil, or oily drilling fluids; and (3) install a blowout prevention (BOP) assembly and well control system before drilling below any casing string or during workover operations. Oil production facilities are exempt from the SPCC security provisions.\n73 Fed. Reg. 74,236 (Dec. 5, 2008). reviewed the spill data for the oil production sector contained in its study of the exploration and production sector…While these data do not characterize the extent of environmental damage caused by oil discharges from small oil production facilities, they demonstrate that the volume of oil discharged from onshore oil production facilities increasing, and the number of oil discharges on a yearly basis has remained the same, despite a decline in crude oil production. In addition, oil production facilities are often unattended, and typically located in remote areas, which potentially increases the risk of environmental damage from an oil discharge of oil.\nVarious development activities at oil and gas well sites involve storage of oil that may trigger the SPCC regulations to impose these requirements. During initial exploration and drilling, the capacity of the fuel tank of the drill rig is the primary way the SPCC rule could be triggered, and EPA officials said that almost all drill rigs exceed the threshold capacity. During well completion and workover, where hydraulic fracturing is conducted, EPA officials said the capacity of the fuel tank in the turbines and pumps being used for fracturing typically exceed the threshold. As to wells in the production phase, they said there would generally be no SPCC requirement at dry gas wells, because they would not be storing condensate on-site. For wet gas and oil production, the size of the condensate or oil tanks on the site would be the key to whether SPCC is triggered.\nId. at 58,802. See also Considerations for the Regulation of Onshore Oil Exploration and Production Facilities Under the Spill Prevention, Control, and Countermeasure Regulation (40 C.F.R. part 112)) (available at www.regulations.gov document EPA–HQ– OPA–2007–0584–0015).\nEPA has developed guidance related to SPCC applicability and compliance for oil production, drilling, and workovers. According to officials, EPA is currently developing a “frequently asked questions” document about the SPCC program and hydraulic fracturing. This document is being developed in response to an influx of questions about how the SPCC rule applies to gas well sites, particularly from companies active in the Marcellus shale. According to EPA officials, while the SPCC is focused on oil, wet gas wells involve condensates, some of which have traditionally been deemed liquid hydrocarbons and included in the program. In particular, questions have arisen over the lightest condensates (C2 and C4 hydrocarbons), which are usually in gaseous form at standard temperatures and pressures and hence are not included in the SPCC program, whereas storage of heavier condensates, such as C6+ hydrocarbons, has been included (as liquids) in the SPCC program.\nEPA directly administers the SPCC program. require facilities to report to the agency that they are subject to the SPCC rule and, as of 2008, EPA did not know the universe of SPCC-regulated facilities, but the agency was considering developing some data. EPA officials stated that they have significant data but not complete data because of the lack of a registration or submittal requirement. To ensure that facility owners and operators are meeting SPCC requirements, EPA personnel inspect selected regulated facilities to determine their compliance with the regulations. For some facilities, the SPCC compliance date was in November 2011. EPA is working to develop a national database of sites inspected under the SPCC rule. Officials said that the SPCC program’s database includes 120 inspections at oil and gas production facilities for fiscal year 2011, of which 105 had some form of noncompliance, which varies in significance from paperwork inconsistencies to more serious violations (though EPA officials were unable to specifically quantify the number of more serious violations).\nThe Clean Water Act does not provide EPA with the authority to authorize states to implement the program in its place.\nAccording to EPA headquarters officials, EPA generally selects facilities for inspection based on spill reports EPA receives through the National Response Center.\nThe Oil Pollution Prevention Regulation also requires an owner or operator of nontransportation onshore facilities that could, because of location, reasonably be expected to cause substantial harm to the environment by discharging oil into or on the navigable waters or shorelines, to submit to the appropriate EPA Regional office a facility response plan. The regulation specifies criteria to be used in determining whether a facility could reasonably be expected to cause substantial harm and hence triggers such requirement, and it also provides that the EPA Administrator may at any time, on determination considering additional factors, require a facility to submit a facility response plan. A facility owner or operator also may maintain certification that it could not, because of location, reasonably be expected to cause substantial harm by discharging oil into or onto navigable waters or shorelines. Relevant to oil well sites, the initial criteria for requiring a facility response plan is that the facility has total oil storage of 1 million gallons or more. Where such facilities meet at least one of four other criteria—such as lacking secondary containment, or located at distances that could injure fish and wildlife—then a facility response plan is required. The plan is to provide, in essence, an emergency response action plan for the worst-case discharge and other relevant information. According to EPA officials, onshore oil well sites would typically not go over the threshold criteria triggering the requirement for a facility response plan. Officials said there may be a small number of sites where very large or centralized operations with a number of wells connected to central piping and/or storage might trigger a facility response plan.", "CWA established the policy of the United States that there should be no discharges of oil or hazardous substances into or upon U.S. navigable waters or onto adjoining shorelines, among other resources, and generally prohibited such discharges. Relevant provisions require reporting of certain discharges of oil or a hazardous substance to these waters.\nEPA has issued regulations designating those hazardous substances that present an imminent and substantial danger to the public health or welfare when discharged to U.S. navigable waters or onto adjoining shorelines in any quantity.\nEPA also has determined, in regulations, the quantities of oil and other hazardous substances of which the discharge to U.S. navigable waters or onto adjoining shorelines may be harmful to the public health or welfare or the environment. CWA in conjunction with these regulations require facilities to report to the National Response Center certain unpermitted releases of oil or hazardous substances to surface waters. The National Response Center subsequently sends reports to EPA Regions and headquarters. With respect to oil, discharges of oil must be reported if they “(c)ause a film or sheen upon or discoloration of the surface of the water or adjoining shorelines or cause a sludge or emulsion to be deposited beneath the surface of the water or upon adjoining shorelines,” or if they violate applicable water quality standards. With respect to hazardous substances, EPA has determined threshold quantities—those which may be harmful to the public health or welfare or the environment— known as reportable quantities.", "EPA, as well as other relevant federal agencies, has various response authorities to ensure effective and immediate removal of a discharge, and mitigation or prevention of a substantial threat of a discharge, of oil or a hazardous substance to U.S. navigable waters or onto adjoining shorelines. The National Oil and Hazardous Substances Pollution Contingency Plan, issued by EPA by regulation, provides a system to respond to discharges and to contain, disperse, and remove oil and hazardous substances, among other things.EPA Region 5, in conjunction with the state of Ohio, the Region has responded to several incidents in which orphan wells were found to be leaking or discharging crude oil into waterways.\nFor example, according to Under CWA section 311, as required to carry out its purposes including spill prevention and response, EPA also has authority to require the owner or operator of a facility subject to the Oil Pollution Prevention Regulation, among other provisions, to establish and maintain such records; make such reports; install, use, and maintain such monitoring equipment and methods; provide such other information deemed necessary; and for entry and inspection of such facilities.", "For violations of the law, or applicable regulations or permits, EPA has authority to issue administrative orders requiring compliance, impose administrative penalties, as well as to bring suit, in conjunction with the Department of Justice, to impose civil penalties.EPA the authority to access records and inspect facilities, and the ability Section 311 also gives to require provision of information, with respect to persons and facilities subject to section 311, including SPCC program requirements.\nFor example, in Region 8, EPA participated in an effort with the U.S. Fish and Wildlife Service (FWS), states, and tribes, after FWS expressed concerns about migratory birds landing on open pits that contained oil and water, which killed or harmed the birds. surveys to observe pits. Where apparent problems were identified, relevant federal or state agencies were notified and were to give oil and gas operators an opportunity to correct problems. Ground inspections were then conducted where deemed warranted and, if problematic conditions were found, further follow-up action was taken by EPA or the relevant state or other federal agency. As a result of this effort, 99 sites with violations of SPCC requirements were identified. EPA’s report stated that “on-compliance with SPCC requirements was more pervasive than anticipated. Although the SPCC program has been the focus of outreach and compliance assistance nationally for more than 25 years, there remains a strong need to communicate its requirements, inspect regulated facilities, and conduct appropriate technical assistance or enforcement to ensure improved compliance.” The report states that, for most SPCC violations, EPA issued a notice of violation and that many notice of violation recipients came into compliance without escalation to formal enforcement, but that some enforcement actions were taken. Region 8 reported identifying 22 sites with documented SPCC violations as a result of subsequent efforts in 2004-2005. Information on the nature or resolution of these violations was not readily available.\nEPA Region 8, Oil and Gas Environmental Assessment Effort 1996 – 2002, v (2003).", "CWA section 311 provides EPA authority to address certain releases of oil or hazardous substances to U.S. navigable waters and adjoining shorelines. Specifically, on determination that “there may be an imminent and substantial threat to the public health or welfare of the United States, including fish, shellfish, and wildlife, public and private property, shorelines, beaches, habitat, and other living and nonliving natural resources under the jurisdiction or control of the United States, because of an actual or threatened discharge of oil or a hazardous substance from a vessel or facility” in violation of the prohibition against discharges of oil or hazardous substances to U.S. navigable waters and adjoining shorelines, EPA may bring suit, or may, after notice to the affected state, take any other action under this section, including issuing administrative orders, that may be necessary to protect the public health and welfare.", "Production components may include, but are not limited to, wells and related casing head, tubing head and ‘‘Christmas tree’’ piping, as well as pumps, compressors, heater treaters, separators, storage vessels, pneumatic devices and dehydrators. Production operations also include the well drilling, completion and workover processes and includes all the portable non-self-propelled apparatus associated with those operations.\nIn addition, EPA officials have noted that tanks, ponds, and pits are sources of emissions that may be present at well sites. Others have also identified condensate storage tanks and flaring as significant emission sources often associated with gas wells. The key criteria pollutant of concern for oil and gas production is VOCs, as an ozone precursor, and the primary HAP released by the oil and gas production industry are BTEX (benzene, toluene, ethylbenzene, and xylenes) and n-hexane.\nTo address stationary sources under CAA, EPA is required to promulgate industry-specific emissions standards such as National Emission Standards for Hazardous Air Pollutants (NESHAP) and New Source Performance Standards (NSPS) for source categories that EPA has listed under the Act. CAA also provides for review of new and modified major sources of emissions under the Prevention of Significant Deterioration and Nonattainment New Source Review programs, typically implemented by states. CAA and EPA regulations require operating permits, known as Title V permits, for certain stationary sources, and establish minimum requirements for state operating permitting programs.programs is described below as it may apply to oil and gas well sites.\nMobile sources associated with oil and gas production may include trucks bringing fuel, water, and supplies to the well site; construction vehicles; and truck-mounted pumps and engines. That is, oil and gas wells may be served by a variety of road and nonroad vehicles and engines. EPA regulates emissions from an array of mobile sources by imposing emission limits on such vehicles and engines; these generally applicable regulations are not specific to the oil and gas industry and are not discussed here.\nFinally, the Act includes provisions addressing accidental releases of dangerous pollutants to the air. Oil and gas wells are unlikely to trigger the planning aspects of these provisions, according to EPA; however, the well sites are subject to the general duty clause, a self-implementing provision of CAA under which operators are responsible for identifying hazards associated with accidental releases and designing and maintaining a safe facility, taking such steps as are necessary to prevent releases.\nTable 9 summarizes the applicability of key Clean Air Act programs to emission points at oil and gas well sites. These provisions will be discussed in greater detail in this appendix.", "", "The 1990 CAA amendments significantly expanded the hazardous air pollutants program; they identified 189 specific HAPs to be regulated, required EPA to list categories of sources to be regulated, and established implementation timelines. The list of HAPs includes several potentially found in oil and gas well emissions. In addition to these listed HAPs, EPA and others have identified hydrogen sulfide, which is found in oil and gas well emissions but is not a listed HAP, as hazardous and toxic to humans. EPA has the authority to add to the HAPs list pollutants which may present, through inhalation or other routes of exposure, a threat of adverse human health effects or adverse environmental effects, but not including releases subject to EPA’s regulation under section 112(r)—namely, the accidental release and risk management regulations. The prevention of accidental releases regulation includes accidental releases of hydrogen sulfide. In a 1993 report to Congress, EPA found that the limited data available did not evidence a significant threat to human health or the environment from “routine” emissions of hydrogen sulfide from oil and gas wells.\nCAA provides a process to petition EPA to modify the HAPs list. On March 30, 2009, the Sierra Club and 21 other environmental and public health organizations and individuals petitioned EPA to list hydrogen The petitioners asserted that sulfide as a HAP under section 112(b). low-level hydrogen sulfide emissions not addressed by the accidental release provisions in section 112(r) are harmful to human health.officials told us they are considering the petition but have no specific timeline for acting upon it.", "EPA is required to promulgate and periodically revise NESHAPs for source categories the agency has identified. NESHAPs may include standards for major sources and for area sources, which are any sources not major. Major source NESHAPs are based on the maximum achievable control technology (MACT), while EPA may use a different standard of generally available control technology for area sources.\nS under CAA section 112(b), especially since H2S’s routine exposure effects – on a daily basis – are not addressed whatsoever under the accidental release provisions in section 112(r) of CAA.” Id. at 1. combination of HAPs. Normally, the determination of a facility’s potential to emit HAPs is based on the total of all activities at a facility, known as aggregation. Under a unique provision of CAA, however, “emissions from any oil or gas exploration or production well (with its associated equipment) and emissions from any pipeline compressor or pump station shall not be aggregated with emissions from other similar units,” to determine whether such units or stations are major sources of air pollution, or for other purposes under section 112 (e.g., the HAPs section). Finally, facilities that do not contain a regulated unit (e.g., glycol dehydrator or covered storage vessel) are not subject to any requirement in the rule, even if they emit HAPs.\nRegarding the aggregation provisions, EPA officials explained that the agency has historically interpreted the statutory language to prohibit aggregation of HAP emissions from wells and associated equipment, meaning that each well and piece of associated equipment must be evaluated separately for purposes of determining major source status. EPA has defined “associated equipment” in the regulations. Officials said that EPA has not evaluated the significance of the aggregation prohibition and EPA’s interpretation of it, such as its effect on the numbers of facilities that are or are not regulated as major sources and hence subject to MACT controls. Officials also said that it is likely that the effect of the aggregation provisions on well sites is smaller than its impact on downstream oil and gas production facilities where equipment tends to be larger and would be more likely to trigger MACT requirements if aggregated.\n64 Fed. Reg. at 32,619.", "EPA originally promulgated the NESHAPs for Oil and Natural Gas Production source subcategory in two parts: the standard for major sources was issued in 1999, and the NESHAP for area sources in 2007. In April 2012, EPA promulgated amendments to the NESHAPs for major sources.\nThe NESHAPs for major sources apply to emission points of HAPs located at oil and natural gas production facilities (including wells, gathering stations, and processing plants) that are major sources. Under this rule, in determining whether a well site’s potential to emit HAPs equals or exceeds 10 tons per year (the major source threshold), only emissions from equipment other than wells or “associated equipment,” may be aggregated; associated equipment is a defined term, and excludes glycol dehydrators and storage vessels. In other words, emissions from wells are not aggregated; only emissions from glycol dehydrators and storage vessels at a site may be aggregated. Further, the rule exempts facilities exclusively handling and processing “black oil” and small oil and gas production facilities, including well sites, prior to the point of custody transfer.which these exemptions have the effect of cancelling MACT requirements that would otherwise apply to oil and gas wells from unconventional deposits.\nEPA documents do not indicate the extent to EPA headquarters officials did not know if any oil or gas wells were NESHAP major sources prior to the April 2012 amendments, and EPA officials in each of the four Regions we contacted were unaware of any examples of oil and natural gas wells being regulated as major sources. EPA officials noted that glycol dehydrators are more likely where there are high pressure gas wells, such as in the Jonah-Pinedale area of Wyoming. EPA officials said that a multiple pad well site in this area would very likely be major for HAPs, except that any federally enforceable standards are first applied to determine the potential emissions, and Wyoming’s presumptive best available control technology standards would likely limit the emissions such that the potential to emit would be reduced to area source levels. Analyses developed for the recent amendments also do not identify if any well sites triggered the major source NESHAPs prior to the amendments, but available data suggest few well sites do so.\nLarge glycol dehydrators are those with an actual annual average natural gas flowrate equal to or greater than 85 thousand standard cubic meters per day and actual annual average benzene emissions equal to or greater than 0.90 Mg/yr. 77 Fed. Reg. 49,490 , 49,568-69 (Aug. 16, 2012) (revising 40 C.F.R. §§ 63.761, 63.760(b)). cover vented through a closed vent system to a control device that recovers or destroys HAPs emissions with an efficiency of 95 percent or greater, or for combustion devices, reduces HAPs emissions to a specified outlet concentration. However, these standards only apply at sites that are deemed major sources, and as outlined above, it appears likely that few well sites reach the key threshold emissions level.\nThe April 2012 amendments added one more emission source to the These sources NESHAP major source rule: small glycol dehydrators. must meet a unit-specific limit for emissions of BTEX that is calculated using a formula in the rule based on the unit’s natural gas throughput and gas composition. Existing dehydrators have 3 years to comply, while new dehydrators must comply upon start-up.\nId. at 49,503; see also EPA, Summary of Requirements for Processes and Equipment at Natural Gas Well Sites. these sources in order to analyze and establish MACT emission standards for this subcategory of storage vessels.”\nIn addition, the April 2012 amendments changed a key definition in the NESHAPs for determining major source status. change (i.e., revision to the definition of “associated equipment”) is that emissions from all storage vessels and all glycol dehydrators now will be counted toward determining whether a facility is a major source under the NESHAP for Oil and Natural Gas Production. EPA documents do not indicate the extent to which the change in definition will result in additional oil and gas wells being subject to the MACT requirement.\nCAA prohibits EPA from listing oil and gas production wells (with its associated equipment) as a specific “area source” category, unless the area source category is for oil and gas production wells located in any metropolitan statistical area or consolidated metropolitan statistical area with a population in excess of 1 million, and the EPA Administrator determines that emissions of HAPs from such wells present more than a negligible risk of adverse effects to public health.\nId. at 49,501, 49,569 (revising 40 C.F.R. § 63.761).\nEPA defines these control areas with reference to parameters used by the U.S. Census Bureau to identify densely settled areas. See 72 Fed. Reg. 26, 28 (2007). limit for benzene. For area sources outside of these control areas, an operational standard is required instead of an add-on control.\nArea sources are required to notify EPA that they are subject to the rule; additional information, including periodic reports, are required for area sources within a control area. The area source notifications are sent to a specific EPA e-mail box. EPA does not track whether the facilities providing notification are well sites or other components of the oil and natural gas production sector, so it is difficult to determine to what extent oil and gas well sites are subject to the area source NESHAP.\nRegarding EPA’s authority to establish an area source category for oil and gas wells in metropolitan statistical areas, if certain conditions are met, officials said that EPA has not considered doing so. They said that they have not analyzed well emissions in relation to location in or outside a metropolitan statistical area, and that if the agency were to consider developing an area source within metropolitan statistical areas, they would need to conduct a new data collection effort.", "In addition, EPA has promulgated other NESHAPs, the applicability of which to oil and gas well sites depends upon the particular equipment— and factors such as capacity or emission rate—used at a well site. Although some published materials suggest several NESHAPs may apply, based on discussions with EPA, the primary NESHAP that officials believe could apply at oil and gas well sites is the Boilers and Process Heaters NESHAP for major sources.\nThe major source rule for boilers and process heaters has an unusual feature in that, to determine applicability of the rule, it references whether or not an oil and gas production facility falls within the major source definition under the NESHAPs for Oil and Gas Production Facilities (subpart HH). If an oil and gas well were a major source under the Oil and Gas NESHAP, then any boilers or process heaters with heat input of 10 million British thermal units (BTU) per hour are subject to emission limitations requirements, and any smaller heaters are subject to work standards, under the Boiler NESHAP. These requirements differ from those in the NESHAP for Oil and Gas Production Facilities by, among other things, imposing limits for other pollutants, such as particulate matter, hydrogen chloride, mercury, carbon monoxide, and dioxins/furans, depending on the type of unit. Officials stated that some glycol dehydrators at well sites could be over the trigger heat input and would be subject to the Boiler NESHAP requirements if the oil and gas site were a major source subject to the rule. As noted above, it is not known how many, if any, well sites are major sources.\nWhere a gas well has a compressor, the compressor engine may be EPA did not have available subject to standards for stationary engines. information on the extent to which these engines are present at well sites and, if so, whether they fall under these rules, which are based on equipment and are not specific to the oil and gas industry.", "EPA promulgates NSPS, which are generally applicable to (1) new or reconstructed facilities and (2) facilities that have undergone modification—that is, any physical change in, or change in the method of operation of, a facility which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted. These rules are implemented by EPA or by states through delegation.the NSPS primarily regulates VOCs (as an ozone precursor).\nFor the oil and gas production industry, In 1985, EPA promulgated NSPS for the oil and gas industry focused on natural gas processing plants, but did not include any standards for emissions from preprocessing production activities. promulgated such standards for some production emissions, notably completion and recompletion of certain hydraulically fractured gas wells.In addition, some other generally applicable standards for certain equipment may apply at oil and gas well sites.", "In April 2012, EPA promulgated amendments to the NSPS for the Oil and Gas sector, including new standards applicable to the production source category. The new standards were issued pursuant to a 2010 consent decree that settled a challenge brought by environmental groups over EPA’s failure to conduct required reviews of the existing standards. Following publication of the new rules in August 2012, an industry group petitioned EPA to reconsider certain aspects of the new rules.\n40 C.F.R. pt. 60, subparts KKK, LLL. completions and recompletions of natural gas wells, with variable implementation dates as described in table 10. These practices are designed to capture emissions from flowback from hydraulically fractured wells, and reduce VOC emissions. EPA’s regulatory impact analysis estimated that the rules will apply to about 9,700 new wells per year, and to about 1,200 existing wells being recompleted per year. Of these, EPA’s analysis estimates that nearly 9,400 wells will be required to use “green completion” techniques to capture and treat flowback emissions so that the captured natural gas can be sold or otherwise used, while the remainder will use completion combustion.\nAdditionally, to reduce VOC emissions, the April 2012 rule establishes standards including those for, as relevant to gas well sites, gas-driven pneumatic controller devices and storage vessels, subject to thresholds. According to EPA documents, over 13,600 pneumatic controllers will be affected, but it is not clear the extent to which these are located at well sites. Similarly, EPA documents estimate that 304 storage vessels annually will trip the threshold of 6 tons per year of VOC and thus be subject to the rule, and EPA officials expect most of these storage vessels will be located at wells.\nWhen asked about the potential increased burden of the amended NSPS rules, officials said that it was not clear whether the rule would result in more or fewer CAA-related permits. For example, the applicability of NSPS may trigger a state requirement to get a construction permit or other type of permit. These permits may be triggered by, among other things, a facility’s “potential to emit” that is calculated assuming all federally enforceable controls are in place. Officials said that the NSPS, which are federally enforceable requirements, will reduce actual emissions and thus could reduce the number of facilities that trigger the requirement for these state permits. In the new rule, EPA generally exempted covered facilities from the obligation to obtain a Title V operating permit.", "EPA has issued equipment-focused NSPS for certain equipment that may be used at oil and gas well sites. These include NSPS for Volatile Organic Liquid Storage Vessels (Including Petroleum Liquid Storage Vessels). These standards apply to such tanks with a capacity greater than or equal to 75 cubic meters that is used to store volatile organic liquids and that were built, reconstructed, or modified after July 23, 1984. Tanks attached to trucks and other mobile vehicles are excluded.while there are tanks at well sites, they are often smaller than the threshold in this rule. Specifically, while the standards apply to tanks greater than 75 cubic meters (about 475 barrels, according to EPA), an individual tank typically found at oil and gas sites is often between 250 – 400 barrels, hence avoiding coverage under this rule.\nOther NSPS that have been identified as potentially relevant include those for gas turbines and steam generators. EPA officials said, however, that typical activity at well sites is not enough to trigger thresholds for coverage under this rule, either.", "CAA New Source Review (NSR) provisions require a source to obtain a permit and undertake other obligations to control its emissions of air pollution prior to construction of a new source or modification of an existing stationary source. However, NSR only applies if the construction project results in actual emissions or the potential to emit regulated air contaminants at or above certain threshold levels established in the NSR regulations. For a new source, NSR is triggered only if the emissions would cause the source to qualify as major. For an existing major source making a modification, NSR is triggered only if the modification will result in a significant increase in emissions and a significant net emissions increase of that pollutant. Relevant to NSR, the emission profile for oil and gas wells would include hydrogen sulfide and VOCs, among others. In most areas, states implement the NSR permitting programs.\nThe major NSR program is actually composed of the following two separate programs:\nNonattainment NSR applies to emission of specific pollutants from sources located in areas designated as nonattainment for those pollutants because they do not meet the pollutant-specific national ambient air quality standards.\nPrevention of Significant Deterioration (PSD) applies to emissions of all other regulated pollutants from sources located in attainment areas where such standards are met or in areas unclassifiable for such standards.\nFor PSD, the major source threshold is generally 250 tons per year of any regulated air pollutant. Determining whether a facility is a major source, together with identifying which emissions should be included in doing so is guided by the process as for Title V permits, discussed below. While a 1993 EPA report appeared to suggest that most oil and gas extraction wells would not likely be subject to PSD regulations based on the applicability criteria, the specific determination of which emission units, including wells, must be included in determining whether a source is major (source aggregation) involves a case-by-case, fact-specific analysis. For nonattainment NSR, the major source threshold ranges from 100 tons per year down to 10 tons per year depending on the severity of the air quality problem where the source is located and the specific pollutant at issue. To be a major source under nonattainment NSR, the source must emit or have a potential to emit above the major source level set for the specific regulated air pollutant (or its precursor) for which the area is designated nonattainment. With respect to nonattainment NSR, EPA officials stated that some large wells in nonattainment zones could be major sources standing alone because of low emission thresholds in certain areas; as noted above, such thresholds could be as low as 10 tons per year in the most severe nonattainment areas, versus 250 tons per year in attainment areas.", "Relevant to oil and gas production, CAA generally requires Title V permits for the operation of determined based on the facility’s actual emissions or “potential to emit;” any source, including a nonmajor source, subject to a NSPS; any source, including an area source, subject to a NESHAP, among any source required to obtain a PSD or NSR permit.\nThus, whether a Title V permit is required depends on whether the source (1) is subject to one of these other requirements, unless EPA has exempted the particular area sources or nonmajor sources from the Title V permit requirement, or (2) meets the emissions thresholds for a major source. Title V permits for a major source must include all applicable requirements for all relevant emission units in the major source. Title V permits for nonmajor sources must include all applicable requirements applicable to emissions units that caused the source to be subject to the Title V permitting requirements. Title V permits may need to add monitoring, reporting, or other requirements but generally do not add new emissions control requirements (rather they consolidate requirements from throughout CAA programs and contain conditions to assure compliance with such requirements). According to EPA officials, the permits help operators and the public to understand what the requirements are for compliance with CAA and help assure compliance with such requirements.\nTitle V permits are generally issued by states and, in some instances, EPA Regional offices. As of August 2012, EPA officials were unaware of any Title V permits issued solely on the basis of oil and gas well site emissions alone. EPA officials stated that some oil and gas well sites have adopted federally enforceable emissions limits such that the sites do not need a Title V permit, which they would otherwise have triggered. In addition, EPA identified a March 2012 case in which a state environmental agency alleged, among other things, that an oil and gas production site had VOC emissions of over 600 tpy, which would require a Title V permit. The operator disputed the violations but agreed to submit an application for a Title V permit.", "Applicable to both NSR and related determinations for Title V, EPA regulations specify three factors that must be met in source determinations—whether the emissions points are under common control, belong to the same major industrial grouping, and are located on contiguous or adjacent properties. Thus, in contrast to the NESHAPs, in determining whether significance thresholds for emissions are met for purposes of NSR or Title V, EPA and states must aggregate VOC emissions from oil and gas well sites that are both (1) contiguous or adjacent and (2) under common control. To determine whether a source meets the emissions thresholds for a Title V or NSR major source designation, EPA applies these regulatory criteria to evaluate whether to aggregate oil and gas production wells with other emission sources. Specifically, permitting authorities (EPA or authorized states or local authorities) have in particular matters, on a case-by-case basis, aggregated emissions from facilities to determine major sources, for purposes of Title V operating permits or NSR. Determining when emissions must be aggregated is a fact-based inquiry that is made by permitting authorities on a case-by-case basis. While authorized states are typically responsible for making source determinations, EPA headquarters has stated that Regional offices should continue to review and comment on source determinations to assure consistency with regulations and historical practice. In addition, EPA Regions may be responsible for source determinations in areas where they are responsible for permitting.\nAggregation of emissions from the oil and gas industry generally, including production facilities, has received recent attention. For example, in 2007, EPA provided guidance on how to evaluate aggregation in source determinations for the oil and gas industry. EPA later withdrew this industry-specific guidance and emphasized that source determinations in this industry were governed by the existing regulations, the existing interpretations of them, and need for case-specific application of the regulations in each permitting action.\nSee Summit Petroleum Corp. v. EPA, Nos. 09-4348, 10-4572, slip op. (6th Cir. August 7, 2012). oil and gas activities with the compressor station in determining the source. A citizen group appealed this decision to the Environmental Appeals Board. Both citizen group challenges were ultimately dismissed after the parties engaged in a dispute resolution process. EPA entered settlements with the citizen group and agreed to undertake a pilot program for the purpose of studying, improving, and streamlining source determinations in the oil and gas industry in new or renewal Title V permits for which EPA Region 8 is the initial Title V permitting authority.\nIn sum, several recent disputes over aggregation of oil and gas facilities involve whether or not well emissions should be aggregated; however, whether or not well emissions are aggregated for Title V or PSD purposes generally would not affect other federal requirements for emission controls at well sites.", "In 2009, EPA promulgated the Greenhouse Gas Reporting Rule, providing a framework for the greenhouse gas reporting program and establishing requirements for some source categories. According to EPA, the goals of the program are to obtain data that are of sufficient quality that they can be used to support a range of future climate change policies and regulations; to balance the rule coverage to maximize the amount of emissions reported while minimizing reporting from small emitters; and to create reporting requirements that are consistent with existing programs by using existing estimation and reporting methodologies to reduce reporting burden, where feasible.\nEPA subsequently issued and amended a rule to implement the program for the category of Petroleum and Natural Gas Systems, including oil and gas wells. According to EPA, oil and gas well sites may contain sources of greenhouse gas emissions including: (1) combustion sources, such as engines used on-site and which typically burn natural gas or diesel fuel, and (2) process sources, such as equipment leaks and vented emissions. The process sources include pneumatic devices, dehydrators, and compressors. EPA has identified the onshore production subcategory as the largest segment for equipment leaks and vented and flared emissions in the petroleum and natural gas system source category.\nThe rule requires petroleum and natural gas facilities—including oil and gas well sites—that emit 25,000 metric tons or more of carbon dioxide equivalent per year to report certain data to EPA. Specifically, oil and gas production facilities are to report annual emissions of carbon dioxide, methane, and nitrous oxide from equipment leaks and venting, gas flaring, and stationary and portable combustion.\nReporting is to begin in September 2012, for calendar year 2011.\n76 Fed. Reg. 73,886, 73,889, 73,899 (Nov. 29, 2011) (amending 40 C.F.R. § 98.3).\nFor purposes of this rule, onshore petroleum and natural gas production is defined to include all equipment on a single well pad or associated with a single well pad (including but not limited to compressors, generators, dehydrators, storage vessels, and portable non-self-propelled equipment which includes well drilling and completion equipment, workover equipment, gravity separation equipment, auxiliary non-transportation- related equipment, and leased, rented or contracted equipment or storage facilities), used in the production, extraction, recovery, lifting, stabilization, separation, or treating of petroleum and/or natural gas (including condensate). Moreover, the rule defines an onshore oil and gas production facility as including all oil or gas equipment on or associated with a well pad and carbon dioxide enhanced oil recovery operations that are under common ownership or control and that are located in a single hydrocarbon basin; thus, for example, where multiple wells are owned or operated by the same person or entity in a single basin, the owner or operator is to report well data collectively for each hydrocarbon basin. EPA estimated that this facility definition for onshore petroleum and natural gas production will result in 85 percent GHG emissions coverage of this industry segment, and EPA documents estimate that emissions from approximately 467,000 onshore wells are covered under the rule.", "Section 112(r) of CAA establishes the chemical accidental release prevention program applicable to specifically listed “regulated substances,” as well as other extremely hazardous substances. This provision, among other things, required EPA to publish regulations and guidance for chemical accident prevention at facilities using substances that pose the greatest risk of harm from accidental releases; the resulting regulatory program is known as the Risk Management Program. In conjunction with the program, EPA was required to promulgate a list of at least 100 substances which, in the case of an accidental release, are known to cause or may reasonably be anticipated to cause death, injury, or serious adverse effects to human health or the environment, and to periodically review the list. Among others, hydrogen sulfide is included on the list of regulated substances. Section 112(r) also established the Chemical Safety Board; and the general duty for owners and operators of facilities to take steps to prevent accidental releases of the listed and other extremely hazardous substances, among other things.", "Whether and the extent to which a facility is subject to the Risk Management Program requirements depends on the regulated substances present and their quantities, the processes, and the presence of receptors. Generally, the regulation requires, for covered processes, a three-part program including (1) a hazard assessment; (2) a prevention program that includes safety procedures and maintenance, monitoring, and employee training measures; and (3) an emergency response program.\n63 Fed. Reg. 640 (Jan. 6, 1998); 65 Fed. Reg. 13,243, 13,244 (Mar. 13, 2000). naturally occurring hydrocarbon mixtures, which include any combination of the following: condensate, crude oil, field gas, and produced water (defined as water extracted from the earth from an oil or natural gas production well, or that is separated from oil or natural gas after extraction), regulated substances in gasoline, when in distribution or related storage for use as fuel for internal combustion engines, and a flammable substance when the substance is used as a fuel.\nRegarding the exemption of naturally occurring hydrocarbon mixtures prior to entry into a processing plant or refinery, EPA explained at the time that the agency believed they do not warrant regulation, noting that the general duty clause would apply when site-specific factors make an In addition, EPA stated that, unlisted chemical extremely hazardous. for naturally occurring hydrocarbons and for regulated substances in gasoline, a key consideration was EPA’s original intent to exempt flammable mixtures that do not meet a preexisting standard—the National Fire Protection Association flammability hazard rating of 4. EPA has also explained that this rating reflects the potential to result in vapor cloud explosions and boiling liquid expanding vapor explosions, which it found pose the greatest potential hazard from flammable substances to the public and environment.\n40 C.F.R § 68.126 (2012).\nProgram rule. In this context, the Chemical Safety Information, Site Security and Fuels Regulatory Relief Act prohibited EPA from listing flammable substances used as fuel, solely because of their explosive potential. EPA then revised the regulation, adding the exemption to comply with the act.\nThe regulated chemicals present at oil and gas well sites include components of natural gas (such as butane, propane, methane, and ethane), but these are exempt from the threshold determination of a facility subject to the Risk Management Program when present in “naturally occurring hydrocarbon mixtures.” If an oil or gas well site nonetheless uses or stores some of the regulated chemicals not encompassed by the exemptions, it could trigger the risk management requirements.", "The owners and operators of stationary sources producing, processing, handling or storing such substances have a general duty …to identify hazards which may result from such releases using appropriate hazard assessment techniques, to design and maintain a safe facility taking such steps as are necessary to prevent releases, and to minimize the consequences of accidental releases which do occur.\nKnown as the “general duty clause,” the provision is analogous to a negligence standard, according to EPA officials. In other words, if there is a known risk and a way to mitigate it, then the operator should conduct risk mitigation. As explained in an EPA report, “responsibilities include the conduct of appropriate hazard assessments and the design, operations, and maintenance of a safe facility,” as well as release mitigation and community protection. EPA officials noted that industry standards (such as from the American National Standards Institute or the American Petroleum Institute) and fire codes are used in determining the duty of care. EPA has published Chemical Safety Alerts to advise the regulated community of its general duty clause obligations.\nThe general duty clause applies to sources handling or storing substances listed by EPA in the Risk Management Program regulations or any other extremely hazardous substance, without a threshold. EPA headquarters officials said that, conceivably, the general duty clause would apply to every single well but stated that it would be in EPA Regions’ discretion where and when to use the general duty clause to conduct inspections. In some Regions, EPA has conducted inspections of gas well sites to enforce the general duty clause, including identifying noncompliance with certain safety standards. EPA Regional officials said that they use infrared video cameras to conduct inspections to identify leaks of methane from storage tanks or other equipment at well sites. For example, EPA Region 6 officials said they have conducted 45 inspections at well sites since July 2010 and issued 10 administrative orders related to violations of CAA general duty clause. EPA officials said that all well sites are required to comply with the general duty clause but that EPA prioritizes and selects sites for inspections based on risk.", "Section 112(r) also provides EPA with the authority to issue orders as may be necessary to protect the public health when the EPA Administrator determines that there may be an imminent and substantial endangerment to human health or welfare or the environment because of an actual or threatened accidental release of a regulated substance.", "The Chemical Safety Board, established by section 112(r), is charged with investigating and publicly reporting on accidental releases resulting in a fatality, serious injury, or substantial property damages. The board is authorized, among other things, to make recommendations to EPA. In September 2011, the Chemical Safety Board released a report investigating three incidents involving fatality and injuries at oil and gas storage tanks located at well sites and surveyed an additional 23 such incidents that occurred between 1983 and 2010. The report found that these accidents occurred when the victims—all young adults—gathered at rural unmanned oil and gas storage sites lacking fencing and warning signs. This report concluded such sites pose a public safety risk. The report also reviewed federal, state, and local regulations, inherently safer designs of tanks, and industry standards. Noting that exploration and production storage tanks are exempt from the security requirements of CWA and from the risk management requirements of CAA, the Chemical Safety Board recommended that EPA encourage owners and operators to reduce these risks. Specifically, the Chemical Safety Board recommended EPA “publish a safety alert directed to owners and operators of exploration and production facilities with flammable storage tanks, advising them of their general duty clause responsibilities for accident prevention under CAA.” The letter requests that EPA provide within 180 days a response stating how EPA will address the recommendation. On June 27, 2012, EPA responded to the Chemical Safety Board and stated that EPA agrees to develop and publish a safety alert and anticipates the agency will be able to publish a final safety alert by June 2013. The Chemical Safety Board also made related recommendations to several states and industry associations.", "Even where a state implements key CAA provisions, EPA retains oversight and enforcement authority. For example, EPA may initiate an enforcement action via an administrative order or a civil action for a violation of any requirement or prohibition of an applicable SIP, permit, or certain other requirement or prohibition after notification to the state and the party. CAA also gives EPA authorities regarding access to records and the ability to require provision of information, as to any person who owns or operates any emission source, among others.", "Where EPA receives evidence that a source or a combination of sources present an imminent and substantial endangerment to public health or welfare, or the environment, EPA may bring suit or, where prompt action is needed, issue orders to stop the emission of air pollutant or take other necessary action.and attempt to confirm the accuracy of information before taking such actions.", "In 1976, Congress passed the Resource Conservation and Recovery Act (RCRA), generally establishing EPA authority to regulate the generation, transportation, treatment, storage, and disposal of hazardous waste, and also including some provisions respecting solid waste. As to solid waste, RCRA provided a more limited federal role and included incentives for states to implement programs to manage nonhazardous solid waste disposal, a prohibition on open dumping of wastes, and a requirement for EPA to promulgate technical criteria for classifying solid waste disposal facilities, among other things.", "a solid waste, or combination of solid wastes, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may (A) cause, or significantly contribute to an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness; or (B) pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or disposed of, or otherwise managed.\nRCRA Subtitle D, 42 U.S.C. ch. 82, subch. IV (§§ 6941-6949a) (2012). ignitability, corrosivity, or reactivity. The generation, transport, and disposal of wastes meeting the RCRA regulatory hazardous definition are generally subject to RCRA Subtitle C requirements, such as reporting, using a manifest, and disposing of the waste in approved ways, such as through hazardous waste landfill.", "Notwithstanding the provisions for identifying hazardous wastes, the Solid Waste Disposal Act Amendments of 1980 created a separate process for certain oil and gas exploration and production wastes. Under the statute, these wastes would not be subject to regulation as hazardous waste under RCRA Subtitle C unless specific actions were taken. The amendments required EPA to conduct and publish “a detailed and comprehensive study…on the adverse effects, if any, of drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil or natural gas or geothermal energy on human health and the environment.” The study report was to “include appropriate findings and recommendations for Federal and non-Federal actions concerning such effects.” he Administrator shall, after public hearings and opportunity for comment, determine either to promulgate regulations under this subchapter for drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil or natural gas or geothermal energy or that such regulations are unwarranted. The Administrator shall transmit his decision, along with any regulations, if necessary, to both Houses of Congress. Such regulations shall take effect only when authorized by Act of Congress.\nIn considering the first factor, EPA found that a wide variety of management practices are utilized for these wastes, and that many alternatives to these current practices are not feasible or applicable at individual sites…As to the second factor, EPA found that existing State and Federal regulations are generally adequate to control the management of oil and gas wastes. Certain regulatory gaps do exist, however, and enforcement of existing regulations in some States is inadequate. EPA’s review of the third factor found that imposition of Subtitle C regulations for all oil and gas wastes could subject billions of barrels of waste to regulation under Subtitle C as hazardous wastes and would cause a severe economic impact on the industry and on oil and gas production in the U.S…and could cause severe short-term strains on the capacity of Subtitle C Treatment, Storage, and Disposal Facilities..and a significant increase in the Subtitle C permitting burden for State and Federal hazardous waste programs.\nId. at 25,446.\nEPA stated that regulation of these wastes as hazardous waste under Subtitle C posed significant problems, including the lack of flexibility in the statute to take into account the varying geological, climatological, geographic, and other differences characteristic of oil and gas production sites, and to consider cost in applying the requirements—such that EPA would be unable to craft a program to avoid severe economic impacts and to fill only the gaps in existing programs.\nIn lieu of regulating these wastes as hazardous waste under Subtitle C, EPA announced “a three-pronged approach toward filling the gaps in existing State and Federal regulatory programs,” comprised of (1) improving existing programs under RCRA, the Safe Drinking Water Act, and the Clean Water Act; (2) working with states to improve their programs; and (3) working with Congress on any additional legislation EPA further stated that it planned to revise its that might be needed. existing standards under Subtitle D of RCRA, “tailoring these standards to address the special problems posed by oil, gas, and geothermal wastes and filling the regulatory gaps,” and “in developing these tailored Subtitle D standards for crude oil and natural gas wastes, EPA will focus on gaps in existing State and Federal regulations and develop appropriate standards that are protective of human health and the environment. Gaps in existing programs include adequate controls specific to associated wastes and certain management practices and facilities for large-volume wastes, including roadspreading, landspreading, and impoundments.”\nEPA, Exploration & Production Waste and RCRA, presented at ASTSWMO Annual Meeting (Oct. 26, 2011).\nEnvironmental Regulations (STRONGER) program. EPA also worked with industry representatives to develop best management practices for exploration and production wastes, but these efforts did not culminate in any document or guidance.\nOn September 8, 2010, the Natural Resources Defense Council submitted a petition requesting regulation of waste associated with the exploration, development, or production of oil, natural gas, and geothermal energy. the determination not to regulate these wastes because, among other things, the underlying assumptions—concerning the availability of alternative disposal practices, the adequacy of state regulations, and economic harm to the oil and gas industry—are no longer valid. The petition requests that EPA promulgate regulations applying to wastes from the exploration, development and production of oil and natural gas under Subtitle C of RCRA.\nLetter, NRDC to EPA, Petition for Rulemaking Pursuant to Section 6974(a) of the Resource Conservation and Recovery Act Concerning the Regulation of Wastes Associated with the Exploration, Development, or Production of Crude Oil or Natural Gas or Geothermal Energy (Sept. 8, 2010); see also RCRA § 7004(a), 42 U.S.C. § 6974(a) (2012). issue, the agency intends to issue a proposed response to the petition. The proposed response will be printed in the Federal Register, and EPA will establish an electronic docket and provide an opportunity for public comment. Although EPA has not yet sought public comment on the petition, the agency has received several unsolicited comment letters, including from two industry associations, the STRONGER program, and two states.\nIf EPA revises the regulatory determination for some or all exploration and production wastes, the agency would conduct a full regulatory process to propose the regulations. Under the key RCRA provision, the regulations would not become effective until authorized by congressional action. Should the exemption be lifted, not all exploration and production wastes would necessarily be hazardous. Rather, whether particular exploration and production wastes would be hazardous and subject to regulation would depend on whether those particular wastes meet the regulatory definition of hazardous (i.e., are a listed waste or exhibit a characteristic of hazardous waste).", "While well sites wastes originating within the well or generated by field operations such as water separation, demulsifying, degassing, and storage are exempt, RCRA Subtitle C regulations generally apply to other wastes that may be generated at oil and gas wells, such as discarded unused products, solvents used to clean surface machinery, and others, if they are actually hazardous. In 2002, EPA published a guide titled “Exemption of Oil and Gas Exploration and Production Wastes from Federal Hazardous Waste Regulations” that identifies, among other things, a list of nonexempt wastes. The guide identified nonexempt wastes including the following wastes that may be generated by activities at oil and gas well sites: unused fracturing fluids or acids; oil and gas service company wastes such as empty drums, drum rinsate, sandblast media, painting wastes, spent solvents, spilled chemicals, and waste acids; vacuum truck and drum rinsate from trucks and drums transporting or containing nonexempt waste; used equipment lubricating oils; waste compressor oil, filters, and blowdown; used hydraulic fluids; caustic or acid cleaners; radioactive tracer wastes; and drums, insulation, and miscellaneous solids.\nAccording to EPA’s guidance document, this list represents some types of wastes that, if hazardous, are not exempt from Subtitle C regulation; however, these wastes may or may not be hazardous in a particular situation. These wastes are hazardous if they are a listed hazardous waste or exhibit a hazardous characteristic, such as ignitability or toxicity. If hazardous, then the facility is subject to waste management requirements that vary depending upon the amount of hazardous waste generated per calendar month.\nRCRA regulations establish several categories for facilities generating hazardous waste, with differing reporting obligations. Among these, the lowest level category is conditionally exempt small quantity generators, composed of facilities generating no more than 100 kilograms (220 pounds) per month of hazardous waste. These facilities are subject to limits on the amount of hazardous waste they accumulate, as well as general requirements to determine which wastes are hazardous and to ensure that any hazardous wastes sent for off-site disposal are sent to state-approved facilities, RCRA-permitted or interim status, or for certain wastes, universal waste facilities, facilities beneficially using, recycling, or reclaiming the waste. Generally, conditionally exempt small quantity generators would not be required to have an EPA ID number. Small quantity generators are those facilities generating more than 100 kilograms (220 pounds) but less than 1,000 kilograms (2,220 pounds) per month of hazardous waste. These facilities are subject to limits on the amount of hazardous waste they accumulate, as well as storage requirements, and general requirements to determine which wastes are hazardous and to ensure that any hazardous wastes sent for off-site disposal are sent to RCRA-permitted or interim status facilities. In addition, the small quantity generators are required to have an EPA ID number and use manifests, by which hazardous waste may be tracked.\nId. at § 262.12(a) (a generator, other than a conditionally exempt small quantity generator, is essentially required to obtain an identification number before storing the waste or offering it to a transporter.). and inspection purposes. Generally, EPA (or the authorized state’s) involvement at generator-only sites includes receiving notifications and issuing identification numbers, receiving biennial reports, conducting compliance assurance activities such as inspections, and investigating alleged problems.\nEPA has not undertaken a specific assessment of the extent to which oil and gas well sites are generating small amounts of regulated hazardous wastes and consequently are regulated as small quantity generators or conditionally exempt small quantity generators. EPA officials were unaware of the extent to which oil and gas well sites generate nonexempt hazardous waste (e.g., hazardous wastes other than exempt exploration and production wastes) in quantities significant enough to require an EPA ID number. EPA Region 8 officials were unaware of any instances in which a well site requested an EPA ID number. A challenge in understanding the extent to which oil and gas well sites are regulated stems in part from the use of North American Industry Classification System (NAICS) codes. While there is a code at the six-digit level that generally corresponds with oil and gas production, it appears that, for some facilities with this code, the facility entry includes associated downstream facilities such as a compressor station or gas processing plant, making it impossible to use RCRAInfo – a publicly available EPA database that contains information on RCRA generators -- alone to identify well sites triggering the particular requirement of interest. For example, this database shows that some facilities with the oil and gas production NAICS code are listed as conditionally exempt small quantity generators. GAO’s review of a small sample of these listings suggests some may include downstream facilities, while others appear to be well sites.", "Oil and gas exploration and production wastes may be RCRA statutory solid wastes even if they are exempt from hazardous waste requirements or are nonhazardous wastes. As compared with hazardous waste, RCRA provided EPA a different and largely nonregulatory role for solid waste. EPA’s role in solid waste management is focused on assisting states in developing solid waste management programs. For example, EPA developed guidelines for certain aspects of solid waste management. A key part of EPA’s limited regulatory role for solid waste was to establish criteria defining which solid waste disposal facilities and practices are “sanitary landfills” and those which constitute “open dumps,” where RCRA prohibited open dumping of solid waste.\nConsistent with the scheme established by RCRA Subtitle D, states have primary responsibility for managing disposal of solid waste, including that resulting from oil and gas exploration and production. State solid waste programs regulate treatment (which may include incineration) and land disposal of these wastes, among other things. In addition, states may have specific programs to address oil and gas production wastes, and some states put such wastes in a special category of solid waste, such as industrial wastes, with more stringent requirements than the federal minimum requirements. (See report and app. IX for discussion of selected aspects of state waste management.)", "EPA has certain enforcement authorities to address hazardous wastes. RCRA sections 3007, 3008, and 3013 collectively provide EPA with authorities to monitor compliance, conduct investigations, and enforce Subtitle C (the hazardous waste subtitle) and its implementing regulations. Each of these key authorities depends, among other things, on the existence or presence of a hazardous waste in a given situation. EPA’s authority under sections 3007 and 3013 extends beyond waste that is regulated as hazardous under Subtitle C (e.g., wastes meeting the regulatory definition of hazardous waste), and includes waste that meets the statutory definition of hazardous waste in RCRA section 1004(5).\nFor example, section 3008(a) authorizes EPA to issue administrative compliance orders “whenever on the basis of any information” the EPA Administrator determines that any person has violated or is in violation of any requirement of Subtitle C. These orders may require the person ,to come into compliance immediately or by a specific time frame and/or pay a civil penalty for any past or current violation and may include suspension or revocation of a facility’s RCRA permit. Alternatively, EPA, through the Department of Justice, may file a civil action in federal court for violations of RCRA and its implementing regulations and permits. EPA must give notice to the state, if it has an EPA-authorized hazardous waste program, prior to issuing an order or filing a civil judicial action.\nSection 3007(a) gives EPA authority to inspect and copy records and to obtain samples from any person who generates, stores, treats, transports, disposes of, or otherwise handles or has handled hazardous wastes, and to enter sites where hazardous wastes are or have been generated, stored, treated, disposed of, or transported from. Section 3007 also establishes mandatory compliance inspections. EPA has interpreted its section 3007 authority, discussed above, to include the authority to access records and sites related to solid waste “that the Agency reasonably believes may pose a hazard when improperly managed.” EPA officials did not provide any examples of EPA using its section 3007 authority at oil or gas well sites.\nSection 3013 authorizes EPA to issue an order requiring monitoring, testing, analysis, and reporting if the EPA Administrator determines, upon receipt of any information, that the presence or release of any hazardous waste at a facility or site at which hazardous waste is, or has been, stored, treated, or disposed of may present a substantial hazard to human health or the environment. Furthermore, in certain circumstances, EPA may use its authority under section 3013 to conduct its own investigation into the nature and extent of a potential hazard.\nEPA officials did not provide any examples of EPA using these hazardous waste enforcement provisions for incidents arising at oil or gas well sites.\nEPA has fewer enforcement responsibilities and authorities for nonhazardous waste facilities under RCRA Subtitle D, than it does for hazardous waste activities regulated under RCRA Subtitle C. In particular, state solid waste programs are based in state law and generally are not subject to enforcement or overfiling by EPA. RCRA’s prohibition on open dumping of solid and hazardous waste is enforceable by citizen suit.", "EPA has imminent and substantial endangerment authority to address both hazardous and solid wastes. Section 7003 authorizes EPA to issue administrative orders and to file suit in federal district court. In addition, “upon receipt of evidence that the past or present handling, storage, treatment, transportation or disposal of any solid waste or hazardous waste may present an imminent and substantial endangerment to health or the environment,” EPA has authority to restrain any person who has contributed or who is contributing to such handling, storage, treatment, transportation or disposal, from such activity, to order them to take such other action as may be necessary, or both. Such orders can be issued to a person who contributed in the past or is currently contributing to the imminent and substantial endangerment to health or the environment. Section 7003 orders are enforceable; if a nonfederal recipient fails to comply, EPA can enforce the order, including fines, by requesting that Department of Justice file suit in federal court.\nEPA’s imminent and substantial endangerment authority is not limited to Subtitle C regulated hazardous wastes but also includes statutory solid wastes and hazardous wastes. EPA has interpreted the authority broadly, to allow a range of actions to be taken, including addressing the threat of endangerment. Nonetheless, EPA officials noted that a section 7003 action is distinct from, for example, the agency’s Subtitle C enforcement authorities because the objective of such an action is to abate the imminent and substantial endangerment, rather than to enforce specific RCRA requirements. Whether RCRA section 7003 authority is applicable to a given situation requires a fact-based determination that the facts establish the statutory elements, including the existence of conditions that may present an imminent and substantial endangerment.\nEPA has issued section 7003 orders at several facilities handling wastes from oil and gas well sites. For example, as previously discussed, EPA Region 8 participated in an effort with the FWS, states, and tribes, after the FWS expressed concerns about migratory birds landing on open pits that contained oil and water, which killed or harmed the birds. The effort involved aerial surveys to observe pits. Where apparent problems were identified, relevant federal or state agencies were notified and were to give oil and gas operators an opportunity to correct problems. Ground inspections were then conducted where deemed warranted and, if problematic conditions were found, further follow up action was taken by EPA or the relevant state or other federal agency. As a result of this effort, EPA issued nine orders pursuant to RCRA section 7003 authority. According to the report, the orders required operators “to remove oil from pits, install effective exclusionary devices, and/or clean up sites.” EPA Region 8 has issued section 7003 orders to several commercial oilfield waste disposal facility operators in Wyoming, finding each site endangered the environment including having caused bird mortalities due to inadequate pit management.\nAs another example, in 2005, EPA Region 6 entered into an agreement with an exploration company and property owners at a site in Oklahoma where the contents of a well drilling waste pit had been relocated onto residential property; the agreement required the waste to be removed, among other things.", "In 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), often referred to as “Superfund,” to address the cleanup of releases of hazardous substances, pollutants, and contaminants nationwide and, in so doing, protect human health and the environment from their effects. The enactment of CERCLA gave the federal government the authority to respond to actual and threatened releases of hazardous substances, pollutants, and contaminants that may endanger public health or welfare or the environment, as well as requiring reporting of hazardous substances releases above threshold quantities. CERCLA also established a liability scheme, whereby potentially responsible parties such as owners and operators may be liable for cleanup and other costs stemming from the release (or threatened release) of hazardous substances into the environment from a facility. CERCLA is primarily a remedial statute; it is preventive in that it authorizes responses to threatened releases of hazardous substances, pollutants, and contaminants, and to the extent that the liability scheme provides incentives for owners and operators to take care to avoid releases to the environment.", "Under a provision known as the petroleum exclusion, CERCLA’s provisions do not apply to releases to the environment that are purely petroleum, including crude oil and natural gas, and fractions of crude oil including the hazardous substances, such as benzene, that are indigenous in those petroleum substances. EPA can respond to releases of hazardous substances, however, even if there are colocated petroleum releases. any injection of fluids or other materials authorized under applicable State law (i) for the purpose of stimulating or treating wells for the production of crude oil, natural gas, or water, (ii) for the purpose of secondary, tertiary, or other enhanced recovery of crude oil or natural gas, or (iii) which are brought to the surface in conjunction with the production of crude oil or natural gas and which are reinjected.\nHowever, EPA has explained, “he National Response Center must be notified in any situation involving the use of injection fluids or materials that are not authorized specifically by State law for purposes of the development of crude oil or natural gas supplies and resulting in a release of a hazardous substance” at or above the threshold reporting quantity.", "Where there has been a release of a hazardous substance, CERCLA section 103 requires a person in charge of a facility to report such releases above reportable quantities as soon as he/she has knowledge of such release to the National Response Center. EPA regulations establish CERCLA hazardous substances and their reportable quantities. While releases of pure petroleum (e.g., petroleum in which hazardous substances have not increased such as by addition or processing) are excluded, releases of CERCLA hazardous substances that are commingled with petroleum are subject to the reporting requirement. Oil and gas well operators would be required to report any releases to the environment of other hazardous substances, for example, if a stored hazardous substance was accidentally spilled onto the ground, or if hazardous substances above the reportable quantity were injected but not authorized by state law.\nThe National Response Center—managed by the U.S. Coast Guard— receives release reports and forwards them to EPA Regions. When receiving a report, according to EPA Regional staff will screen the report for such factors as what was spilled and in what quantity and whether the spill threatens surface waters, to determine if EPA needs to respond and, if appropriate, will obtain additional information on the event, and/or send an on-scene coordinator to the site. EPA officials also noted they use the release reports to refer sites to program enforcement offices, such as the Clean Water Act’s SPCC program, for follow-up. Although release reports are publicly available, the available search terms do not readily differentiate oil and gas well sites from other types of oil and gas facilities. EPA officials noted that there had been approximately 200 reports of oil spills from oil facilities in the last 5 years. EPA Region 5 officials stated that oil spills are more often related to pipelines, tank sites, or trucking accidents, with few occurring at well sites.", "EPA established the Superfund program to carry out its responsibilities and authorities under CERCLA. Under the Superfund program, EPA implements its authorities to compel parties responsible for contaminating sites—via releases of hazardous substances—to clean them up, as well as to enter into agreements with such parties for them to conduct the cleanup. In addition, EPA can itself conduct response actions, which may include investigations and cleanup activities, and then seek reimbursement from the responsible parties.\nThe Superfund cleanup process involves a series of steps during which specific activities—such as investigations and cleanups—take place or decisions are made. The CERCLA program has two basic types of cleanup: (1) cleanups under the removal process, which generally address short-term threats, and (2) cleanups under the remedial action process, which are generally longer-term cleanup actions. In determining whether to use removal or remedial authority to take a response action, EPA considers the time-sensitivity, complexity, comprehensiveness, and cost of the response action.\nSeveral EPA Superfund authorities are particularly relevant to oil and gas well operations, including the following: Investigations, monitoring, coordination. Under section 104(b), EPA generally may conduct investigation activities with appropriated program funds whenever a hazardous substance is released or there is a substantial threat of such a release, or there is reason to believe a release has occurred or is about to occur. These activities may include monitoring, surveys, testing, and other information gathering, as well as planning, legal, fiscal, economic, engineering, architectural, and other studies or investigations, as deemed appropriate.\nInformation gathering and access. Under section 104(e), EPA has authority to obtain information as well as authorities to enter property Specifically, EPA may and to conduct inspections and take samples. require a person to furnish information about the identification, nature, and quantity of materials that have been or are generated, treated, stored, or disposed of at a facility or transported thereto, or the nature or extent of a release or threatened release of a hazardous substance or pollutant or contaminant, or the ability of a person to pay for or to perform a cleanup, including related documents and records, among other things. Where there is a reasonable basis to believe there may be a release or threat of release of a hazardous substance or pollutant or contaminant, EPA is authorized to enter a facility or property where such release is or may be threatened, among other things, and may inspect and obtain samples. EPA may obtain access by agreement, warrant, or administrative order. If consent is not granted, EPA may issue administrative orders or, through the Department of Justice, file civil actions, to compel compliance with requests made under these provisions.\nRemovals. Under section 104(a), EPA generally has authority to act whenever there has been a release or substantial threat of release into the environment of any hazardous substance. EPA generally may conduct removal actions, among other things. Removal actions are broadly defined and include actions to monitor, assess, and evaluate the release; the disposal of removed material; and other actions to prevent, minimize, or mitigate damage to the public health or welfare or to the environment such as provision of alternative drinking water supplies.\nImminent and substantial endangerment authority related to releases of a pollutant or contaminant. Under section 104(a), EPA has authority to act whenever a release or substantial threat of release into the environment of any pollutant or contaminant may present an imminent and substantial danger to the public health or welfare. This provides EPA with authority over releases of substances that are not CERCLA however, as hazardous but that may harm public health or welfare; noted above, releases that are purely petroleum are excluded. Under this authority, EPA may conduct removals, provide for remedial action, or take any other response measure consistent with the National Contingency Plan.\nAuthorities to pursue potentially responsible parties. In addition, under section 106(a), EPA, through the Department of Justice, can pursue injunctive relief in court, where an actual or threatened release of a hazardous substance from a facility may pose an imminent and substantial endangerment to the public health or welfare or the environment. EPA also can issue an administrative order requiring a potentially responsible party to take response actions as may be necessary to protect public health and welfare and the environment. CERCLA also provides authorities for EPA to pursue cleanup and related costs from potentially responsible parties, and to enter settlements, as well as providing for liability of potentially responsible parties for damages to federal, state, and tribal natural resources.\nEPA has utilized its CERCLA authorities at several locations where it has been alleged that hazardous substance releases from oil and gas well sites have contaminated land or groundwater. In an example at a conventional oil well, in the 1990s, EPA, as represented by the Department of Justice, reached an agreement in which an oil exploration and production company pled guilty to a criminal felony count related to CERCLA violations when operators disposed of waste oil and hazardous substances by injecting them down the annuli (the space between the well casing and the surrounding rock) of the oil wells, over a 2-year period. According to the Department of Justice, the company agreed to spend $22 million to resolve the criminal case and related civil claims, which included claims brought under RCRA, SDWA, and EPCRA, as well as CERCLA.\nSee Richard M. Fetzer, On-Scene Coordinator EPA, Action Memorandum to Dennis Carney, Associate Division Director, Hazardous Site Cleanup Division, EPA, re: Request for Funding for a Removal Action at the Dimock Residential Groundwater Site, Jan. 19, 2012. contamination investigations at Pavillion, Wyoming.referenced CERCLA section 104(e) authority in requesting information from operators of wells proximate to the Pavillion site.\nEPA has used CERCLA section 104(e) in conjunction with other authorities in several “multimedia” information requests, where EPA seeks information under multiple statutes and for multiple media—air, land, water—that may be affected. In 2011, for example, EPA used CERCLA and other authorities to request information concerning a blowout at a Marcellus shale natural gas well in Bradford, Pennsylvania. In this instance, a well blowout during hydraulic fracturing resulted in the release of flowback fluids to a tributary of the Susquehanna River, as well as combustible gases to the atmosphere.", "The Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA) provides a mechanism to help communities plan for emergencies involving extremely hazardous substances, and to provide individuals and communities with access to information regarding the storage and releases of certain toxic chemicals, extremely hazardous substances, and hazardous chemicals in their communities.", "EPCRA imposes a set of generally applicable requirements to report information on the uses, inventories, and releases into the environment of hazardous and toxic chemicals above threshold quantities. Regarding releases, EPCRA section 304 requires owners or operators of facilities where a chemical is produced, used, or stored to notify state and local emergency planning authorities of certain releases. The releases for which EPCRA requires reporting partially overlap with those for which the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) requires reporting. Where there is overlap, EPCRA’s procedures ensure state and local authorities receive this information, and CERCLA’s procedures ensure federal authorities receive notification.\nRegarding reporting of chemical information and inventories, EPCRA sections 311 and 312 requirements apply only to those facilities storing or using (1) more than 500 pounds or the threshold planning quantity, whichever is lower, of extremely hazardous substances, or (2) more than 10,000 pounds of other hazardous chemicals. These facilities are required to provide chemical information (e.g., Material Safety Data Sheet or other detailed list) and submit an annual inventory report to state and local emergency planning authorities and to the local fire department with jurisdiction over the facilities.", "Well sites are subject to EPCRA sections 304, 311, and 312, among others, and may be subject to reporting requirements to the extent that the chemicals used, stored, or produced at well sites meet the respective reporting thresholds. Under EPCRA section 304, any facility, such as a well site, that produces, uses, or stores any hazardous chemical and has a release above the reportable quantity of a CERCLA hazardous substance or an extremely hazardous substance, must provide notification to state and local emergency planning authorities, as well as the National Response Center. Under EPCRA sections 311 and 312, any facility, such as a well site, at which an extremely hazardous chemical or any other hazardous chemical is present at the relevant threshold quantity, must meet inventory reporting requirements. For extremely hazardous chemicals, the threshold is 500 pounds or its threshold planning quantity, whichever is less. For all other hazardous chemicals, the reporting threshold is 10,000 pounds. For example, if the aggregate amount of hydrofluoric acid, an extremely hazardous chemical with a threshold planning quantity of 100 pounds, at a well site exceeds that threshold then the facility must report under sections 311 and 312. As another example, if a well stores or uses more than 10,000 pounds of drip gas or natural gas condensate at any one time, then the facility must report under sections 311 and 312.\nThe extent to which these requirements are triggered at oil and gas well sites depends on the presence and quantities of listed chemicals at such sites, among other things. We did not locate any publicly available data on the quantity of chemicals stored at actual or typical well sites, but FracFocus provides self-reported data on the types of chemicals used in hydraulic fracturing, meaning that these chemicals are present and used at well sites. According to data in FracFocus, some hydraulic fracturing operations may use various hazardous chemicals, including some that are also CERCLA hazardous substances, such as hydrochloric acid, formaldehyde, formic acid, acetaldehyde, ethylene glycol, methanol, acetic acid, sodium hydroxide, potassium hydroxide, acrylamide, and naphthalene; of these, one is also considered “extremely hazardous.”\nAccording to EPA, its Regional offices have several cases in development where the facility triggered the reporting requirements under 311 and 312 during all phases of operation, including drilling, hydraulic fracturing, and production. EPA stated that, based on the Regions’ experience, section 311 and 312 requirements could be triggered at every well site. EPA provided an example of section 312 information for a well site, which according to EPA officials, indicates that some hazardous chemicals may be present at the particular well site in quantities that would trigger section 311 and 312 requirements.\nThe information provided by EPA suggests that the types of chemicals with maximum on-site quantities of 10,000 to 99,999 pounds are the following: cement and associated additives; drilling mud and associated additives; lubricants, drilling mud additives; and alkalinity and pH control material.\nThe information provided by EPA also suggests that the types of chemicals with maximum on-site quantities of 100,000 to 999,999 pounds are the following: weight materials, and fuels.", "EPCRA also requires some facilities in listed industries to report to EPA their releases of listed toxic chemicals to the environment; at present, these requirements do not apply to oil and gas well operations.\nSection 313 of EPCRA generally requires certain facilities that manufacture, process, or otherwise use any of more than 600 listed individual chemicals and chemical categories, to report annually to EPA and their respective state, for those chemicals used above threshold quantities. Facilities need to report the amounts that they released to the environment and whether they were released into the air, water, or soil.\nId. at (i).\nFull-time employee is defined as 2,000 hours per year of full-time equivalent employment. A facility would calculate the number of full-time employees by totaling the hours worked during the calendar year by all employees, including contract employees, and dividing that total by 2,000 hours. 40 C.F.R.§ 372.3 (2012).\nAmerican Industry Classification System (NAICS) codes, and subsequently to update as needed to reflect changes to the NAICS codes.\nEPCRA section 313(b)(1)(B) provides EPA with authority to add or delete industrial codes. 1988. In the initial regulations, EPA discussed its approach to evaluating additional industrial codes under its discretionary authority but did not add any at that time. Oil and gas extraction industries were not included on the statutory list of Standard Industrial Classification codes and hence were not subject to the rule.\nEPCRA § 313(b)(1)(B), 42 U.S.C. § 11023(b)(1)(B) (2012). EPA can also add individual facilities. EPCRA § 313(b)(2), 42 U.S.C. § 11023(b)(2) (2012).\nOne industry group, oil and gas extraction classified in [Standard Industrial Classification] code 13, is believed to conduct significant management activities that involve EPCRA section 313 chemicals. EPA is deferring action to add this industry group at this time because of questions regarding how particular facilities should be identified. This industry group is unique in that it may have related activities located over significantly large geographic areas.\nWhile together these activities may involve the management of significant quantities of EPCRA section 313 chemicals in addition to requiring significant employee involvement, taken at the smallest unit (individual well), neither the employee nor the chemical thresholds are likely to be met. EPA will be addressing these issues in the future.\nThe preamble of the final rule stated in part, “ number of commenters support EPA’s decision not to include oil and gas exploration and production in its proposal, and urge EPA not to propose adding this industry in the future. EPA considered the inclusion of this industry group prior to its proposal, and indicated in the proposal that one consideration for not including it was concern over how a ‘facility’ would be defined for purposes of reporting in EPCRA section 313 …This issue, in addition to other questions, led EPA to not include this industry group. EPA will continue its dialogue with the oil and gas exploration and production industry and other interested parties, and may consider action on this industry group in the future.”\nIn fall 2011, EPA conducted a discussion forum on regulations.gov. The background information provided in the forum stated that EPA was considering a rule to add or expand coverage to the following industry sectors: Iron Ore Mining, Phosphate Mining, Solid Waste Combustors and Incinerators, Large Dry Cleaners, Petroleum Bulk Storage, and Steam Generation from Coal and/or Oil. EPA officials told us that, for the current possible rulemaking, the initial screening process for sectors to consider adding to the TRI included review of those sectors, such as oil and gas production, that were considered but ultimately not added in the 1997 rule. In addition, EPA officials said the initial screening process also included sectors covered by analogous registries of other countries. According to EPA, the oil and gas sector falls into both categories and was considered in the initial screening. As of July 2012, EPA officials stated that EPA does not anticipate adding oil and gas exploration and production sites as part of the possible rule currently under consideration to add industry sectors to the scope of TRI. EPA officials explained that the agency has not changed its assessment of the oil and gas sector as it pertains to TRI reporting since the 1996 proposed rule and stated that adding oil and gas well sites would likely provide a substantially incomplete picture of the chemical uses and releases at these sites, and would therefore be of limited utility in providing information to communities.\nEPA officials noted that Canada’s National Pollutant Release Inventory (NPRI) has data on Canadian oil and gas wells for some TRI chemicals. Specifically, EPA identified several TRI chemicals that were also reported to the Canadian NPRI by oil and gas facilities as being released, disposed of, and/or transferred in large quantities in reporting year 2010 in Canada including ammonia, arsenic, cadmium, copper, hexavalent chromium, hydrogen sulfide, lead, manganese, mercury, phenanthrene, phosphorus, sulfuric acid aerosols, and zinc compounds.\nIf oil and gas exploration and production were added to the industries required to report to the TRI, such facilities meeting relevant thresholds would have to report releases of hydrogen sulfide, which is among the chemicals of particular concern some have cited. In October 2011, EPA lifted its administrative stay of the EPCRA section 313 reporting requirements for hydrogen sulfide, which had been in effect since 1994, shortly after the chemical was added to the list of toxic chemicals. EPA conducted a technical evaluation of hydrogen sulfide and found no basis for continuing the administrative stay of the reporting requirements. The first reports under EPCRA section 313 for hydrogen sulfide will be due on July 1, 2013, for reporting year 2012.", "EPCRA provides EPA with various authorities to enforce the act’s requirements. For example, for violations of EPCRA section 311 or section 312 requirements, such as provision of annual inventory reports to state and local authorities, EPA may assess administrative penalties, or initiate court actions to assess civil penalties. In cases of violations of section 304 release reporting requirements, EPA may assess administrative penalties, among other things.", "To help protect human health and the environment, the Toxic Substances Control Act (TSCA) authorizes EPA to regulate the manufacture, processing, use, distribution in commerce, and disposal of chemical substances and mixtures. EPA has authorities by which it may assess and manage chemical risks, including (1) to collect information about chemical substances and mixtures; (2) upon making certain findings, to require companies to conduct testing on chemical substances and mixtures; and (3) upon making certain findings, to take action to protect adequately against unreasonable risks such as by either prohibiting or limiting manufacture, processing, or distribution in commerce of chemical substances or by placing restrictions on chemical uses. EPA maintains the TSCA Chemical Substance Inventory that currently lists over 84,000 chemicals that are or have been manufactured or processed in the United States; about 62,000 were already in commerce when EPA began reviewing chemicals in 1979. Generally, TSCA’s reporting requirements fall on the manufacturers (including importers), processors, and distributors of chemicals, rather than users of the chemicals.\nAccording to EPA, some of the chemicals on the TSCA Chemical Substance Inventory are used in oil and gas exploration and production. For example, in response to our request, EPA identified several chemicals on the FracFocus list of “chemicals used most often” which are on the TSCA inventory.representative of different product function categories, are as follows: These examples, which EPA chose as\nHydrochloric acid – Acid;\nPeroxydisulfuric acid, ammonium salt – Breaker;\nEthanaminium, 2-hydroxy-N,N,N-trimethyl-, chloride (1:1) – Clay\nMethanol – Corrosion Inhibitor; and\n2-Propenamide, homopolymer – Friction Reducer.\nAs part of EPA’s Study on the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources, EPA is currently analyzing information provided by nine hydraulic fracturing service companies, including a list of chemicals the companies identify as used in hydraulic fracturing operations. EPA officials said that they expect most of these chemicals disclosed by the service companies to appear on the TSCA inventory list, provided that chemicals are not classified solely as pesticides. EPA does not expect to be able to compare the list of chemicals provided by the nine hydraulic fracturing service companies to the TSCA inventory until the release of a draft report of the Study on the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources for peer review, expected in late 2014. For those chemicals that are listed, some hydraulic fracturing service companies may be manufacturers, processors, or distributors, and could be subject to certain TSCA reporting provisions.\nOn August 4, 2011, Earthjustice and 114 others filed a petition with EPA asking the agency to exercise TSCA authorities and issue rules to require manufacturers, processors, and distributors of chemicals used in oil and gas exploration or production to develop and/or provide certain information. The petition asserts that more than 10,000 gallons of such chemicals may be used to fracture a single well. EPA denied the portion of the petition requesting that EPA issue a TSCA section 4 rule to require identification and toxicity testing of chemicals used in oil and gas exploration or production, stating that the petition did not set forth facts sufficient to support the findings required for such test rules.\nThe petition also requested that EPA issue new rule(s) under TSCA section 8 to require, for these chemicals, maintenance and submission of various records, call-in of records of allegations of significant adverse reactions, and submission of all existing not previously reported health EPA granted the section 8(a) and 8(d) portions of and safety studies. the petition in part, stating that the agency believes “there is value in initiating a proposed rulemaking process under TSCA authorities to obtain data on chemical substances and mixtures used in hydraulic fracturing,” but denying them so far as they concern other chemical substances used in oil and gas exploration and production but not in hydraulic fracturing.\nEPA is drafting an Advance Notice of Proposed Rulemaking for the section 8(a) and (d) rules. As of August 31, 2012, EPA has not released a publication date for this proposed rulemaking. EPA also intends to convene a stakeholder process to gather additional information for use in developing a proposed rule, and “to develop an overall approach that would minimize reporting burdens and costs, take advantage of existing information, and avoid duplication of efforts.” EPA officials said that the agency will consider, among other things, how to address confidential business information as it develops the proposal. A TSCA section 8(a) rule, once issued, may require reporting, insofar as known or reasonably ascertainable, of such chemical information as chemical names, molecular structure, category of use, volume, byproducts, existing environmental and health effects data, disposal practices, and worker exposure. Regulations promulgated under TSCA section 8(d) are to require submission to EPA of reasonably ascertainable health and safety studies.\nTSCA provides EPA with certain enforcement authorities. For example, EPA may impose a civil penalty for certain violations of TSCA, such as failing to comply with requirements to notify and provide certain information to EPA before manufacturing a new chemical, or by using for commercial purposes a chemical substance that the user had reason to know was manufactured, processed, or distributed in violation of such requirements, among other things.", "All six states we reviewed have state agencies responsible for implementing and enforcing environmental and public health requirements, which include overseeing oil and gas development (see table 11). In five of the six states we reviewed, this responsibility is split primarily between two different agencies. In general, one of these agencies has primary responsibility for regulating oil and gas development activities such as drilling that occur on the well pad and for managing and disposing of certain wastes generated on-site, while the other agency has a broader mandate for implementing and enforcing environmental or public health requirements, some aspects of which may affect oil and gas development. For example, the Colorado Oil and Gas Conservation Commission regulates activities such as drilling, hydraulic fracturing, and disposal of produced water in Class II UIC wells, while the Colorado Department of Public Health and Environment regulates discharges to surface waters, commercial solid waste facilities, and certain air emissions. In contrast, oil and gas development in Pennsylvania is primarily governed by one agency—the Pennsylvania Department of Environmental Protection.\nThis appendix presents information about state statutory and regulatory requirements in the areas of siting and site preparation (see table 12); drilling, casing, and cementing (see table 13); hydraulic fracturing (see table 14); well plugging (see table 15); site reclamation (see table 16); waste management in pits (see table 17); waste management through underground injection (see table 18); and managing air emissions (see table 19). Requirements presented in the following tables have been summarized mainly from state regulations, though references to state statutes are included in certain circumstances.", "Table 20 is intended to show representative areas of regulation, focused on substantive requirements specific to oil and gas wells. The table includes EPA’s environmental and public health requirements, requirements from the six states included in our review, and additional requirements that apply for the development of federally-owned mineral resources. Other activities at oil and gas well sites may also be subject to federal or state regulation.", "", "", "", "", "In addition to the individual named above, Barbara Patterson, Assistant Director; Elizabeth Beardsley; David Bieler; Antoinette Capaccio; Cindy Gilbert; Armetha Liles; Alison O’Neill; and Janice Poling made key contributions to this report." ], "depth": [ 1, 2, 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 2, 3, 3, 3, 2, 1, 2, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 2, 2, 2, 2, 2, 3, 3, 3, 3, 2, 2, 1, 2, 3, 3, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "h3_full", "h1_full", "", "", "h0_full", "h0_full", "", "", "h1_title", "h1_full", "", "h2_full", "h2_full", "h2_full", "h2_full", "", "", "h3_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How have the states in GAO's review changed?", "What is the scope of these laws?", "What regulations restrict oil and gas development on federal lands?", "Do these regulations apply to both conventional and unconventional development?", "What does the Bureau of Land Management do?", "What kinds of regulation does BLM oversee?", "How have agencies managed to regulate oil and gas development?", "What challenges have these agencies faced?", "What specific challenges relate to this?", "How has hiring staff been a challenge for these agencies?", "How have technological improvements affected oil and gas extraction?", "What specific developments have occurred as a result?", "What are the results of these improvements in extraction of oil and gas?" ], "summary": [ "All six states in GAO’s review implement additional requirements governing activities associated with oil and gas development and have updated some aspects of their requirements in recent years.", "For example, all six states have requirements related to how wells are to be drilled and how casing—steel pipe within the well—is to be installed and cemented in place, though the specifics of their requirements vary. The states also have requirements related to well site selection and preparation, which may include baseline testing of water wells before drilling or stormwater management.", "Oil and gas development on federal lands must comply with applicable federal environmental and state laws, as well as additional requirements.", "These requirements are the same for conventional and unconventional oil and gas development.", "The Bureau of Land Management (BLM) oversees oil and gas development on approximately 700 million subsurface acres.", "BLM regulations for leases and permits govern similar types of activities as state requirements, such as requirements for how operators drill the well and install casing. BLM recently proposed new regulations for hydraulic fracturing of wells on public lands.", "Federal and state agencies reported several challenges in regulating oil and gas development from unconventional reservoirs.", "EPA officials reported that conducting inspection and enforcement activities and having limited legal authorities are challenges.", "For example, conducting inspection and enforcement activities is challenging due to limited information, such as data on groundwater quality prior to drilling. EPA officials also said that the exclusion of exploration and production waste from hazardous waste regulations under RCRA significantly limits EPA’s role in regulating these wastes. In addition, BLM and state officials reported that hiring and retaining staff and educating the public are challenges.", "For example, officials from several states and BLM said that retaining employees is difficult because qualified staff are frequently offered more money for private sector positions within the oil and gas industry.", "Technological improvements have allowed the extraction of oil and natural gas from onshore unconventional reservoirs such as shale, tight sandstone, and coalbed methane formations.", "Specifically, advances in horizontal drilling techniques combined with hydraulic fracturing (pumping water, sand, and chemicals into wells to fracture underground rock formations and allow oil or gas to flow) have increased domestic development of oil and natural gas from these unconventional reservoirs.", "The increase in such development has raised concerns about potential environmental and public health effects and whether existing federal and state environmental and public health requirements are adequate." ], "parent_pair_index": [ -1, 0, -1, 0, -1, 2, -1, 0, 1, 2, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 5, 5, 5, 5, 6, 6, 6, 6, 0, 0, 0 ] }

{ "title": [ "", "The Undue Burden Standard and Planned Parenthood of Southeastern Pennsylvania v. Casey", "Admitting Privileges Requirement", "Ambulatory Surgical Center Requirement", "Whole Woman's Health v. Hellerstedt" ], "paragraphs": [ "I n 2013, the Texas legislature passed House Bill 2 (H.B. 2), a measure that prescribed new requirements for abortion facilities and physicians who perform or induce abortions in Texas. Supporters of the bill maintained that these requirements would guarantee a higher level of care for women seeking abortions. Opponents, however, characterized the requirements as unnecessary and costly, and argued that they would make it more difficult for abortion facilities to operate.\nSince its enactment, critics of H.B. 2 focused on two of the measure's requirements, in particular. First, H.B. 2 required a physician who performs or induces an abortion to have admitting privileges at a hospital within 30 miles from the location where the abortion was performed or induced. In general, admitting privileges allow a physician to transfer a patient to a hospital if complications arise in the course of providing treatment. Second, H.B. 2 required an abortion facility to satisfy the same standards as an ambulatory surgical center (ASC). These standards address architectural and other structural matters, as well as operational concerns, such as staffing and medical records systems.\nIn June 2016, the U.S. Supreme Court (Court) invalidated both requirements, finding that \"[e]ach places a substantial obstacle in the path of women seeking a previability abortion ... [and] constitutes an undue burden on abortion access[.]\" In Whole Woman's Health v. Hellerstedt , the Court reversed a decision by the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) that upheld the requirements on both constitutional and procedural grounds. In Hellerstedt , the Court rejected the Fifth Circuit's analysis, stating that neither requirement \"offers medical benefits sufficient to justify the burdens upon access that each imposes.\"\nHellerstedt has been recognized both for its impact in Texas and for its perceived refinement of the undue burden standard that is used to evaluate the constitutionality of abortion regulations. Because at least 25 states are believed to have either an admitting privileges or ASC requirement, Hellerstedt is also expected to have an impact in other jurisdictions. This report examines Hellerstedt , as well as Whole Woman's Health v. Cole , the Fifth Circuit's June 2015 decision. The report also discusses the undue burden standard and explores how Hellerstedt could change how the standard is applied in future cases.", "The undue burden standard that is now used to evaluate abortion regulations was formally adopted by the Court in Planned Parenthood of Southeastern Pennsylvania v. Casey , a 1992 decision involving five provisions of the Pennsylvania Abortion Control Act. In a joint opinion, the Court reaffirmed the basic constitutional right to an abortion, while simultaneously allowing new restrictions to be placed on the availability of the procedure. The Court declined to overrule Roe v. Wade , its 1973 decision that first recognized the right to terminate a pregnancy, explaining the importance of following precedent: \"The Constitution serves human values, and while the effect of reliance on Roe cannot be exactly measured, neither can the certain cost of overruling Roe for people who have ordered their thinking and living around that case be dismissed.\"\nAt the same time, however, the Court refined its holding in Roe by abandoning the trimester framework articulated in the 1973 decision, and rejecting the strict scrutiny standard of judicial review it had previously espoused. In Casey , the Court adopted a new undue burden standard that attempts to reconcile the government's interest in potential life with a woman's right to terminate her pregnancy. The Court observed:\nThe very notion that the State has a substantial interest in potential life leads to the conclusion that not all regulations must be deemed unwarranted. Not all burdens on the right to decide whether to terminate a pregnancy will be undue. In our view, the undue burden standard is the appropriate means of reconciling the State's interest with the woman's constitutionally protected liberty.\nAccording to the Court, an undue burden exists if the purpose or effect of an abortion regulation is \"to place a substantial obstacle in the path of a woman seeking an abortion before the fetus attains viability.\" The Court further indicated that unnecessary health regulations that have the purpose or effect of presenting a substantial obstacle to a woman seeking an abortion would impose an undue burden.\nEvaluating the Pennsylvania law under the undue burden standard, the Court concluded that four of the five provisions at issue did not impose an undue burden. The Court upheld the law's 24-hour waiting period requirement, its informed consent provision, its parental consent provision, and its recordkeeping and reporting requirements. The Court invalidated the law's spousal notification provision, which required a married woman to tell her husband of her intention to have an abortion. Acknowledging the possibility of spousal abuse if the provision were upheld, the Court maintained: \"The spousal notification requirement is thus likely to prevent a significant number of women from obtaining an abortion. It does not merely make abortions a little more difficult or expensive to obtain; for many women, it will impose a substantial obstacle.\"\nThe Court's decision in Casey was particularly significant because it appeared that the new undue burden standard would allow a greater number of abortion regulations to pass constitutional muster. Prior to Casey , the application of Roe 's strict scrutiny standard of review resulted in most state abortion regulations being invalidated during the first two trimesters of pregnancy. For example, applying strict scrutiny, the Court invalidated 24-hour waiting period requirements and informed consent provisions in two cases: Akron v. Akron Center for Reproductive Health , Inc. and Thornburgh v. American College of Obstetricians and Gynecologists .\nCasey also recognized that the state's interest in protecting the potentiality of human life extended throughout the course of a woman's pregnancy. Thus, the state could regulate from the outset of a woman's pregnancy, even to the point of favoring childbirth over abortion. Under the trimester framework articulated in Roe , a woman's decision to terminate her pregnancy in the first trimester could not be regulated generally by the state.\nFollowing Casey , the Court applied the undue burden standard in just three cases prior to Hellerstedt . In Mazurek v. Armstrong , the Court reversed a decision by the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) involving a Montana law that restricted the performance of abortions to licensed physicians. The Ninth Circuit vacated a district court's judgment that denied a motion for a preliminary injunction based on the lower court's conclusion that a group of physicians and a physician assistant had not established a likelihood of prevailing on their claim that the law imposed an undue burden. The Supreme Court concluded that there was no evidence that the law had an improper purpose or that it would place a substantial obstacle in the path of a woman seeking an abortion. Although the Court did not specifically address the law's effect, it did note that it would have an impact on only a single practitioner.\nStenberg v. Carhart and Gonzales v. Carhart both involved the so-called \"partial-birth\" abortion procedure. In Stenberg , the Court invalidated a Nebraska law that restricted the procedure, in part, because it imposed an undue burden on a woman's ability to terminate a pregnancy. Finding that the statute's plain language prohibited the performance of both the \"partial-birth\" abortion procedure and another more commonly used abortion procedure, the Court maintained that the law imposed an undue burden because abortion providers would fear prosecution, conviction, and imprisonment if they acted.\nIn Gonzales , the Court considered the validity of the federal Partial-Birth Abortion Ban Act of 2003. The Court distinguished the federal law from the Nebraska statute at issue in Stenberg , noting the inclusion of \"anatomical landmarks\" that identify when an abortion procedure will be subject to the law's prohibitions. Because the plain language of the law did not restrict the availability of alternate abortion procedures, the Court concluded that it was not overbroad and did not impose an undue burden on a woman's ability to terminate her pregnancy.", "At least 15 states have adopted laws or regulations that require physicians who perform abortions to have admitting privileges at a nearby hospital. Texas's requirement provided that a physician \"performing or inducing an abortion ... must, on the date the abortion is performed or induced, have active admitting privileges at a hospital that: (A) is located not further than 30 miles from the location at which the abortion is performed or induced; and (B) provides obstetrical or gynecological health care services.\" A physician who violated the requirement could be subject to a fine of up to $4,000. The Texas legislature indicated that the requirement raised the standard and quality of care for women seeking abortions, and protected their health and welfare. Opponents maintained, however, that the requirement would likely result in the closure of numerous abortion facilities as physicians faced difficulty obtaining admitting privileges.\nIn 2013, Planned Parenthood and a group of abortion providers and physicians, including Whole Woman's Health, challenged the constitutionality of the admitting privileges requirement and a separate requirement involving the administration of abortion-inducing drugs. In Planned Parenthood of Greater Texas Surgical Health Services v. Abbott , the Fifth Circuit concluded that the admitting privileges requirement was facially constitutional. The Fifth Circuit found that the requirement did not impose an undue burden despite the possibility of facility closures and increased travel distances to obtain an abortion. With regard to travel, the court maintained: \" Casey counsels against striking down a statute solely because women may have to travel long distances to obtain abortions.\"\nWhole Woman's Health subsequently challenged the admitting privileges requirement as applied to two specific clinics in El Paso and McAllen, Texas. In Whole Woman's Health v. Lakey , a federal district court concluded that the requirement was unconstitutional as applied to both clinics and, when considered together with the ASC requirement, was unconstitutional \"as applied to all women seeking a previability abortion.\"\nOn appeal, the Fifth Circuit considered both facial and as-applied challenges to both requirements. In Whole Woman's Health v. Cole , the appeals court found that the provider's facial challenge to the admitting privileges requirement failed on procedural grounds. The court maintained that the provider's facial claim violated the principle of res judicata, and should have been precluded by its decision in Abbot t . The court noted: \"By granting a broad injunction against the admitting privileges requirement ... the district court resurrected the facial challenge put to rest in Abbott ...\"\nAlthough the Fifth Circuit rejected the facial challenge to the admitting privileges requirement, it upheld an injunction of the requirement as applied to the abortion facility in McAllen, when it utilized a specific physician. This physician was unsuccessful at obtaining admitting privileges at local hospitals for reasons other than his competence.\nAt the same time, however, the Fifth Circuit reversed an injunction of the requirement as applied to the abortion facility in El Paso. Citing a nearby abortion facility in Santa Teresa, New Mexico, and the fact that people travel regularly between the two cities for medical care, the court maintained that the admitting privileges requirement did not impose an undue burden. The Fifth Circuit distinguished the Texas admitting privileges requirement from a similar Mississippi requirement that it invalidated in Jackson Women's Health Organization v. Currier , a 2014 decision. The Fifth Circuit explained that invalidating the Mississippi requirement would have led to the closure of the last abortion facility in the state. An invalidation of the Texas requirement would not have the same effect.", "State laws that require abortion providers to satisfy the same standards as ASCs have become increasingly more common. Texas regulations define an ASC as a facility \"that primarily provides surgical services to patients who do not require overnight hospitalization or extensive recovery, convalescent time or observation.\" Under Texas law, ASCs are required to satisfy a variety of operating, fire prevention and safety, and construction standards.\nIn Cole , the Fifth Circuit concluded that the plaintiffs' claim involving the ASC requirement failed on both procedural grounds and on the merits. The court found that the claim was precluded by its decision in Abbott . Although the plaintiffs did not challenge the requirement in Abbott because implementing regulations had not yet gone into effect, the Fifth Circuit maintained that because Abbott involved the same parties and legal standards, the requirement should have been challenged in that case.\nThe Fifth Circuit determined that a facial challenge to the ASC requirement would also fail on the merits because the requirement did not have the purpose or effect of placing a substantial obstacle in the path of a woman seeking an abortion. The court maintained that the plaintiffs failed to show that the ASC requirement was adopted for an improper purpose. Although the lower court found an improper purpose based on what it concluded was a lack of credible evidence to support the proposition that abortions performed in ASCs lead to better health outcomes, the Fifth Circuit observed: \"All of the evidence referred to by the district court is purely anecdotal and does little to impugn the State's legitimate reasons for the Act.\"\nIn addition, the Fifth Circuit found that the ASC requirement did not have the effect of placing a substantial obstacle in the path of a woman seeking an abortion. In Casey , the Court indicated that if a law would be invalid in a large fraction of the cases in which it is relevant, it should be found to have an improper effect. Notably, the Court considered the effect of Pennsylvania's spousal notification requirement only on married women who did not want to notify their husbands of their plans to have an abortion, rather than its effect on all women or all pregnant women in the state. In that equation, the Court concluded that the spousal notification requirement would have an effect in a large fraction of the relevant cases.\nIn Cole , however, the Fifth Circuit found that the ASC requirement would not have a similar effect. After considering the number of women of reproductive age in Texas and the number of women of reproductive age who would have to travel more than 150 miles to have an abortion because of the implementation of both the admitting privileges and ASC requirements, the court determined that only 16.7% of women of reproductive age would have to travel more than 150 miles to have an abortion. The Fifth Circuit reasoned that 16.7% did not constitute a large fraction of the relevant cases, and thus, the effect of the ASC requirement was not improper.\nAlthough the Fifth Circuit rejected a facial challenge to the ASC requirement, it affirmed an injunction of the requirement as applied to the abortion facility in McAllen, with some modifications. The court acknowledged that the McAllen facility is the sole abortion provider in the Rio Grande Valley and discussed the 235-mile distance some women in the Rio Grande Valley would have to travel to obtain an abortion. In light of this distance, the court indicated that the state would be enjoined from enforcing the requirement until another facility opened at a location that was closer than those located in San Antonio. Acknowledging its discussion of Casey and travel distances in Abbott , the Fifth Circuit observed: \"[I]n the specific context of this as-applied challenge as to the McAllen facility, the 235-mile distance presented, combined with the district court's findings, are sufficient to show that [the requirement] has the 'effect of placing a substantial obstacle in the path of a woman seeking an abortion.'\"\nThe Fifth Circuit declined, however, to affirm the lower court's judgment involving the ASC requirement as applied to the El Paso facility. Because abortion services are available at the facility in Saint Teresa, New Mexico, and there was evidence that many women traveled to that facility before enactment of H.B. 2, the court concluded that the ASC requirement did not place a substantial obstacle in the path of women seeking an abortion in the El Paso area.", "In its petition for review of the Fifth Circuit's decision, Whole Woman's Health asked the Court to consider the extent to which the Texas requirements actually supported women's health. Whole Woman's Health maintained that the Fifth Circuit's refusal to consider the promotion of women's health conflicted with the approaches taken by other federal courts of appeals.\nWhole Woman's Health also challenged the Fifth Circuit's conclusion that res judicata barred it from considering newly developed facts that could have an impact on the provider's facial challenges to the requirements. Whole Woman's Health argued that when a claim rests on facts developed after a judgment is entered in a prior case, the claim is not barred by that judgment, and a court may award any remedy that is otherwise appropriate.\nIn a 5-3 decision, the Court rejected both the procedural and constitutional grounds for the Fifth Circuit's decision in Cole . Writing for the majority in Hellerstedt , Justice Breyer found that res judicata did not bar facial challenges to either the admitting privileges requirement or the ACS requirement. Justice Breyer also concluded that the requirements provide \"few, if any, health benefits for women, pose[] a substantial obstacle to women seeking abortions, and constitute[] an 'undue burden' on their constitutional right to do so.\" Justice Breyer noted that the undue burden standard requires courts to consider \"the burdens a law imposes on abortion access together with the benefits those laws confer.\" Moreover, Justice Breyer maintained that courts should place considerable weight on the evidence and arguments presented in judicial proceedings when they consider the constitutionality of abortion regulations.\nIn addressing the admitting privileges requirement and res judicata, the Court distinguished the pre-enforcement challenge in Abbott with the post-enforcement challenge at issue. Citing the Restatement (Second) of Judgments, the Court noted that the development of new material facts, such as the large number of clinics that closed after H.B. 2 began to be enforced, could mean that a new case and a prior similar case do not present the same claim. The Court observed: \"When individuals claim that a particular statute will produce serious constitutionally relevant adverse consequences before they have occurred—and when the courts doubt their likely occurrence—the factual difference that those adverse consequences have in fact occurred can make all the difference.\"\nIn addition, the Court found that res judicata did not preclude a facial challenge to the ASC requirement. The Court emphasized that the ASC and admitting privileges requirements were separate and distinct, and that the Fifth Circuit failed to account for their differences when it concluded that the challenge to the ASC requirement was precluded by Cole : \"This Court has never suggested that challenges to different statutory provisions that serve two different functions must be brought in a single suit.\" The Court also indicated that the decision not to bring a facial challenge to the ASC requirement in Abbott was reasonable in light of the absence of regulations to implement the ASC requirement and the possibility that some abortion facilities might receive a waiver from the requirement.\nIn its application of the undue burden standard to the admitting privileges and ASC requirements, the Hellerstedt Court referred heavily to the evidence collected by the district court. With regard to the admitting privileges requirement, the Court cited the low complication rates for first and second trimester abortions, and expert testimony that complications during the abortion procedure rarely require hospital admission. Based on this and similar evidence, the Court disputed the state's assertion that the purpose of the admitting privileges requirement was to ensure easy access to a hospital should complications arise. The Court emphasized that \"there was no significant health-related problem that the new law helped to cure.\" Citing other evidence concerning the closure of abortion facilities as a result of the admitting privileges requirement and the increased driving distances experienced by women of reproductive age because of the closures, the Court maintained: \"[T]he record evidence indicates that the admitting-privileges requirement places a 'substantial obstacle in the path of a woman's choice.'\"\nThe Court again referred to the record evidence to conclude that the ASC requirement imposed an undue burden on the availability of abortion. Noting that the record supports the conclusion that the ASC requirement \"does not benefit patients and is not necessary,\" the Court also cited the closure of facilities and the cost to comply with the requirement as evidence that the requirement poses a substantial obstacle for women seeking abortions. While Texas argued that the clinics remaining after implementation of the ASC requirement could expand to accommodate all of the women seeking an abortion, the Court indicated that \"requiring seven or eight clinics to serve five times their usual number of patients does indeed represent an undue burden on abortion access.\"\nThe majority's focus on the record evidence, and a court's consideration of that evidence in balancing the burdens imposed by an abortion regulation against its benefits, is noteworthy for providing clarification of the undue burden standard. Although the Casey Court did examine the evidence collected by the district court regarding Pennsylvania's spousal notification requirement, and was persuaded by it, the Fifth Circuit discounted similar evidence collected by the lower court in Abbott and Lakey . In Hellerstedt , the Court maintained that the Fifth Circuit's approach did \"not match the standard that this Court laid out in Casey ...\"\nIn a dissenting opinion joined by Chief Justice Roberts and Justice Thomas, Justice Alito maintained that the petitioners' claims should have been barred by res judicata. With regard to the ACS requirement, in particular, Justice Alito contended that the claim should have been brought in Abbott because it imposed the same kind of burden on the availability of abortion. Justice Alito also criticized the absence of \"precise findings\" to support the argument that the admitting privileges and ASC requirements caused the closure of abortion facilities. If such facilities closed for reasons other than the requirements, he contended, \"the corresponding burden on abortion access may not be factored into the access analysis.\"\nWhether Hellerstedt should be interpreted to guarantee the invalidation of all of the other state admitting privileges and ASC requirements is not certain. The Court's emphasis on balancing the burdens imposed by an abortion regulation with its benefits, and its reliance on the record evidence, seems to suggest that each regulation would have to be examined on its own terms. Nevertheless, because of the similarities between the Texas requirements and the other admitting privileges and ASC requirements, it seems possible that other courts will also conclude that these requirements do not provide an appreciable benefit to women.\nThe impact of Hellerstedt will likely become clearer as courts apply the decision to other cases. Notably, following the issuance of its decision in Hellerstedt , the Court declined to review two other cases involving state admitting privileges requirements. In Jackson Women's Health Organization v. Currier and Planned Parenthood of Wisconsin v. Schimel , the Fifth Circuit and the U.S. Court of Appeals for the Seventh Circuit determined that admitting privileges requirements in Mississippi and Wisconsin imposed an undue burden on the availability of abortion. In addition, in light of Hellerstedt , the Attorney General of Alabama indicated that he would dismiss his appeal of Planned Parenthood Southeast v. Strange , a 2014 decision that concluded that the state's admitting privileges requirement imposed an undue burden.\nHellerstedt appears to have prompted groups that oppose abortion to explore other legislative options that would restrict the procedure by promoting the health of the fetus rather than the health of the woman. For example, legislation that would prohibit the performance of an abortion once a fetus has reached a gestational age of 20 weeks, a point in development when some contend that the fetus can experience pain, has been considered by state legislatures and the U.S. Congress. It should be noted, however, that fetal pain laws in Idaho, Arizona, and Utah have already been invalidated by the Ninth Circuit and the U.S. Court of Appeals for the Tenth Circuit (Tenth Circuit). In 2014, the Court declined to review the Ninth Circuit's decision in Isaacson v. Horne , a 2013 case that invalidated Arizona's fetal pain law.\nEven if the Court were to review a case involving a fetal pain law, it seems possible that it could apply the undue burden standard in a manner that deviates from its analysis in Hellerstedt . Unlike the admitting privileges and ASC requirements, which seek to promote women's health, the fetal pain laws were enacted to protect fetuses. Whether the Court would balance the burdens and benefits of a fetal pain law like it did in Hellerstedt is not entirely certain. Notably, the Ninth and Tenth Circuits focused on the Court's discussion of viability in Roe and Casey when they examined the Idaho, Arizona, and Utah fetal pain laws. In Casey , the Court emphasized that a state may not unduly interfere with a woman's right to terminate a pregnancy prior to viability: \"Before viability, the State's interests are not strong enough to support a prohibition of abortion or the imposition of a substantial obstacle to the woman's effective right to elect the procedure.\" Because the state fetal pain laws banned most abortions after a specified gestational age, regardless of whether a fetus had attained viability, the Ninth and Tenth Circuits concluded that the laws were unconstitutional. Like the appellate courts, the Supreme Court may focus on viability, rather than a balancing of burdens and benefits, in an examination of a fetal pain law." ], "depth": [ 0, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full", "h0_full", "h2_full h1_full" ] }

{ "question": [ "What was the result of Whole Woman's Health v. Hellerstedt?", "What was the effect of the two requirements?", "What is the general allowance of admitting privileges?", "What argument was made in favor of the requirements?", "What argument was made against the requirements?", "What was the conclusion of Whole Woman’s Health v. Hellerstedt?", "How did the Court apply the undue burden standard?", "What other considerations were made specifically in this case?", "How has Whole Woman’s Health v. Hellerstedt affected Texas?", "How is Whole Woman’s Health v. Hellerstedt expected to affect other states?", "What is this report about?" ], "summary": [ "In Whole Woman's Health v. Hellerstedt, the U.S. Supreme Court (Court) invalidated two Texas requirements that applied to abortion providers and physicians who perform abortions.", "Under a Texas law enacted in 2013, a physician who performs or induces an abortion was required to have admitting privileges at a hospital within 30 miles from the location where the abortion was performed or induced. The Texas law also required an abortion facility to satisfy the same standards as an ambulatory surgical center (ASC). These standards address architectural and other structural matters, as well as operational concerns, such as staffing and medical records systems.", "In general, admitting privileges allow a physician to transfer a patient to a hospital if complications arise in the course of providing treatment.", "Supporters of the Texas law maintained that the requirements would guarantee a higher level of care for women seeking abortions.", "Opponents, however, characterized the requirements as unnecessary and costly, and argued that they would make it more difficult for abortion facilities to operate.", "In Hellerstedt, the Court concluded that the admitting privileges and ASC requirements placed a substantial obstacle in the path of women seeking an abortion, and imposed an undue burden on the ability to have an abortion.", "In applying the undue burden standard that is now used to evaluate abortion regulations, the Court explained that a reviewing court must consider the burdens a law imposes on abortion access together with the benefits that are conferred by the law.", "The Court also indicated that courts should place considerable weight on the evidence and arguments presented in judicial proceedings when they consider the constitutionality of abortion regulations.", "Hellerstedt has been recognized both for its impact in Texas and for its perceived refinement of the undue burden standard.", "Because at least 25 states are believed to have either an admitting privileges or ASC requirement, Hellerstedt is expected to have an impact in other jurisdictions.", "This report examines Hellerstedt and discusses how the decision might affect the application of the undue burden standard in future abortion cases." ], "parent_pair_index": [ -1, 0, 1, 0, 0, -1, 0, 0, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Background", "ICD Code Overview", "Usage of ICD Codes", "CMS Developed Transition Educational Materials, Modified Medicare Systems, and Assisted Medicaid Agencies", "CMS Developed Educational Materials, Conducted Outreach, and Assessed Covered Entity and Vendor Readiness", "CMS Reported Having Begun Modifying Medicare Systems and Policies for the Transition", "CMS Provided Technical Assistance and Monitors the Readiness of Medicaid Agencies", "Stakeholders Cited Testing Activities, Education, Outreach, and Provider Burden among Concerns; CMS Has Taken Steps to Address Concerns and Prepare for Transition", "Concluding Observations", "Agency Comments", "Appendix I: Comments from the Department of Health and Human Services", "Appendix II: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The transition to ICD-10 codes, which has widespread implications for health care transactions and quality measurement in the United States, offers the potential for several improvements over the current ICD-9 code set. Medicare and Medicaid will incorporate the ICD-10 codes into multiple program functions that currently use ICD-9 codes, including payment systems and quality measurement programs.", "ICD-9 codes were initially adopted in the United States as the standard for documenting morbidity and mortality information for statistical purposes, but was expanded and adopted in 2000 through HIPAA as the standard code set for use in all electronic transactions by covered entities. Specifically, ICD-9 codes are used in all U.S. health care settings to code diagnoses and are also used in all U.S. inpatient hospital settings to code procedures. Beginning on October 1, 2015, all health care transactions that include ICD codes must use ICD-10 codes for dates of service that occur on or after that date. Transactions with dates of service that occur prior to the transition date of October 1, 2015, must continue to be coded with ICD-9 codes. The vendors whose goods or services health care providers may utilize to help them code and process claims, such as electronic health record vendors and practice management system vendors, are not covered entities, but they must respond to HIPAA standards in order to support their HIPAA-covered customers. Figure 1 illustrates the flow of health care transactions that include ICD codes from the health care provider to payers, and identifies which types of organizations are and are not covered entities.\nThe Centers for Disease Control and Prevention’s (CDC) National Center for Health Statistics is responsible for developing the ICD-10 diagnosis codes with input from medical specialty societies, and CMS is responsible for developing the ICD-10 procedure codes. Representatives from CMS and the National Center for Health Statistics comprise the Coordination and Maintenance Committee, which is responsible for approving coding changes and making modifications, based upon input from the public. CDC and CMS, assisted by the American Hospital Association (AHA) and the American Health Information Management Association (AHIMA)— collectively known as the Cooperating Parties—are responsible for supporting covered entities’ transitions to ICD-10. The Cooperating Parties’ responsibilities include developing and maintaining guidelines for ICD-10 codes and developing ICD-10-related educational programs.\nIn addition to the Cooperating Parties, other organizations are helping to prepare covered entities for the ICD-10 transition. For example, officials with the Workgroup for Electronic Data Interchange (WEDI), a coalition of covered entities, vendors, and other members of the health care industry, hold regular meetings with industry members to discuss how to address ICD-10 transition issues. Additionally, WEDI and other stakeholders have made educational materials available on their websites.the Healthcare Information and Management Systems Society’s ICD-10 Playbook contains tools, guidelines, and information to help covered entities prepare for the transition to ICD-10 codes. Stakeholders have also held sessions on ICD-10 transition-related issues during their member conferences.\nThere are several differences between ICD-9 and ICD-10 codes. For example, ICD-10 codes can include up to seven alphanumeric digits, while ICD-9 codes can only include up to five alphanumeric digits. The additional digits in ICD-10 codes allow for the inclusion of more codes. Specifically, there are approximately 15,000 ICD-9 diagnosis codes compared to approximately 70,000 ICD-10 diagnosis codes, and approximately 4,000 ICD-9 procedure codes compared to approximately 72,000 ICD-10 procedure codes. Despite the dramatic increase in the number of ICD-10 codes, according to CMS and others, most physician practices use a relatively small number of diagnosis codes that are generally related to a specific type of specialty.\nThe additional number of ICD-10 codes enables providers and payers to capture greater specificity and clinical information in medical claims. For example, ICD-10 codes enable providers to report on the body part and the side of the body subject to the evaluation or procedure. More specifically, while there was 1 ICD-9 code for angioplasty—a procedure to restore blood flow through an artery—there are 854 ICD-10 codes for angioplasty, with codes including additional detail on the body part, approach, and device used for the procedure. Another difference between ICD-9 and ICD-10 codes is the terminology and disease classifications, which have been updated so that they are consistent with new technology and current clinical practice. For example, under ICD-9, there was a single code to reflect tobacco use or dependence. Under ICD-10, there is a category for nicotine dependence with subcategories to identify the specific tobacco product and nicotine-induced disorder. The updated disease classifications for nicotine disorders reflect the increased knowledge of the effects of nicotine. Other differences between ICD-9 and ICD-10 codes include the addition of new concepts that did not exist in ICD-9 diagnosis codes, such as the expansion of postoperative codes to distinguish between intraoperative and post-procedural complications; and the designation of trimester for pregnancy codes.", "The ICD codes are used in a variety of ways by payers, including Medicare and Medicaid. For example, payers generally use ICD diagnosis codes to determine whether the care provided by physicians is medically necessary and, therefore, eligible for reimbursement. Additionally, Medicare hospital inpatient payment rates are based on Medicare-Severity Diagnosis-Related Groups (MS-DRG), a system that classifies inpatient stays according to both patients’ diagnoses and the procedures the patients receive, both of which are identified using ICD codes. The MS-DRG signifies the average costliness of inpatient stays assigned to one MS-DRG category relative to another MS-DRG category. All payers will need to update all systems and processes that utilize ICD codes by October 1, 2015, to ensure they are ICD-10 compliant.\nIn addition to claims processing, Medicare, Medicaid, and private payers conduct a variety of quality measurement activities that use quality measures, which will need to be updated to reflect the ICD-10 codes. For example, Medicare providers collect and report quality measures to CMS for the Hospital Inpatient Quality Reporting program, the Physician Quality Reporting System, the Physician Value-based Payment Modifier Program, and the Electronic Health Records program, and many private payers measure their performance using Healthcare Effectiveness Data and Information Set® (HEDIS) measures.", "In preparation for the transition from ICD-9 to ICD-10 codes, CMS developed various educational materials, conducted outreach, and monitored the readiness of covered entities and the vendors that support them for the transition. In addition, the agency reported modifying its Medicare systems and policies. CMS also provided technical assistance to Medicaid agencies and monitored their readiness for the ICD-10 transition.", "CMS developed a variety of educational materials for covered entities, available on the agency’s ICD-10 website,transition to ICD-10 codes. Each of the 28 stakeholders we contacted reported that the educational materials CMS made available have been helpful to preparing for the ICD-10 transition. Some of the materials CMS developed are specific to small and medium physician practices, large practices, or small hospitals. CMS officials told us that the agency developed these materials in response to feedback the agency received to help them prepare for the from stakeholders that indicated that these specific groups wanted materials targeted to them. The educational materials include documents that provide information about ICD-10 codes, including how they differ from ICD-9 codes, and explain why the transition is occurring; checklists and timelines that identify the steps necessary to prepare for the transition, including the associated timeframes; tip sheets on how providers should communicate with the vendors that supply their practices with products that utilize ICD coding—such as software vendors and billing services—and vice versa; videos and webinars; and links to stakeholder websites that also feature ICD-10 guidance and training materials.\nIn addition, CMS officials told us that the agency partnered with organizations to enable providers to obtain continuing medical education credit for eight training modules as a way to incentivize providers to prepare for the transition.\nTo help small practices prepare for the ICD-10 transition, and in response to focus group feedback, CMS launched a new website in March 2014 called “Road to 10.” According to CMS documentation dated March 2013, industry feedback received by the agency indicated that small physician practices lag behind other providers in preparing for the transition. Seventeen of the 28 stakeholders we contacted noted that this website was helpful in preparing covered entities for the transition. The Road to 10 website, which can be accessed through CMS’s main ICD-10 website, provides additional training materials not available through CMS’s main ICD-10 website, including training videos describing the clinical documentation needs for the following specialties: cardiology, family practice and internal medicine, obstetrics and gynecology, orthopedics, and pediatrics. The website also provides a customizable action plan based on several criteria: specialty; practice size; types of vendors supporting the practice, such as an electronic health record system vendor; payers to whom the clinician submits claims; and the level of readiness for the ICD-10 transition.\nSome of CMS’s educational materials are intended to help covered entities determine which ICD-10 codes they may need to use. Specifically, CMS and the other members of the Cooperating Parties developed a tool called the General Equivalence Mappings to assist covered entities in converting ICD-9 codes to ICD-10 codes. Covered entities can use the General Equivalence Mappings tool to identify ICD-10 codes that might be most relevant to them—a practice that CMS advocates in its checklists and action plans. Six of the 28 stakeholders we contacted described this tool as being helpful to their preparatory activities. CMS’s Road to 10 website also identifies common ICD-10 diagnosis codes associated with the following six physician specialties: cardiology, family practice, internal medicine, obstetrics and gynecology, orthopedics, and pediatrics.\nCMS also conducted a number of outreach activities in order to inform covered entities and others about the educational materials that are available, educate and engage covered entities, obtain real-time feedback on areas that may merit additional activities from CMS, and promote collaboration among stakeholders. Twenty-two of the 28 stakeholders we contacted reported that CMS’s outreach activities have been helpful in preparing covered entities for the transition to ICD-10 codes. Examples of the types of outreach CMS has conducted include the following.\nEmail lists, social media, and advertisements. CMS communicated information related to the ICD-10 transition through several email lists, the primary one being the ICD-10 email list, which CMS officials said was distributed to 186,000 email addresses as of November 25, 2014. The emails communicated information related to the ICD-10 transition and generally directed recipients to CMS’s ICD-10 website, which agency officials told us receives approximately 184,000 page views per month. Our review of the emails sent from August 2013 to August 2014 indicated that CMS communicated a variety of information, including available trainings and separate specialty-specific trainings; best practices; and resources available to help covered entities prepare for the transition. Other CMS email lists also communicated information related to the ICD-10 transition, including eHealth and Medicare Learning Network® (MLN) ConnectsTM. CMS officials told us that other groups redistribute CMS’s emails to their members, which helped the agency reach additional covered entities. For example, officials said that approximately 140 national associations distribute the information to their members, which represent over 3 million individuals, and that the Medicare Administrative Contractors (MAC) forward these messages to their email lists, which include about 600,000 addresses. CMS’s regional offices also distribute materials through their local email lists, according to CMS officials. In addition, CMS’s Twitter account provided information about the ICD- 10 transition, such as the date by which covered entities must use ICD-10 codes, and provided links to educational materials and information about upcoming presentations. CMS officials told us that the agency has placed and plans to place additional advertisements about the transition in both print and online resources, such as journals and associations’ publications.\nNational broadcasts. CMS hosted teleconferences that provided an overview of key transition issues, and an opportunity for participants to ask questions. In addition, according to the publisher, in 2013, CMS participated in four broadcasts of Talk 10 Tuesdays, a weekly 30-minute Internet radio broadcast directed to healthcare providers transitioning to ICD-10, which has about 6,800 registered listeners.\nStakeholder collaboration. CMS has collaborated with stakeholders in various ways. For example, in 2013, CMS held two meetings with stakeholders that represented covered entities and vendors. In those meetings, stakeholders noted several concerns related to the ICD-10 transition and made recommendations to CMS. In addition, CMS officials reported holding 40 one-on-one meetings with 31 individual stakeholders between January 2013 and March 2014. Topics of stakeholder collaboration meetings included the effectiveness of existing educational materials and how to communicate the benefits of ICD-10 coding to the public. CMS officials also presented information about the ICD-10 transition at conferences held by stakeholders. In addition, CMS hosted two live events (in April 2011 and September 2014) where members of the American Academy of Professional Coders answered questions about the ICD-10 codes. Fifteen of the 28 stakeholders we contacted mentioned that CMS’s outreach to or collaboration with stakeholders has been helpful to preparing covered entities for the transition. Officials with one of these stakeholders noted that CMS’s participation in stakeholder meetings demonstrates that CMS is listening to the health care industry’s concerns.\nCMS has begun to conduct additional outreach to small primary care physician practices. First, CMS started to conduct in-person training for small physician practices in a number of states. According to CMS officials, between February and December 2014, CMS held 90 1-to- 2 hour trainings in 29 states and the District of Columbia; in each one, between 1 and 12 sessions were held. In January 2015, officials said the agency will begin scheduling trainings that will occur in 2015. CMS officials said that the content for these trainings was based on feedback from physician focus groups about what physicians are most interested in learning about during the sessions. In addition, CMS piloted a direct mail project to small primary care practices in four states—Arizona, Maryland, Ohio, and Texas—and CMS officials told us they planned to complete an assessment of the pilot in early December 2014. In responding to a draft of this report, CMS officials stated that the agency plans to expand the pilot to rural communities. CMS officials stated that the agency is working with stakeholders to identify specific practice locations to send direct mail, an activity they plan to begin in March 2015 and conclude in May 2015; however, CMS officials did not identify the number of practices the agency plans to target for this effort.\nIn addition to developing educational materials and conducting outreach, CMS conducted activities to assess the readiness of covered entities and vendors. For example, to prepare for the original implementation date of October 1, 2013, CMS’s contractors conducted an assessment of the health care industry’s ICD-10 transition planning in 2009. Additionally, in 2011, CMS’s contractors interviewed 27 organizations representing vendors, payers, and small physician practices, and surveyed almost 600 organizations regarding their awareness of and preparation for the transition to ICD-10 codes. These activities revealed a number of things, including that covered entities wanted additional guidance on how to prepare for the transition, such as templates describing testing steps; that providers were concerned about the time and costs associated with the transition; and that 82 percent of providers, 88 percent of payers, and 75 percent of vendors contacted believed they would be ready to use ICD-10 codes by the original October 1, 2013, transition date. More recently, CMS has relied on its stakeholder collaboration meetings, focus group testing, and review of surveys conducted by the health care industry to gauge covered entities’ readiness for the transition, according to agency officials. During the course of our work, we learned that CMS planned to conduct a survey to assess current covered entity and vendor readiness. However, in commenting on a draft of this report, HHS told us that CMS had decided not to go forward with those plans, as CMS determined that the agency’s limited resources would be better spent continuing its outreach activities due to the rapidly approaching transition deadline.", "CMS reported that the agency has begun modifying Medicare’s systems and policies in preparation for the ICD-10 transition. Examples of these activities include the following:\nCoverage policies. CMS and its MACs have updated National Coverage Determination and Local Coverage Determination polices, which identify the items and services that are covered by Medicare to reflect the conversion to ICD-10 codes.\nMedicare fee-for-service (FFS) claims processing systems. CMS documentation states that the agency completed all ICD-10-related changes to its Medicare FFS claims processing systems as of October 1, 2014, and that the claims processing systems have been updated in response to the results of internal testing, but it is not yet known whether updates may be needed based upon the results of external testing.\nInternal testing. CMS has reported that its Medicare claims processing systems reflect different types of internal testing activities. For example, each MAC conducted testing to ensure that claims using ICD-10 coding complied with the Local Coverage Determination policies, and that the claims processing systems appropriately accepted or rejected and processed claims.\nExternal testing. CMS had not completed testing with external parties, and agency officials acknowledged that the agency would make additional changes to its systems if future testing identified any issues. Specifically, CMS conducted “acknowledgment testing”—that is, testing to determine whether claims submitted by providers and suppliers that contain ICD-10 codes were accepted or rejected—over two separate weeks in 2014 (one week in March and one in November). CMS plans to hold two additional weeks of acknowledgement testing in 2015 (one week in March and one in June). In addition, CMS has plans to conduct such testing with any covered entity that submits test claims on an ongoing basis until October 1, 2015. During CMS’s first acknowledgement testing week in March 2014, the agency reported that 2,600 covered entities submitted more than 127,000 claims—89 percent of which were accepted, with some regional variation in acceptance rates. During CMS’s second acknowledgement testing week in November 2014, the agency reported that 500 covered entities submitted about 13,700 claims—76 percent of which were accepted. CMS documentation indicates that testing during the March and November 2014 acknowledgment testing weeks did not identify any issues with the agency’s Medicare FFS claims processing systems. Additionally, CMS plans to conduct “end-to-end testing”—that is, testing to determine how claims submitted by providers and suppliers that contain ICD-10 codes would be adjudicated, and that accurate payments for these claims will be calculated—during three weeks in 2015 (in January, April, and July). CMS is planning to conduct end-to-end testing with a total of 2,550 covered entities, or 850 covered entities in each week-long testing period.\nWe did not independently assess the extent to which CMS’s Medicare FFS claims processing systems have been updated or tested in preparation for the ICD-10 transition because we have separate ongoing work evaluating these activities.\nHospital reimbursement. According to CMS documentation, the agency has converted MS-DRGs, which determine reimbursement rates to hospitals for inpatient hospital stays by Medicare beneficiaries, to reflect ICD-10 codes. CMS planned to continue making adjustments to the MS-DRGs, as appropriate, based upon input from the Coordination and Maintenance Committee and from public comments.\nThe version of the MS-DRG that will be implemented on October 1, 2015, is to be made available to the public in the summer of 2015. CMS documentation suggests that until the new version of the MS-DRG is provided, hospitals may use the documentation and software CMS has already made available to analyze the effect the conversion to ICD-10 codes will have on hospital payments.\nCMS has employed different strategies to communicate the changes it has made to its systems and policies. The agency distributes educational materials through the MLN. For example, CMS has issued articles that instruct providers and suppliers (e.g., inpatient hospitals and home health agencies) on how to code claims that span a period of time that crosses the ICD-10 compliance date of October 1, 2015. In addition, the MACs help educate and provide information to Medicare providers and suppliers. For example, the MACs are to distribute information to providers and suppliers about the acknowledgement testing weeks.", "CMS provided technical assistance to Medicaid agencies in states and the District of Columbia to help them prepare for the ICD-10 transition. For example, CMS developed educational and guidance tools, such as an implementation handbook, which identified five implementation phases: (1) awareness, (2) assessment, (3) remediation, (4) testing, and (5) transition. In addition, according to the CMS official leading these technical assistance activities, CMS conducted about 60 onsite training sessions with Medicaid agencies. By January 2015, CMS officials said the agency will have conducted site visits to 12 Medicaid agencies that need additional assistance to prepare for the transition, and will conduct additional trainings as needed. CMS also provides technical assistance to Medicaid agencies in other ways. For example, a CMS official noted that the agency advised Medicaid agencies on their testing plans and worked with them on their development of risk mitigation plans related to provider readiness. In addition, CMS officials noted that the agency hosts bi- weekly meetings with Medicaid agencies, which include selected external stakeholders, such as other payers and health care providers, during which Medicaid agencies share information, lessons learned, and best practices related to the ICD-10 transition.\nCMS also monitors the readiness of Medicaid agencies for the ICD-10 transition. For example, CMS officials noted that the agency assesses the readiness of Medicaid agencies quarterly and holds conference calls with each one. According to CMS officials, as of October 2014, all states and the District of Columbia reported that they would be able to perform all of the activities that CMS has identified as critical to preparing for the ICD- 10 transition by the deadline. These critical success factors are the ability to accept electronic claims with ICD-10 codes; adjudicate claims; pay providers (institutional, professional, managed care); complete coordination of benefits with other insurers; and create and send Medicaid system reports to CMS. CMS officials stated that all Medicaid agencies must test each of the critical success factors and report back to However, as of November 26, 2014, CMS no later than June 30, 2015.not all Medicaid agencies had started to test their systems’ abilities to accept and adjudicate claims containing ICD-10 codes. Specifically, CMS officials told us that 2 states had completed internal and external testing, 9 states and the District of Columbia had started internal testing activities, and 16 states had started external testing activities. The remaining 23 states, according to the CMS officials, were in the process of updating their policies and systems, which needs to occur before testing begins. Therefore, Medicaid agencies may need to make system changes if testing identifies issues.", "Stakeholders we contacted identified several areas of concern about the ICD-10 transition, including that CMS needed to expand the number of ICD-10 testing activities, with some of those stakeholders commenting that CMS’s ICD-10 testing has not been sufficiently comprehensive. Stakeholders we contacted also noted areas of concern and made recommendations regarding CMS’s ICD-10 education and outreach efforts, and requested that the agency mitigate any additional provider burdens leading up to and following the ICD-10 transition.\nTesting. Twenty of the 28 stakeholders we contacted identified concerns or made recommendations related to CMS’s ICD-10 testing activities. Their comments focused on CMS’s lack of comprehensive ICD-10 testing, as well as the need to communicate the future test results to covered entities.\nLack of comprehensive testing. Seventeen stakeholders raised concerns that CMS’s ICD-10 testing was not comprehensive. Specifically, some of these stakeholders were concerned that CMS has not yet conducted Medicare FFS end-to-end testing. Additionally, some of these stakeholders were concerned that CMS would not include enough covered entities in its testing. For example, one stakeholder expressed concern that not all provider types, such as small providers, would be represented in the planned testing. Another stakeholder was concerned that the number of testing participants may not be large enough to get a true sense of industry readiness or the ability of CMS to properly process the full range of ICD-10 codes.\nAs previously noted, CMS officials said that the agency has scheduled Medicare FFS end-to-end testing with a total of 2,550 covered entities during three separate weeks in 2015, and identified staffing and financial constraints as the reason for limiting the number of covered entities participating in the scheduled testing. However, agency officials indicated that the number of covered entities they plan to test with will exceed the number requested by some industry groups. In addition, CMS officials said they are committed to ensuring that the testing participants are representative of the health care industry.\nCommunicate test results. Seven stakeholders we contacted recommended CMS better communicate the agency’s readiness for the ICD-10 transition, by, for example, improving communication of test results. Two of these stakeholders indicated that doing a better job communicating test results would not only increase confidence that CMS will be prepared to process claims, but also would help providers identify modifications needed in their own coding or billing practices.\nCMS officials noted that the agency intends to publicly release the results of Medicare FFS end-to-end testing once the agency has completed its analysis of each of the three scheduled testing periods. Specifically, CMS’s communications plan indicates that the agency intends to report on the results of each testing period within a month of when the testing is completed. CMS officials told us that the report will provide details about the types and numbers of testing participants, technical challenges that arise during testing, and CMS’s plans for fixing them.\nEducation. Twenty of the 28 stakeholders we contacted identified concerns or recommendations related to CMS’s covered entity education efforts. Specifically, these stakeholders’ comments focused on whether covered entities were aware of CMS’s educational materials to help them prepare for the ICD-10 transition. These stakeholders suggested CMS emphasize benefits from transitioning to ICD-10, as well as best practices and success stories, expand in-person training, and develop more specialty-specific materials.\nCovered entity awareness of educational materials. Eleven stakeholders we contacted expressed concerns about the extent to which the covered entities they represent were aware of and using the educational materials developed by CMS. In particular, while all 28 stakeholders we contacted indicated that CMS’s educational materials have been helpful to covered entities, some of them were concerned that the materials may not be reaching the covered entities most in need of them, such as solo or small physician practices, rural and critical access hospitals, nursing homes, and home health agencies.\nCMS officials indicated that all of the agency’s outreach efforts—as described earlier in this report—have been intended to work in concert to promote awareness of the ICD-10 transition and direct covered entities, especially hard-to-reach entities, to helpful educational materials. CMS officials stated that the agency has partnered with a number of organizations to reach covered entities, including those covered entities that some stakeholders indicated are most in need of the materials. Specifically, CMS partnered with WEDI to create the “ICD-10 Implementation Success Initiative,” a partnership between payers, providers, coding organizations, and other organizations to promote awareness of the ICD-10 transition by directing users to available CMS and industry educational resources. In addition, CMS officials indicated that the agency tracks the use of its educational materials by, for example, monitoring the number of documents downloaded or videos viewed, and uses the tracking information to customize and develop new information as needed. However, the agency’s monitoring activities do not provide specific information on whether the providers most in need of these materials—which stakeholders identified as solo or small physician practices, rural and critical access hospitals, nursing homes, and home health agencies— are accessing and using them.\nPlace greater emphasis on sharing ICD-10 benefits, best practices, and success stories. Seven stakeholders we contacted suggested that CMS put greater emphasis on sharing ICD-10 benefits, best practices, and success stories in order to increase support among providers for the transition. Specifically, one stakeholder said that it would be helpful if CMS could identify “physician champions” who could discuss the benefits of transitioning to ICD-10, walk other physicians through the steps needed to prepare for the transition, and reassure them that they will not suffer financially in the process of preparing for the transition. Similarly, another stakeholder suggested that success stories could illustrate that the effort to comply with the ICD-10 transition may not be as difficult as anticipated. A third stakeholder mentioned that CMS could do more to explain how the transition to ICD-10 can create value in delivering patient care.\nCMS officials highlighted agency materials that describe benefits, best practices, and success stories that are currently available on the Road to 10 website, and also described materials they are developing. For example, CMS officials identified website materials that describe clinical, operational, professional, and financial benefits of using ICD- 10 codes, which are topics that physicians identified as resonating with them; and video testimonials from physician champions. CMS officials also noted that the agency is developing additional positive testimonials and best practice resources from providers and payers, as well as ICD-10 “use cases” that will provide practical examples of how ICD-10 codes will be used in a clinical setting. Officials noted that the development of these materials is part of an effort to share positive physician experiences as a way to re-engage physicians and other covered entities following the transition delay to October 1, 2015. CMS officials indicated that this information will be posted to the CMS website in December 2014, but did not provide additional details on the specific materials they plan to develop during the period of our review.\nExpand in-person training and provide more advance notice of those events. Six stakeholders we contacted recommended that CMS expand its in-person training for physician practices to additional states. Initially, CMS officials indicated that they planned to hold these in-person training events in 18 states.that every state has small or rural practices that are struggling to make the ICD-10 transition and could benefit from CMS’s training One stakeholder remarked activities. Another stakeholder indicated that CMS had initially only provided a few days’ advance notice for scheduled training, and requested that CMS provide more advance notice.\nCMS officials said the agency is expanding the in-person trainings to additional states, beyond the 18 states noted above, where resources allow. Specifically, as of January 2015, officials said that they had held trainings in 11 additional states. CMS officials also indicated that the agency is collaborating with nationally and locally recognized organizations to expand training to additional states. Officials said that where resources are not available for in-person training, CMS is reviewing options to offer more video training through the ICD-10 website. In response to concerns about the notice provided for these events, CMS officials said that the Road to 10 website identifies scheduled in-person training events by location, and that the agency is working closely with the CMS regional offices, medical specialty associations, and other state and local partners to raise awareness of these events.\nDevelop additional specialty-specific materials. Four stakeholders we contacted requested that CMS continue developing additional physician specialty-specific educational materials. For example, one stakeholder suggested that CMS develop more materials that focus on specific, practical examples of how the ICD-10 codes would be used in a clinical setting.\nCMS officials noted that the agency has made various specialty- specific materials available, and stated that the agency plans to add more specialty-specific educational materials to its Road to 10 website, and, as requested, will partner with stakeholders to develop materials targeted to their providers. In commenting on a draft of this report, CMS officials noted that the agency plans to develop materials for anesthesia, bariatric, general surgery, pulmonary, and renal specialties; however, they did not indicate when those materials will be made available on the website.\nOutreach. Nineteen of 28 stakeholders we contacted recommended that CMS take additional actions that could improve its outreach efforts.\nSpecifically, stakeholders recommended that the agency communicate plans to ensure that Medicare FFS providers would be reimbursed in a timely manner; provide information on the effect of the ICD-10 transition on CMS’s quality measurement activities; contact providers through non- electronic methods, such as print media and mail; promote a greater sense of immediacy in preparing for the transition; provide information on alternative methods for Medicare claims submission; and make public CMS’s Medicare FFS contingency plans.\nCommunicate plans to ensure Medicare FFS payment. Seven stakeholders we contacted recommended that CMS take action to ensure that providers would be reimbursed in a timely manner if CMS’s Medicare FFS claims processing systems are unable to accept and correctly process claims. These recommendations included the following: (1) expand the use of the agency’s Medicare Part B advance payment policy to account for instances where MACs are unable to receive and, therefore, pay providers’ claims;(2) reimburse Medicare providers’ claims even if there are problems with the ICD diagnosis codes submitted; and (3) allow Medicare providers to submit either ICD-9 or ICD-10 codes—referred to as dual coding—for a period of time following the October 1, 2015, transition deadline.\nCMS officials stated that the agency understands the importance of paying claims on time during the ICD-10 transition, and is committed to working closely with providers to ensure a smooth transition and responded to each of the recommendations:\nCMS officials indicated that the agency’s current authority permits CMS to determine circumstances that warrant the issuance of advance payments to affected physicians and suppliers providing Medicare Part B services, and that this authority could be used should CMS systems be unable to process valid Part B claims that contain ICD-10 codes beginning October 1, 2015. Under these circumstances, no action would need to be taken by the physician or supplier, nor would the agency need to publish additional criteria or modify the existing advance payment policy, according to CMS officials.\nCMS officials stated that the submission of valid ICD-10 codes is a requirement for payment; however, when the presence of a specific diagnosis code is not required for payment then the claim would be paid even if a more appropriate ICD-10 code should have been used on the claim. For example, CMS officials told us that, because there are many reasons why an individual would need to go in for an office visit, office visits do not require the claim to include specific ICD-10 codes; therefore, as long as a claim for an office visit includes a valid ICD-10 code, it would be paid. Additionally, CMS officials indicated that, absent indications of potential fraud or intent to purposefully bill incorrectly, CMS will not instruct its contractors to audit claims specifically to verify that the most appropriate ICD-10 code was used. However, audits will continue to occur and could identify ICD-10 codes included erroneously on claims which could lead to claims denials, according to CMS officials.\nCMS officials said that dual processing of ICD-9 and ICD-10 codes on Medicare claims is not possible given that HIPAA does not allow for the use of two different code sets at the same time.\nCommunicate how the ICD-10 transition affects CMS programs that use clinical quality measures. Six stakeholders we contacted expressed a need for more information on how the ICD-10 transition will affect CMS programs that make use of clinical quality measures. One stakeholder suggested that there is a lack of understanding about how the ICD-10 transition will affect quality measurement reporting.\nSee http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment- Instruments/HomeHealthQualityInits/OASIS-C1.html. transition deadline. In commenting on a draft of this report, CMS officials stated that CMS had made available a crosswalk of ICD-9 and ICD-10 codes for quality measures in the hospital inpatient and hospital outpatient quality reporting programs.\nEngage through non-electronic methods. Five stakeholders we contacted recommended that CMS do more to engage with covered entities through non-electronic methods. For example, one stakeholder indicated that not all of its members rely on electronic communications, instead relying on more traditional forms of receiving information—such as print media and mail—and suggested that CMS expand the methods it uses to engage with covered entities. Other stakeholders recommended that CMS work with local or regional resources, such as the Regional Extension Centers (REC), as part of a strategy to reach a broader audience.\nBeyond the agency’s electronic outreach efforts, CMS officials indicated that the agency employs various methods, including bi- weekly stakeholder collaboration meetings, in-person training, and print advertisements, to engage covered entities. Another activity officials noted as responsive to stakeholder feedback is the direct mail pilot project that began in August 2014, and which CMS officials said the agency plans to expand in 2015. CMS officials noted that CMS is able to track whether recipients of direct mail have accessed the agency’s ICD-10 website. Additionally, CMS officials said that, in 2012, the agency began conducting multiple trainings with the RECs on the ICD-10 transition in partnership with the Office of the National Coordinator for Health Information Technology.\nPromote a greater sense of immediacy. Four stakeholders we contacted recommended that CMS’s outreach efforts foster a greater sense of “immediacy” in order to convince covered entities that they should begin preparing for the transition; the amount of time necessary to properly prepare is significant. For example, one stakeholder urged CMS to strengthen its message to providers by encouraging providers to conduct specific transition-related activities, such as a systems remediation assessment.\nCMS officials noted that the agency has taken steps to modify the types of messages they send covered entities as the transition deadline approaches. After the most recent delay in the transition date, officials said that CMS’s messages began highlighting the practical steps covered entities could take to get started with their transition to ICD-10. For example, officials noted that CMS has issued “one year out” messages intended to help covered entities follow a one-year plan to transition to ICD-10, as well as messages that direct covered entities to detailed ICD-10 transition guidance and resource materials. CMS officials said that the agency’s messaging in 2015 will continue to focus on encouraging covered entities to begin specific, technical activities, such as by providing guidance on how to conduct end-to-end tests for ICD-10 readiness.\nCommunicate Medicare FFS claims submission alternatives. Four stakeholders we contacted expressed concern that providers could face delays in reimbursement if they have problems making changes to their practice management or electronic health record systems to enable the electronic submission of claims with ICD-10 codes by the transition deadline; therefore, they suggested that CMS do more to communicate alternatives for submitting claims.\nCMS officials noted that the agency has already made available information on alternatives for claims submissions to covered entities through an MLN Matters article. These alternatives, according to the article, consist of free billing software available from the MACs’ websites or MACs’ Internet portals if the portal offers claims submissions. In addition, providers and suppliers may submit paper claim forms. However, this information is included in an article primarily addressing CMS’s Medicare FFS ICD-10 testing approach, and it may not be clear to covered entities that this document also communicates Medicare FFS claim submission alternatives. Officials indicated that CMS plans to publish a claims submission alternative educational product in September 2015, but if the agency learns that providers need the information sooner, they will issue the document earlier.\nCommunicate Medicare FFS contingency plans. Four stakeholders we contacted suggested that CMS should make public the agency’s Medicare FFS contingency plans that address potential post-transition issues. Two stakeholders suggested that without a contingency plan, covered entities may doubt whether CMS is ready for the transition deadline, and that making such plans public would demonstrate CMS’s commitment to the transition date and instill confidence that CMS has a clear strategy for addressing any issues that may arise.\nCMS officials developed a draft contingency plan that outlines the steps CMS will take to address specific issues affecting Medicare FFS claims processing if they were to arise after the transition, but this plan has not been shared with the public. Officials indicated that they do not intend to make the contingency plan public because the information relevant to providers—that is, claims submission alternatives—has already been made available in an MLN article. CMS’s contingency plan addresses the agency’s plans in the following scenarios: if covered entities are unable to submit ICD-10 codes, if covered entities are submitting incorrect ICD-10 codes, and if CMS’s Medicare FFS claims processing systems are unable to accept and correctly process claims. To help prepare in the case of the latter scenario, the plan indicates that the agency would hold an exercise— which occurred in December 2014, according to CMS officials—to simulate the actions that could be taken in such an event. Officials said that if there are issues that occur on or after October 1, 2015, CMS will use its regular communication channels to educate the provider community about what is happening and what, if anything, providers need to do.\nProvider Burden. Seven of the 28 stakeholders we contacted expressed concerns that the burden of participating in CMS audits and various other concurrent programs is limiting and will continue to limit health care providers’ ability to focus on ICD-10 transition preparedness, and requested that CMS mitigate any additional provider burdens leading up to and following the ICD-10 transition. For example, one stakeholder suggested that CMS delay implementing any new audits, because the individuals responsible for preparing for the transition to ICD-10 codes are often the same individuals involved in responding to CMS’s audit activities. Another stakeholder indicated that a lack of staff is the greatest barrier to a successful ICD-10 transition, as providers are also trying to simultaneously comply with a number of competing health reform priorities, such as the Medicare Electronic Health Records program.\nIn written responses to us, CMS officials stated that the agency understands the effect new audit activities have on providers. However, officials also indicated that some audits may have the potential to decrease provider burden, and that it would not be appropriate for CMS to delay all new audits. Additionally, while CMS officials did not identify specific actions the agency could take to address stakeholders’ concerns about the burden of participating in various other concurrent programs, they noted that the transition to ICD-10 is foundational to advancing health care. Specifically, CMS officials stated that the granularity of ICD- 10 codes will improve data capture and data analysis, which can be used to improve patient care, and inform health care delivery and health policy.", "A successful transition to ICD-10 codes requires every health care provider, clearinghouse, and payer to prepare in advance of the October 1, 2015, transition deadline. CMS has taken multiple steps to help prepare covered entities for the transition, including developing educational materials and conducting outreach, and the majority of the stakeholders we contacted reported that both of those activities have been helpful to preparing covered entities for the ICD-10 transition. With respect to Medicare, CMS reported that the agency’s Medicare FFS claims processing systems have been updated to reflect ICD-10 codes, and it is not yet known whether any changes might be necessary based upon the agency’s ongoing external testing activities. CMS has also worked with the states to help ensure that their Medicaid systems are ready for the ICD-10 transition, but, in many states, work remains to complete testing by the transition deadline.", "We provided a draft of this report to HHS for comment. HHS concurred with our findings. In its written comments, reproduced in appendix I, HHS stated that it is committed to helping address stakeholders needs and in working with those that need additional assistance to prepare for the transition. The Department detailed various methods it has used and is using to prepare stakeholders, Medicare FFS claims processing systems, and state Medicaid agencies for the transition.\nHHS also 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 Secretary of Health and Human Services, the Administrator of CMS, 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 have any questions about this report, please contact me at (202) 512-7114 or dsouzav@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Gregory Giusto, Assistant Director; Nick Bartine; Shannon Legeer; Drew Long; and Jennifer Whitworth made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full h2_title", "", "h2_full", "h0_title h2_full h3_title", "h0_full h3_full h2_full", "h0_full", "h0_full", "h1_full", "h0_full h2_full", "", "", "", "", "" ] }

{ "question": [ "How has CMS reacted to ICD-10?", "How has CMS prepared for ICD-10?", "What polices has CMS modified in preparation for ICD-10?", "What is CMS doing to ensure Medicaid agencies are ready for the transition to ICD-10?", "How are stakeholder organizations reacting the transition to ICD-10?", "How has CMS responded to stakeholders' concerns regarding educational materials?", "How has CMS responded to stakeholders' concerns regarding training and materials?", "How has CMS responded to stakeholders' concerns regarding contact methods and publicity?", "Where are ICD codes used?", "What is the result of the new revision of ICD codes?", "How do healthcare providers have to transition to the 10th revision of ICD codes?", "What is the GAO report about?", "Where did GAO source information for its report?" ], "summary": [ "The Centers for Medicare & Medicaid Services (CMS), within the Department of Health and Human Services (HHS), has undertaken a number of efforts to prepare for the October 1, 2015, transition to the 10th revision of the International Classification of Diseases (ICD-10) codes, which are used for documenting patient medical diagnoses and inpatient medical procedures.", "CMS has developed educational materials, such as checklists and timelines, for entities covered by the Health Insurance Portability and Accountability Act of 1996 (HIPAA)—that is, health care providers, clearinghouses, and health plans, which GAO refers to as “payers”—and their support vendors. In addition, CMS has conducted outreach to prepare covered entities for the transition by, for example, holding in-person training for small physician practices in some states. CMS officials have also monitored covered entity and vendor readiness through stakeholder collaboration meetings, focus group testing, and review of surveys conducted by the health care industry. CMS also reported modifying its Medicare systems and policies.", "For example, CMS documentation states that the agency completed all ICD-10-related changes to its Medicare fee-for-service (FFS) claims processing systems, which reflect the results of internal testing. At this time, it is not known what, if any, changes might be necessary based upon the agency's ongoing external testing activities.", "CMS has also provided technical assistance to Medicaid agencies and monitored their readiness for the transition. For example, all Medicaid agencies reported that they would be able to perform all of the activities that CMS has identified as critical by the transition deadline; however, as of November 2014, not all agencies have started to test their systems' abilities to accept and adjudicate claims containing ICD-10 codes.", "Stakeholder organizations identified several areas of concern about the ICD-10 transition and made several recommendations, which CMS has taken steps to address. For example, stakeholders expressed concerns that CMS's testing activities have not been comprehensive. In addition, while all 28 stakeholders GAO contacted indicated that CMS's educational materials have been helpful to covered entities, stakeholders were concerned about the extent to which those entities were aware of and using those materials. Stakeholders also recommended that CMS expand its in-person training and develop additional specialty-specific materials. Additionally, stakeholders recommended that CMS do more to engage covered entities through non-electronic methods and to make its Medicare FFS contingency plans public.", "In response, CMS officials said that the agency has scheduled end-to-end testing with 2,550 covered entities during three weeks in 2015 (in January, April, and July), and has promoted awareness of its educational materials by, for example, partnering with payers, providers, and others to direct users to available CMS and industry educational resources.", "CMS officials said the agency has added in-person training in additional states with plans to also offer more video trainings, and planned to develop additional specialty-specific materials.", "CMS officials indicated that the agency employs various methods to engage covered entities—including bi-weekly stakeholder collaboration meetings and print advertisements—and also conducted a direct mail pilot project to primary care practices in four states, and plans to expand the pilot. CMS officials also indicated the information in the agency's contingency plans that are relevant to providers is currently publicly available.", "In the United States, every claim submitted by health care providers to payers—including Medicare and Medicaid—for reimbursement includes ICD codes.", "On October 1, 2015, all covered entities will be required to transition to the 10th revision of the codes, requiring entities to develop, test, and implement updated information technology systems. Entities must also train staff in using the new codes, and may need to modify internal business processes.", "On October 1, 2015, all covered entities will be required to transition to the 10th revision of the codes, requiring entities to develop, test, and implement updated information technology systems. Entities must also train staff in using the new codes, and may need to modify internal business processes. CMS has a role in preparing covered entities for the transition.", "GAO was asked to review the transition to ICD-10 codes. GAO (1) evaluated the status of CMS's activities to support covered entities in the transition from ICD-9 to ICD-10 coding; and (2) described stakeholders' most significant concerns and recommendations regarding CMS's activities to prepare covered entities for the ICD-10 transition, and how CMS has addressed those concerns and recommendations.", "GAO reviewed CMS documentation, interviewed CMS officials, and analyzed information from a non-probability sample of 28 stakeholder organizations representing covered entities and their support vendors, which GAO selected because they participated in meetings CMS held in 2013 or met GAO's other selection criteria." ], "parent_pair_index": [ -1, 0, 1, -1, -1, 0, 0, 0, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1 ] }

{ "title": [ "", "Introduction", "Background", "Authorization and Uses", "Public Operators", "Customs and Border Protection", "Department of Justice", "Other Federal Uses", "State and Local Governmental Operations", "Private Operators", "Privacy Interests Implicated by UAS Operations", "Surveillance", "Personal Control", "Secrecy", "Autonomy", "Anonymity", "Post-Collection Activities", "Aggregation", "Use", "Retention", "Various Approaches to UAS Privacy Regulation", "Courts", "Fourth Amendment", "Privacy Torts", "Executive Branch", "FAA—Privacy Rules at the Test Sites and Beyond", "President's Memorandum on UAS and Privacy", "UAS Policies and Procedures for Federal Government Use", "Multi-Stakeholder Engagement Process for Commercial and Private UAS Use", "Privacy Impact Assessments and Privacy Working Groups", "DOJ Inspector General UAS Report", "Congress", "Legislation", "Drone Aircraft Privacy and Transparency Act of 2013 (S. 1639, H.R. 2868)", "Preserving Freedom from Unwarranted Surveillance Act of 2013 (S. 1016, H.R. 972)", "Preserving American Privacy Act of 2013 (H.R. 637)", "Oversight", "States" ], "paragraphs": [ "", "It has been three years since Congress enacted the FAA Modernization and Reform Act of 2012 (FMRA), calling for the integration of unmanned aircraft systems (UAS), or \"drones,\" into the national airspace by September 2015. During that time, the substantive legal privacy framework relating to UAS on the federal level has remained relatively static: Congress has enacted no law explicitly regulating the potential privacy impacts of drone flights; the courts have had no occasion to rule on the constitutionality of drone surveillance; and the Federal Aviation Administration (FAA) did not include privacy provisions in its proposed rule on small UAS. However, this issue has not left the national radar. Congress held several hearings in the 113 th Congress on the potential privacy impacts of domestic drone use on American citizens; Members have introduced legislation to regulate both public- and private-actor use of drones; the executive branch has taken various measures to assess the privacy impact of its drone operations; and almost half the states have enacted UAS legislation.\nAs this report will discuss, there are two overarching privacy issues implicated by domestic drone flights. The first issue is defining and understanding what the chameleon phrase \"privacy\" means in the context of aerial surveillance. Traditional privacy concepts such as the right to control information about oneself or secrecy do not adequately capture potential privacy concerns raised by visual surveillance; instead, privacy concepts such as personal autonomy and anonymity must be explored to get a fuller understanding about the scope of privacy interests implicated by UAS operations. Additionally, a separate set of privacy interests might be implicated by the subsequent aggregation, use, and retention of drone-obtained information. For instance, the Supreme Court's aerial surveillance cases generally hold that it is not a Fourth Amendment search to conduct surveillance of private property while flying in navigable airspace. However, one could argue that beyond the initial collection of data, a unique privacy interest is at risk by aggregating multiple flights over one's home, using drone-obtained data in ways never envisioned by the initial collection, or retaining that data indefinitely.\nThe second predominant issue is which entity should be responsible for regulating UAS privacy issues. The courts can be expected to apply traditional privacy rules encompassed in the Fourth Amendment's prohibition against unreasonable searches and privacy torts found largely in state statutory and common law. Since drone use has been relatively limited to date, the courts have yet to address how these laws apply to UAS flights. Privacy safeguards might also come from executive branch policies. On February 15, 2015, President Obama issued a memorandum charging all federal agencies that use drones in their operations to evaluate the privacy impact of such use and develop policies to mitigate any privacy concerns. The need for this new initiative may have been prompted, in part, by the FAA's relatively passive role in setting privacy rules for drone operations. The FAA's recently proposed rule for small UAS operations and certifications did not include any privacy provisions, and it is likely the FAA will remain in an advisory, rather than regulatory, role with respect to this issue. With its power over interstate commerce, Congress has the broadest authority to set national standards for UAS privacy regulation. For instance, Congress could create a broad legislative scheme regulating all UAS uses; it could pass more narrow proposals such as a warrant requirement for law enforcement use; or it could create a scheme regulating the subsequent use, retention, and dissemination of drone-obtained data. Federal legislation introduced in the 113 th Congress, and likely to be introduced in the 114 th Congress, utilized, to some extent, these various approaches. Lastly, some have argued that under our system of federalism, the states should be left to experiment with various privacy schemes. Indeed, the states have taken up this call with 20 states reportedly enacting laws addressing UAS issues by the end of 2014.\nIn reviewing these various forms of regulation, it is clear that understanding privacy rights vis-à-vis drones is not as simple as applying Supreme Court case law or federal and state statutes. Rather, regulations may come from myriad sources, some statutory, some regulatory, and some practical. With this in mind, this report will provide a primer on privacy issues relating to various UAS operations, both public and private, including an overview of current UAS uses, the privacy interests implicated by these operations, and various potential approaches to UAS privacy regulation.", "The FMRA defined an \"unmanned aircraft\" to mean \"an aircraft that is operated without the possibility of direct human intervention from within or on the aircraft.\" An \"unmanned aircraft system\" (UAS) is the unmanned aircraft and its \"associated elements (including communications links and the components that control the unmanned aircraft) that are required for the pilot in command to operate safely and efficiently in the national airspace system.\" UAS, commonly referred to as \"drones,\" can range from the size of an insect—sometimes called nano or micro drones—to the size of a traditional jet. Drones can be outfitted with an array of sensors, including high-powered cameras, thermal imaging devices, license plate readers, and laser radar (LADAR). In the near future, drones might be outfitted with facial recognition or soft biometric recognition, which can recognize and track individuals based on attributes such as height, age, gender, and skin color. In addition to their sophisticated sensors, the technical capability of drones is rapidly advancing. For instance, the Defense Advanced Research Projects Agency (DARPA), the technology research arm of the U.S. military, is working on a drone that can enter a building through a window and fly at speeds up to 20 meters/second without communication to the operator and without GPS waypoints. As discussed below, these advanced sensors and capabilities have the capacity to heighten privacy risks posed by drones.", "Currently, all UAS operators who do not fall within the recreational use exemption (discussed below) must apply directly to the FAA for permission to fly. The process for obtaining permission to operate differs depending on whether the operator is a public operator or a private commercial operator.", "UAS operated by federal, state, or local agencies must obtain a certificate of authorization or waiver (COA) from the FAA. After receiving COA applications, which can be completed online, the FAA conducts a comprehensive operational and technical review of the UAS and can place limits on its operation in order to ensure its safe use in airspace. COAs are not generally publicly available, but have been released in response to Freedom of Information Act (FOIA) requests. The most recent FOIA request on the FAA's website revealed 426 UAS COA files.", "The most prominent domestic user of UAS among federal agencies is the Department of Homeland Security's (DHS's) U.S. Customs and Border Protection (CBP). As of September 2013, CBP was reported to own 10 UAS, which are operated by CBP's Office of Air and Marine (OAM). The bulk of CBP's flight missions involve patrolling the nation's borders, interdicting persons and contraband illegally entering the United States. CBP's COA allows it to operate in an airspace that covers a 100 mile corridor along the northern border and within 20 to 60 miles along the southern border, excluding urban areas. In addition to its border missions, CBP has provided unmanned aerial support to various federal and state agencies, including the Drug Enforcement Administration (DEA), Immigration and Customs Enforcement (ICE), the U.S. Marshals Service, the U.S. Coast Guard, the Bureau of Land Management, and the Texas Department of Public Safety, among others. In one prominent case, CBP used one of its Predator drones to assist local police in North Dakota to monitor an individual suspected of cattle theft and threatening police officers. The number of these \"loan\" operations has steadily increased each year since 2010. For instance, CBP flew one flight for the DEA in 2010, 19 flights in 2011, and 66 in 2012.", "The other primary federal agency currently using UAS in its operations is the Department of Justice (DOJ), the nation's chief law enforcement agency. In 2013, DOJ's Office of the Inspector General issued a report reviewing the various UAS programs underway within DOJ. All of the UAS purchased by DOJ so far have been what the FAA calls \"small UAS,\" those 55 pounds or less. The Federal Bureau of Investigation (FBI) has been the most prominent component of DOJ to use UAS in the field and has been doing so since 2006. The FBI noted in a July 2013 letter to Senator Rand Paul that it had used UAS in 10 operations, including those related to search and rescue, drug interdictions, kidnapping, and fugitive investigations. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has plans to use UAS in its future operations but has not done so yet. And while the DEA and the Marshals Service have purchased several UAS, as of 2012 they had no plans to use them in future operations. This might be attributed to the DEA and Marshals Service use of CBP drones in their operations.", "In addition to DHS and DOJ, the FAA has issued COAs to various other federal entities—both military and civilian. On the defense side, COAs have been issued to DARPA, the U.S. Army, the Navy, the Marine Corps, and the Air Force, for operations in U.S. airspace. On the civilian side, COAs have been issued to the Departments of State, Interior, and Energy, the National Aeronautics and Space Administration (NASA), and the National Institute of Standards and Technology (NIST).", "Like their federal counterparts, state and local governmental entities must obtain a COA in order to conduct drone operations. As of 2012, the FAA has issued several hundred COAs to state and local governmental entities to operate UAS. These have included state and city governments, such as Houston, Texas, and the Colorado Department of Transportation; local fire and police departments, including the Miami-Dade Police Department; and state and local universities, like Indiana University.", "Until the FAA finalizes its small UAS rule as required under FMRA, there are currently only a limited number of ways to gain authorization for private commercial use of UAS. A private operator may obtain a special airworthiness certificate in the experimental category issued by the FAA. These certificates have been issued on a limited basis for flight tests, demonstrations, and training. The second means of authorization is under FMRA's Section 333, which permits the FAA to authorize certain UAS flights before the FAA issues a final small UAS rule. These Section 333 exemptions have been issued for such purposes as movie productions, precision agriculture, flare stack inspection, and bridge inspections. Finally, certain recreational UAS users may fall within FMRA's model aircraft exception, meaning they are not required to obtain specific authorization from the FAA before flying UAS. Section 336 of FMRA prohibits the FAA from promulgating a rule regarding \"model\" aircraft if the aircraft is flown \"strictly for hobby or recreational use\" and meets several other requirements.", "A threshold issue in analyzing drones and privacy is determining what privacy interests might be implicated by drone operations, both public and private. Privacy is an ambiguous term that can mean different things in different contexts, which becomes apparent when attempting to apply traditional privacy concepts to drone surveillance.", "The first privacy interest implicated by the use of UAS is the initial collection of information about people—what can be called \"surveillance\"—whether it is conducted by a government or private actor. With respect to UAS operations, surveillance takes place in nearly all flights, as one of their major purposes is to collect information, namely visual surveillance, from the sky above. Surveillance might entail a broad and indiscriminate recording of people on the ground using a camera sensor on the aircraft. For instance, the U.S. Air Force recently rolled out the newest iteration of its \"Gorgon Stare\" sensor, a remotely controlled, aircraft-based Wide-Area Persistent Surveillance (WAPS) system. This sensor allows a single UAS to monitor a 100km 2 area in high resolution for several hours at a time. CBP uses a similar sensor while monitoring the U.S. border. Alternatively, surveillance might consist of more targeted data collection, such as the FBI's use of a drone in 2013 to monitor a standoff with a child kidnapper. Both types of surveillance, to one degree or another, implicate various privacy concepts, including personal control, secrecy, autonomy, and anonymity.", "One of the leading privacy theories is the right to control information about oneself. According to one prominent privacy theorist, \"[p]rivacy is the claim of individuals, groups, or institutions to determine for themselves when, how, and to what extent information about them is communicated to others.\" This paradigm works in some mediums, for example, when we consent to a smart phone app tracking our location: we can decide whether the trade-off to our privacy is worth the service we will receive in exchange. However, with drones and aerial surveillance, this theory of privacy breaks down. For instance, should we be able to control whether people can view us or our activities in public? How are we expected to exercise such control? And should it make a difference if a person sees us from a traditional aircraft versus a drone? Requiring consent before conducting aerial surveillance could undermine many uses of this new technology, making this theory of privacy as applied to drone surveillance unworkable.", "Another prominent theory of privacy is the secrecy model. Under this model, an individual's privacy is invaded if previously concealed information about them is publicly disclosed; or, put another way, an individual is not entitled to privacy where that information has been revealed to another person. The Supreme Court relied on this secrecy model in the three aerial surveillance cases from the 1980s, which held that surveillance conducted in public airspace does not even trigger—let alone violate—the Fourth Amendment's protection against unreasonable searches. Citing to an earlier case, the Court observed in California v. Ciraolo that \"[w]hat a person knowingly exposes to the public, even in his own home or office, is not a subject of Fourth Amendment protection.\" In addition to Fourth Amendment case law, the privacy tort intrusion upon seclusion applies this same secrecy model such that most activities revealed to the public would not constitute a violation of this tort. If secrecy remains the primary model for the Fourth Amendment and privacy torts, individuals would have little protection from drone surveillance when their location and activities have been revealed to the public.", "Another important theory of privacy is personal autonomy. Autonomy generally refers to the ability of an individual to make life decisions free from interference or control by both government and private actors. Some have argued that surveillance represents a form of social control, mandating conformity in society, hindering independent thinking, and recording and notating people who stray from acceptable norms. One such example is Jeremy Bentham's Panopiticon, a prison facility designed to give inmates the perception of being watched at all times causing them to self-regulate their behavior to the desired norm. Of course, some form of social control—say, crime control—is beneficial and expected in every society. As noted by Professor Daniel Solove, \"many people desire the discipline and control surveillance can bring.\" He notes that \"[t]oo much social control, however, can adversely impact freedom, creativity, and self-development.\" It would appear that potential risks to personal autonomy will depend, at least in part, on the pervasiveness of drone surveillance. Single, targeted operations would not appear to implicate this fear of societal control and harm to personal autonomy. However, some have questioned what effect 24-hour, omnipresent surveillance would have on our public spaces. At this point, the shorter flight capabilities of small UAS—the aircraft likely to be most prevalent in the early stages of UAS integration—would limit the ability to conduct such pervasive surveillance. Yet, as this technology becomes more sophisticated and maximum possible flight times are extended, this risk to autonomy may heighten.", "Anonymity is a \"state of privacy\" that \"occurs when the individual is in public places or performing public acts but still seeks, and finds, freedom from identification and surveillance.\" Professor Christopher Slobogin notes that \"the right to public anonymity provides assurance that, when in public, one will remain nameless—unremarked, part of the undifferentiated crowd—as far as the government is concerned. The right is surrendered only when one does or says something that merits government attention, which most of the time must be something suggestive of criminal activity.\" Others might argue that when we leave our doorstep, and enter into society, we give up this right to anonymity by permitting anyone to view our public movements and whereabouts. Potential blanket UAS surveillance over an urban landscape or a large public event (for instance, the Super Bowl or NASCAR racing), appears to pose a low risk to anonymity. Each person can remain a faceless person in the crowd, free from government identification. Take, for instance, CBP's surveillance at the border: its Predator-B drones reportedly fly at a minimum of 19,000 feet and are not able to identify specific persons on the ground. However, the potential use of sensors such as Automated License Plate Readers (ALPRs) or facial recognition technology, or UAS surveillance specifically targeted at an individual, may have the capacity to eliminate one's anonymity when in public.", "The second class of privacy risks posed by drone surveillance are those activities that occur after surveillance has been conducted—the aggregation, use, and retention of that data. In certain instances, the initial collection may not directly implicate an individual's privacy interests, but the subsequent manipulation and storage of that data may warrant an alternative privacy analysis.", "\"Aggregation\" is simply the gathering of information about a person whether from one or multiple sources. In the pre-digital era, aggregating information about a person took concerted effort and lots of resources. With computer automation, information can be gathered and aggregated from many sources at the mere push of a button. The privacy theory of aggregation supposes that while the collection of bits of data about a person may not violate his or her privacy interests, extensive collection of information about him or her can rise to the level of a legal privacy intrusion. Professor Solove argues that this unique privacy intrusion arises because \"when analyzed, aggregated information can reveal new facts about a person that she did not expect would be known about her when the original, isolated data was collected.\" This theory was on display in the 2012 GPS tracking case United States v. Jones , where five Justices of the Supreme Court (in two separate concurrences) acknowledged that short-term location monitoring was likely not a Fourth Amendment search, but that 28 days of tracking should be considered a search. Judge Richard Leon of the U.S. District Court for the District of Columbia also applied this aggregation theory when invalidating the National Security Agency's (NSA's) metadata program, observing,\nthe ubiquity of phones has dramatically altered the quantity of information that is now available and, more importantly, what that information can tell the Government about people's lives. ... Records that once would have revealed a few scattered tiles of information about a person now reveal an entire mosaic—a vibrant and constantly updating picture of the person's life.\nIn the context of UAS operations, aggregation may mean the surveillance of an individual for an extended time, or the combination of drone-obtained data with other independent information. A simple one time fly-over of a residence may not significantly implicate any of the privacy interests described above (e.g., secrecy, autonomy, anonymity), but continuous surveillance of a person may implicate this aggregation interest. Alternatively, aggregating drone-collected data with other seemingly personal information, such as telephone, banking, utility, and other records—all of which can be obtained without a probable cause warrant—might entail a unique privacy infringement beyond the mere collection of those individual data sets.", "The second post-collection privacy risk is the improper use of data—that is, data collected for an authorized purpose, but subsequently used in an unauthorized way. One commentator has argued that in the era of big data, where we inevitably share troves of personal information with the government and commercial entities, privacy rules that focus on the collection and retention of data are \"becoming impractical for individuals, while also potentially cutting off future uses of data that could benefit society.\" He argues that privacy laws should instead focus on controlling the use of that data. Various federal laws embody this principle. For instance, the Privacy Act of 1974 requires any federal agency that maintains a database of personal records to inform each individual about whom it collects information of \"the principal purpose or purposes for which the information is intended to be used.\" Similarly, the Driver's Privacy Protection Act of 1994 made it a federal crime \"for any person knowingly to obtain or disclose personal information, from a motor vehicle record, for any use not permitted\" under that statute. Instead of placing front-end restrictions on drone surveillance, such as requiring warrants before they are operated, policymakers might want to instead regulate how that information is used. For instance, a proposal may permit law enforcement officials to collect information for one purpose—say, traffic control—but prohibit it from using that information for other purposes, such as against an individual in a criminal prosecution absent a court order.", "Another incident of the digital revolution is the near limitless ability of the government and private companies to store and retain information about individuals. The cost of storage has decreased exponentially over the past several decades and is no longer a hindrance to maintaining vast databases of personal data. The Obama Administration's report on big data highlighted this concern when it noted that \"the declining cost of collection, storage, and processing of data, combined with new sources of data like sensors, cameras, geospatial and other observational technologies, means that we live in a world of near-ubiquitous data collection.\" This issue of data retention has been one of the drivers behind Europe's \"right to be forgotten\" law, which includes a provision requiring that data be retained \"for no longer than is necessary for the purposes for which it was collected.\" Generally speaking, when it comes to Fourth Amendment law, once information is lawfully collected, there are no additional constitutional hindrances to it being stored indefinitely. However, in the NSA metadata litigation, Judge Leon acknowledged that unique privacy interests were affected by the long-term storage of everyone's telephone call records. He observed that in decades past, it was not expected that the government would retain a suspect's phone records once a case was concluded, whereas \"[t]he NSA telephony metadata program ... involves the creation and maintenance of a historical database containing five years' worth of data.\" The privacy impact of retention of UAS-derived data would largely depend on whether people could be identified in the recording. Retention of data that contains personally identifiable information and can be located based on this information would seem to implicate this retention interest.", "In addition to the general privacy concepts implicated by drone surveillance, one might question which government entity, if any, should regulate the potential privacy issues posed by the integration of thousands of UAS into domestic skies. Congress neither mentioned the word \"privacy\" in FMRA nor has it enacted any substantive privacy rules relating to drones subsequently. The FAA recently issued its proposed rule for operating small drones (55 pounds or less), but failed to include any privacy safeguards. Potentially in response to this dearth of privacy regulations, President Obama recently mandated that all federal agencies evaluate the privacy risks posed by their drone operations. This section will explore different approaches to UAS privacy regulation, focusing on the various government institutions—the courts, the executive branch, Congress, and state governments—that might conduct such regulation.", "As the final arbiter of the Constitution, the courts are frequently relied on to safeguard the privacy rights of Americans, whether through the suppression mechanism in criminal prosecutions, or civil suits against government officials for violations of constitutional rights. The Fourth Amendment, as applied by the courts, will provide a floor of legal protections against government actor use of drones. Likewise, privacy torts, which are given much of their content by the courts, will provide some legal recourse to potential privacy invasions caused by drones operated by private actors.", "The Fourth Amendment provides in relevant part: \"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.\" This Amendment, like most constitutional protections, applies only to acts by public actors, and, as such, will provide the minimum legal requirements for government use of drones. In order for the Fourth Amendment to apply in a particular situation, a reviewing court must assess whether the government conducted a \"search\" by asking whether it invaded an individual's \"reasonable expectation of privacy.\" Although no court has had the opportunity to apply the Fourth Amendment to drone technology, similar cases regarding traditional aircraft and location monitoring provide insight.\nIn three cases from the 1980s, the Supreme Court upheld the government's warrantless use of traditional aircraft to surveil both private and commercial property. In Florida v. Riley , the case most closely resembling potential UAS surveillance, the police flew a helicopter 400 feet above a private residence to determine if marijuana was growing in a greenhouse in the backyard. The Court held that this fly-over was not a Fourth Amendment search, as anyone from the public could have seen the property from that vantage point since the aircraft was in federal airspace. Similarly, in the 1983 case United States v. Knotts , the Court held that it was not a Fourth Amendment search to track a person's public movements using an electronic tracking device. There is a general consensus among commentators that a strict application of these cases would accord limited privacy safeguards to individuals located on both public and private property from UAS surveillance being conducted from lawful federal airspace.\nHowever, several more recent cases demonstrate that the Court has been uneasy about applying decade-old cases to new technology. In Kyllo v. United States , for instance, the use of sense-enhancing technology \"not in general public use\" to obtain information about the inside of a home was considered a Fourth Amendment search. Similarly, in United States v. Jones , five Justices (in two separate concurrences) would have held that a month-long location monitoring using a GPS device constituted a search, even in the face of Knotts , which upheld the use of a more rudimentary tracking device. The concurring Justices in Jones expressed concern about the sheer ability of these new technologies to collect vast amounts of information about individuals, and their capacity to break down any natural barriers (such as time and resources) to excessive police surveillance. This conundrum of applying old precedent to newer forms of technology is not unique for the federal courts. Several cases currently pending in the federal courts are wrestling with how to apply Smith v. Maryland , a case from the 1970s that addressed the collection of telephone numbers of one individual over several days, to the NSA's collection of millions of telephone records over a five-year period. With this trend in mind, federal judges may be persuaded that the sophistication and type of sensors used by UAS present a strong enough privacy risk to modify old precedents such as Riley or Ciraolo and adapt them to the new potential reality of UAS aerial surveillance. Additionally, depending on the duration of the surveillance and the amount of data collected on an individual, the courts may be inclined to apply an aggregation-type theory to long-term UAS surveillance.\nThis issue of the law keeping up with technology is a constantly recurring theme in Fourth Amendment jurisprudence. Some have argued that the judiciary is not the ideal forum for creating adequate privacy rules when fast-moving technology is involved. Courts tend to be backward looking—resolving past factual scenarios between two discrete parties. This characteristic makes courts reactive rather than proactive, leading to privacy rules that might fall behind the particular technology in question. For instance, the Supreme Court has yet to resolve whether individuals are entitled to a reasonable expectation of privacy in their emails, a technology that has been around for decades. Part of the problem is that the Court has been unsure of its role in developing privacy rules when technology is in flux, with some Justices preferring that legislatures, rather than the courts, take the lead role. This is not to say that this approach is ineffective: this case-by-case approach allows the courts to formulate rules more cautiously based on concrete facts in an adversarial setting, and reduces the risk of creating rules with potentially unintended consequences.\nThis hesitancy to confront new technologies head-on might explain the Court's recent reliance on property rights as the basis for Fourth Amendment decisions, which, incidentally, might boost Fourth Amendment safeguards against UAS surveillance. In Jones , the five-Justice majority led by Justice Scalia rejuvenated a centuries old property-based theory of the Fourth Amendment by holding that the physical attachment of a GPS device on the undercarriage of a vehicle constituted an invasion of the owner's \"effect\" and therefore a Fourth Amendment search. Justice Scalia observed that the Katz reasonable expectation of privacy formula added to, but did not replace, the traditional property-based test. Likewise, in Florida v. Jardines , the Court relied on this property theory in holding that the government's use of a trained police drug dog to investigate an individual's home and its immediate surroundings was a \"search.\" Depending on the flight path of the aircraft, and the height at which it is operating, this property theory might be employed to hold that flying a UAS onto someone's property with the intent to obtain information is a Fourth Amendment search for which a warrant would be required.", "Like the Fourth Amendment, a body of laws collectively known as \"privacy torts\" might create safeguards against privacy invasions by both public- and private-actor use of unmanned aircraft. While some have held up privacy torts as proof that the existing body of case law is sufficient to regulate privacy issues arising from UAS operations, others have asserted that such laws would provide minimal protection from drone surveillance, at least while in public.\nThe genesis of the modern privacy tort sprung from the pens of Justice Louis Brandeis and Samuel Warren in their law review article \"Right to Privacy.\" There, they espoused the view that privacy could form the underpinning of civil liability absent other physical or tortious conduct. This new tort was later broken down into four discrete torts and included in a set of model rules intended for adoption by the states: (1) intrusion upon seclusion; (2) appropriation of one's name or likeness; (3) publicity given to private life; (4) publicity placing person in false light. Of these four, the first and third will likely prove the most applicable to UAS surveillance.\nThe tort of intrusion upon seclusion, which may vary in its details from state to state, generally provides, \"One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person.\" This tort applies a \"reasonable person standard\"—that is, it tests whether a person of \"ordinary sensibilities\" would be offended by the alleged invasion. Likewise, the intrusion must not only be offensive, but \" highly offensive,\" or as one court put it, \"outrageously unreasonable conduct.\" Generally, a single incident will not suffice; instead, the intrusion must be \"repeated with such persistence and frequency as to amount to a course of hounding\" and \"becomes a burden to his existence.... \" However, in a few cases a single intrusion was adequate. The invasion of privacy must be intentional, meaning the defendant must desire that the intrusion would occur, or, as with other torts, know with a substantial certainty that such an invasion would result from his actions. An accidental intrusion is not actionable. Finally, in some states, the intrusion must cause mental suffering, shame, or humiliation to permit recovery.\nThe tort \"publicity given to private facts\" provides, \"One who gives publicity to a matter concerning the private life of another is subject to liability to the other for invasion of his privacy, if the matter publicized is of a kind that (a) would be highly offensive to a reasonable person, and (b) is not of legitimate concern to the public.\" Like the intrusion upon seclusion tort, publicity given to private facts focuses on publicity given to an individual's private, as opposed to public, life. As the comments to the model rules observe, a person cannot complain of someone taking his photograph while walking down the street, but when a photograph is taken without his consent in a private place, and then subsequently published, he will have a valid publicity claim. Unlike the intrusion tort, publicity given to private life requires that the information be made available to the public at large, and furthermore, generally prohibits claims that involve matters that are of legitimate public concern.\nUnder current law, the location of the target of the surveillance largely controls whether someone has a viable claim for both intrusion upon seclusion and publicity given to private life, and this is likely to hold true with drone surveillance. For the most part, using a drone to peer inside the home of anotherwhether looking through a window or utilizing extra-sensory technology such as thermal imagingwould likely satisfy the intrusion tort, and if photographs were taken and subsequently published, that person would also likely have a claim for publicity given to private life.\nThe likelihood of a successful claim is significantly diminished, however, if the surveillance is targeted at individuals in a public space, or even while on private property so long as they could be viewed from a public vantage point. Take, for instance, the suit brought by Aaron and Christine Boring against Google for photographs taken of their home and subsequently published online as part of Google's Street View program. To create this program, Google employees attach panoramic cameras to their vehicles and drive around taking photographs of areas along the streets. The Borings, who live on a posted private road, discovered that Google had taken photographs of their private residence and swimming pool from their driveway. The Borings sued, among other claims, for intrusion upon seclusion and publicity given to private facts. Both claims were dismissed by the district court. On appeal, the Third Circuit Court of Appeals affirmed the dismissal on both counts, holding that the photographs failed to meet the \"highly offensive\" standard required under both privacy torts. The court found that \"no person of ordinary sensibilities would be shamed, humiliated, or have suffered mentally as a result of a vehicle entering in his or her ungated driveway and photographing him or her from there.\" The view of the Borings' house, pool, and driveway could \"be seen by any person who entered onto their driveway, including a visitor or a delivery man.\" Recording someone with a drone in a public place or even on private property that can be viewed from a public vantage point, as in the Google Street View case, would likely not constitute an invasion under either of these privacy torts.", "In addition to the courts, the executive branch is likely to play a significant role in regulating the privacy implications of UAS operations. Although the FAA has attempted to focus on safety and other regulatory issues, privacy remains a perennial topic for the FAA as it leads the federal government's UAS integration efforts. Some have posited that instead of the FAA, other executive branch agencies, such as DHS and DOJ, should take the lead role in overseeing the privacy implications of their own unmanned operations. President Obama recently issued a new memorandum taking a similar approach, directing all federal agencies to evaluate the privacy impact of their UAS operations and developing policies to mitigate such concerns.", "In FRMA, Congress charged the FAA with integrating UAS into the national airspace. Since passage of this legislation, the FAA has become the center of debate on the privacy implications of these new aircraft. Some in the industry and law enforcement have questioned FAA's authority to regulate privacy at all, arguing that it is both outside its expertise and its legislative grant of authority. Others have argued that precisely because the FAA is charged with integrating UAS that it must resolve one of the most pressing issues involved with such integration—privacy. As a general matter, the FAA has stated that its \"mission does not include developing or enforcing policies pertaining to privacy or civil liberties,\" but several of its obligations in FMRA have kept the FAA enmeshed in this privacy debate.\nThe first such obligation was FMRA's mandate that the FAA establish six test sites to help facilitate the integration of UAS into the national airspace. Neither the program requirements nor the list of attributes for selecting the test sites expressly granted the FAA authority to regulate privacy, or even mentioned \"privacy\" as a general matter of consideration. Nonetheless, the FAA sought public comment on a proposed privacy policy for UAS operations at the sites on February 22, 2013, and issued a final rule on November 14, 2013. The privacy rules, which are contained as a provision in the contracts (known as an \"Other Transaction Agreement,\" or OTA) between the FAA and each site operator include the following requirements: (1) operations at the test sites must adhere to existing federal, state, and local laws regarding an individual's right to privacy; (2) the test site operator must develop a publicly available privacy policy that is informed by the Fair Information Practice Principles (a generally accepted set of rules that regulate how data should be stored, used, and disseminated); (3) the site operator must maintain a record of all UAS operating at the test site; and (4) the site operator must require each UAS operator to have a written plan for the operator's use and retention of data collected by the UAS. The authority to create these rules was purportedly under the FAA's contracting authority and not its general statutory authority. Although the FAA retains the authority to rescind an OTA for a site operator in violation of existing privacy laws, ultimately, this privacy policy signals a hands-off approach, leaving the policing of privacy rules to private parties affected by operations at the test sites, to the test site operators themselves, and to local and state government bodies that oversee the test site operators.\nDespite this relatively passive approach to privacy at the test sites, the FAA has recognized the political and legal importance of privacy in both its proposed small UAS rule and its various planning documents required under FMRA. On February 15, 2015, the FAA issued its proposed operating requirements to allow small UAS (less than 55 pounds) to operate for non-hobby or non-recreational purposes. As was expected, the FAA noted that privacy concerns \"were beyond the scope of this rulemaking.\" However, the FAA also noted it would participate in the \"multi-stakeholder engagement process\" (described below) to assist in a privacy framework concerning commercial and private use of drones. Also, in its five-year roadmap required under FMRA, the FAA noted that while its primary mission \"does not include developing or enforcing policies pertaining to privacy or civil liberties, experience with the UAS test sites will present an opportunity to inform the dialogue ... concerning the use of UAS technologies and the areas of privacy and civil liberties.\" Likewise, in its Comprehensive Plan, also required under FMRA, the FAA devoted a whole section to highlighting the privacy and civil liberties concerns that all federal agencies must take into account as UAS are integrated into the national airspace. While safety will undoubtedly remain the top priority of FAA officials as it navigates the difficult task of integrating drones in the national airspace, with its prominent role of testing and licensing both government, commercial, and private use of drones, it will remain a significant voice in the ongoing privacy debate.", "On February 15, 2015, the same day the FAA issued its proposed small UAS rule, President Obama issued a memorandum entitled \"Promoting Economic Competitiveness While Safeguarding Privacy, Civil Rights, and Civil Liberties in Domestic Use of Unmanned Aircraft Systems.\" This presidential memorandum establishes two new frameworks relating to the potential privacy implications of drone operations by both government and private actors.", "The memorandum first observes that all operations conducted by federal agencies must comply with the Constitution, federal law, and other applicable regulations and policies, an obligation to which agencies are already subject. The memorandum requires that, prior to deployment of new UAS technology and at least every three years, all federal agencies must \"examine their existing UAS policies and procedures relating to the collection, use, retention, and dissemination of information obtained by UAS, to ensure that privacy, civil rights, and civil liberties are protected.\" Agencies that collect information through UAS shall ensure their policies and procedures adhere to the following requirements:\n(i) Collection and Use. Agencies must only collect information using UAS, or UAS-collected information, to the extent that such collection or use is consistent with and relevant to an authorized purpose.\n(ii) Retention. Information collected using UAS that may contain PII [personally identifiable information] shall not be retained for more than 180 days unless retention of the information is determined to be necessary to an authorized mission of the retaining agency, is maintained in a system of records covered by the Privacy Act, or is required to be retained for a longer period by any other applicable law or regulation.\n(iii) Dissemination. UAS-collected information that is not maintained in a system of records covered by the Privacy Act shall not be disseminated outside of the agency unless dissemination is required by law, or fulfills an authorized purpose and complies with agency requirements.\nTo ensure accountability, the memorandum requires, among other things, that agencies develop protocols for receiving, investigating, and addressing potential privacy complaints; ensure they have rules of conduct and training for federal government personnel and contractors; establish meaningful oversight of individuals who have access to sensitive information collected by UAS; develop policies and procedures to authorize the use of UAS in response to a request for UAS assistance of federal, state, tribal, or territorial government operations; and ensure that local entities that purchase UAS through federal funding have policies in place to safeguard privacy and civil liberties prior to expending such funds.\nTo promote transparency, the memorandum requires agencies to provide notice to the public regarding where the agency's UAS are authorized to operate; keep the public informed about the agency's UAS program as well as changes that would significantly affect privacy; and make available to the public, on an annual basis, a general summary of the agency's UAS operations during the previous fiscal year, to include a brief description of types or categories of missions flown, and the number of times the agency provided assistance to other agencies, or to state, local, tribal, or territorial governments.\nThe agencies must report to the President within 180 days from the date of the issuance of the memorandum with a status on the implementation of these policies and procedures, and must make these policies publicly available within one year.", "The President's memorandum also charges the Department of Commerce, through the National Telecommunications and Information Administration (NTIA), to initiate \"a multi-stakeholder engagement process to develop a privacy framework regarding privacy, accountability, and transparency for commercial and private UAS use.\" The end result is expected to be a set of voluntary best practices for privacy issues implicated by commercial and private UAS use.", "Prior to the President's memorandum, several federal agencies had taken steps to assess and address the privacy impacts of their UAS operations. In September 2013, DHS's Chief Privacy Officer, in conjunction with CBP's Office of Air and Marine, issued a Privacy Impact Assessment (PIA) primarily evaluating the privacy impact of its operations at the U.S. border. This was prompted, in part, by statutory obligations under federal law.\nUnder the E-Government Act of 2002, federal agencies must conduct a PIA before (1) \"developing or procuring information technology that collects, maintains, or disseminates information that is in an identifiable form\"; or (2) \"initiating a new collection of information that will be collected, maintained, or disseminated using information technology ... [and] includes information in an identifiable form permitting the physical or online contacting of a specific individual.\" Specific to the Department of Homeland Security, under the Homeland Security Act of 2002, DHS must conduct PIAs \"of proposed rules of the Department or that of the Department on the privacy of personal information, including the type of personal information collected and the number of people affected.\" More generally, the Privacy Officer of DHS is required to coordinate with the Officer for Civil Rights and Civil Liberties to ensure that \"(A) programs, policies, and procedures involving civil rights, civil liberties, and privacy considerations are addressed in an integrated and comprehensive manner; and (B) Congress receives appropriate reports on such programs, policies, and procedures.\"\nDHS's PIA evaluated the various uses of UAS in DHS's operations, including its operations at the border, and concluded that such operations have minimal privacy impact. Because current DHS operations limit flights to an altitude of 19,000 feet, the report noted that cameras on UAS do not permit the operator to specifically identify people on the ground nor do they use technology that sees through walls or collects information regarding the interior of buildings. The report noted that personally identifiable information (PII) is generally not retrieved, but that images may later be associated with specific individuals if they are apprehended and the surveillance feed is associated with them. Acknowledging that UAS can stay in flight longer than traditional aircraft, the report concludes that the privacy impact of this technological difference is mitigated by various safeguards including well-defined flight operations, restrictions on accessing collected data, and security protocols for storing data. It is likely that DHS will utilize this PIA when developing any new policies and procedures required by the President's new memorandum.\nIn addition to PIAs, in late 2012, DHS's Office for Civil Rights and Civil Liberties and its Privacy Office spearheaded the \"Working Group to Safeguard Privacy, Civil Rights, and Civil Liberties in the Department's Use and Support of Unmanned Aerial Systems.\" The working group was intended to assess all active and planned uses of UAS by the various components of DHS and flag any privacy or civil liberties issues potentially raised by such operations. The goal was to develop a set of best practices for safeguarding these various legal interests, and it was reported in September 2014 that such a document would be out by the end of 2014. DHS has yet to release this best practices document. It may be that this document will be subsumed into the larger obligations placed on DHS through the President's new memorandum.", "There has been some debate within DOJ concerning the extent to which unmanned aerial surveillance differs from manned aerial surveillance, and whether these differences warrant new rules for deploying UAS in law enforcement operations. A report issued by DOJ's Office of Inspector General explained that both the FBI and ATF did not see a practical difference in how UAS collect evidence as compared to their manned counterparts. As such, these entities did not see a need to develop specialized UAS privacy protocols. DOJ's Inspector General disagreed with the assessment of the FBI and ATF and concluded the following in its interim report:\nWe found that the technological capabilities of UAS and the current, uncoordinated approach of DOJ components to UAS use may merit the DOJ developing consistent, UAS-specific policies to guide the proper use of UAS. Unlike manned aircraft, UAS can be used in close proximity to a home and, with longer-lasting power systems, may be capable of flying for several hours or even days at a time, raising unique concerns about privacy and the collection of evidence with UAS. Considering that multiple components are using or have the potential to use UAS, we believe the Office of the Deputy Attorney General (ODAG), which has the primary responsibility within DOJ for formulating cross-component law enforcement policies, should consider the need for a DOJ-wide policy regarding UAS uses that could have significant privacy or other legal implications.\nThis conclusion that unmanned operations pose a unique and potentially greater privacy threat than manned operations mirrors that of the President's new memorandum on UAS operations. Even when DOJ, like all other federal agencies using UAS, adopts specific policies and procedures addressing the privacy impact of its UAS operations, this inevitably prompts the question whether federal agencies should be left to police their own surveillance activities. While praising the White House drone memorandum as \"an important and welcome step in advancing drone technology,\" one commentator noted that the memo itself \"does not establish strong privacy and transparency drone standards for agencies, leaving it up to the agencies to develop these standards.\" He continues: \"Because the memo's requirements are not specific, the drone policies the agencies set for themselves will be key to how individuals' privacy is actually protected. Congress still has a role to play in setting strong privacy and transparency standards for drone use.\"", "Several measures were introduced in the 113 th Congress that would have restricted both public-and private-actor domestic UAS operations, and reintroduction of these bills is likely in the 114 th Congress. The proposed regulations in these bills range from warrant requirements for law enforcement operations to comprehensive data collection and minimization statements to privacy-tort-like prohibitions against private-actor intrusions. Additionally, Congress has utilized its oversight authority to hold hearings and probe executive branch agencies to disclose when and where they are using drones and the potential privacy implications of such uses.", "", "In the 113 th Congress, Senator Ed Markey and Representative Peter Welch introduced nearly identical legislation entitled the Drone Aircraft Privacy and Transparency Act of 2013 ( S. 1639 , H.R. 2868 ). These bills would have amended FMRA to create a comprehensive scheme to regulate both government and private-actor use of drones, including data collection requirements, a warrant requirement for law enforcement, and various enforcement mechanisms.\nFirst, these bills would have required the Secretary of Transportation, with input from the Secretary of Commerce, the Chairman of the Federal Trade Commission, and the Chief Privacy Officer of the Department of Homeland Security, to study any potential threats to privacy protections posed by the introduction of drones in the national airspace. They would have prohibited the FAA from issuing a license to operate a drone unless the application included a \"data collection statement.\" This statement would have had to include a list of individuals who would have the authority to operate the drone; the location in which the drone would be used; the maximum period it would be used; and whether the drone would be collecting information about individuals. If the drone would be used to collect personal information, the statement would have had to provide the circumstances in which such information would be used; the kinds of information collected and the conclusions drawn from it; the type of data minimization procedures to be employed; whether the information would be sold, and if so, under what circumstances; how long the information would be stored; and the procedures for destroying irrelevant data.\nThe statement also would have had to include information about the possible impact on privacy protections posed by the operation under that license and steps to be taken to mitigate this impact. Additionally, the statement would have had to include the contact information of the drone operator; a process for determining what information had been collected about an individual; and a process for challenging the accuracy of such data. Finally, the FAA would have been required to post the data collection statement on the Internet.\nIn addition to the data collection statement, any law enforcement agency which operates a drone would have had to file a \"data minimization statement\" with the FAA. This statement would have required adoption of policies by the agency that minimize the collection of information and data unrelated to the investigation of a crime under a warrant; required the destruction of data that is no longer relevant to the investigation of a crime; established procedures for the method of such destruction; and established oversight and audit procedures to ensure the agency operates a UAS in accordance with the data collection statement filed with the FAA.\nS. 1639 and H.R. 2868 would have provided several enforcement mechanisms. First, the FAA could have revoked a license of a user that did not comply with these requirements. The Federal Trade Commission would have had the primary authority to enforce the data collection requirements. Additionally, the Attorney General of each state, or an official or agency of a state, would have been empowered to file a civil suit if there was reason to believe that the privacy interests of residents of that state had been threatened or adversely affected. These bills would have also created a private right of action for a person injured by a violation of this legislation.\nThese bills would also have prohibited a governmental entity from using a drone, or obtaining information from another person using a drone, for protective activities, or for law enforcement or intelligence purposes, except with a warrant. This prohibition would not apply in \"exigent circumstances,\" which was defined to mean imminent danger of death or serious physical injury or high risk of terrorist attack as determined by the Secretary of Homeland Security.", "Senator Rand Paul and Representative Austin Scott's companion bills, the Preserving Freedom from Unwarranted Surveillance Act of 2013 ( S. 1016 , H.R. 972 ), would have focused exclusively on government drone operations. These bills would have required any entity acting under the authority of the federal government to obtain a warrant based upon probable cause before conducting drone surveillance to investigate violations of criminal law or regulations. S. 1016 and H.R. 972 included several exceptions to this warrant requirement: (1) when necessary to prevent or deter illegal entry of any persons or illegal substances into the United States; (2) when a law enforcement officer possesses reasonable suspicion that under particular circumstances \"swift action to prevent imminent danger to life or serious damage to property, or to forestall the imminent escape of a suspect, or destruction of evidence\" is necessary; or (3) when the Secretary of Homeland Security determines credible intelligence indicates a high risk of a terrorist attack by a specific individual or organization. H.R. 972 would have created a right to sue for any violation of its prohibitions. Unlike H.R. 972 , S. 1016 included an express exclusionary rule for evidence obtained in violation of the act.", "Representative Ted Poe introduced the Preserving American Privacy Act of 2013 ( H.R. 637 ), which would have regulated both public and private use of drones under various mechanisms. As to law enforcement use, H.R. 637 would have created a general prohibition on the use of drones to collect covered information or disclose covered information so collected. \"Covered information\" was defined as \"information that is reasonably likely to enable identification of an individual\" or \"information about an individual's property that is not in plain view.\" This prohibition was subject to the following exceptions: (1) law enforcement obtains a court-issued warrant and serves a copy of the warrant on the target of the search within 10 days of the surveillance. However, notice need not be provided if it would jeopardize an ongoing criminal or national security investigation.(2) Law enforcement obtains a court-issued order based upon \"specific and articulable facts showing a reasonable suspicion of criminal activity and a reasonable probability\" that the operation \"will provide evidence of such criminal activity.\" The order may authorize surveillance in a stipulated public area for no more than 48 hours which may be renewed for a total of 30 days. Notice of the operation must be provided to the target no later than 10 days after the operation. Alternatively, notice may be provided not less than 48 hours before the operation in a major publication, on a government website, or with signs posted in the area of the operation. (3) Operation is within 25 miles of national border. (4)The targeted individual has provided prior written consent. (5) Emergency situation involves danger of death or serious physical injury, conspiratorial activities threatening the national security interest, or conspiratorial activities characteristic of organized crime, where a warrant cannot be obtained with due diligence. Law enforcement must then obtain a warrant within 48 hours of such operation. Any evidence obtained in violation of this act would not have been admissible in any trial or adjudicative proceeding.\nAdditionally, H.R. 637 would have required any governmental entity applying for a certificate or license to operate a UAS to also file a data collection statement with the Attorney General, which would have included the purpose for which the UAS will be used; whether the UAS is capable of collecting covered information; the length of time the information will be retained; a point of contact for citizen feedback; the particular unit of governmental entity responsible for safe and appropriate operation of the UAS; the rank and title of the individual who may authorize the operation of the UAS; the applicable data minimization policies barring the collection of covered information unrelated to the investigation of crime and requiring the destruction of covered information that is no longer relevant to the investigation of a crime; and applicable audit and oversight procedures.\nUnder H.R. 637 , the Attorney General would have been empowered to request that the Secretary of Transportation revoke the license or certificate of any entity that fails to file a data collection statement. Further, H.R. 637 contained a provision permitting administrative discipline against an officer who intentionally violates a provision of this act.\nH.R. 637 would also have made it unlawful to intentionally operate a private UAS to capture images in a manner highly offensive to a reasonable person where the person is engaging in a personal or familial activity under circumstances in which the individual has a reasonable expectation of privacy, regardless of whether there is a physical trespass.", "In addition to its authority to enact federal law, Congress can and has utilized its oversight function to shape the debate surrounding the privacy implications of drone surveillance. For instance, both the Senate and House Judiciary Committees held hearings in the 113 th Congress specifically addressing the privacy impact of drone operations. Additionally, individual members probed executive branch officials on when and where they were using drones and the potential privacy implications of such uses. One such example of this oversight function is demonstrated by correspondence between the Senator Rand Paul and the FBI in the summer of 2013. In a July 25, 2013, letter to FBI Director Mueller, Senator Paul asked how the Bureau defined \"reasonable expectation of privacy\" in the context of UAS surveillance, as Paul feared that \"an overbroad interpretation of this protection would enable more substantial information collection on an individual in a circumstance they might not have believed was subject to surveillance.\" The FBI responded by arguing that based on the Supreme Court's three aerial surveillance cases from the 1980s, it need not obtain a warrant for any surveillance \"open to public view\" and that the \"Fourth Amendment principles applicable to manned aerial surveillance discussed in these cases apply equally to UAVs.\" Similar oversight is likely to continue in the 114 th Congress.", "Justice Brandeis once observed that \"it is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.\" Some have argued that under this theory of federalism, the states are best situated to experiment with various UAS policies to determine the most appropriate legal framework for their state. Others have countered that applying a patchwork of 50 different privacy regimes would be overburdensome on both public and private users of UAS. According to the National Conference of State Legislatures (NCSL), by the end of 2014, 20 states had enacted laws addressing UAS issues.\nState laws in this area have mainly come in three forms. The first, and perhaps most numerous, are laws that create broad prohibitions on their own state law enforcement entities, subject to various exceptions that differ from state to state. These exceptions include obtaining a warrant based upon probable cause; countering a high risk of terrorist attack; responding to threats of imminent harm of human life; locating a missing person; and conducting crime scene and traffic photography, among others. The second category relates to use restrictions of data collected by UAS. For instance, Illinois requires law enforcement to destroy all information gathered by a UAS within 30 days of collection unless there is reasonable suspicion that the information contains evidence of criminal activity or the information is relevant to an ongoing criminal investigation. While the relevancy standard is a very low evidentiary threshold, it does prevent limitless retention of private data. Similarly, Alaska prohibits the retention of records collected by drones unless it is required as part of an investigation or prosecution, is used for training purposes, or is required by federal or state law. Images that are retained under Alaska's statute are considered confidential and not subject to the state's public records laws. The third category relates to regulation of private actors, generally through the creation of private causes of action for privacy invasions caused by UAS surveillance. For instance, Idaho prohibits recording individuals on their residence without their consent, or from photographing an individual for the purpose of publishing or otherwise publicly disseminating such photograph no matter where the target is located. Undoubtedly, this third category of proposals creates tension between the public's First Amendment right to gather news and the individual privacy interests at stake, requiring legislatures to fine tune this balance when enacting UAS legislation." ], "depth": [ 0, 1, 1, 2, 3, 4, 4, 4, 4, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 1, 2, 3, 3, 2, 3, 3, 4, 4, 3, 3, 2, 3, 4, 4, 4, 3, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "", "", "h2_full", "h2_full", "", "", "h2_full", "", "", "", "", "", "", "h2_full", "", "", "", "", "", "h2_full" ] }

{ "question": [ "When were drones first integrated into American airspace?", "How have federal laws regarding drones changed since then?", "What legislative changes have been made?", "How have US laws regarding drones changed since then?", "What privacy issues are raised by domestic drone use?", "What is the usual meaning of the term \"privacy\"?", "Why does domestic drone use lead to particular privacy concerns?", "What major issue arises from domestic use of drones?", "Who is expected to be responsible for this regulation?", "What action has the federal government taken regarding privacy issues of drones?", "How has Congress used this authority as yet?" ], "summary": [ "It has been three years since Congress enacted the FAA Modernization and Reform Act of 2012 (FMRA), calling for the integration of unmanned aircraft systems (UAS), or \"drones,\" into the national airspace by September 2015.", "During that time, the substantive legal privacy framework relating to UAS on the federal level has remained relatively static: Congress has enacted no law explicitly regulating the potential privacy impacts of drone flights, the courts have had no occasion to rule on the constitutionality of drone surveillance, and the Federal Aviation Administration (FAA) did not include privacy provisions in its proposed rule on small UAS.", "Congress has held hearings and introduced legislation concerning the potential privacy implications of domestic drone use; President Obama recently issued a directive to all federal agencies to assess the privacy impact of their drone operations; and almost half the states have enacted some form of drone legislation.", "During that time, the substantive legal privacy framework relating to UAS on the federal level has remained relatively static: Congress has enacted no law explicitly regulating the potential privacy impacts of drone flights, the courts have had no occasion to rule on the constitutionality of drone surveillance, and the Federal Aviation Administration (FAA) did not include privacy provisions in its proposed rule on small UAS. Congress has held hearings and introduced legislation concerning the potential privacy implications of domestic drone use; President Obama recently issued a directive to all federal agencies to assess the privacy impact of their drone operations; and almost half the states have enacted some form of drone legislation.", "There are two overarching privacy issues implicated by domestic drone use. The first is defining what \"privacy\" means in the context of aerial surveillance.", "Privacy is an ambiguous term that can mean different things in different contexts. This becomes readily apparent when attempting to apply traditional privacy concepts such as personal control and secrecy to drone surveillance. Other, more nuanced privacy theories such as personal autonomy and anonymity must be explored to get a fuller understanding of the privacy risks posed by drone surveillance.", "Moreover, with ever-increasing advances in data storage and manipulation, the subsequent aggregation, use, and retention of drone-obtained data may warrant an additional privacy impact analysis.", "The second predominant issue is which entity should be responsible for regulating drones and privacy.", "As the final arbiter of the Constitution, the courts are naturally looked upon to provide at least the floor of privacy protection from UAS surveillance, but as will be discussed in this report, under current law, this protection may be minimal. In addition to the courts, the executive branch likely has a role to play in regulating privacy and drones. Lastly, some have argued that under our system of federalism, the states should be left to experiment with various privacy schemes. It is reported that by the end of 2014, 20 states have enacted some form of drone regulation.", "While the FAA has taken on a relatively passive role in such regulation, the President's new privacy directive for government drone use and multi-stakeholder process for private use could create an initial framework for privacy regulations. With its power over interstate commerce, Congress has the broadest authority to set national standards for UAS privacy regulation.", "Several measures were introduced in the 113th Congress that would have restricted both public- and private-actor domestic UAS operations, and reintroduction of these bills is likely in the 114th Congress." ], "parent_pair_index": [ -1, 0, 1, 0, -1, 0, 0, -1, 0, 0, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "Background", "Process for Developing Corps Projects", "Requirements for Corps Study and Construction Project Deauthorization", "The Corps Does Not Track All Construction Projects and Studies on Its Backlog", "The Corps Has Not Identified All Projects and Studies for Deauthorization or Complied with Statutory Deauthorization Requirements", "The Corps Has Not Identified All Projects Eligible for Deauthorization Due to Limited Data", "The Corps Has Not Complied with Statutory Requirements to Notify Congress of All Projects and Studies Eligible for Deauthorization", "The Corps Has Not Notified Congress of All Projects Eligible for Deauthorization", "The Corps Cannot Demonstrate It Has Consistently Notified Congress of Projects That Meet Deauthorization Eligibility", "The Corps Has Not Complied with Study Deauthorization Requirements", "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 Contacts and Staff Acknowledgments", "GAO Contact", "Acknowledgments" ], "paragraphs": [ "The Corps is the world’s largest public engineering, design, and construction management agency. Located within the Department of Defense, the Corps has both military and civilian responsibilities. Through its Civil Works Program, the Corps plans, constructs, operates, and maintains a wide range of water resources projects. The Corps’ Civil Works Program has nine major functional areas, also known as business lines: Navigation, Flood Risk Management, Environment, Recreation, Hydropower, Water Supply, Emergency Management, Regulatory Program, and Support for Others.organized into three tiers: a national headquarters in Washington, D.C., 8 regional divisions, and 38 local district offices (see fig. 1).", "The major steps in developing a Corps construction project are shown in figure 2.\nUsually, the Corps becomes involved in water resource construction projects when a local community perceives a need or experiences a problem that is beyond its ability to solve and contacts the Corps for assistance. If the Corps does not have the statutory authority required for studying the problem, the Corps must obtain authorization from Congress before proceeding. Studies have been authorized through legislation, typically a WRDA, or, in some circumstances, through a committee resolution by an authorizing committee. Next, the Corps must receive an appropriation to study the project, which it seeks through its annual budget request to Congress.\nUnder WRDA 2007 amendments, after receiving authorization and an appropriation, studies were conducted in two phases: reconnaissance and feasibility. at full federal expense to determine if the problem warranted federal participation in a feasibility study and how the problem could be addressed. During the reconnaissance phase, the Corps also assessed the level of interest and support from nonfederal entities such as state, tribal, county, or local governments or agencies that may become sponsors. If the Corps determined that further study was warranted, the district office typically sought agreement from the local sponsor to share costs for a feasibility study. WRRDA 2014 eliminated the reconnaissance phase to accelerate the study process and allow the Corps to proceed directly to the feasibility study. The conference report accompanying WRRDA 2014 also states that the Corps may terminate a study when it is clear there is no demonstrable federal interest for a project or that construction of the project is not possible for technical, legal, or financial reasons.guidance on the elimination of the reconnaissance phase.\nPub. L. No. 110-114, § 2043(b), 121 Stat. 1041 (2007). the problem and make recommendations on whether the project is worth pursuing and how the problem should be addressed. Corps guidance states that typical feasibility studies should be completed in 18 to 36 months. According to Corps documents, the district office conducts the study and the needed environmental studies and documents the results in a feasibility report that includes a total project cost estimate based on the recommended plan. The Chief of Engineers reviews the report and decides whether to sign a final decision document, known as the Chief’s Report, recommending the project for construction. The Chief of Engineers transmits the Chief’s Report and the supporting documentation to Congress through the Assistant Secretary of the Army for Civil Works and the Office of Management and Budget. Congress may authorize the project’s construction in a WRDA or other legislation. When Congress approves a project for construction, it typically authorizes a total cost for the project based on estimates prepared by the Corps.\nMost construction projects are authorized during the preconstruction engineering and design phase. The purpose of this phase is to complete any additional planning studies and all of the detailed, technical studies and designs needed to begin construction of the project. Once the construction project has been authorized and preconstruction engineering and design has been funded through completion of the plans and specifications for the first construction contract, the Corps seeks funds to construct the project through the annual budget formulation process. As part of the budget process, the Army, with input and data from Corps headquarters, division, and district offices, develops a budget request for the agency. Beginning in fiscal year 2006, the Corps introduced what it refers to as performance-based budgeting as a way to focus funding requests on those projects with the highest anticipated return on investment, rather than a wider set of projects that meet budget policies as it sought to do in the past. Under its current budget formulation process, the Corps uses performance metrics to evaluate projects’ estimated future outcomes and gives priority to those it determines have the highest expected returns for the national economy and the environment, as well as those that reduce risk to human life. Budget justification materials are provided to the House and Senate Appropriations Committee for consideration. Through the conference committee reports accompanying appropriations acts, Congress directs funds for individual projects in increments over the course of several years. The Corps considers a project or study to have been appropriated funds if the project or study has received such direction in a committee report. If the project has been appropriated funds, the district enters into a cost-sharing agreement with the nonfederal sponsor. Once funds have been appropriated and a cost-sharing agreement is in place, the construction phase can begin and the Corps may obligate funds for a project. Construction is generally managed by the Corps but performed by private contractors. During construction, the Corps may request and Congress may enact scope or cost changes.", "Under current federal statute, the process for deauthorizing construction studies is initiated if the study has not been appropriated funds for 5 consecutive fiscal years. Specifically, the Secretary of the Army is required to annually transmit to Congress a list of water resources studies that have not been completed and have not been appropriated funds in the last 5 full fiscal years.that list to appropriate funds, or the study is deauthorized.\nCongress has 90 days after the submission of Current federal statute also requires a similar deauthorization process for construction projects. The Secretary of the Army is required to transmit to Congress a list of projects—or separable elementshad funds obligated for 5 full consecutive fiscal years. Beginning with WRDA 2007, this list was required to be sent to Congress annually; prior —that have not to WRDA 2007, the list was required biennially.obligated for planning, design, or construction of a project on that list during the next fiscal year, the project is deauthorized, and the Secretary of the Army is to publish the list of deauthorized projects in the Federal Register.", "The Corps’ report of a $62 billion backlog list of more than 1,000 projects is incomplete because the agency does not track all of its authorized construction projects and studies. Specifically, the Corps does not enter all authorized projects and studies into its databases because of the absence of a policy to do so. As a result, we found the Corps’ reported backlog list likely underestimates the complete construction backlog. Without having complete information on its backlog, the Corps does not know the full extent of unmet water resources needs of the nation, and Congress does not have complete information to make informed decisions on project and study authorizations and appropriations.\nWe found that the Corps’ reported backlog likely under-represents the complete backlog of construction projects in terms of both cost and number of projects. According to Corps headquarters officials, the backlog list is manually maintained by one staff person as a secondary duty. Our past work has found that using manual processes to maintain data can hinder an organization’s ability to ensure that data are complete and accurate. Corps officials said, and our review found, that some projects that were authorized are included on the backlog list, but not their associated cost, therefore raising questions about the validity of the $62 billion estimate. For example, the Amite River and Tributaries, Louisiana, East Baton Rouge Parish Watershed project was authorized in WRDA and modified most recently in WRDA 2007 for a total cost of $187 1999million, but according to Corps officials, construction funds have not been appropriated for this project. Although the project’s name appears on the Corps’ backlog list, there is no dollar amount associated with that project, so the cost is not included in the Corps’ reported backlog list. We found a total of 12 projects authorized in WRDA 1999 that are included in the Corps’ reported backlog list but do not have an associated cost. However, internal control standards in the federal government call for agencies to clearly and promptly document transactions and other significant events from authorization to completion. Corps headquarters officials acknowledged that information was missing from their databases and said they do not currently have an estimate for the cost or number of projects that are not included in their databases.\nCorps headquarters officials told us that the agency does not have a policy instructing district offices to enter projects that are authorized but have not been appropriated funds into their databases, and it is left to the discretion of the district offices to do so. Officials from 1 of the 16 district offices we spoke with said the district has developed guidance to enter all authorized projects into the Corps’ centralized databases, regardless of whether the projects had funds appropriated. Officials at the 15 other district offices told us they enter projects into the Corps’ databases only after funds are appropriated. Corps headquarters officials said that the agency’s databases were created primarily as project management databases, and therefore, projects are generally not entered into the databases until they are active and funds are appropriated. However, federal standards for internal control call for agencies to document internal control in management directives, administrative policies, or operating manuals and be readily available for examination. We also have previously found that it is important to have agencywide policies and procedures to help ensure consistent treatment, especially if employees are geographically dispersed. Without written policies or guidance, Corps district offices will likely continue to inconsistently enter projects that are authorized but not funded into their databases, and that will continue to result in incomplete data.\nIn the absence of authorized projects not consistently being entered into the Corps’ centralized databases, officials from 10 of the 16 district offices we spoke with said they maintained their own lists of authorized projects, including those that were authorized but did not have funds appropriated. Officials from some of these districts said that they do so in order to maintain contact with nonfederal sponsors and so that they have complete project information for budget presentation preparations. Officials from two district offices we interviewed said that they do not maintain a list of authorized projects that did not have funds appropriated, but nonfederal sponsors often contact them regarding these projects, so the officials were aware of them. Officials from three districts we interviewed said they do not maintain a list of all authorized projects in their district and are unable to estimate how many projects from their district are not included in the Corps’ databases. Officials in one of these districts said that they are unaware of the number of projects that have been authorized and not funded but estimated the number to be large.\nThe Corps’ reported backlog does not include studies. Corps officials stated the agency does not track a backlog of all authorized studies, nor does it have a policy instructing districts to do so, due to manpower and resource constraints. However, because federal statute requires the Corps to submit a list to Congress of incomplete water resources studies for which no funds have been appropriated for 5 full fiscal years, the Corps needs to know which studies are eligible for deauthorization. Without having this data, the Corps cannot comply with the requirement to submit a list to Congress identifying studies for deauthorization that have not had funds appropriated for 5 fiscal years.\nWithout having a complete backlog list of projects and studies, it is difficult for the Corps to know the full universe of unmet water resources needs in the country. Our prior work also found that the Corps’ budget presentation is not transparent and only includes information on the According to projects the President proposes to fund in the budget year.that work, congressional users of the Corps’ budget presentation said that not having information on all projects limits the ability of Congress to make fully informed decisions. Similarly, WRDA 2007 required the Corps to submit an annual fiscal transparency report, including a list of all projects that have been authorized but for which construction is not complete. The Corps has not submitted this report. The Corps estimates it will submit the comprehensive backlog report of projects required in WRRDA 2014 by March 2015, once it completes its new database that is discussed below. Until the Corps submits such a report to Congress, lawmakers will not have complete information to make informed decisions on construction project and study authorizations and appropriations.\nCorps headquarters officials recognize that they are missing project backlog data for some authorized projects and have begun to implement an initiative known as the Smart Use of Systems Initiative, which is designed to add projects to a new agency database. One of the goals of this initiative is to create a database to include all authorized projects. Headquarters officials said the agency hired a contractor in February 2014 to create an inventory of all projects that were authorized since the passage of WRDA 1986. This inventory is a major component of a new, centralized project database called the Civil Works Integrated Funding Database. They said to create this inventory, the contractor will search WRDA 1986 and other legislation, such as appropriations acts, that may include project authorizations, and then match those projects with information contained in the Corps’ databases. Officials said this process will require the contractor to work closely with Corps staff because projects may have different names in legislation than the project names contained in the Corps’ databases. According to Corps headquarters officials, once the contractor completes the inventory of all projects authorized since WRDA 1986, Corps headquarters officials will add those projects authorized prior to WRDA 1986. Corps headquarters officials said that once the new database has been implemented, district or headquarters officials will be required to enter data on new construction projects following authorization. As of the end of June 2014, Corps headquarters officials said that the contractor has completed the initial phase of the inventory of projects authorized since WRDA 1986 and that the contractor is updating the inventory based on comments from Corps headquarters officials. These officials estimate the Civil Works Integrated Funding Database will contain all authorized projects by the end of the 2014 calendar year. Officials said the inventory will not include authorizations for studies and have not determined what, if any, mechanisms they would put in place to track these studies. However, federal internal control standards call for agencies to have mechanisms in place to appropriately document transactions and other significant events.", "The Corps has not identified all eligible construction projects and studies for deauthorization and has not complied with statutory requirements to notify Congress of all projects and studies eligible for deauthorization. As discussed earlier, the Corps does not require its district offices to enter all authorized projects into its databases; therefore, the agency is unlikely to identify as eligible for deauthorization those projects that are excluded from the database and have not had funds obligated for 5 fiscal years. In addition, the Corps has not complied with its statutory requirements to notify Congress of all projects that have not had funds obligated in 5 fiscal years and cannot demonstrate it has notified Congress of projects eligible for deauthorization on an annual basis. Moreover, the Corps has not notified Congress of eligible studies for deauthorization as required by statute.", "As discussed earlier, not all projects are included in the Corps’ databases because the agency does not have policies and procedures in place to enter all authorized projects; therefore, some projects that have not had obligations in 5 fiscal years are unlikely to appear on the Corps’ list of projects eligible for deauthorization. Corps headquarters officials said that the project deauthorization process begins when Corps headquarters officials and contractors query the agency’s centralized project databases to identify any project that has not had obligations in the previous 5 fiscal years. Corps headquarters officials then send a memorandum (deauthorization memorandum) outlining statutory deauthorization provisions for projects along with the draft list of projects that are eligible for deauthorization to the division offices, which in turn are to send the list to the district offices for verification, according to these officials. As part of this effort, district offices are to verify, among other things, the project name, the last year the project had funds obligated, whether it met deauthorization criteria as outlined in statute, and an explanation of why the project has not had funds obligated. As stated previously, the Corps does not generally enter projects into its databases until funds are appropriated, therefore, the Corps’ list of projects eligible for deauthorization is unlikely to contain those authorized projects that have not been appropriated funds nor obligated funds within 5 full fiscal years, as required by statute. Although Corps headquarters officials said that this deauthorization process occurs annually, headquarters officials provided us with the lists of projects that were verified and returned by the division and district offices for one year (2012).\nThe deauthorization memorandum instructs the district offices to review and verify the information contained on the draft list. Headquarters officials said that district officials also are to add information on the year in which the project was authorized to the list of eligible projects, but that information is not currently included in the Corps’ databases. However, the deauthorization memorandum does not specify that district offices are to add projects missing from the list that have not had funds obligated for 5 years. Officials we interviewed from 5 of the 16 Corps district offices in our review said they do not attempt to identify and add projects to the draft list because they were not aware that they were to do so. Officials from two other district offices said their division does not send the draft list to them unless there are projects for that district listed, so there would not be an opportunity for these district offices to add projects in such situations. However, officials from three other district offices we spoke with added projects to the headquarters draft list. For example, Charleston district officials said they added seven projects to the 2012 headquarters draft list that were authorized in WRDA 2007 but had not had funds appropriated and therefore did not have funds obligated. However, neither Corps headquarters nor the Assistant Secretary of the Army for Civil Works transmitted a list to Congress for projects eligible for deauthorization for fiscal year 2012 as required under statute.", "The Corps has not consistently complied with statutory deauthorization notification requirements. Specifically, with respect to project notification requirements, the Corps has not notified Congress of all deauthorization eligible projects, nor has the Corps consistently provided Congress notification in the required time frames. With respect to study notification requirements, the Corps has not notified Congress of deauthorization eligible water resources studies.", "As stated previously, current statutory requirements provide for a project to be reported to Congress for deauthorization if such projects have not been obligated funds for 5 consecutive fiscal years, and then to be automatically deauthorized if funds are not obligated in the next fiscal year after transmittal of the list to Congress. However, Corps district officials told us that they have recommended projects that headquarters officials have identified as eligible for deauthorization not be included on the list of projects sent to Congress, even though funds were not obligated for those projects for 5 consecutive fiscal years. Specifically, officials from 6 district offices informed us that they typically add comments to a draft list asking that a project not be included on the list of projects eligible for deauthorization if a nonfederal sponsor is still interested in pursuing the project or if the district finds continued federal interest in the project. Due to staff turnover at headquarters and missing documentation on past deauthorization efforts, headquarters officials said they are unable to determine the reasons why projects were not identified as eligible for deauthorization. Moreover, Corps headquarters officials were unable to provide us with agency guidance or policy used to determine what projects they consider exempt from project deauthorization eligibility.\nIn our analysis of the 2011 draft list of projects eligible for deauthorization sent to the district offices, we found that headquarters had included 43 projects on the draft list that had not been obligated funds from fiscal year 2007 through 2011—the 5 fiscal years preceding the date of the list for Congress. However, 41 of those 43 projects were not included in the Corps’ list of projects eligible for deauthorization that was sent to Congress. According to headquarters officials, some of the 41 projects may not have been eligible for deauthorization because, for example, they were Continuing Authorities Projects, which are not subject to deauthorization, or the project was incorporated into another ongoing project. Although Corps headquarters officials were unable to provide us with the lists that included district comments, officials from 6 of the district offices we interviewed told us that projects may be removed from consideration by headquarters if nonfederal sponsors support projects or if there is continued federal interest in projects that have not had funds obligated for 5 fiscal years, for example:\nThe Galveston district has had a project on the Corps headquarters draft list of projects eligible for deauthorization in 2010, 2011, 2012, and 2013. Galveston district officials said the nonfederal sponsor expressed continued interest in the project and requested that the project not be deauthorized. According to Corps data, funds have not been obligated for this project since 2006 but the project has not been deauthorized.\nThe Jacksonville district has had a project on the headquarters list of projects eligible for deauthorization in 2010, 2011, 2012, and 2013. According to Jacksonville district officials’ comments on the 2012 list, Corps data the nonfederal sponsor continued to support the project.showed that funds have not been obligated for this project since 2006 but it has not been deauthorized.\nThe Louisville district had a project on the headquarters list of projects eligible for deauthorization in 2008 and 2009. Louisville district officials said construction on some components of the project are not yet complete because the nonfederal sponsor has not been able to contribute its portion of the funds for those components. Because the nonfederal sponsor is still interested and some construction had been completed, district officials said they did not recommend that the project be included in the list of projects eligible for deauthorization. According to Corps data, funds have not been obligated for this project since 1998 but it has not been deauthorized.\nThe Corps’ decision to remove projects from their draft list when such projects have not had funds obligated for 5 fiscal years and thereby not notify Congress of all projects eligible for deauthorization is not consistent with statutory requirements. As a result, Congress has not received a complete list of projects eligible for deauthorization, and some projects may still be listed as authorized without being subject to deauthorization as specified in statute.\nOfficials we interviewed from 10 of 16 district offices said that the 5-year time frame for deauthorizing projects without obligations, as specified in statute, is too short of a time frame to be eligible for deauthorization.\nFor example, officials in 4 of the 16 district offices we interviewed cited the current economic climate, including reductions in the Corps’ budget and fewer funds available for construction projects, as reasons why a project should not be deauthorized as it might still have value to the communities after the 5-year period. Additionally, officials from 2 Corps district offices said some projects may not receive priority in the agency’s budget For example, an official from the Alaska district said that request.projects within his district tend to rank lower than projects in high-traffic ports, such as New York and Long Beach, but authorized construction projects are still important to the Alaskan community and should not be deauthorized.\nReports show that having a large backlog can have negative effects. For example, a 2007 report by the National Academy of Public Administration states that a backlog complicates the budgeting process and provides an incentive to spread funding widely, over many projects, rather than to complete high priority projects that have already begun construction. That report recommended that the Corps and Congress work to eliminate the backlog of projects that have little chance of being funded. Similarly, the National Academy of Sciences reported in 2011 that the backlog leads to projects being delayed, conducted in a stop-start manner, and contributes to overall inefficient project delivery.\nNational Academy of Public Administration, Prioritizing America’s Water Resources Investments: Budget Reform for Civil Works Construction Projects at the U.S. Army Corps of Engineers (Washington, D.C.: February 2007).", "Current federal statute requires the Secretary of the Army to transmit to Congress a list of authorized projects or separable elements of projects that have had no obligations during the previous 5 full fiscal years. However, Corps headquarters officials were unable to provide us with copies of most of the deauthorization lists the agency has been required to send to Congress since WRDA 1996. Specifically, the Corps located 4 lists (2006, 2010, 2011, and 2012) out of the 12 lists that were transmitted to Congress for fiscal years 1997 through 2013, as required.\nGAO/AIMD-00-21.3.1. policies, or operating manuals and be readily available for examination. Without having documented policies or procedures that outline the deauthorization process, Corps headquarters officials and officials from the Assistant Secretary of the Army for Civil Works may not be clear about the specific responsibilities of each office, and Congress may not be notified annually about projects eligible for deauthorization.\nUnder what is commonly referred to as the Federal Records Act, each federal agency is required to make and preserve records. However, the Corps does not have a recordkeeping policy in place with respect to project deauthorizations, which has resulted in incomplete records of documents related to the deauthorization process, including documents sent to Congress. Without records and recordkeeping policies related to project deauthorizations, the Corps will have difficulty ensuring that its transactions related to deauthorization are done in a manner to comply with the statutory records management requirements. In addition, historical records related to project deauthorizations could be lost due to the absence of a recordkeeping policy and not be available for public access in the event of a Freedom of Information Act request.\nIn addition to requiring the Corps to send lists of projects eligible for deauthorization to Congress, federal statute requires the publication of projects that are deauthorized in the Federal Register. According to the deauthorization memorandum, Corps headquarters officials are responsible for publishing in the Federal Register the list of projects that are deauthorized, as well as a list of projects removed from the list of projects eligible for deauthorization due to resumption of funding or reauthorization. The Corps has published 3 lists (1999, 2003, and 2009) of projects that are deauthorized in the Federal Register during the 12 fiscal years from 1997 to 2013 during which the agency was subject to the statutory project deauthorization requirements. Corps headquarters officials told us that the statute does not specify dates for publishing projects that are deauthorized in the Federal Register. In addition, Corps headquarters officials told us that the Corps has no formal written policy or guidelines consistent with federal standards for internal control, to ensure that lists of projects that are deauthorized are published in the Federal Register. Without having documented policies or procedures that outline the deauthorization process, the Corps cannot ensure that projects deauthorized by operation of the statute are published in the Federal Register as required.", "The Corps has not complied with statutory requirements to submit to Congress an annual list of incomplete water resources studies that have been authorized but for which no funds have been appropriated during the prior 5 full fiscal years. As discussed earlier, Corps headquarters officials told us the agency does not track studies and therefore cannot identify studies that meet deauthorization eligibility requirements. Moreover, the Corps does not require studies to be entered into its databases until funds have been appropriated. Corps headquarters officials also said the agency does not have policies and procedures outlining a process to identify and submit to Congress a list of studies eligible for deauthorization and have not submitted lists of studies eligible for deauthorization to Congress, as required by statute, due to manpower and resource constraints. Without having a mechanism to compile data on studies or a documented policy and procedures in place to deauthorize studies as noted in federal internal control standards,Corps cannot comply with deauthorization requirements for studies specified in statute, and the agency, Congress, and nonfederal sponsors have incomplete information on what is feasible to address the water resources needs of the country.", "The Corps’ incomplete construction backlog and declining appropriations for construction projects have left communities uncertain when or if their projects will be completed. Although the Corps has taken the initial steps of compiling a database to include all authorized projects, the agency faces challenges in identifying backlogged projects and projects eligible for deauthorization. Specifically, the agency does not have complete data on its backlogged projects, because it does not have documented policies or procedures to enter projects into its databases when authorized as called for by federal standards for internal control. Without such guidance, it is likely that the Corps will continue to have incomplete data on such projects and cannot know the full extent of the construction project backlog, making it difficult to effectively deauthorize all eligible projects and for the Corps and Congress to effectively prioritize projects and plan the agency’s work. In addition, the Corps was unable to locate all of the lists of projects eligible for deauthorization that it has been required to transmit to Congress since 1997, and the Corps has published lists of deauthorized projects in the Federal Register inconsistently during that time period. Without a recordkeeping policy in place as required by statute and without a documented policy and procedures outlining the deauthorization process consistent with federal standards for internal control, the Corps cannot ensure that projects eligible for deauthorization are submitted to Congress and that projects deauthorized by operation of the statute are published as required in the Federal Register.\nFurthermore, although federal statute places study-related deauthorization requirements on the Corps, the Corps has not complied with these provisions. Moreover, the Corps does not have a mechanism to compile data on studies or a documented policy and procedures for identifying eligible studies for deauthorization, as called for by federal standards for internal control. As such, the Corps, Congress, and nonfederal sponsors will not have complete information for making fully informed decisions on what is feasible to address the water resources needs of the country.", "To ensure that the Corps meets the statutory requirements related to deauthorization of projects, we recommend that the Secretary of Defense direct the Secretary of the Army to direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to take the following four actions:\nEstablish and implement a written policy to ensure all authorized projects are entered into the agency’s database and tracked.\nOnce the new database includes all authorized projects, determine what projects are eligible for deauthorization, transmit the list to Congress, and publish projects that are deauthorized in the Federal Register.\nEstablish and implement written policies and procedures documenting the project deauthorization process, from initial compilation of a list of eligible projects to submitting the list to Congress and publishing the projects that are deauthorized in the Federal Register.\nEstablish and implement a policy for record-keeping to ensure that documents related to deauthorization are maintained as federal records.\nTo ensure that the Corps meets the statutory requirements related to deauthorization of incomplete water resources studies, we recommend that the Secretary of Defense direct the Secretary of the Army to direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to take the following three actions:\nEstablish a mechanism for tracking all authorized studies and establish and implement a written policy to ensure all authorized studies are tracked.\nEstablish and implement policies and procedures documenting the deauthorization process for studies, from initial compilation of a list of eligible studies to submitting the list to Congress.\nDetermine what studies are eligible for deauthorization and transmit the list to Congress.", "We provided a draft of this report for review and comment to the Department of Defense. In its written comments, reprinted in appendix II, the department concurred with our recommendations and noted that it will take steps to address those recommendations.\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 of this report to the appropriate congressional committees, the Secretary of Defense, the Secretary of the Army, the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers, 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 have any questions about this report, please contact me at (202) 512- 3841 or fennella@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 (1) the extent to which the Corps tracks data on its backlog of construction projects and studies, and (2) the extent to which the Corps identifies construction projects and studies eligible for deauthorization, and meets statutory deauthorization requirements. For purposes of this report, the Corps’ backlog includes any study or project that was authorized but for which the study or the construction is not yet complete. Our work focused on the deauthorization processes for construction studies and projects in fiscal years 1997 to 2013. We chose this time frame based on amendments to the deauthorization requirements enacted in WRDA 1996 and because the Corps did not have complete obligations data for fiscal year 2014 at the time of our review.\nTo determine the extent to which the Corps tracks data on its backlog of construction studies and projects as well as the extent to which the Corps identifies eligible construction studies and projects for deauthorization, we reviewed relevant federal statutes and the Corps’ policies and procedures related to data collection and deauthorization processes. We also obtained the Corps’ obligations data for fiscal years 1997 to 2013 in an attempt to recreate the Corps’ methods to identify projects for deauthorization. However, after multiple interviews with Corps headquarters officials responsible for the agency’s databases to discuss discrepancies, we determined the data were not reliable for our purposes because not all authorized projects were contained in the databases. We found that the obligations data that the Corps had were sufficiently reliable for us to compare those projects with the projects the Corps includes in its backlog and to compare with the Corps’ draft deauthorization lists. We also reviewed data dictionaries, user guides, and other documentation that the Corps provided for the agency’s databases. We reviewed these documents to help determine how the Corps used its databases to guide its deauthorization processes and to assess data reliability. We also reviewed deauthorization documents produced by the Corps from 1997 to 2013. These documents included draft deauthorization lists created by Corps headquarters, draft deauthorization lists that were verified by the division and district offices, lists of projects eligible for deauthorization that were sent to Congress, and Federal Register notices pertaining to deauthorized projects. Corps headquarters officials located one year of draft deauthorization lists that were verified from the division and district offices. We also reviewed any draft deauthorization lists that were provided by district officials we spoke with. Corps headquarters officials provided us with four (2006, 2010, 2011, and 2012) lists of projects eligible for deauthorization the agency sent to Congress from 1997 to 2013. We interviewed Corps headquarters officials to obtain additional information on the agency’s policies and procedures for tracking its construction backlog and to determine the process the agency uses to create a list of studies and projects eligible for deauthorization. In addition, we spoke with nonfederal sponsors of Corps projects who are members of two national associations, to determine how they were affected by the Corps’ backlog and deauthorization process. We selected these associations to represent the Corps’ water resources projects and with membership that includes nonfederal sponsors of Corps water resources projects. The views of representatives from these associations are not generalizable, but they provided perspectives on the Corps’ backlog and deauthorization processes.\nWe also interviewed officials from a nonprobability sample of 16 of 38 Corps domestic civil works district offices to determine how district offices track data on studies and projects and implement the deauthorization process. We selected a non-probability sample of district offices that met our selection criteria of (1) geographical representation of two district offices in each of the Corps’ 8 civil works division offices and (2) number of projects per district office. Specifically, we selected the district offices with the most projects and the district offices with the least projects in each of the 8 division offices, based on a list, provided by Corps headquarters officials, of construction projects by division and district. Project data was obtained from headquarters officials and included active projects in each of the Corps districts. We used this data for the purpose of selecting our non-probability sample, and determined it was sufficiently reliable for this purpose. Because this is a non-probability sample, the experiences and views of the Corps district officials are not representative of, and cannot be generalized to, all Corps districts. However, these experiences and views provide illustrative examples of how district offices track projects and implement the deauthorization process.\nWe conducted this performance audit from July 2013 to August 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 individual named above, key contributors to this report included Vondalee R. Hunt (Assistant Director), Cheryl Arvidson, Danny Baez, Elizabeth Beardsley, Cindy Gilbert, Geoffrey Hamilton, Kristin Hughes, Lisa S. Moore, Jerome Sandau, and Holly Sasso." ], "depth": [ 1, 2, 2, 1, 1, 2, 2, 3, 3, 3, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "h2_full", "h0_full h2_full h1_full", "h0_title h2_title h3_title h1_full", "h2_full h1_full", "h0_title h1_title h3_title", "h1_full", "h0_full h3_full h1_full", "h1_full", "h0_full h1_full", "", "", "h3_full", "", "", "", "" ] }

{ "question": [ "How thorough is the Corps's list of water resources construction projects?", "Why isn't this list complete?", "What steps are being taken to remedy this incompleteness?", "What impact will the incompleteness of this list have?", "How has the Corps responded to requirements to identify projects for deauthorization?", "Why hasn't the Corps complied the projects?", "Will the Corps publish complete deauthorization lists in the future?", "What is the impact of this inconsistency?", "How much would it cost for the Corps to complete its backlog of water resources projects?", "Under what circumstances must the Corps identify a project for deauthorization?", "What are the consequences of deauthorization for such projects?", "What is the GAO report about?", "What information did GAO survey for this report?" ], "summary": [ "The U.S. Army Corps of Engineers' (Corps) backlog list of authorized water resources construction projects is incomplete because the agency does not track all authorized projects and the list does not include studies. Specifically, GAO found that the backlog does not include some projects that were authorized but were not appropriated funds.", "Corps headquarters officials said that the agency does not have a policy instructing its district offices to enter into their databases projects that are authorized but have not been appropriated funds and that it is up to the discretion of the district offices to do so. Corps officials also stated that the agency does not include studies on its backlog, nor does it have a policy instructing district offices to track studies. Federal internal control standards state that agencies are to document internal controls in management directives, administrative policies, or operating manuals to help ensure consistent treatment. Officials at 15 of 16 district offices told GAO that they enter projects into the databases only after funds are appropriated.", "The Corps has begun to take steps to include all authorized projects in a new agency database; however, this database will not include studies. Federal internal control standards call for agencies to have mechanisms to appropriately document transactions and other significant events.", "The absence of a complete backlog list of projects and studies will likely make it difficult for the Corps to know the full universe of unmet water resource needs of the country, and Congress to make informed decisions when authorizing projects and studies, and appropriating funds.", "The Corps has not identified all eligible construction projects and studies for deauthorization and has not complied with statutory requirements to notify Congress of all projects and studies eligible for deauthorization.", "The agency is unlikely to identify those projects that have been excluded from the databases and had no funds obligated for 5 fiscal years, because, as discussed above, the Corps does not require districts to enter all authorized projects into its databases. Officials GAO interviewed from 5 of 16 districts said they likely would not identify and add projects to the draft deauthorization eligible list because they were not required to do so. Moreover, the Corps has not complied with statutory requirements to notify Congress of all projects that have not had obligations in 5 fiscal years. Specifically, the Corps cannot demonstrate it transmitted a list of projects eligible for deauthorization 8 times in the 12 years it was required to do so since 1997. Corps headquarters officials said that the process and communication mechanisms for deauthorizing projects are not in Corps policies or procedures. In addition, the Corps has not complied with requirements to identify studies for deauthorization because officials have said the agency does not have the policies and procedures in place to do so.", "Without documented policies and procedures consistent with federal standards for internal control, the Corps may continue its inconsistent publishing of deauthorization lists.", "Without having the data, as discussed above, or policies and procedures in place to identify studies for deauthorization, the Corps and Congress will not have complete information to make decisions when prioritizing the water resources needs of the country.", "The Corps reports having a backlog of more than 1,000 authorized water resources construction projects in its Civil Works Program that it estimates to cost more than $62 billion to complete, as of June 2014.", "Federal statute requires the Corps to identify for deauthorization projects that have had no obligations for 5 years and studies that have had no appropriations for 5 years.", "Once a project or study is deauthorized, it must be reauthorized to begin or resume construction or study.", "GAO was asked to review the Corps' construction backlog and deauthorization processes. This report examines (1) the extent to which the Corps tracks its backlog of construction projects and studies, and (2) the extent to which the Corps identifies construction projects and studies eligible for deauthorization, and meets statutory deauthorization requirements.", "GAO interviewed Corps headquarters officials and officials from 16 of the Corps' 38 domestic civil works districts, selected based on geographical representation and number of projects." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, -1, 2, -1, 0, 1, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 1, 1 ] }

{ "title": [ "", "Choices Ahead for Policy Makers", "Conceptual Policy Approaches", "Research and \"Wait-and-See\"", "Science-Based Goals", "Economics-Based Approaches", "Cost-Benefit Approach", "Hedging or Insurance Policies", "Cost-Effectiveness and Other Concepts", "Incrementalism,\"Muddling Through,\" and Adaptive Strategies", "The Policy Tool Box", "Regulatory and Market Tools to Reduce Greenhouse Gases", "Source-by-Source Regulations", "Market Mechanisms", "GHG Fees or \"Carbon Taxes\"", "\"Cap and Trade\"", "Design Choices in Cap-and-Trade Programs", "Allocating the GHG Reduction Requirements", "\"Safety Valves\" and Allowance Price Floors", "Distributing the Revenues from Emission Fees or Sales", "Market Facilitation Tools", "Tools to Stimulate Technological Change", "Options to Ease the Economic Transition", "International Policy Tools", "Tools to Stimulate Adaptation to Climate Change" ], "paragraphs": [ "", "Regardless of the public conversation, the Earth's climate is changing. Changes are exhibited in observations of average temperatures over land and in the oceans, melting glaciers and ice caps, shifting precipitation patterns, modified growing seasons, shifting distributions of plants and animals, and a variety of additional observations. (Many but not all elements of climate show distinct trends.) Regional climates in the United States have shifted as well ( Figure 1 ).\nA variety of factors contribute to the changes, their weights differing depending on the time periods and geographic locations under examination. In public media, the controversy over causes may appear much greater than the broad scientific agreement that exists: the scientific evidence best supports rising atmospheric concentrations of \"greenhouse gases\" (GHG) (particularly carbon dioxide, methane, nitrous oxides) and other air pollutants as having contributed to the majority of global average temperature increase since the late 1970s. (See box.) The rise of GHG concentrations is due to emissions from human-related activities.\nOther air pollution, irrigation, the built environment, and depletion of ozone in the stratosphere may be more important for changing temperature and/or precipitation patterns in some locations over the past 30 years but have small overall effect on global average temperature. For short periods, such as a few years, volcanic eruptions and solar cycles may have noticeable influence. Over time scales of hundreds to tens of thousands of years, cycles of the Sun's radiation and the features of the Earth's orbit and wobble have dominated, triggering effects amplified by feedbacks in the climate system and visible in glacial cycles.\nRegardless of causes, climate changes have potentially large economic and ecological consequences, both positive and negative, which depend on the rapidity, size, and predictability of change. Some of the impacts of past change are evident in shifting agricultural productivity, forest insect infestations and fires, shifts in water supply, record-breaking summer high temperatures, and coastal erosion and inundation. People and natural systems respond to climate changes regardless of whether the government responds. Over time, the consequences of climate change for the United States and the globe will be influenced by choices made or left to others by the U.S. Congress.\nCongress has engaged, over the past three decades, in authorizing and funding federal programs to improve understanding of climate changes (past and predicted) and their implications. Science programs predominated prior to 1990. In 1992, the Senate gave its advice and consent to U.S. ratification of the United Nations Framework Convention on Climate Change (UNFCCC), effectively agreeing to its objective:\n... to achieve ... stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.\nThis commitment is legally binding, though not practicably enforceable, and has guided some subsequent federal actions, including the first U.S. climate action plan in 1992, published under President George H. W. Bush. Since the 1990s, some federal programs and many legislative proposals have sought to slow greenhouse gas (GHG)-induced climate change through regulatory, voluntary, and financial efforts to abate emissions. Many such proposals remain controversial and few have been enacted. In 2007, the Supreme Court ruled in Massachusetts v. EPA that the Clean Air Act's (CAA's) \"sweeping\" definition of \"air pollutant\" embraces \"any air pollutant ... including any physical, chemical ... substance or matter which is emitted into or otherwise enters the ambient air.\" Also, the Court ruled that EPA could not use policy considerations in deciding whether to regulate GHG emissions; EPA can avoid taking further action \"only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion.\" Following this decision, EPA found that GHG-induced climate change endangers human health and welfare and has acted to promulgate regulations to control six GHG.\nMost experts, and also the Obama Administration, would prefer new legislation strategically addressing GHG abatement, rather than authorities under the CAA, as a policy vehicle to address climate change. The 111 th Congress debated bills that would have established comprehensive climate change policy, and that would have included new regulatory authority to cap emissions of GHG and to allow emissions sources the flexibility to trade the emissions allowances like a commodity (\"cap-and-trade\"). Debate in the 112 th Congress has focused more on restricting authorities of the EPA to control GHG as pollutants under the CAA, or to reduce or eliminate funding for climate change-related federal programs.\nNew federal programs (especially in the Department of the Interior) aimed at planning for adaptation to climate change, regardless of its cause, have emerged in the 2000s. Many agencies and some in Congress consider projections of impacts and preparation to be among the stewardship responsibilities of the federal government for publicly held resources that may be affected by climate change, as well as for protecting human health and general welfare. Some of those in Congress who consider such programs to be warranted may not, however, fully support Administrative proposals for funding, in light of budget pressures or concerns about strategies or program design.\nUnderlying efforts explicitly to address climate change are other programs enacted for other purposes that influence U.S. contributions and vulnerabilities to climate change. For example, regulations and financial incentives for agriculture, energy, and infrastructure shape these sectors' emissions of GHG, technological opportunities, and vulnerabilities in the face of changing seasonality, water availability and temperatures, inundation of flood plains, winds, and other climate-linked phenomena.\nOngoing public concerns and international pressures for U.S. collaboration to mitigate and adapt to climate change are likely to keep climate change on Congress's legislative agenda for the foreseeable future. To support congressional considerations, this report outlines (1) conceptual approaches to setting goals for policies, and (2) brief descriptions of the principal \"policy tools\" that could be wielded to achieve policy goals.", "Neither domestically nor internationally have policy-makers converged on a common approach to setting goals or managing climate change-related risks. Some do not consider that there are sufficient risks of climate change to merit governmental intervention. For policy-makers who may wish to consider addressing climate change, this section articulates four competing strategies for setting climate change policies: (1) research and wait-and-see, (2) science-based goal setting, (3) economics-based policies, and (4) incrementalism or adaptive management.", "For several decades, policy-makers have been aware of the large range of projections of GHG-induced climate change and adverse impacts, as well as of the potentially large costs associated with avoiding GHG-induced climate change. In the face of these uncertainties, arguably the primary strategy followed by the U.S. federal government has been to support research and to \"wait-and-see.\" Proponents assume that scientific research will yield more certainty about climate change that would help make better policy decisions, and yield answers in a timeframe consistent with making effective policy decisions. They may also assume that investment in technology research will reduce GHG abatement costs, making it cheaper to reduce emissions later. Following this approach, the U.S. government has invested many billions of dollars in climate research and \"clean\" technologies over the past two decades, with a small fraction allocated to policies that directly mitigate the risks or promote adaptation to them.\nSome scientists and advocates for emissions abatement action have welcomed the resources for research, but also expressed the likelihood that research may well widen, not narrow, uncertainties. No matter how much is invested in research, critical uncertainties are likely to remain. Some people have argued that research cannot provide \"right\" policy answers and that this strategy constitutes avoidance of difficult decisions. In contrast, others have pointed to analysis that wrong actions taken in the context of uncertainties may result in unnecessary costs. Some have suggested that economic conditions in the future may make addressing climate change more affordable than the present: increasing incomes and improving technologies could make it easier for future generations to pay to address climate change than for people today.\nResearch has made significant scientific progress over the past three decades. Still, it may be easier to argue that uncertainties may now be better characterized but not narrowed; some may have widened. It is unclear that further research within the next decade or two will significantly narrow crucial uncertainties, such as prediction of precipitation patterns over the next 50 years (needed to estimate climate change risks, such as impacts on costs of agricultural production or flood control, as examples). If over that period GHG emissions continue to rise, future GHG policies would need to make greater and more rapid reductions in order to avoid any particular level of risk reduction. Federally supported research also has made new technologies available and reduced the costs of others. The lowering of technology costs during that period may or may not offset the added costs of starting later, with greater, more rapid GHG reductions to achieve a given level of risk reduction.", "Some advocates propose a science-centric approach, looking to physical or biological criteria to identify appropriate policy goals. This assumes that science alone can provide an objective standard of a \"safe\" or \"tolerable\" level or rate for climate change, or at least an inflection point beyond which the projected damages of climate change may rise more steeply. Proponents of this approach may look to past rates of temperature change, past (i.e., pre-industrial) atmospheric concentrations of GHG, or indicators of ecosystem adaptability, for identifying the policy goal. Typically, the science-based approach draws on the estimated relationships between GHG emissions, GHG atmospheric concentrations, global average temperature changes, and projected impacts of climate change for identifying equivalent targets across these different parameters ( Figure 2 and Table 1 ).\nTable 1 summarizes estimates of the amount that climate would change (Column 3, measured as the increase in the global mean temperature above the preindustrial levels) if GHG concentrations in the atmosphere were to rise to different levels (Column 1) and then stabilize there. CO 2 concentrations in 2011 are about 392 parts per million (ppm). GHG levels (Column 2, converted to CO 2 -equivalents and added) are about 450 ppm. Today's concentrations (Columns 1 and 2) are comparable to the first level, but are projected to continue to rise indefinitely unless strong policy inducements reduce emissions eventually to net zero. The estimates indicate that\nhigher GHG concentrations would be associated with higher projected temperature increases; allowing GHG concentrations to rise higher would allow later abatement action—a delay in the years by which emissions would have to peak and then decline in order to stabilize concentrations at a given level; allowing higher GHG concentrations would allow high GHG emissions compared to emissions in the year 2000.\nBased on the kinds of estimates in Table 1 , recent policy debates have included the following proposals for science-centric policy targets:\npreventing increases of global temperature that exceed 1.5 o C or 2 o C above 1990 levels; stabilizing atmospheric GHG concentrations at or below 350, 450, or 550 ppm (with current CO 2 concentrations at about 392 ppm); setting maximum GHG emission levels or \"caps\" (typically with an implicit concentration or temperature target) that would be progressively reduced, such as a cap by 2020 on the GHG emissions of industrialized countries at 30% below their 1990 levels, or a global GHG emissions cap at 50% below 1990 levels by 2005; or setting years by which the emissions or some or all countries would peak and then decline.\nA science-centric approach is embedded in the international negotiating framework. Countries agreed in the United Nations Framework Convention on Climate Change to an objective of avoiding \"dangerous\" climate change, often characterized as avoiding a particular temperature increase (first bullet above); negotiations have tended to focus on reducing emissions to levels compatible with achieving that objective of avoiding \"dangerous\" change. The U.S. congressional debate on climate change strategy has focused most strongly on percentage-reduction targets for GHG emissions and on which policy tools to use rather than debating what science-based policy goals might be.\nThere are many challenges to using primarily science to set climate change policy targets. First, differing degrees of confidence in scientific findings affects different peoples' willingness to take actions. Arguably, much of the U.S. public debate has been about whether to have confidence in the consensus of climate change scientists.\nSecond, policy targets are easiest to communicate with simple metrics, but simple metrics may not clearly reflect the many complex dimensions of climate science. For example, although global average temperature is a common proxy for climate change (\"global warming\"), many risks may be more closely tied to other dimensions, such as changes in local temperature extremes, time of last frost, maximum spring river flow, storm severity, or sea levels. Other impacts may depend strongly on the changing character of precipitation, which may increase or decrease at different locations and times, more than on temperature change. Metrics alternative to global average temperature change are more difficult to characterize as policy targets, and averages may not correlate with adverse impacts.\nThird, scientists, economists, and other experts differ in their views of which climate changes and impacts are important for setting policy. For example, should decisions emphasize what is happening (or not happening) now, or give weight to the distant impacts over many centuries of possible melting of most of Antarctica? Or, is it practical to consider that the Earth's biomes may shift and reorganize substantially over coming decades, when the full impacts of such changes may be impossible to predict? Some people may not weigh impacts occurring outside their state or country as heavily as those at home. Some may give more weight to impacts on humans than on other species or landscapes. Science does not offer tools for handling such policy considerations.\nFourth, policy-makers and stakeholders have very different preferences for accepting different risks and their willingness to accept risks. As a 2011 National Research Council report states:\nIt should be emphasized that choosing among different targets is a policy issue rather than a strictly scientific one, because such choices involve questions of values, e.g., regarding how much risk to people or to nature might be considered too much.\nSometimes, scientific guidance for limits is available if there are thresholds above which adverse effects begin to occur or the rate of increase of adverse effects becomes more rapid or irreversible. These are called \"critical thresholds\" or \"tipping points.\" Scientists have been examining a host of potential critical thresholds in the climate system: they exist in many ecological systems and could be catastrophic for some populations or systems, or possibly on a global scale (e.g., if the Amazon rainforest were to collapse and shift to a deciduous forest or savannah system). The effects of CO 2 emissions on ocean acidification, though not \"climate change,\" may present thresholds with greater scientific certainty for setting policies than CO 2 effects on temperature. (See text box. )\nFor some, appropriate GHG emissions limits may be tied to assessment of technological feasibility (and technology costs). While technologies exist today to begin a trajectory of major GHG reductions, targets that would stabilize GHG concentrations would require development and deployment of new technologies over the longer term. Some congressional proposals have aimed at promoting new technology development and market penetration, though not with a stated quantitative objective.\nAn emissions-denoted policy target may be easier than concentrations or temperature targets, given the range of climate changes that could occur with a given increase in GHG emissions. Also, the United States could not unilaterally achieve a federally set concentration or temperature target; it would require a global effort. Further, only emission limits are viewed as a practical basis for allocating responsibilities to the sources of emissions (i.e., private businesses), and for enforcing those limits.", "While many scientists, environmentalists, and other stakeholders may advocate scientifically determined policy goals, other stakeholders frequently advocate that policies should be designed to maximize economic efficiency (or to maximize economic growth measured as Gross Domestic Product, GDP).\nThere are several economic approaches that could help define climate change policy, including cost-effectiveness analysis, cost-benefit analysis, or hedging. This section focuses on a cost-benefit approach, which seeks to maximize the economic efficiency of policy.", "Intuitively, many people only take actions when they perceive that the benefits of the action exceed its costs, though the important benefits and costs may be qualitative, not monetary. For decisions of public policy, many economists and business stakeholders advocate that formal assessment of the costs and benefits of a proposed policy (or policy alternatives) should be performed and that the only options selected should be those wherein the benefits exceed the costs. This preference is predicated on the principle that policies should seek to be efficient, making best use of private and public resources available. Indeed, in 1981, President Ronald Reagan issued Executive Order 12291 (46 FR 13193 3 CFR, 1981). E.O. 12291 requires that regulatory objectives seek to the maximize net benefits to society, although some legislative authorities direct other considerations to be paramount (e.g., protecting the most vulnerable populations).\nThere are limitations of formal cost-benefit analysis (CBA), however, and particularly as applied to climate change policy-making. First is the consideration that CBA addresses efficiency, but typically not other policy considerations, such as \"fairness\" (although some economists are testing methods to address some equity issues). Additionally, problems to applying CBA to climate change have been established by a variety of researchers:\n1. Climate change decisions will be made (or not made) by many disparate people and organizations, public and private, in the context of multiple goals, constraints, and secondary effects; the sum of their decisions (and their costs and benefits) would necessarily differ from the options and valuations considered in a cost-benefit analysis. 2. Estimates of costs and of benefits may be unreliable. Several studies following completion of projects or after implementation of policy decisions have shown that prospective estimates may be very inaccurate. Decisions based on inaccurate estimates may be inefficient. Some researchers have found that retrospective evaluations of actual costs or benefits may reveal them to be very different, at least in some cases, than pre-decision projections. 3. CBA methods assume that a policy decision is \"marginal,\" that it can be made in clearly ordered increments from some baseline level, and that the choice can be isolated from significant changes in the structure and output of the entire economy. However, some analysts contend that human-induced climate change is a \"non-marginal\" problem: decisions to address it or not would alter the structure, the path of growth, and even the existence of some economies. At least one study has shown that applying marginal analysis to non-marginal policy questions can produce both quantitatively and qualitatively \"wrong\" decisions. 4. The outcomes of CBA for choices having long-term effects can be strongly determined by the choice of \"discount rates\" to reflect the \"time value of money\"—that is, the observation that people typically would prefer to get a given amount of money today rather than a year from now. Respected economists disagree over what the appropriate discount rate should be for climate change decisions, and even whether discounting should be used at all when choices affect unborn generations. This discounting controversy remains unresolved despite decades of discourse. 5. CBA, at least as practiced, typically uses single point estimates whereas many values important in climate change analysis are uncertain—sometimes widely uncertain. Few, if any, researchers have conducted analyses in ways that adequately reflect the distributions of uncertainties and the interactions of uncertain variables in their analyses. 6. Moreover, the \"average\" values used frequently assume that people are neutral to risks (they equally weight higher versus lower risks), while empirical data indicate that most people seem to be \"risk averse\" (i.e., they would make lower-risk choices even in instances where their expected payoffs on average would be greater with the higher-risk choice). Arguably, differences among people in their aversions to particular kinds of risks in climate change policy choices—whether more attuned to risks of energy cost increases or to employment, or whether more to health and ecological stability—make it more difficult to build consensus on policy. 7. Some critics suggest that CBA does not support an appropriate decision rule. CBA assumes a \"Kaldor-Hicks\" rule—that the optimal public decision should make everyone in aggregate better off, even if those who are made worse off are not compensated by those made better off. Some economists have pointed out theoretical problems in applying the Kaldor-Hicks rule, for example, that it can result in inconsistent decisions. In addition, one economist notes that \"social decision-making necessarily is about weighing up gains and losses and deciding on the relative importance of different individuals' gains and losses.\" CBA typically does not assist in making those trade-offs. Proponents point out that CBA provides one type of information—not that it is the only and exclusive criterion for public policy decisions.\nEconomic analyses would be, at best, incomplete and likely biased because of the current state of information and methods. Many values that should be included in a rigorous CBA are unknown, and even unimagined at this stage of understanding. The direction of bias most often is posited to undercount benefits of mitigation policies, though there are reasons that omissions could overstate climate damages as well (e.g., by missing low-cost adaptations that people might make). Despite these challenges, formal CBA arguably provides one of the most complete frameworks for organizing and presenting a vast array of incommensurate impacts for decision-makers. However, CBA is unlikely in the near term to yield a simple or objective \"answer\" on optimal policy for decision-makers.", "An alternative economic approach is \"hedging\" or insurance, by adopting policies that would reduce the risks of losses, without certainty of what those risks are. This approach can be similar to buying homeowners' insurance even though the likelihood of fire or other losses is unknown. In this approach, policy-makers might enact some low-cost measures or measures that serve other policy goals. (Sometimes these are called \"no regrets\" measures.) If long-term restructuring of the energy economy might be needed in the future, hedging policies might initiate measures in that direction (such as research support for some new technologies) while further information on risks evolves. Hedging as a strategy does not provide objective guidance on the \"right\" level or kinds of measures. In some senses, \"clean energy\" development may be a primary hedging strategy, proposed by some Members of Congress.", "Economics offers additional approaches, such as estimating the most efficient policy design once the objective has been established (cost-effectiveness analysis). In other words, if policy-makers agree on a policy goal, such as a limit on GHG emissions, cost-effectiveness analysis is one means to evaluate alternative policy designs to achieve the goal in the least costly way. Conversely, cost-effectiveness analysis may seek the policy design with greatest effectiveness (e.g., the lowest level of GHG concentration stabilization, or greatest risk reduction comparing GHG mitigation and adaptation to climate) for a given cost.\nA broader critique of using economics to recommend policies, and in favor of \"muddling through\" (next section), questions several of the fundamental assumptions of most current economic analysis:\n[T]here is a change occurring in formal theorizing in which the holy trinity—rationality, greed, and equilibrium—is being abandoned as required aspects of any model, and being replaced with a slightly broader trinity—purposeful behavior, enlightened self interest and sustainability.\nIn essence, CBA grew from the \"economics of control.\" It assumed that \"infinitely bright economists with full knowledge of the system\" could optimize the economy. More contemporary examination of the quality of information (frequently poor) and seemingly \"irrational\" behavior evidenced by peoples' actions has led some economists to \"search for understanding a system in which the blueprints are missing, nonexistent, or so far beyond our analytic capabilities that we might as well forget about them.\"", "Political scientist Charles Lindblom argued that neither drastic policy change nor carefully planned giant steps are usually possible in policy-making. Rather, only \"small or incremental steps—no more than muddling—is ordinarily possible.\" He argued that \"No person, committee, or research team, even with all the resources of modern electronic computation, can complete the analysis of a complex problem. Too many interacting values are at stake, too many possible alternatives, too many consequences to be traced through an uncertain future—the best we can do is achieve partial analysis.\" In other words, particularly in cases where decision-makers cannot agree on the objective of policy, the best that policies can achieve is making agreed incremental policy changes with ad hoc adjustments as conditions evolve and agreements arise.\nAs a variant of \"muddling through,\" some experts advocate an adaptive approach to climate change decision-making (both public and private). An adaptive approach entails setting an initial policy, then monitoring and evaluating progress toward the stated goal, and making adjustments as knowledge is gained and new opportunities become available. Two proponents of adaptive strategies argue:\n[C]limate change presents a problem of decision-making under conditions of deep uncertainty. We begin with the premise that while we know a great deal about the potential threat of climate change and the actions we might take to prevent it, we cannot now, nor are we likely for the foreseeable future [to], answer the most basic questions, such as is climate change a serious problem and how much would it cost to prevent it? We argue that in the face of this uncertainty, we should seek robust strategies. Robust strategies are ones that will work reasonably well no matter what the future holds.... [R]obust strategies for climate change are possible by means of adaptive-decision strategies, that is, strategies that evolve over time in response to observations of changes in the climate and economic systems. Viewing climate policy as an adaptive process provides an important reconfiguration of the climate-change policy problem.\nSeveral concerns about adaptive approaches may be raised. First, while an adaptive approach may achieve overall efficiencies compared to less flexible strategies, the efficiencies come at a cost of lessened certainty for investors that a policy will remain fixed (e.g., for investment on long-lived infrastructure). This can raise the risks of certain investments and add to their costs.\nSecond, some people conclude that abating climate change would require radical technological change, and perhaps changes in social and economic structures, which cannot be achieved with incremental changes. Experts point to \"path dependence\" of economic structures and technological evolution, in which initial conditions set a trajectory or \"path\" that becomes increasingly difficult to modify as investments build on one another. \"Muddling through\" follows that path dependence, almost by definition. Others propose that successfully addressing climate change requires \"transformational change,\" a change in state that is not merely an extension of the past.\nAlso, pursuing adaptive strategies, Lempert and Schlesinger have argued that \"the real measure of ... success\" should not be near-term GHG reductions, but \"rather the new potential for large-scale emissions reductions society has created for the years ahead.\" Though this point may be valid, it may be, alternatively, that expanding the potential for emissions reductions requires incentives to shift from a \"business-as-usual\" path that may not be provided by incrementalism. Transformational change frequently alters power relationships, and may be obstructed by a human tendency to ignore or reject information that does not conform with one's existing beliefs or prior decisions. This leaves open the question of whether muddling through would serve to maintain the status quo or to serve the \"creative destruction\" that \"incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.\"", "Public and political interest in addressing climate change has cycled up and down over the past three decades. Although no comprehensive or cohesive strategy exists at the federal level, many existing programs and measures (including tax incentives)—and uncertainty about what future science and policy will bring—create a context that influences private and governmental decision-making. Some in the public and 112 th Congress may seek to eliminate climate change-related programs and policies, while others may seek to modify, reorganize, or enhance them.\nA variety of generic policy tools may be in use already or be potentially available to address climate change concerns. This section is intended to introduce the rationales, designs, and applicability of options, to assist Members' deliberations. The order of the following policy tools is not intended to represent any order of priority:\nregulatory, including market-based, tools to reduce GHGs; distribution of potential revenues from GHG programs; non-regulatory tools that help markets work more efficiently; tools to stimulate technological change; options to ease the economic transition to a lower GHG economy; instruments to encourage international actions; and tools to stimulate adaptation to climate change.\nThe following sections summarize some potentially applicable instruments in each of these categories that have been proposed or may be in use now. Many of these tools are seen as complementary, and proponents often contend that results can be achieved more efficiently with a carefully matched combination of policy tools than by wielding any one alone.", "Most experts believe that the most economically efficient way to reduce GHG emissions is to put a price on emissions that reflects the costs (or risks) of those emissions to others. Putting a price on GHG emissions can be done with traditional source-by-source regulation, and/or with market mechanisms.", "From the earliest decades of air pollution controls, emission reductions have often been achieved by setting emission performance standards on each source of pollution, or requiring that sources use a particular type of technology, such as the \"best available control technology.\" These may be applied for sectors as a whole, or varying with individual source permits. Practice has sometimes successfully included \"technology-forcing\" regulation, as well, that sets future performance standards well beyond contemporaneously achievable levels.\nMany regulatory controls have been effective through decades of experience, though studies contend that the compliance costs might be reduced if strategies give greater priority to cost-effectiveness and flexibility. Even when U.S. regulators have been allowed by law to consider costs in setting emission regulations, they have had additional factors to consider and often have had weak information about the costs of compliance for each individual source. Also, regulations can be difficult to adjust as circumstances evolve. Although in some circumstances source-by-source regulation may be most effective and efficient, it often cannot achieve, by itself, a desired emission reduction target at the least possible cost.", "An approach that utilizes aspects of commodity markets can achieve, in some cases, emission reductions similar to a source-by-source regulatory approach but at lower overall cost. Though none to reduce GHG emissions have been proposed in the 112 th Congress, several bills introduced in the 111 th Congress proposed such \"market mechanisms\" because, for some sources, they can increase the efficiency of regulation by allowing the least costly reductions first.\nTwo principal types of market mechanisms pertinent to GHG reductions are GHG or carbon fees, or cap-and-trade systems. The key contrast between these two mechanisms is that\nGHG emission fees would provide certainty about the prices paid by sources, but uncertainty concerning how much GHGs would be reduced; conversely, cap-and-trade systems provide certainty in how much GHGs would be reduced, but not regarding the prices paid by sources.\nBoth emission fees and cap-and-trade systems potentially generate revenues—potentially in the hundreds of billions of dollars annually.\nAnother important difference between cap-and-trade and other policy tools is that it can separate who pays for emissions reductions from where the reductions occur , as discussed below. This can allow the program design to accomplish both efficiency and equity objectives simultaneously.", "Fees could be charged to a source of emissions according to its total emissions. Theoretically, a source would reduce its emissions down to the level where it is no longer cheaper to make the reductions (per ton) than to pay the tax (per ton). There could be many variations on this basic model, including charging fees only on emissions above rates designated by source types. Aside from possible tax exemptions, emission fees would not allow flexibility in who takes action or where GHG reductions would occur. A system might be designed to allow flexibility in when GHG reductions are made, though the principal flexibility would be the source's decision whether to make the reductions or pay the taxes. Many economists believe that emission fees or taxes would be the most economically efficient way to reduce emissions, though this might depend on micro-economic factors (such as availability of accurate information on response options), and it would not guarantee an overall level of effectiveness for the program.\nIn the context of possible, broader tax reform in the 112 th Congress, some experts might argue in favor of shifting existing taxes from \"goods\" to \"bads\" like pollution, since taxes raise prices and tend to decrease demand for the taxed product or service. A number of studies have examined the implications of replacing existing taxes by GHG taxes: though not conclusive, several studies suggest that such a tax shift, depending on its structure, could have positive or negative impacts on economic growth and/or employment. (The actual results would depend on the particular size and structure of a tax shift.) One concern about pollution taxes is that they would tend to be regressive; another is that to the degree that carbon fees are effective in reducing the emissions, they also reduce the revenue base.", "One type of market mechanism begins with regulations on emission sources to reduce their emissions, but then may allow flexibility in who makes the emission reduction, when the reductions are made, and/or where the emission reductions occur (outside of the regulated sources, or even internationally).\nIn a cap-and-trade program, the regulator sets an overall cap on emissions. It must allocate responsibility for achieving the cap to individual sources, frequently termed \"allowances\" to emit. These may be allocated by giving away allowances and/or selling them at prices at fixed rates or set by auctions (discussed in a later section). The allocation mechanism essentially establishes who pays or potentially benefits from the cap-and-trade system.\nIn a cap-and-trade program, the trade component allows entities to sell their unneeded emission \"allowances,\" while emission sources that emit more than their allocation of allowances may comply by reducing their emissions and/or buying additional allowances. Emissions trading establishes a market, creating incentives to reduce emissions below required levels in order to sell the extra allowances to sources who may have higher costs of control. \"Cap-and-trade is the free market based approach to complex multilateral problems like climate change,\" say proponents.\nCap-and-trade programs allow flexibility in who makes the required emission reductions. While the allocation of allowances determines who pays to reduce emissions, trading allows the regulated sources to pay for reductions elsewhere at lower cost. Thus, cap-and-trade can address both efficiency and equity considerations.\nWithin cap-and-trade systems are two additional types of flexibility:\nEmission reduction credits or offsets: Flexibility in where reductions occur—in the United States or internationally—can also minimize costs, although some questions arise about enforceability, loss of program effectiveness, and financial flows. Allowing international credits or offsets, to the degree that GHGs could be reduced reliably at lower cost in other countries, could help reduce costs of complying with any U.S. GHG requirements. Banking and borrowing: When flexibility could allow entities to save or \"bank\" unneeded allowances until they need them, or to \"borrow\" against their future allocations of allowances (with a charge for borrowing). Banking and borrowing could apply to source-by-source regulation as well as to cap-and-trade programs.", "Although there are numerous questions to resolve in designing a cap-and-trade program, such as the level at which to set the cap, which sources to cover under the cap, whether to allow offsets from non-covered sources and other countries, etc., this section discusses two: how to allocate the GHG reduction requirements, and whether to set a ceiling or floor on the prices a source must pay for any allowances it wishes to purchase.", "Policy makers would have to decide who would be responsible for reducing GHG emissions—this determines who pays for the reductions, not who actually makes the reductions. The first decision is what the emissions limit or performance standards may be across categories of GHG sources. Certain types of sources, by sector or size, may be excluded from GHG reduction requirements, such as in EPA's \"tailoring rule,\" which proposes not to require GHG permits for sources that emit less than 25,000 tons of CO2 annually. Frequently, this step is among the most controversial in establishing control policy. (Alternatively, the policy-makers may not set a particular limit or standard, but require all regulated sources to buy emissions permits.) Typically, at the end of a compliance period (e.g., a year), a source must turn in to the regulating authority a number of allowances at least equal to the tons emitted in that period.\nThe second decision is how emissions sources will get their emission allowances. The regulator may give away or sell permits to cover all or some of each source's emissions. In many systems, these permits are called \"allowances\" and one allowance equals a permit to emit one ton of a pollutant. In a cap-and-trade system, allowances can be\ngiven away (e.g., \"grandfathered\" to existing GHG sources, or given to non-source entities ), sold at a fixed price, auctioned, or a combination of these techniques.\nAllowances are a valuable commodity (because they can be sold). How this valuable commodity is allocated could potentially transfer billions of dollars of wealth across different groups. This transfer of wealth (from entities who need to buy allowances to entities that sell them) could be many times greater than the economic cost of the GHG reductions. How to allocate allowances is therefore an important component—and among the most controversial—in the GHG reduction debate. Giving allowances to particular groups may be a tempting way to increase the acceptability of a GHG control program, or to improve the \"fairness\" of the program, but it could distort incentives and reduce the efficiency of the program. One way (among others) to minimize the transfer of wealth in a GHG control program would be to sell allowances rather than to give them away. Sales, including auctions, would increase the efficiency of an overall GHG reduction. Selling the allowances at a fixed price becomes very much like an emission fee or tax program. Many past proposals would give away some allowances to both sources of emissions and other entities (e.g., states, other sectors) and would auction some allowances.", "GHG allowances under a cap-and-trade program become a market commodity; the prices of most commodities rise and fall—sometimes with great volatility—as daily, seasonal or annual conditions vary. Variance would be expected with GHG allowance prices.\nPrices could rise above anticipated levels if reducing GHGs turns out to be more difficult than projected, or if speculators bid up prices, or under other conditions. Some people concerned about the costs of GHG reduction programs advocate setting a ceiling on the maximum price a source might have to pay for allowances it may need to comply; some have termed this a \"safety valve\" on prices. If prices were to exceed a designated level for some period of time, either the regulatory authority could release additional allowances into the market through an auction, or sell them at a fixed fee. While this would limit the overall cost of the program, it would also limit the overall GHG reductions (although these could be \"borrowed\" from future years' caps). It also would reduce incentives for technological innovation by limiting the price rise that could occur, limiting the profit potential that could stimulate some investors to finance technological research. Some researchers note that the positive potential effects on technology innovation resulting from price volatility is one reason policy-makers might favor emissions caps over emission fees.\nOther stakeholders argue that, to stimulate technological advance, a floor should be set on the prices for allowances in the market (i.e., the regulator sets a \"reserve price\" for allowances sold at auction, or would buy allowances in the market until the prices rise to the minimum acceptable level). While constraining how little the GHG program may cost, a price floor assures investors there is a minimum value for the services their technologies could provide.", "If emissions are taxed, or allowances are sold to sources at flat fees or by auction, public revenues could be generated—as much as hundreds of billions of dollars per year (depending on the size of the tax or the quantity of reductions required). A key policy issue associated with taxes, sales, or auctions is what to do with the revenues. Revenues can be used to\noffset reductions of other taxes, sometimes called \"revenue recycling\" (e.g., labor taxes); rebate to sources to help defray compliance costs of covered sources (e.g., according to their production levels); fund programs (or provisions) that could reduce transition costs, such as worker retraining and relocation programs, market facilitation programs, technology development programs, tax credits, loan guarantees, etc.; provide payments to address distributional concerns (e.g., production-based rebates to energy-intensive sources; tax credits to low-income consumers); or fund programs that may have little to do with reducing GHG emissions but that garner wider support for the legislation.\nAs discussed in a later section, how any revenues are used may help to minimize the overall costs of the GHG reductions, or, conversely, may lead to higher costs.", "Even when market mechanisms are used to help control emissions, markets do not work perfectly; complementary, typically non-regulatory, policies may help to achieve reductions at the lowest possible costs. Public or targeted information programs can help prepare people for the changes a GHG control policy may demand, and gain their support for it. Providing public information about climate change risks would likely induce some voluntary action—an approach used to promote anticipatory adaptation, for example. Information about government programs, including advanced notice of regulatory requirements, can help decision-makers to make an efficient transition to changing circumstances. Product labeling and \"seals of approval\" are additional informational tools used privately and by governments to facilitate efficient markets. Accurate information about risks can allow investors to make appropriate decisions. Some private initiatives, such as the Ceres Investor Network on Climate Risks, seek and disseminate information, including through corporate shareholder resolutions, about investment risks and opportunities associated with climate change.\nAdditionally, technical assistance programs—like several existing federal voluntary programs, such as the Climate Leaders or Energy Star programs —can help consumers and businesses to make economical choices. Technical assistance programs may provide, for example, calculation tools, training, and access to information. Programs may work with equipment suppliers to commercialize products that are more efficient or emit fewer GHGs, as has occurred with, for example, Energy Star home electronics initiatives, or the Mobile Air Conditioning Climate Protection Partnership. Most experts agree that such programs work best when targeted to address specific decision-makers or imperfections in the market, and that the GHG reductions they could yield by themselves are limited. Some programs, however, may result in private savings that far exceed their federal budgetary costs (which are broadly spread across taxpayers). On the other hand, the governmental expenditures per unit of emissions reduction achieved may be much higher than regulatory programs, where more costs are borne by emissions sources.\nPerceived investment risks can sometimes make consumers and investors reticent to make changes or invest in new technologies. Risk-sharing policy tools can include loan guarantees, insurance, or tax incentives. Public information and education campaigns are additional tools that can support a policy's acceptability and effectiveness.", "Achieving deep GHG emission reductions from projected levels would require extraordinary changes in how energy is used and supplied over time. Moreover, the cost to reduce GHG emissions would depend critically on development and deployment of improved technologies. Multiple studies conclude that \"markets are unlikely to provide proper incentives for the development of clean technologies, absent public policy.\" Public policies clearly have led to major technological advances in other fields (e.g., developing nuclear energy, putting humans on the moon, developing advanced weapons). Still, the quantitative link between policy tools and resulting technological advance is unpredictable.\nOften, policies to stimulate technological change are described as \"demand-pull,\" or \"supply-push.\" A third type of policy aims to improve market function, to lubricate the interface between buyers and suppliers. Specific measures in these three categories are described below.\nDemand-Pull : Policy tools can act on the demand for new technologies. Some types of policy tools act primarily to stimulate demand for new technologies:\n\"Technology-forcing\" regulations have effectively stimulated demand for better (and more cost-effective) technologies in the past. \"Technology-forcing policies respond to the reality that the world is not static and that policy itself can create and shape the options society faces in meeting its needs.\" Many economists prefer price incentives to stimulate technological change, because they decentralize decision-making to consumers and suppliers, and are arguably more cost-effective. On the other hand, price incentives may not succeed in inducing transformative or radical change from existing technologies because of the lack of certainty regarding prices over the long period required for developing and commercializing new technologies. At least one study found that, in some circumstances, technology mandates may be more effective than direct financial incentives. Renewable or clean energy quotas have been enacted in many states, requiring electricity producers to generate a specified share of power with defined renewable energy or other (i.e., nuclear, hydroelectric) technologies. These kinds of quotas create demand for designated classes of technologies that may not otherwise be commercially preferred by investors (e.g., because of perceived risks or extra costs). The Clean Energy Standard (CES) is an example of demand-side, technology-forcing incentive. This option has been proposed by the Obama Administration, as well as by Senators Jeff Bingaman and Lisa Murkowski. A CES has been enacted in Indiana. Tax incentives and consumer rebates can reduce the price to purchasers of certain technologies. The Energy Policy Act of 2005 ( P.L. 109-58 ), for example, extended numerous tax credits to individuals and businesses to make investments in energy efficiency or renewable energy generation that meet certain criteria, in order to accelerate technology deployment.\nSupply-Push : Other policy tools primarily act on the supply of technologies—increasing incentives for technology suppliers to conduct research and development (R&D) and to commercialize more advanced technologies:\nSubsidies to research and develop new or improved technologies are a common tool of federal policy, including current approaches to mitigating climate change. Federal appropriations of billions of dollars have been enacted in recent years to stimulate more efficient energy technologies; renewable, nuclear, and \"clean coal\" technologies; and approaches like alternatives to gasoline or diesel fuel for vehicles. These subsidies can take the form of tax credits for R&D, cost-sharing grants or contracts, direct investments, loan guarantees, and others. Technology awards or prizes are sometimes offered to innovators that develop advanced technologies that meet specified criteria. Government procurement policies can drive technological development forward, by setting challenging standards for performance and guaranteeing purchase of that technology at a particular (attractive) price, or by purchasing a less-emitting technology even if it is not the lowest cost alternative. Both types of procurement policies have been used by the federal government to advance technologies that emit fewer GHGs than more conventional technologies. \"Manhattan Project\"-like federal research has been proposed by some experts, who argue that a focused cadre of researchers, with sufficient resources and allowed to pursue high-risk, high-payoff projects could facilitate technological \"breakthroughs\" that could facilitate radical change in energy systems.\nSome policy tools that may affect the advance of technologies could be indirect. For example, incentives to ensure a sufficient supply from universities of well-trained scientists and engineers in GHG mitigation-related fields could be a component of promoting technological advance.\nSupply-Demand Interface : Some policy instruments focus on lubricating the connections between suppliers and users of technologies; sometimes these are called market facilitation . They may reduce the \"transaction costs\" of deploying new technologies in commercial markets. Programs to improve the interface between suppliers and users (e.g., the \"Energy Star\" programs of the Environmental Protection Agency and the Department of Energy) became a new emphasis since the late 1980s and early 1990s. The Energy Star website claims savings in the utility bills of consumers assisted by the program of nearly $18 billion in 2010.\nSuch programs may improve the information available on technologies and markets, make it more accessible, give it independent \"third party\" evaluations, improving technical capacity to choose and install technologies, and many others. More specific examples include trade conferences and missions, internet-based technology databases, publication of research including reviews of applications, \"stamps of approval,\" etc. Most of these measures are employed already in private markets (i.e., marketing by suppliers), especially by larger firms. However, there are niches in markets where government-supported actions may improve the supply-demand interface in markets and speed deployment of new technologies as well as make technology developers better aware of potential users needs and interests. Experts have noted the ability of supply-demand interface measures to improve market efficiency, as well as their limits in reducing emissions in lieu of stronger incentives.", "The U.S. economy currently depends primarily on fossil fuels, especially for electricity generation and transportation. Without factoring in the environmental, energy security, and other \"external\" costs, the United States has optimized its infrastructure to use the relatively inexpensive fossil fuels. A transition to alternatives or to low-emission technologies, if faster than the natural rate of capital turnover, could incur costs. Several policy mechanisms can help to ease the transition of the current economy to one optimized around low-GHG emissions:\ntiming the total required GHG reductions to coincide with normal retirements of equipment and infrastructure and when new investments may be made; trading, banking, and borrowing of allowances allow sources to manage the timing of their reductions at least cost; market facilitation tools, described above, can help sources and consumers make optimal decisions, including information campaigns that help sources anticipate the regulatory regime; investment in appropriate infrastructure (important also for state, local, and private entities) that enables deployment of emerging technologies; and regulatory and permitting regimes that are adequately prepared for new technologies in new locations (e.g., in permitting carbon capture and storage technologies, or resolving \"solar rights\" issues).\nIn addition, the private sector is concerned about the possible international competitiveness and trade impacts of GHG reductions in the United States. Some policy tools that could be applied, although some could encounter potential challenges under the World Trade Organization (WTO) rules, include\nborder tax adjustments that would raise the prices of imports from countries without GHG controls comparable to those of the United States; \"international reserve\" allowances that importers of certain goods must purchase (raising the cost of imports) if the country of origin does not apply GHG controls comparable to those of the United States; giving, over some period, allowances or revenues from sales of allowances to affected industries in order to facilitate adjustment; in the process of crafting domestic policies, negotiating with potentially affected WTO Members to seek ways to avoid imposing restrictive import measures; working within the WTO to change or clarify rules to permit the imposition of import restrictions by countries adopting trade-vulnerable GHG control requirements; and working multilaterally to have GHG emission controls applied equitably to sources internationally (see discussion below) and to avoid WTO challenges.\nThe design of competitiveness-oriented policy tools would require caution to avoid challenge under WTO as unfair trade practices.", "Because GHG emissions from virtually all countries add to global atmospheric concentrations, the effectiveness of policies to address climate change will depend on the collaboration of all major countries, especially the largest emitters. Some of the large emitters, such as the nations of the European Union, already have committed to reducing their GHG emissions below year 1990 levels and have proposed further reductions beyond the Kyoto Protocol's current commitment period that ends in 2012. The United States, China and other large developing country emitters have offered GHG targets, but are not obligated to reduce their GHG, and the position of Russia beyond 2012 remains a question. A country, if it wished to promote global GHG emission reductions, could exercise a number of relevant policy tools, unilaterally or in cooperation (including legal treaties) with other nations:\nleadership and relationship-building; strategic policy leverage (including quid pro quo); capacity building and other technical assistance; financial assistance; agreement on standards for international investment; and contributions of research and technological developments.\nThere are additional options, and a multitude of variants in designing each of these policy tools.", "Computer modeling suggests that, even if GHG emissions were stopped today, historical emissions would lead to another 1 o C (1.8 o F) of warming by 2050. Interest has grown in recent years in improving understanding of the potential impacts of climate variability and change, and in stimulating effective adaptation to minimize future losses and take advantage of opportunities. Policy tools to promote efficient adaptation could include, among other options:\nresearch to improve characterization of future climate change, natural variability, and the potential implications for different sectors and ecosystems; public information, both broad and targeted to specific populations, including access to robust characterization of future climate conditions and associated risks; programs to develop practical tools to assist decision-makers to understand the implications of climate change for their areas of operation (e.g., water management, infrastructure engineering, disease vector prediction, etc.); financial or regulatory incentives to reduce risks (e.g., to discourage construction in vulnerable flood plains; to encourage insurers to include climate change risks in their premium schedules; etc.); improved emergency planning to reduce risks and respond to extreme weather events (e.g., droughts, tornadoes, etc.); and acquisition of key assets, such as easements in coastal zones or lands along wildlife migratory routes, that may be valuable for long-term adaptation.\nPolicy tools to encourage private and public sector adaptations, like the research to support them, are relatively undeveloped compared to work on GHG mitigation." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 2, 1, 2, 3, 3, 4, 4, 3, 4, 4, 3, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h2_title h1_full", "", "h1_full", "h2_title", "", "", "h2_full", "h1_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What causes climate change?", "What has caused the increase in concentrations of GHG?", "How much of this can be avoided?", "How does policy reduce the effects of climate change?", "What approaches might such proposals take?", "Which of these strategies is the best?", "Which strategy to alleviate the effects of climate change is best?", "What is the goal of the Climate Change: Conceptual Approaches and Policy Tools report?" ], "summary": [ "Different factors contribute to climate change, their contributions depending on the time periods and geographic locations under examination. Current scientific evidence best supports rising atmospheric concentrations of \"greenhouse gases\" (GHG) (particularly carbon dioxide, methane, nitrous oxides) and other air pollutants as having driven the majority of global average temperature increase since the late 1970s.", "The increase in concentrations is due almost entirely to GHG emissions from human activities. Hence, the policy debate has focused on whether and how to abate GHG emissions from human-related activities.", "Locally, human-related air pollution, irrigation, the built environment, land use change, and depletion of ozone in the stratosphere may be more important but have small overall effect on global average temperature.", "Policy proposals take different approaches to setting goals or managing climate change-related risks.", "This report describes four strategies for setting climate change policies: (1) research and wait-and-see, (2) science-based goal setting, (3) economics-based policies, and (4) incrementalism or adaptive management.", "Each may take into account the concerns, values, and skepticisms of some constituencies, but each also has limitations. It is unclear whether any single conceptual approach could cover all elements of the policy debate, though hybrid approaches may help to build political consensus over whether and how much policy intervention is appropriate.", "Analysts have elucidated the potential usefulness and limitations of each option. Many experts have concluded that, to achieve a given policy goal, strategies using complementary policy tools can increase cost-effectiveness, alleviate burdens on particular constituencies, and address additional concerns of policy-makers.", "This report seeks to support Congress as it debates and modifies the mix of federal programs that may influence the climate or adaptation to its changes." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 1, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 6, 6 ] }

{ "title": [ "Background", "Modernization of the Electricity Infrastructure", "Regulation of the Electricity Industry", "The Electricity Grid Is Potentially Vulnerable to an Evolving Array of Cyber-Based Threats", "Reported Incidents Illustrate the Potential Impact of Cyber Threats", "Actions Have Been Taken to Secure the Electricity Grid, but Challenges Remain", "Challenges to Securing Electricity Systems and Networks", "Contact and Acknowledgments", "Appendix I: Related GAO Products" ], "paragraphs": [ "The electricity industry, as shown in figure 1, is composed of four distinct functions: generation, transmission, distribution, and system operations. Once electricity is generated—whether by burning fossil fuels; through nuclear fission; or by harnessing wind, solar, geothermal, or hydro energy—it is generally sent through high-voltage, high-capacity transmission lines to local electricity distributors. Once there, electricity is transformed into a lower voltage and sent through local distribution lines for consumption by industrial plants, businesses, and residential consumers. Because electric energy is generated and consumed almost instantaneously, the operation of an electric power system requires that a system operator constantly balance the generation and consumption of power.\nUtilities own and operate electricity assets, which may include generation plants, transmission lines, distribution lines, and substations—structures often seen in residential and commercial areas that contain technical equipment such as switches and transformers to ensure smooth, safe flow of current and regulate voltage. Utilities may be owned by investors, municipalities, and individuals (as in cooperative utilities). System operators—sometimes affiliated with a particular utility or sometimes independent and responsible for multiple utility areas—manage the electricity flows. These system operators manage and control the generation, transmission, and distribution of electric power using control systems—IT- and network-based systems that monitor and control sensitive processes and physical functions, including opening and closing circuit breakers. As we have previously reported, the effective functioning of the electricity industry is highly dependent on these control systems. However, for many years, aspects of the electricity network lacked (1) adequate technologies—such as sensors—to allow system operators to monitor how much electricity was flowing on distribution lines, (2) communications networks to further integrate parts of the electricity grid with control centers, and (3) computerized control devices to automate system management and recovery.", "As the electricity industry has matured and technology has advanced, utilities have begun taking steps to update the electricity grid—the transmission and distribution systems—by integrating new technologies and additional IT systems and networks. Though utilities have regularly taken such steps in the past, industry and government stakeholders have begun to articulate a broader, more integrated vision for transforming the electricity grid into one that is more reliable and efficient; facilitates alternative forms of generation, including renewable energy; and gives consumers real-time information about fluctuating energy costs.\nThis vision—the smart grid—would increase the use of IT systems and networks and two-way communication to automate actions that system operators formerly had to make manually. Electricity grid modernization is an ongoing process, and initiatives have commonly involved installing advanced metering infrastructure (smart meters) on homes and commercial buildings that enable two-way communication between the utility and customer. Other initiatives include adding “smart” components to provide the system operator with more detailed data on the conditions of the transmission and distribution systems and better tools to observe the overall condition of the grid (referred to as “wide-area situational awareness”). These include advanced, smart switches on the distribution system that communicate with each other to reroute electricity around a troubled line and high-resolution, time-synchronized monitors—called phasor measurement units—on the transmission system.\nThe use of smart grid systems may have a number of benefits, including improved reliability from fewer and shorter outages, downward pressure on electricity rates resulting from the ability to shift peak demand, an improved ability to shift to alternative sources of energy, and an improved ability to detect and respond to potential attacks on the grid.", "Both the federal government and state governments have authority for overseeing the electricity industry. For example, the Federal Energy Regulatory Commission (FERC) regulates rates for wholesale electricity sales and transmission of electricity in interstate commerce. This includes approving whether to allow utilities to recover the costs of investments they make to the transmission system, such as smart grid investments. Meanwhile, local distribution and retail sales of electricity are generally subject to regulation by state public utility commissions.\nState and federal authorities also play key roles in overseeing the reliability of the electric grid. State regulators generally have authority to oversee the reliability of the local distribution system. The North American Electric Reliability Corporation (NERC) is the federally designated U.S. Electric Reliability Organization, and is overseen by FERC. NERC has responsibility for conducting reliability assessments and developing and enforcing mandatory standards to ensure the reliability of the bulk power system—i.e., facilities and control systems necessary for operating the transmission network and certain generation facilities needed for reliability. NERC develops reliability standards collaboratively through a deliberative process involving utilities and others in the industry, which are then sent to FERC for approval. These standards include critical infrastructure protection standards for protecting electric utility-critical and cyber-critical assets. FERC has responsibility for reviewing and approving the reliability standards or directing NERC to modify them.\nIn addition, the Energy Independence and Security Act of 2007established federal policy to support the modernization of the electricity grid and required actions by a number of federal agencies, including the National Institute of Standards and Technology (NIST), FERC, and the Department of Energy. With regard to cybersecurity, the act required NIST and FERC to take the following actions:\nNIST was to coordinate development of a framework that includes protocols and model standards for information management to achieve interoperability of smart grid devices and systems. As part of its efforts to accomplish this, NIST planned to identify cybersecurity standards for these systems and also identified the need to develop guidelines for organizations such as electric companies on how to securely implement smart grid systems. In January 2011, we reported that NIST had identified 11 standards involving cybersecurity that support smart grid interoperability and had issued a first version of a cybersecurity guideline.\nFERC was to adopt standards resulting from NIST’s efforts that it deemed necessary to ensure smart grid functionality and interoperability. However, according to FERC officials, the statute did not provide specific additional authority to allow FERC to require utilities or manufacturers of smart grid technologies to follow these standards. As a result, any standards identified and developed through the NIST-led process are voluntary unless regulators use other authorities to indirectly compel utilities and manufacturers to follow them.", "Threats to systems supporting critical infrastructure—which includes the electricity industry and its transmission and distribution systems—are evolving and growing. In February 2011, the Director of National Intelligence testified that, in the past year, there had been a dramatic increase in malicious cyber activity targeting U.S. computers and networks, including a more than tripling of the volume of malicious software since 2009. Different types of cyber threats from numerous sources may adversely affect computers, software, networks, organizations, entire industries, or the Internet. Cyber threats can be unintentional or intentional. Unintentional threats can be caused by software upgrades or maintenance procedures that inadvertently disrupt systems. Intentional threats include both targeted and untargeted attacks from a variety of sources, including criminal groups, hackers, disgruntled employees, foreign nations engaged in espionage and information warfare, and terrorists. Table 1 shows common sources of cyber threats.\nThese sources of cyber threats make use of various techniques, or exploits that may adversely affect computers, software, a network, an organization’s operation, an industry, or the Internet itself. Table 2 shows common types of cyber exploits.\nThe potential impact of these threats is amplified by the connectivity between information systems, the Internet, and other infrastructures, creating opportunities for attackers to disrupt critical services, including electrical power. In addition, the increased reliance on IT systems and networks also exposes the electric grid to potential and known cybersecurity vulnerabilities. These vulnerabilities include an increased number of entry points and paths that can be exploited by potential adversaries and other unauthorized users; the introduction of new, unknown vulnerabilities due to an increased use of new system and network technologies; wider access to systems and networks due to increased connectivity; an increased amount of customer information being collected and transmitted, providing incentives for adversaries to attack these systems and potentially putting private information at risk of unauthorized disclosure and use.\nIn May 2008, we reported that the corporate network of the Tennessee Valley Authority—the nation’s largest public power company, which generates and distributes power in an area of about 80,000 square miles in the southeastern United States—contained security weaknesses that could lead to the disruption of control systems networks and devices connected to that network. We made 19 recommendations to improve the implementation of information security program activities for the control systems governing the Tennessee Valley Authority’s critical infrastructures and 73 recommendations to address specific weaknesses in security controls. The Tennessee Valley Authority concurred with the recommendations and has taken steps to implement them.\nWe and others have also reported that smart grid and related systems have known cyber vulnerabilities. For example, cybersecurity experts have demonstrated that certain smart meters can be successfully attacked, possibly resulting in disruption to the electricity grid. In addition, we have reported that control systems used in industrial settings such as electricity generation have vulnerabilities that could result in serious damages and disruption if exploited. Further, in 2007, the Department of Homeland Security, in cooperation with the Department of Energy, ran a test that demonstrated that a vulnerability commonly referred to as “Aurora” had the potential to allow unauthorized users to remotely control, misuse, and cause damage to a small commercial electric generator. Moreover, in 2008, the Central Intelligence Agency reported that malicious activities against IT systems and networks have caused disruption of electric power capabilities in multiple regions overseas, including a case that resulted in a multicity power outage. As government, private sector, and personal activities continue to move to networked operations, the threat will continue to grow.", "Cyber incidents continue to affect the electricity industry. For example, the Department of Homeland Security’s Industrial Control Systems Cyber Emergency Response Team recently noted that the number of reported cyber incidents affecting control systems of companies in the electricity sector increased from 3 in 2009 to 25 in 2011. In addition, we and others have reported that cyber incidents can affect the operations of energy facilities, as the following examples illustrate:\nSmart meter attacks. In April 2012, it was reported that sometime in 2009 an electric utility asked the FBI to help it investigate widespread incidents of power thefts through its smart meter deployment. The report indicated that the miscreants hacked into the smart meters to change the power consumption recording settings using software available on the Internet.\nPhishing attacks directed at energy sector. The Department of Homeland Security’s Industrial Control Systems Cyber Emergency Response Team reported that, in 2011, it deployed incident response teams to an electric bulk provider and an electric utility that had been victims of broader phishing attacks. The team found three malware samples and detected evidence of a sophisticated threat actor.\nStuxnet. In July 2010, a sophisticated computer attack known as Stuxnet was discovered. It targeted control systems used to operate industrial processes in the energy, nuclear, and other critical sectors. It is designed to exploit a combination of vulnerabilities to gain access to its target and modify code to change the process.\nBrowns Ferry power plant. In August 2006, two circulation pumps at Unit 3 of the Browns Ferry, Alabama, nuclear power plant failed, forcing the unit to be shut down manually. The failure of the pumps was traced to excessive traffic on the control system network, possibly caused by the failure of another control system device.\nNortheast power blackout. In August 2003, failure of the alarm processor in the control system of FirstEnergy, an Ohio-based electric utility, prevented control room operators from having adequate situational awareness of critical operational changes to the electrical grid. When several key transmission lines in northern Ohio tripped due to contact with trees, they initiated a cascading failure of 508 generating units at 265 power plants across eight states and a Canadian province.\nDavis-Besse power plant. The Nuclear Regulatory Commission confirmed that in January 2003, the Microsoft SQL Server worm known as Slammer infected a private computer network at the idled Davis-Besse nuclear power plant in Oak Harbor, Ohio, disabling a safety monitoring system for nearly 5 hours. In addition, the plant’s process computer failed, and it took about 6 hours for it to become available again.", "Multiple entities have taken steps to help secure the electricity grid, including NERC, NIST, FERC, and the Departments of Homeland Security and Energy. NERC has performed several activities that are intended to secure the grid. It has developed eight critical infrastructure standards for protecting electric utility-critical and cyber-critical assets.\nThe standards established requirements for the following key cybersecurity-related controls: critical cyber asset identification, security management controls, personnel and training, electronic “security perimeters,” physical security of critical cyber assets, systems security management, incident reporting and response planning, and recovery plans for critical cyber assets. In December 2011, we reported that NERC’s eight cyber security standards, along with supplementary documents, were substantially similar to NIST guidance applicable to federal agencies.\nNERC also has published security guidelines for companies to consider for protecting electric infrastructure systems, although such guidelines are voluntary and typically not checked for compliance. For example, NERC’s June 2010 Security Guideline for the Electricity Sector: Identifying Critical Cyber Assets is intended to assist entities in identifying and developing a list of critical cyber assets as described in the mandatory standards. NERC also has enforced compliance with mandatory cybersecurity standards through its Compliance Monitoring and Enforcement Program, subject to FERC review. NERC has assessed monetary penalties for violations of its cyber security standards.\nNIST, in implementing its responsibilities under the Energy Independence and Security Act of 2007 with regard to standards to achieve interoperability of smart grid systems, planned to identify cybersecurity standards for these systems. In January 2011, we reported that it had identified 11 standards involving cybersecurity that support smart grid interoperability and had issued a first version of a cybersecurity guideline. NIST’s cybersecurity guidelines largely addressed key cybersecurity elements, such as assessment of cybersecurity risks and identification of security requirements (i.e., controls); however, its guidelines did not address an important element essential to securing smart grid systems—the risk of attacks using both cyber and physical means. NIST officials said that they intended to update the guidelines to address this and other missing elements they identified, but their plan and schedule for doing so were still in draft form. We recommended that NIST finalize its plan and schedule for incorporating missing elements, and NIST officials agreed. We are currently working with officials to determine the status of their efforts to address these recommendations.\nFERC also has taken several actions to help secure the electricity grid. For example, it reviewed and approved NERC’s eight critical infrastructure protection standards in 2008. Since then, in its role of overseeing the development of reliability standards, the commission has directed NERC to make numerous changes to standards to improve cybersecurity protections. However, according to the FERC Chairman’s February 2012 letter in response to our report on electricity grid modernization, many of the outstanding directives have not been incorporated into the latest versions of the standards. The Chairman added that the commission would continue to work with NERC to incorporate the directives. In addition, FERC has authorized NERC to enforce mandatory reliability standards for the bulk power system, while retaining its authority to enforce the same standards and assess penalties for violations. We reported in January 2011 that FERC also had begun reviewing initial smart grid standards identified as part of NIST efforts. However, in July 2011, the commission declined to adopt the initial smart grid standards identified as a part of the NIST efforts, finding that there was insufficient consensus to do so.\nThe Department of Homeland Security has been designated by federal policy as the principal federal agency to lead, integrate, and coordinate the implementation of efforts to protect cyber-critical infrastructures and key resources. Under this role, the Department’s National Cyber Security Division’s Control Systems Security Program has issued recommended practices to reduce risks to industrial control systems within and across all critical infrastructure and key resources sectors, including the electricity subsector. For example, in April 2011, the program issued the Catalog of Control Systems Security: Recommendations for Standards Developers, which is intended to provide a detailed listing of recommended controls from several standards related to control systems. The program also manages and operates the Industrial Control Systems Cyber Emergency Response Team to respond to and analyze control-systems-related incidents, provide onsite support for incident response and forensic analysis, provide situational awareness in the form of actionable intelligence, and share and coordinate vulnerability information and threat analysis through information products and alerts. For example, it reported providing on-site assistance to six companies in the electricity subsector, including a bulk electric power provider and multiple electric utilities, during 2009-2011.\nThe Department of Energy is the lead federal agency which is responsible for coordinating critical infrastructure protection efforts with the public and private stakeholders in the energy sector, including the electricity subsector. In this regard, we have reported that officials from the Department’s Office of Electricity Delivery and Energy Reliability stated that the department was involved in efforts to assist the electricity sector in the development, assessment, and sharing of cybersecurity standards. For example, the department was working with NIST to enable state power producers to use current cybersecurity guidance. In May 2012, the department released the Electricity Subsector Cybersecurity Risk Management Process. The guideline is intended to ensure that cybersecurity risks for the electric grid are addressed at the organization, mission or business process, and information system levels. We have not evaluated this guide.", "In our January 2011 report, we identified a number of key challenges that industry and government stakeholders faced in ensuring the cybersecurity of the systems and networks that support our nation’s electricity grid.These included the following:\nThere was a lack of a coordinated approach to monitor whether industry follows voluntary standards. As mentioned above, under the Energy Independence and Security Act of 2007, FERC is responsible for adopting cybersecurity and other standards that it deems necessary to ensure smart grid functionality and interoperability. However, FERC had not developed an approach coordinated with other regulators to monitor, at a high level, the extent to which industry will follow the voluntary smart grid standards it adopts. There had been initial efforts by regulators to share views, through, for example, a collaborative dialogue between FERC and the National Association of Regulatory Utility Commissioners, which had discussed the standards-setting process in general terms. Nevertheless, according to officials from FERC and the National Association of Regulatory Utility Commissioners, FERC and the state public utility commissions had not established a joint approach for monitoring how widely voluntary smart grid standards are followed in the electricity industry or developed strategies for addressing any gaps. Moreover, FERC had not coordinated in such a way with groups representing public power or cooperative utilities, which are not routinely subject to FERC’s or the states’ regulatory jurisdiction for rate setting. We noted that without a good understanding of whether utilities and manufacturers are following smart grid standards, it would be difficult for FERC and other regulators to know whether a voluntary approach to standards setting is effective or if changes are needed.\nAspects of the current regulatory environment made it difficult to ensure the cybersecurity of smart grid systems. In particular, jurisdictional issues and the difficulties associated with responding to continually evolving cyber threats were a key regulatory challenge to ensuring the cybersecurity of smart grid systems as they are deployed. Regarding jurisdiction, experts we spoke with expressed concern that there was a lack of clarity about the division of responsibility between federal and state regulators, particularly regarding cybersecurity. While jurisdictional responsibility has historically been determined by whether a technology is located on the transmission or distribution system, experts raised concerns that smart grid technology may blur these lines. For example, devices such as smart meters deployed on parts of the grid traditionally subject to state jurisdiction could, in the aggregate, have an impact on those parts of the grid that federal regulators are responsible for— namely the reliability of the transmission system.\nThere was also concern about the ability of regulatory bodies to respond to evolving cybersecurity threats. For example, one expert questioned the ability of government agencies to adapt to rapidly evolving threats, while another highlighted the need for regulations to be capable of responding to the evolving cybersecurity issues. In addition, our experts expressed concern with agencies developing regulations in the future that are overly specific in their requirements, such as those specifying the use of a particular product or technology. Consequently, unless steps are taken to mitigate these challenges, regulations may not be fully effective in protecting smart grid technology from cybersecurity threats.\nUtilities were focusing on regulatory compliance instead of comprehensive security. The existing federal and state regulatory environment creates a culture within the utility industry of focusing on compliance with cybersecurity requirements, instead of a culture focused on achieving comprehensive and effective cybersecurity. Specifically, experts told us that utilities focus on achieving minimum regulatory requirements rather than designing a comprehensive approach to system security. In addition, one expert stated that security requirements are inherently incomplete, and having a culture that views the security problem as being solved once those requirements are met will leave an organization vulnerable to cyber attack. Consequently, without a comprehensive approach to security, utilities leave themselves open to unnecessary risk.\nThere was a lack of security features built into smart grid systems.\nSecurity features are not consistently built into smart grid devices. For example, experts told us that certain currently available smart meters had not been designed with a strong security architecture and lacked important security features, including event logging and forensics capabilities that are needed to detect and analyze attacks. In addition, our experts stated that smart grid home area networks—used for managing the electricity usage of appliances and other devices in the home—did not have adequate security built in, thus increasing their vulnerability to attack. Without securely designed smart grid systems, utilities may lack the capability to detect and analyze attacks, increasing the risk that attacks will succeed and utilities will be unable to prevent them from recurring.\nThe electricity industry did not have an effective mechanism for sharing information on cybersecurity and other issues. The electricity industry lacked an effective mechanism to disclose information about cybersecurity vulnerabilities, incidents, threats, lessons learned, and best practices in the industry. For example, our experts stated that while the electricity industry has an information sharing center, it did not fully address these information needs. In addition, President Obama’s May 2009 cyberspace policy review also identified challenges related to cybersecurity information sharing within the electric and other critical infrastructure sectors and issued recommendations to address them. According to our experts, information regarding incidents such as both unsuccessful and successful attacks must be able to be shared in a safe and secure way to avoid publicly revealing the reported organization and penalizing entities actively engaged in corrective action. Such information sharing across the industry could provide important information regarding the level of attempted cyber attacks and their methods, which could help grid operators better defend against them. If the industry pursued this end, it could draw upon the practices and approaches of other industries when designing an industry-led approach to cybersecurity information sharing. Without quality processes for information sharing, utilities will not have the information needed to adequately protect their assets against attackers.\nThe electricity industry did not have metrics for evaluating cybersecurity. The electricity industry was also challenged by a lack of cybersecurity metrics, making it difficult to measure the extent to which investments in cybersecurity improve the security of smart grid systems. Experts noted that while such metrics are difficult to develop, they could help compare the effectiveness of competing solutions and determine what mix of solutions combine to make the most secure system. Furthermore, our experts said that having metrics would help utilities develop a business case for cybersecurity by helping to show the return on a particular investment. Until such metrics are developed, there is increased risk that utilities will not invest in security in a cost-effective manner, or have the information needed to make informed decisions on their cybersecurity investments.\nTo address these challenges, we made recommendations in our January 2011 report. To improve coordination among regulators and help Congress better assess the effectiveness of the voluntary smart grid standards process, we recommended that the Chairman of FERC develop an approach to coordinate with state regulators and with groups that represent utilities subject to less FERC and state regulation to (1) periodically evaluate the extent to which utilities and manufacturers are following voluntary interoperability and cybersecurity standards and (2) develop strategies for addressing any gaps in compliance with standards that are identified as a result of this evaluation. We also recommended that FERC, working with NERC as appropriate, assess whether commission efforts should address any of the cybersecurity challenges identified in our report. FERC agreed with these recommendations.\nAlthough FERC agreed with these recommendations, they have not yet been implemented. According to the FERC Chairman, given the continuing evolution of standards and the lack of sufficient consensus for regulatory adoption, commission staff believe that coordinated monitoring of compliance with standards would be premature at this time, and that this may change as new standards are developed and deployed in industry. We believe that it is still important for FERC to improve coordination among regulators and that consensus is reached on standards. We will continue to monitor the status of its efforts to address these recommendations.\nIn summary, the evolving and growing threat from cyber-based attacks highlights the importance of securing the electricity industry’s systems and networks. A successful attack could result in widespread power outages, significant monetary costs, damage to property, and loss of life. The roles of NERC and FERC remain critical in approving and disseminating cybersecurity guidance and enforcing standards, as appropriate. Moreover, more needs to be done to meet challenges facing the industry in enhancing security, particularly as the generation, transmission, and distribution of electricity comes to rely more on emerging and sophisticated technology.\nChairman Bingaman, Ranking Member Murkowski, and Members of the Committee, this concludes my statement. I would be happy to answer any questions you may have at this time.", "If you have any questions regarding this statement, please contact Gregory C. Wilshusen at (202) 512-6244 or wilshuseng@gao.gov or David C. Trimble, Director, Natural Resources and Environment Team, at (202) 512-3841 or trimbled@gao.gov. Other key contributors to this statement include Michael Gilmore, Anjalique Lawrence, and Jon R. Ludwigson (Assistant Directors), Paige Gilbreath, Barbarol James, Lee McCracken, and Dana Pon.", "Cybersecurity: Threats Impacting the Nation. GAO-12-666T. Washington, D.C.: April 24, 2012.\nCybersecurity: Challenges in Securing the Modernized Electricity Grid, GAO-12-507T. Washington, D.C.: February 28, 2012.\nCritical Infrastructure Protection: Cybersecurity Guidance Is Available, but More Can Be Done to Promote Its Use. GAO-12-92. Washington, D.C.: December 9, 2011.\nHigh-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.\nElectricity Grid Modernization: Progress Being Made on Cybersecurity Guidelines, but Key Challenges Remain to Be Addressed. GAO-11-117. Washington, D.C.: January 12, 2011.\nCybersecurity: Continued Attention Needed to Protect Our Nation's Critical Infrastructure. GAO-11-865T. Washington, D.C.: July 26, 2011.\nCritical Infrastructure Protection: Key Private and Public Cyber Expectations Need to Be Consistently Addressed. GAO-10-628. Washington, D.C.: July 15, 2010.\nCyberspace: United States Faces Challenges in Addressing Global Cybersecurity and Governance. GAO-10-606. Washington, D.C.: July 2, 2010.\nCybersecurity: Continued Attention Is Needed to Protect Federal Information Systems from Evolving Threats. GAO-10-834T. Washington, D.C.: June 16, 2010.\nCritical Infrastructure Protection: Update to National Infrastructure Protection Plan Includes Increased Emphasis on Risk Management and Resilience. GAO-10-296. Washington, D.C.: March 5, 2010.\nCybersecurity: Progress Made but Challenges Remain in Defining and Coordinating the Comprehensive National Initiative. GAO-10-338. Washington, D.C.: March 5, 2010.\nCybersecurity: Continued Efforts Are Needed to Protect Information Systems from Evolving Threats. GAO-10-230T. Washington, D.C.: November 17, 2009.\nDefense Critical Infrastructure: Actions Needed to Improve the Identification and Management of Electrical Power Risks and Vulnerabilities to DOD Critical Assets. GAO-10-147. Washington, D.C.: October 23, 2009.\nCritical Infrastructure Protection: Current Cyber Sector-Specific Planning Approach Needs Reassessment. GAO-09-969. Washington, D.C.: September 24, 2009.\nNational Cybersecurity Strategy: Key Improvements Are Needed to Strengthen the Nation’s Posture. GAO-09-432T. Washington, D.C.: March 10, 2009.\nElectricity Restructuring: FERC Could Take Additional Steps to Analyze Regional Transmission Organizations’ Benefits and Performance. GAO-08-987. Washington, D.C.: September 22, 2008.\nInformation Security: TVA Needs to Address Weaknesses in Control Systems and Networks. GAO-08-526. Washington, D.C.: May 21, 2008.\nCritical Infrastructure Protection: Multiple Efforts to Secure Control Systems Are Under Way, but Challenges Remain. GAO-07-1036. Washington, D.C.: September 10, 2007.\nCybercrime: Public and Private Entities Face Challenges in Addressing Cyber Threats. GAO-07-705. Washington, D.C.: June 22, 2007.\nMeeting Energy Demand in the 21st Century: Many Challenges and Key Questions. GAO-05-414T. Washington, D.C.: March 16, 2005.\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, 1, 2, 1, 1 ], "alignment": [ "h2_title h1_title", "h2_full", "h1_full", "h0_full h2_full", "", "h3_title h1_full", "h3_full h1_full", "h3_full", "h3_full h2_full" ] }

{ "question": [ "How have the threats to US cybersystems changed?", "What kind of threats are a concern?", "Who perpetrates these threats?", "What is the potential impact of these threats?", "Who has taken steps to address such concerns?", "What steps have been taken to address such concerns?", "How does the electric power industry rely on information technology?", "What is the use of such technology?", "What are the potential drawbacks of such technology?", "What does GAO's statement on the protection of the electricity grid discuss?", "Where did GAO source their information for this statement?" ], "summary": [ "The threats to systems supporting critical infrastructures are evolving and growing. In testimony, the Director of National Intelligence noted a dramatic increase in cyber activity targeting U.S. computers and systems, including a more than tripling of the volume of malicious software.", "Varying types of threats from numerous sources can adversely affect computers, software, networks, organizations, entire industries, and the Internet itself. These include both unintentional and intentional threats, and may come in the form of targeted or untargeted attacks from criminal groups, hackers, disgruntled employees, nations, or terrorists.", "These include both unintentional and intentional threats, and may come in the form of targeted or untargeted attacks from criminal groups, hackers, disgruntled employees, nations, or terrorists.", "The interconnectivity between information systems, the Internet, and other infrastructures can amplify the impact of these threats, potentially affecting the operations of critical infrastructures, the security of sensitive information, and the flow of commerce. Moreover, the electricity grid’s reliance on IT systems and networks exposes it to potential and known cybersecurity vulnerabilities, which could be exploited by attackers. The potential impact of such attacks has been illustrated by a number of recently reported incidents and can include fraudulent activities, damage to electricity control systems, power outages, and failures in safety equipment.", "To address such concerns, multiple entities have taken steps to help secure the electricity grid, including the North American Electric Reliability Corporation, the National Institute of Standards and Technology (NIST), the Federal Energy Regulatory Commission, and the Departments of Homeland Security and Energy.", "These include, in particular, establishing mandatory and voluntary cybersecurity standards and guidance for use by entities in the electricity industry. For example, the North American Electric Reliability Corporation and the Federal Energy Regulatory Commission, which have responsibility for regulation and oversight of part of the industry, have developed and approved mandatory cybersecurity standards and additional guidance. In addition, NIST has identified cybersecurity standards that support smart grid interoperability and has issued a cybersecurity guideline. The Departments of Homeland Security and Energy have also played roles in disseminating guidance on security practices and providing other assistance.", "The electric power industry is increasingly incorporating information technology (IT) systems and networks into its existing infrastructure (e.g., electricity networks, including power lines and customer meters).", "This use of IT can provide many benefits, such as greater efficiency and lower costs to consumers.", "However, this increased reliance on IT systems and networks also exposes the grid to cybersecurity vulnerabilities, which can be exploited by attackers. Moreover, GAO has identified protecting systems supporting our nation’s critical infrastructure (which includes the electricity grid) as a governmentwide high-risk area.", "Accordingly, this statement discusses (1) cyber threats facing cyber-reliant critical infrastructures, which include the electricity grid, and (2) actions taken and challenges remaining to secure the grid against cyber attacks.", "In preparing this statement, GAO relied on previously published work in this area and reviewed reports from other federal agencies, media reports, and other publicly available sources." ], "parent_pair_index": [ -1, 0, 0, 0, -1, -1, -1, 0, 0, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 0, 0, 0, 1, 1 ] }

{ "title": [ "", "Introduction", "Primer on Flood Policy and Federal Flood-Related Activities", "Evolution of Efforts to Address Flood Risk", "Federal Flood-Related Activities", "Flood Control", "Insurance, Land Use, and Standards", "Mitigation and Nonstructural and Green Infrastructure Approaches", "Understanding Risk Through Monitoring, Modeling, and Mapping", "Federal Assistance Programs", "Federal Emergency Management Agency18", "U.S. Army Corps of Engineers22", "Supplemental Appropriations", "U.S. Department of Agriculture28", "Supplemental Appropriations and Program Amendments", "National Oceanic and Atmospheric Administration31", "Environmental Protection Agency39", "Department of Housing and Urban Development46", "Supplemental Appropriations", "Funding Specifically for Mitigation and Resilience Activities", "Flood Insurance and Related Programs49", "Flood Maps and State and Local Land-Use Control", "NFIP Flood Mitigation", "Flood Mitigation Assistance Grant Program", "Community Rating System", "Increased Cost of Compliance Coverage", "Resilience-Related Policy Challenges Facing the NFIP", "Repetitive Flood Losses", "Future Flood Losses", "Policy Considerations", "CRS Reports" ], "paragraphs": [ "", "Recent flood disasters have raised congressional and public interest in not only reducing flood risks, but also improving flood resilience, which is the ability to adapt to, withstand, and rapidly recover from floods. Congress has established various federal programs that may be available to assist U.S. state, local, and territorial entities and tribes in reducing flood risks. Among the most significant current federal programs assisting communities with improvements to reduce their flood risks and improve their flood resilience are (1) programs that assist with infrastructure to reduce flood risks and other flood mitigation activities, and (2) programs of the National Flood Insurance Program (NFIP) that provide incentives to reduce flood risks. This report provides information about these federal programs; it is organized into the following sections:\nprimer on flood policy and federal flood-related activities; descriptions of selected federal assistance programs; introduction to flood insurance and related programs; and policy considerations.\nIn the United States, flood-related responsibilities are shared. States and local governments have significant discretion in land use and development decisions (e.g., building codes, subdivision ordinances), which can be factors in determining the vulnerability to and consequence of hurricanes, storms, extreme rainfall, and other flood events. Flood events, particularly Hurricane Katrina in 2005 and subsequent events, have generated concern about the nation's and the federal government's financial exposure to flood losses, as well as the economic, social, and public health impacts on individuals and communities.\nCongress and other policymakers may be faced with various policy questions related to flood policy, federal programs, and federalism, including the following:\nAre federal programs providing cost-effective assistance to state and local entities to reduce flood risks not only in areas that recently experienced floods, but also other areas at risk of flooding? Could changes to how federal assistance programs or the NFIP are implemented and funded result in long-term net benefits in terms of avoided federal disaster assistance, lives lost, and economic disruption associated with floods? Do federal programs provide incentives or disincentives for state and local entities to prepare for floods and manage their flood risks?\nAlthough this report covers a broad range of federal programs that may be able to assist with reducing community flood risk and improving flood resilience, it is not comprehensive. Multiple aspects of flood policy and specialized federal programs are not addressed herein. This report is largely an overview of existing federal programs with a brief description of some policy considerations as context for these programs and the nation's flood challenge.", "", "Over the decades, U.S. flood policy has evolved from trying to control floodwaters to more comprehensive management of flood risks. Early efforts focused on flood control and flood damage reduction using engineered structures such as dams and levees. In the late 20 th century, the approach shifted to flood risk reduction and mitigation , which expanded the measures employed to include buyouts, easements, elevation of structures, evacuation, and other life-saving and damage-reducing actions. More recently, the concept of flood resilience has become more prominent. This evolution in part derives from efforts to address the different components that contribute to flood risk. Risks associated with floods and other natural disasters often are expressed as a probabilistic function of\na hazard, which is the local threat of an event (e.g., probability of a particular community experiencing a storm surge of a specific height); vulnerability, which is the pathway that allows a hazard to cause consequences (e.g., level of protection and performance of shore-protection measures); and consequences of an event (e.g., loss of life, property damage, economic loss, environmental damage, and social disruption).\nFor managing flood risks, some stakeholders promote policies to reduce the hazard (e.g., climate change mitigation to reduce sea level rise ). Some stakeholders are interested in reducing vulnerability. These stakeholders may support construction of levees, dams, and shore-protection measures; they also may support protection of natural features that provide flood management benefits, like coastal wetlands and natural dunes and undeveloped floodplains. Some stakeholders support policies to reduce consequences through measures such as development restrictions, building codes, floodproofing of structures, buyouts of vulnerable properties, and improved evacuation routes. Efforts to improve flood resilience often combine trying to reduce consequences, vulnerabilities, and in some cases hazards.", "", "Although U.S. local, state, and territorial entities and tribes maintain significant flood management responsibilities, the federal role has expanded over the decades in response to catastrophic and regional flood events. Some of the earliest federal involvement was construction of specific flood control works after significant flood disasters. Examples include construction by the U.S. Army Corps of Engineers (USACE) of levees and floodways as part of the Mississippi River and Tributaries (MR&T) project, which Congress authorized in 1928, and drainage structures of the Central and Southern Florida project in and around the Florida Everglades, which Congress authorized in 1948. Since the early 1900s, the federal government has constructed many dams, levees, and other water resource projects to reduce riverine flood damages. Starting in the mid-1950s, the federal government also has participated in many cost-shared coastal flood risk reduction projects consisting of engineered coastal dunes and beaches, floodwalls, storm surge barriers, and levees. Nonfederal entities (e.g., municipalities, irrigation districts, county flood control entities) also make their own investments in flood control infrastructure. Although local governments often preferred structural measures to control flooding (and for their other benefits like recreation at engineered beaches), some stakeholders and groups opposed these measures because of concerns about their environmental impacts. Other interests raised concerns that flood control structures may encourage development in flood-prone areas, and that the residual risks behind levees and shore protections and downriver from dams were underappreciated.\nUSACE is the principal federal agency engaged in construction of flood control measures (e.g., levees and engineered coastal dunes). When appropriations are available, the Natural Resources Conservation Service (NRCS) of the U.S. Department of Agriculture (USDA) has acquired floodplain easements and supported construction of small levees and dams in rural areas. Some flood control infrastructure owned by local and state entities also has received support from hazard mitigation assistance programs administered by the Federal Emergency Management Agency (FEMA) and the Community Development Block Grant (CDBG) programs of the Department of Housing and Urban Development (HUD).", "In 1968, Congress shifted the federal role in managing flood risks by entering the flood insurance market after private firms had largely abandoned offering flood insurance. Congress established the NFIP in the National Flood Insurance Act of 1968 (NFIA; 42 U.S.C. §4001 et seq.). The new program aimed to alter development in flood-prone areas identified as the 100-year floodplain; this floodplain also is referred to as the 1% annual-chance floodplain, or the floodplain for the Base Flood Elevation (BFE) for purposes of the NFIP. The NFIP's multipronged regulatory system consists of community flood risk assessment and mapping, purchase requirements for flood insurance for certain residential and commercial structures, and the adoption of minimum local requirements for land use and building codes for vulnerable areas. The NFIP allows for residential and commercial construction in known floodplains, with the proviso that construction must follow building-code regulations that reduce future flood damage and prevent new development from increasing flood risk.\nAlthough the federal government through the NFIP requires that participating communities adopt minimum land-use and building-code regulations, local and state governments maintain the dominant role in adopting building codes (and local governments in their enforcement), including those related to flood risk. A broader federal role in land use and building codes was discussed in the late 1960s. It largely was not adopted with a few exceptions for coastal land use (as discussed in the text box titled \"Land Use and Federal Statutes Related to Coastal Management\").\nIn 1977, President Carter signed Executive Order (E.O.) 11988 (Floodplain Management), which requires that federal actions are to avoid supporting development in the 100-year floodplain if alternatives are available. Also, federal agencies responsible for real property are to design and construct structures and facilities consistent with NFIP regulations. In 2015, President Obama signed E.O. 13690; among other things, the order established a Federal Flood Risk Management Standard (FFRMS) for federally funded projects, which required a higher level of flood resilience than E.O. 11988. On August 15, 2017, President Trump signed E.O. 13807 in an effort to streamline federal infrastructure approval. Among other actions, E.O. 13807 revoked E.O. 13690. By revoking E.O. 13690, E.O. 13807 appears to have eliminated the FFRMS and returned federal floodplain policy to the original text of E.O. 11988.", "After extensive flooding in the Midwest in 1993, federal programs were created or adjusted to support a wider array of activities to reduce damage and prevent loss of life, such as moving flood-prone structures and developing evacuation plans. Nonstructural mitigation is now regularly used as part of flood management for new development and during repairs of damaged property and communities. Some local, state, and federal agencies and programs allow or support approaches that mimic nature or are \"nature-based\" (e.g., placement of oyster beds along coastlines to reduce erosion), especially if there are multiple benefits (e.g., erosion reduction, fish habitat, and water quality benefits from oyster beds).\nNatural flood resilience can be reduced by development that degrades wetlands and ecosystems (e.g., mangroves, coral, and oyster reefs) and increases impervious surface in the watershed (e.g., reducing rainfall infiltration into absorbent prairie ecosystems). Department of the Interior agencies (e.g., U.S. Fish and Wildlife Service, National Park Service), NOAA, USACE, and the U.S. Environmental Protection Agency (EPA) are involved in ecosystem restoration and protection activities, as well as permitting and planning activities, which may restore or protect these natural features and their flood risk reduction benefits.\nRunoff from rainfall in urban areas is often referred to as stormwater. For decades local governments and public works officials constructed stormwater infrastructure to move rainwater rapidly away from developed areas. This was done largely through grey infrastructure using pipes, gutters, ditches, and storm sewers. Although these systems were able to collect and move water away, the stormwater discharged from these systems to surface waters often contained pollutants. In recent years, local governments and public works officials have both increasingly expressed interest in and adopted green infrastructure for stormwater as a way to manage rainfall to reduce flood losses and to prevent pollution. For stormwater, green infrastructure often consists of using or mimicking natural processes to infiltrate, encourage evapotranspiration, or reuse stormwater runoff on-site where it is generated; this helps to reduce or delay runoff that contributes to high water levels in streams and rivers, as well as manage the pollutants entering surface water. Other communities and water users are looking to use green infrastructure to recharge groundwater with urban stormwater and other types of floodwater.\nUntil recently, the major federal role in stormwater had been EPA regulations to reduce pollution from stormwater runoff pursuant to objectives and requirements in the Clean Water Act. That is, the federal government, if it participated financially in stormwater management, focused on the pollution prevention aspects. As a result of legislative and administrative changes by EPA and states administering the Clean Water State Revolving Fund (CWSRF), activities that \"manage, reduce, treat, or recapture stormwater\" are now eligible for financial support. Such activities may have flood mitigation as well as pollution prevention benefits.\nFigure 2 illustrates the suite of flood resilience and risk reduction improvements, including both structural and nonstructural measures, for coastal communities and states. A similar suite of options is available for communities along rivers. A flood risk management response may incorporate multiple types of improvements. For example, Figure 3 illustrates how levees can be set back from a river to allow for a larger floodplain and how other structural and nonstructural components can be combined to create a more comprehensive flood risk management system (e.g., a hybrid of grey and green infrastructure).", "The federal government is involved in monitoring and modeling flood risk along with nonfederal and private entities. Federal entities engaged in understanding flood hazards, including flood inundation mapping, include FEMA, DOI's U.S. Geological Survey (USGS), NOAA, and USACE. For example, federal agencies survey coastlines and conduct research to understand coastal processes, hazards, and resources and report on weather-related hazards, including hurricane storm surge warnings. Also, the National Science Foundation supports research on related topics. Advancements in technologies have assisted in better understanding weather and climate, hydrology and hydraulics, and also mapping. Although many types of data are needed to estimate flood risk and produce flood maps, elevation data are fundamental to constructing accurate estimates and maps. Federal agencies along with state, local, and private entities have been using advanced sensing technologies to collect better elevation data for a wide variety of applications, including for maps that can then be used to model and manage flood risk.", "Congress has created various federal programs that may be able to assist state, local, territorial, and tribal entities with flood risk reduction and flood resilience improvements for communities. Table 1 summarizes some of these federal programs. Each program shown in Table 1 was created for a specific purpose and has statutory limitations. For example, some programs are triggered only after certain declarations or actions; others are part of regular agency operations. Discussions later in this report provide more information on each of the programs listed in Table 1 . Although the subsequent discussions examine geographic eligibility generally, some programs may not be eligible in certain areas designated under the Coastal Barrier Resources Act.\nTable 1 provides information on regular funding for FY2018 (i.e., annual discretionary appropriations for some programs) and supplemental appropriations provided in FY2017 and FY2018. Additional information is provided in the more detailed discussions about each program, including for most programs in the Trump Administration's budget request for FY2019.\nThe first set of assistance programs shown in Table 1 are those that provide assistance targeted specifically at flood-related improvements. The second set addresses not only flood but also other hazard mitigation and resilience activities. The third set includes broader programs that include flood-risk reduction, resilience, or stormwater activities among multiple eligible activities.\nIn some instances, a state may carry out some activities supported by the programs shown in Table 1 in a coordinated manner. Each state has a State Hazard Mitigation Officer who helps to compile a state mitigation plan, administers certain mitigation funding, and generally has knowledge of the state's existing mitigation resources and its history of programs and funding awards in this area. Also, a few federal programs allow for funds provided through them to be used to satisfy the nonfederal cost-sharing requirement for another federal program (e.g., see entry for CDBG in Table 12 ).\nThe below sections and accompanying tables discuss the programs shown in Table 1 discussions of the programs are grouped by the federal agency or department administering them. The order followed is FEMA, USACE, USDA, NOAA, EPA, and HUD.\nTable 1. Selected Federal Programs That Support Flood Resilience and Risk Reduction Improvements", "FEMA administers three mitigation grant programs that relate to flood resilience and risk reduction:\nPre-Disaster Mitigation (PDM) grant program; Hazard Mitigation Grant Program (HMGP); and Flood Mitigation Assistance (FMA) program.\nHMGP assistance is triggered by a major disaster declaration by the President under the authorities of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act), whereas the PDM program makes awards on an annual basis to states and, in recent years, through a competitive process. The FMA awards also are made on an annual basis and are traditionally funded through the insurance premiums of NFIP policyholders. Collectively, FEMA refers to these programs as its Hazard Mitigation Assistance Grant Programs. Table 2 , Table 3 , and Table 4 include information on PDM, HMGP, and FMA, respectively. FMA is also discussed later in this report in \" NFIP Flood Mitigation .\"\nNone of these programs directly received recent supplemental appropriations in FY2017 or in FY2018 (as of mid-July 2018). However, the HMGP is one of the programs funded through the Disaster Relief Fund (DRF), which did receive multiple supplemental appropriations.", "USACE is the primary federal agency involved in construction projects to provide flood damage reduction; it conducts this work through both project-specific and programmatic authorities. Typically, most of this work requires that the construction costs be shared with a nonfederal sponsor, such as a municipality or levee district. Generally, federal involvement is limited to projects that are determined to have national benefits exceeding their costs, or that address a public safety concern. The rate of annual federal discretionary appropriations for USACE projects has not kept pace with the rate of authorization for these projects; therefore, there is competition for annual USACE construction funds. Table 5 and Table 6 include information on USACE flood risk reduction projects and programs. Table 5 provides information on projects that require Congress to specifically authorize their study and construction in legislation. For projects of a limited size and scope, Congress has provided USACE with programmatic authorities to participate in planning and construction of some projects without project-specific congressional authorization; these authorities are known as continuing authorities programs (CAPs). Table 6 provides information on four flood-related CAPs. CAPs are known by the section of the law in which they were authorized. The four flood-related CAPs discussed are the following:\nSection 205 CAP to reduce flood damages, the Section 103 CAP to reduce beach erosion and hurricane storm damage, the Section 14 CAP to protect public works and nonprofit services affected by streambank and shoreline erosion, and the Section 111 CAP to mitigate shore damage from federal navigation projects.\nFigure 4 illustrates how a USACE project may place sand to reduce flood risk by widening the beach and raising the height of the dune; Figure 5 illustrates the shoreline before and after the USACE project.\nUSACE also is authorized to fund the repair of certain nonfederal flood control works (e.g., levees, dams) and federally constructed hurricane or shore protection projects that are damaged by other than ordinary water, wind, or wave action (e.g., storm surge, rather than high tide). To be eligible for this assistance, damaged flood control works must be eligible for and active in the agency's Rehabilitation and Inspection Program (RIP) and have been in an acceptable condition at the time of damage, according to regular inspections by USACE. RIP has 1,100 active nonfederal flood risk management systems participating. The program does not fund repairs associated with regular operations and maintenance. For more information on RIP repair assistance, see the relevant sections of CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes , by [author name scrubbed].", "In P.L. 115-123 , Congress provided $135 million to USACE's Investigations account for studies and $15.055 billion to the agency's Construction account for construction projects; this funding represented 87% of the $17.398 billion in supplemental appropriations provided by the bill to USACE. Of the monies in the Construction account, Congress provided that $15.000 billion was to be used for the following:\n$10.425 billion was designated for expedited construction of flood and storm damage reduction projects in states and territories affected by Hurricanes Harvey, Irma, and Maria. $4.575 billion was to be used for USACE flood and storm damage reduction construction activities in any state or territory with more than one flood-related major disaster declaration in calendar year (CY) 2014, CY2015, CY2016, or CY2017, and $50 million of this amount was set aside for CAP projects that reduce the risk of flooding and storm damage.\nAs of July 5, 2018, USACE had assigned to specific USACE projects most of the funds provided for construction and studies; of the $15.000 billion, $1.131 billion in construction funds and $23 million for studies remained unassigned.\nUSACE projects in five states (FL, GA, LA, SC, and TX) and two territories (USVI and PR) are eligible for both the $10.425 billion and the $4.575 billion, as shown in Figure 6 . A total of 33 states and 3 territories meet the criterion of one flood-related major disaster declaration in CY2014, CY2015, CY2016, or CY2017, as shown in Figure 6 ; that is, $4.575 billion in P.L. 115-123 funds are available for use on USACE construction projects in these 33 states and 3 territories.\nOf the $135 million for the Investigation account, P.L. 115-123 required that $75 million was to be available for states and territories affected by Hurricanes Harvey, Irma, and Maria; the statute also stated that the remainder (i.e., $60 million) was to be available for \"high-priority studies of projects\" in any state or territory with more than one flood-related major disaster declaration in CY2014, CY2015, CY2016, or CY2017.", "As at the USACE, USDA's role in flood control and risk reduction was established by Congress decades ago. The general difference between the two agencies is the size, scope, location, and authorization of projects. USDA's Natural Resources Conservation Service (NRCS) administers two programs that provide flood damage reduction—the Watershed and Flood Prevention Operations (WFPO) program and the floodplain easement program of the Emergency Watershed Protection (EWP) program. These programs provide assistance to states, tribes, and local organizations; projects generally originate at the local level and do not require congressional approval. Annual appropriations vary greatly from year to year, resulting in a number of authorized but unfunded projects. Table 7 and Table 8 include information on USDA flood risk reduction and mitigation programs. Figure 7 provides an example of a EWP floodplain easement and Figure 8 provides an example of a WFPO project.", "P.L. 115-123 authorized supplemental appropriations for crop and livestock losses from the 2017 hurricane season and wildfires. The act also provided additional funding for the EWP program for necessary expenses related to the consequences of Hurricanes Harvey, Irma, and Maria, for wildfires occurring in CY2017, and for other natural disasters. The EWP funding is to remain available until expended and, as with most EWP funding, no disaster declaration is required.\nThe FY2018 Consolidated Appropriations Act ( P.L. 115-141 , Division A, §761) included statutory amendments to the WFPO program that increased the project cost threshold required for congressional approval. Under the amended language, the Senate and House Agriculture Committees must approve projects that need an estimated federal contribution of more than $25 million for construction, an increase from the previous $5 million threshold. This program historically has been called the small watershed program because no project may exceed 250,000 acres and no structure may exceed more than 12,500 acre-feet of floodwater detention capacity or 25,000 acre-feet of total capacity. Although these limitations were not changed, the FY2018 appropriation temporarily waives the 250,000 acre limitation for all authorized activities in FY2018 where the primary purpose is not flood prevention.", "NOAA conducts a broad variety of activities that support coastal resilience, including scientific research, data collection and monitoring, planning, habitat conservation and restoration, outreach and education, coastal and ocean management, and other activities pursuant to the Coastal Zone Management Act of 1972, as amended (CZMA; P.L. 92-583 , 16 U.S.C. §§1451-1466). Most of NOAA's efforts focus on management, planning, and technical assistance; some of these programs lead to improved coastal flood resilience. NOAA activities include its coastal and waterfront Smart Growth program, Habitat Blueprint living shorelines program, and state Sea Grant programs, among others. For more on NOAA's CZMA activities, see the earlier text box titled \"Land-Use Planning and Federal Statutes Related to Coastal Management.\"\nNOAA also supports flood resilience activities by providing funding to the National Fish and Wildlife Foundation's (NFWF's) coastal resilience assessment projects. NFWF, with support from NOAA and USACE, has conducted U.S. coastline resilience analyses including community exposure index mapping and mapping of resilience hubs (which are areas where natural resource restoration would have the greatest impact for human community resilience while benefitting critical fish and wildlife habitat). In FY2017, Congress appropriated funding to the NOAA Regional Coastal Resilience Grant program, within NOAA's Coastal Management Grants budget line, which supported activities for strengthening coastal communities and habitat restoration. In FY2018, Congress shifted funding for this program to the National Oceans and Coastal Security Fund, also known as the Title IX Fund. According to P.L. 114-113 , the Title IX Fund was established to \"better understand and utilize ocean and coastal resources and coastal infrastructure, including baseline scientific research, ocean observing, and other programs and activities carried out in coordination with Federal and State departments or agencies.\" Although NOAA retains oversight of the Title IX Fund, the administrative responsibility has transferred to NFWF.\nUnder the Title IX Fund statutory language, NOAA and NFWF have established the National Coastal Resilience Fund to advance restoration and strengthening of natural coastal systems to (1) protect coastal communities, (2) enable rapid community recovery, and (3) enhance important fish and wildlife habitats. The National Coastal Resilience Fund will award funding to two types of projects: Project Planning and Design, and Project Implementation.\nAn example of a project conducted through the NOAA Regional Coastal Resilience Grant program is shown in Figure 9 . NOAA and NFWF's National Coastal Resilience Fund may support similar projects. In this case, NOAA provided financial assistance for a collaborative effort to monitor, evaluate, and provide recommendations for the design and placement of nature-based shoreline protection. The project was monitored to document if concrete \"reef balls\" could protect restored marshes and reduce erosion from wave energy at the nearby shoreline.\nNOAA did not receive supplemental appropriations in FY2017. NOAA did receive supplemental appropriations in FY2018 through P.L. 115-123 ; however, the additional amount was not allocated to implement coastal flood risk reduction measures.", "EPA's principal role in stormwater management is regulatory, consisting primarily of a discharge permit program. Although the EPA's financial role in flood risk reduction historically has been very limited, it has expanded in recent years, with attention to how green infrastructure approaches to stormwater management can improve water quality. EPA may provide support for stormwater projects that contribute to pollution prevention through reduction of contaminants and erosion, including by managing runoff.\nTo date, the primary avenue for this EPA assistance has been through the clean water State Revolving Fund (SRF) program ( Table 10 ). Each state implements its own SRF program, which is allowed to support a range of projects and activities; this results in variations in program implementation from state to state. Historically, the vast majority of the projects supported by the SRF have been wastewater infrastructure activities, some of which may have involved stormwater infrastructure. Pursuant to changes made in 2014 ( P.L. 113-121 ), stormwater management became one of multiple eligible categories of activities for SRF loans and other assistance. However, the selection of SRF projects for assistance remains prioritized on meeting the pollution-prevention objectives of the Clean Water Act.\nEPA's Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) program also may provide a source of financial assistance for water infrastructure, which may include stormwater-related activities. As described in Table 11 , P.L. 113-121 (Title V, Subtitle C) established the WIFIA program; it authorized EPA to provide credit assistance (e.g., secured/direct loans or loan guarantees) for a range of wastewater and drinking water projects. In general, project costs must be $20 million or larger to be eligible for WIFIA credit assistance, and WIFIA loan assistance is generally limited to 49% of eligible costs. EPA issued its first WIFIA loan in 2018. For purposes of WIFIA, green infrastructure includes the following:\na wide array of practices at multiple scales that manage wet weather and that maintains and restores natural hydrology by infiltrating, evapotranspiring and harvesting and using stormwater. On a regional scale, green infrastructure is the preservation and restoration of natural landscape features, such as forests, floodplains and wetlands, coupled with policies such as infill and redevelopment that reduce overall imperviousness in a watershed. On the local scale, green infrastructure consists of site- and neighborhood-specific practices, such as bioretention, trees, green roofs, permeable pavements and cisterns.", "Other federal departments and agencies may provide support for flood resilience and risk reduction through broad programs. Primary examples of this are certain HUD-administered programs. Under HUD's Community Development Block Grants (CDBG) program, public works is 1 of 27 eligible categories of activities; flood resilience improvements may qualify as public works under CDBG, as shown in Table 12 . Other eligible activities that may qualify for CDBG assistance that benefit state and local flood resilience are buyouts of damaged properties in a floodplain and relocating residents to safer areas. Due to the block grant nature of the program, local and state officials exercise a great deal of discretion in determining which combination of eligible activities to employ. Table 13 provides information on the loan guarantee program of the CDBG.\nUnlike CDBG, the CDBG-Disaster Recovery (CDBG-DR) program is not an annually funded HUD program. Instead, it has been funded at times through supplemental appropriations legislation and is tied to a specific disaster (and affected areas) or set of disasters. The CDBG-DR program is designed to help communities and neighborhoods that otherwise might not recover after a disaster due to limited resources. Eligible grantees typically include states, units of local government, and Indian tribes.\nCongress has appropriated more than $84.7 billion since 1999 for CDBG-DR in supplemental funds for CDBG-DR to support disaster relief, mitigation, and recovery activities. As a result, the program has become one of the federal government's principal instruments in support of long-term economic recovery following both man-made and natural disasters, such as floods. Often, CDBG-DR grantees must use at least 70% of the funds for activities that principally benefit low- and moderate-income (LMI) persons or areas. Table 14 provides information on the CDBG-DR program for major disasters occurring in CY2017 and selected previous years; the table reflects the program and its appropriations as of July 2018.", "In response to major disasters that occurred during CY2014 to CY2017, Congress approved three acts appropriating a total of $35.8 billion in supplemental CDBG-DR funds. With these funds, states, communities, and Indian tribes could address unmet needs and undertake mitigation efforts in the most impacted and distressed areas affected by a major disaster. HUD defines unmet needs as the financial resources necessary to recover from a disaster that are not likely to be addressed by other public or private sources of funds, including but not limited to private insurance, FEMA's Stafford Act assistance programs, the Federal Highway Administration's Emergency Relief Program, and Small Business Administration Disaster Loans. The $35.8 billion aggregate amount awarded to states, local governments, and Indian tribes includes\n$400 million appropriated with the passage of the Consolidated Appropriations Act, FY2017, P.L. 115-31 , to address unmet needs resulting from major disasters that occurred in CY2015, CY2016, and CY2017; $7.4 billion appropriated with the passage of the Supplemental Appropriations for Disaster Relief Requirements Act, 2017, P.L. 115-56 , to address unmet needs resulting from major disasters that occurred in CY2017; and $28 billion appropriated with the passage of the Bipartisan Budget Act of 2018, P.L. 115-123 , for major disasters that occurred in CY2014, CY2015, CY2016, and CY2017, with not more than $16 billion allocated to states that experienced a major disaster in 2017, to address unmet needs for assistance and of this amount not more than $11 billion to be awarded to states and communities impacted by Hurricane Maria.", "The Bipartisan Budget Act of 2018, P.L. 115-123 , signed into law on February 8, 2018, also required HUD to allocate not less than $12 billion of the $28 billion appropriated to support mitigation and resilience activities among CDBG-DR grantees that experienced presidentially declared disasters from 2014 through 2017. The remaining funds may be used to address unmet needs of disasters that occurred in 2017. P.L. 115-123 further required that HUD allocate at least 33% of the two pools of funds within 60 days of February 9, 2018, the date of its enactment, based on the best available data. On April 10, 2018, in compliance with this provision of the act, HUD announced the allocation of the following:\n$12 billion to address unmet needs of states and communities impacted by 2017 presidentially declared disasters, including Puerto Rico and the U.S. Virgin Islands, which was $3.9 billion less than the maximum established by the act; and $15.9 billion for mitigation and resilience activities. The lower allocation to unmet needs allowed HUD to allocate an additional $3.9 billion for mitigation.\nThe act also required HUD to allocate the remaining 67% of the funds appropriated by December 1, 2018.", "The NFIP is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has two main policy goals: (1) to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk of property owners to the federal government; and (2) to mitigate and reduce the nation's comprehensive flood risk through the development and implementation of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. As of March 2018, the NFIP had 5.025 million flood insurance policies providing nearly $1.28 trillion in coverage, with over 22,000 communities in 50 states and 6 other jurisdictions participating. As a public insurance program, the goals of the NFIP are very different from the goals of private-sector companies, as it encompasses social goals to provide flood insurance in flood-prone areas to property owners who otherwise would not be able to obtain it and reduce government's cost after floods. The NFIP also engages in many \"noninsurance\" activities in the public interest: it identifies and maps flood hazards, disseminates flood risk information through flood maps, requires community land-use and building-code standards, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and offers grants and incentive programs for household- and community-level investments in flood risk reduction.", "The NFIP accomplishes the goal of reducing comprehensive flood risk primarily by requiring participating communities to collaborate with FEMA to develop and adopt flood maps called Flood Insurance Rate Maps (FIRMs) and enact minimum floodplain standards based on those flood maps. The NFIP encourages communities to adopt and enforce floodplain management regulations such as zoning codes, subdivision ordinances, building codes, and rebuilding restrictions. Internal FEMA studies have found that structures built to FEMA standards experience 73% less damage than structures not built to those standards. According to FEMA, the program saves the nation an estimated $1.87 billion annually in flood losses avoided because of the NFIP's building and floodplain management regulations, and FEMA expects this amount to increase over time as additional new construction is built to increasingly stronger standards.\nCommunities that choose to participate in the NFIP are required to adopt land use and control measures with effective enforcement provisions and to regulate development in the floodplain. As authorized in law, FEMA has developed a set of minimum floodplain management standards that are intended to\n(1) constrict the development of land which is exposed to flood damage where appropriate, (2) guide the development of proposed construction away from locations which are threatened by flood hazards, (3) assist in reducing damage caused by floods, and (4) otherwise improve the long-range land management and use of flood-prone areas.\nFEMA has set forth the minimum standards it requires for participation in the NFIP in federal regulations. Though the standards appear in federal regulations, the standards have the force of law only because they are adopted and enforced by a state or local government.\nFEMA's Risk Mapping, Assessment, and Planning (Risk MAP) program is a key part of flood risk reduction by providing information to identify flood hazards, assess flood risks, and partner with states and communities to provide flood hazard and risk data to guide mitigation actions. In order to do this, FEMA conducts Flood Insurance Studies (FISs) to produce FIRMs that depict a community's flood risk and floodplain. Flood Insurance Studies analyze the terrain and factors that affect flood hazards using specified models and the physical, hydrologic, and climate conditions in effect at the time the studies are conducted. FIRMs use the information from the FISs to delineate floodplain boundaries. FIRMs and FISs are a \"snapshot\" of flood risk at their time of creation, and therefore can become outdated as demographic, topographic, hydrologic, or climatic conditions change, or as engineering methods and models improve. Generally, flood maps may require updating when there have been significant new building developments in or near the flood zone, changes to flood protection systems, or environmental changes in the community, or when better data become available. An area of specific focus of the FIRM is the Special Flood Hazard Area (SFHA). The SFHA is intended to distinguish the flood risk zones that have a chance of flooding during a once-in-100-year flood, or a flood of greater frequency. This means that properties have a risk of flooding of at least 1% every year if in the SFHA. However, over 20% of NFIP claims are for properties outside SFHAs. Over the past two decades, 80% of U.S. counties have experienced 10 or more floods, and 97% of U.S. counties have experienced at least 2 floods.", "The NFIP offers three programs that encourage communities to reduce flood risk: the Community Rating System, the Flood Mitigation Assistance (FMA) grant program, and Increased Cost of Compliance (ICC) coverage. These programs are funded entirely by premiums and fees paid by NFIP policyholders. For more on how premiums are set for policyholders, see CRS Report R44593, Introduction to the National Flood Insurance Program (NFIP) , by [author name scrubbed] and [author name scrubbed].", "FMA awards grants for a number of purposes, including state and local mitigation planning; the elevation, relocation, demolition, or floodproofing of structures; the acquisition of properties; and other activities. In FY2014, the FMA program was authorized to use $100 million of NFIP revenue. It was authorized to use $150 million in FY2015, $175 million in FY2016, $175.06 million in FY2017, and $175 million in FY2018. The funding is available until it is expended, so the amount awarded may exceed the amount authorized by Congress in an appropriations act for a specific fiscal year. A FEMA database of approved FMA grants indicates that nearly $906 million in projects has been approved between July 1997 and March 2018.", "Through a program called the Community Rating System, FEMA encourages communities to improve upon the minimum floodplain management standards required to participate in the NFIP. The Community Rating System, as authorized by law, is intended to incentivize the reduction of flood and erosion risk, as well as the adoption of more effective measures to protect natural and beneficial floodplain functions. FEMA awards points for measures that increase a community's \"class\" rating in the Community Rating System on a scale of 1 to 10, with 1 being the highest ranking. Starting at Class 9, policyholders in the SFHA within a Community Rating System community receive a 5% discount on their Standard Flood Insurance Policy (SFIP) premiums, with increasing discounts of 5% per class until reaching Class 1. At that level, policyholders in the SFHA can receive a 45% discount on their flood insurance premiums. As of June 2017, 1,444 communities participated in the Community Rating System, with nearly 3.6 million policyholders. This represents about 5% of eligible NFIP communities that could participate in the Community Rating System program. However, these communities have a large number of flood policies, so more than 69% of all flood policies are written in communities participating in the Community Rating System program. The Community Rating System discount is cross-subsidized into the NFIP program, such that the discount for one community ends up being offset by increased premium rates in all communities across the NFIP. The Community Rating System provides an average discount of 11.4% on standard flood insurance policy premiums across the NFIP. Therefore, this average 11.4% discount for Community Rating System communities is cross-subsidized and shared across NFIP communities through a cost (or load) increase of 13.4% to overall premiums in communities not participating in the Community Rating System.\nThe credits on premium rates for flood insurance coverage are based on the estimated reduction in flood and erosion damage risks resulting from the measures adopted by the community. Points are awarded for an array of improvements in how the community informs its public on flood risk, maps and regulates its floodplain, reduces possible flood damage, and provides immediate warnings and responds to flooding incidents. The highest points are awarded for activities that reduce future flood risk, such as development limitations, preserved open space, retrofitted buildings, and acquisition and relocation of buildings.", "The NFIP requires most policyholders to purchase ICC coverage, which is in effect a separate insurance policy to offset the additional expense of restoring a structure to meet more rigorous building code standards than were required when it was originally built. This ICC coverage is authorized in law, with rates for the coverage, as well as how much can be paid out for claims, set by FEMA. Congress has capped the amount that can be paid for ICC coverage at $75 annually. The ICC policy has a separate rate premium structure: currently ICC premiums vary between $4 and $70. ICC coverage provides an amount up to $30,000 in payments for certain eligible expenses. ICC coverage is in addition to the building coverage provided by the standard flood insurance policy. However, the payment on the building claim plus the ICC claim cannot exceed the statutory maximum payment of $250,000 for residential structures or $500,000 for nonresidential structures.\nFor example, when a building is determined by a community to be substantially damaged following a flood, floodplain management standards adopted by local communities can require the building to be rebuilt to meet current floodplain management requirements, even if the property previously did not need to do so. For instance, the new compliance standard may require the elevation of the rebuilt building to above the base flood elevation. An ICC claim may then be submitted by the policyholder to offset the cost of complying with the elevation standard. FEMA also makes ICC coverage available if a building has been declared a repetitive loss by a community's floodplain management regulations.\nICC claims payments may also be used toward the costs of elevating, demolishing, relocating, or floodproofing nonresidential buildings, or any combination of these actions. According to ICC data, elevation is the most common form of mitigation. Approximately 61% of all ICC claims closed with payment are single-family residential claims involving compensation for elevation of a structure to or above the BFE. Although the cost of elevating a structure depends on the type of building and elevation requirement, the average cost of elevating an existing property has been estimated at $33,239 to $91,732, and suggestions have been made for years that the amount of ICC coverage should be raised.\nIn addition, FEMA has not implemented ICC coverage for two conditions for which it is authorized to do so by law. These two conditions are for properties that have sustained flood damage on multiple occasions, if the administrator determines that it is cost-effective and in the best interests of the NFIP, and for properties for which an offer of mitigation assistance is made under various federal assistance programs.\nSince the ICC was introduced in 1997, the program has received over $1.4 billion in premiums and paid over $700 million in claims, with over $450 million in underwriting expenses and $50 million of claims-handling expenses. However, between $100 million and $200 million has yet to be paid on claims for prior years. For the years on which FEMA has data, 2007 to 2015, the NFIP has lost money on ICC on a cash flow basis. During that period, on aggregate premiums of $701 million, the NFIP had aggregate ICC underwriting losses of $171 million.", "By rewarding behavior that reduces risks through the pricing of flood insurance policies, insurance has the potential to incentivize or even force policyholders and/or communities to address underlying flood risk. Insurance provisions also could provide incentives to limit flood damage by rewarding well-designed buildings with lower premiums, lower deductibles, or higher coverage limits. However, at present, mitigation activities form only a small part of the NFIP portfolio.", "An area of debate involves NFIP coverage of properties that have suffered multiple flood losses, which are at greater risk than the average property insured by the NFIP. One concern is the cost to the program; another is whether the NFIP should continue to insure properties likely to have further losses. According to FEMA, repetitive loss (RL) and severe repetitive loss properties (SRL) account for approximately $17 billion in claims, or approximately 30% of total claims over the history of the program. As of January 31, 2018, there were 24,078 currently insured RL properties and 15,311 currently insured SRL properties. Repetitive loss and severe repetitive loss properties (which represent about 1-2% of the overall policies in the NFIP) have accounted for approximately $9 billion in claims, or approximately 16% of total claims over the history of the program. A study of all of the residential NFIP claims filed between January 1978 and December 2012 showed that the magnitude of claims for RL structures as a percentage of building value was higher than non-RL properties by 5% to 20%.", "An increased number of properties are expected to be at risk of future flooding. A 2013 report produced at FEMA's request, The Impact of Climate Change and Populat i on Growth on the National Flood I n surance Program Through 2100 , concluded that by 2100, the 1% annual chance fluvial floodplain area is projected to grow nationally by about 45%. In the populated areas of most interest to the NFIP, about 30% of these increases may be attributed to increased runoff caused by the increase in impermeable land surfaces caused by population growth/development, whereas the remaining 70% represents the influence of climate change. The implication of this is that, on a national basis, approximately 13.5% of the growth in the fluvial SHFA is likely to be due to population growth and would occur even without any climate change. For the coastal environment, the typical increase in the coastal SFHA is projected to be about 55% by 2100. Sea-level rise is not only a concern for the future; many areas are already experiencing \"nuisance flooding\" from minor tidal flooding or rainstorms. The frequency and duration of minor tidal flooding has increased dramatically in recent decades along many U.S. coastal areas. Although not catastrophic, such flooding can significantly disrupt normal commerce and activity, and the seemingly minor inconveniences and local economic losses from each event can have a cumulative effect that results in considerable hidden costs to residents and businesses. In addition, the NFIP will continue to face the risk of catastrophic losses: events like Hurricanes Harvey, Irma, Maria, Katrina, and Sandy are not outside the expected range of NFIP losses. Since August 2017, the NFIP has paid over $10.6 billion in claims for Hurricanes Harvey, Irma, and Maria.", "Recent major flood events have renewed concerns about the nation's and the federal government's financial exposure to flood losses, as well as the economic, social, and public health impacts of floods on individuals and communities. Part of the challenge for Congress and other policymakers in reducing flood risks and improving resilience is the distribution of responsibilities among local, state, territorial, tribal, and federal entities. There exists some tension between the broader federal interest in reducing the federal government's exposure to costs for disaster response and recovery, and nonfederal (including private) roles in shaping how structures and facilities are built in coastal areas, floodplains, and elsewhere. Local and state governments in the United States have the primary responsibility for managing flood risk and resilience, including through guiding land use in floodplains, establishing and enforcing building codes and ordinances, and construction of public works to protect communities. At the same time, as discussed in this report, the federal government has elected to become involved in some aspects of flood resilience and risk reduction (e.g., NFIP) and disaster response and recovery. Consequently, although the federal government does not participate in many nonfederal decisions affecting flood risk, the federal government is affected by actions by local governments, states, tribes, and territories that reduce or exacerbate flood risk.\nNo authoritative national estimate of the financial consequences of all types of flooding—riverine floods, coastal storms, tidal flooding, flash floods, intense precipitation, stormwater—is available. Also, the current overall level of federal and nonfederal investments to reduce flood risk is unknown. Consequently, it is not possible to determine how current government investment in flood resilience and risk reduction compares to the national damage and disruption caused by flooding or to government spending on response and recovery.\nPotential questions for the 115 th Congress and other policymakers include the following:\nDo federal programs provide incentives or disincentives for U.S. states, local governments, territories, and tribes to prepare for flood and manage their flood risks? Are the level, type, and geographic distribution of federal actions for flood resilience and risk reduction cost-effective? Are there changes to how federal flood-related assistance programs and the NFIP are implemented or funded that could result in long-term net benefits in avoided federal disaster assistance, lives lost, and economic disruption?\nIn addressing the nation's flood risk and resilience, policymakers may choose to prioritize some federal roles over others, increase or redistribute activities and funding across existing federal programs, reorient or eliminate existing programs, or establish new programs.", "CRS Report R40763, Agricultural Conservation: A Guide to Programs , by [author name scrubbed]. CRS Report R42854, Emergency Assistance for Agricultural Land Rehabilitation , by [author name scrubbed]. CRS Report R43315, Water Infrastructure Financing: The Water Infrastructure Finance and Innovation Act (WIFIA) Program , by [author name scrubbed] and [author name scrubbed]. CRS Report RL34537, FEMA's Pre-Disaster Mitigation Program: Overview and Issues , by [author name scrubbed]. CRS Report R43520, Community Development Block Grants and Related Programs: A Primer , by [author name scrubbed]. CRS Report R43990, FEMA's Public Assistance Grant Program: Background and Considerations for Congress , by [author name scrubbed] and [author name scrubbed]. CRS Report R44593, Introduction to the National Flood Insurance Program (NFIP) , by [author name scrubbed] and [author name scrubbed]. CRS Report R44632, Sea-Level Rise and U.S. Coasts: Science and Policy Considerations , by [author name scrubbed] and [author name scrubbed]. CRS Report R44963, Wastewater Infrastructure: Overview, Funding, and Legislative Developments , by [author name scrubbed]. CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes , by [author name scrubbed]. CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs , coordinated by [author name scrubbed]. CRS In Focus IF10859, The Coastal Barrier Resources Act (CBRA) , by [author name scrubbed] and [author name scrubbed]." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 3, 1, 2, 2, 3, 2, 3, 2, 2, 2, 3, 4, 1, 2, 2, 3, 3, 3, 2, 3, 3, 1, 1 ], "alignment": [ "h0_title h1_title", "h1_full", "h1_title", "", "h1_title", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "h0_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What does the NFIP require participating communities to develop?", "What else does the NFIP encourage communities to do?", "What are the programs that reduce flood risk?", "How has the federal role in responding to flooding changed since the 1960s?", "What public sentiments were produced by Hurricane Katrina and subsequent events?", "What decisions are Members of Congress faced with?" ], "summary": [ "In order for federal flood insurance to be available to homeowners and business owners in a community, the NFIP requires participating communities to develop and adopt flood maps and enact minimum floodplain standards based on those flood maps.", "The NFIP encourages communities to adopt and enforce floodplain management regulations such as zoning codes, building codes, subdivision ordinances, and rebuilding restrictions.", "The NFIP also encourages communities to reduce flood risk through three programs: the FMA, Community Rating System, and Increased Cost of Compliance (ICC) coverage.", "Since the 1960s, the federal role in responding to catastrophic and regional flooding has expanded both through the NFIP and federal disaster response and recovery efforts.", "Hurricane Katrina and subsequent events have generated concern about the nation's and the federal government's financial exposure to flood losses and floods' economic, social, and public health impacts on individuals and communities.", "Members of Congress and other decisionmakers are faced with numerous policy questions, including whether federal programs provide incentives or disincentives for state and local entities to prepare for floods and manage their flood risks, and whether changes to how federal assistance programs and the NFIP are implemented and funded could result in long-term resilience benefits." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1 ], "summary_paragraph_index": [ 8, 8, 8, 10, 10, 10 ] }

{ "title": [ "", "Background to the Regional Haze Rule", "The Regional Haze Rule", "The Regional Haze Rule and Very Fine Particulates", "The Regional Haze Rule and the Clean Air Interstate Rule", "The Clean Air Interstate Rule (CAIR)24", "BART, CAIR, and Electric Generating Units", "Determining BART under the Regional Haze Rule", "Substituting CAIR for BART", "EPA's Justification", "Questions", "Implications" ], "paragraphs": [ "", "When amending the Clean Air Act in 1977, Congress added provisions focused on protecting the quality of clean air areas, and especially of national parks and other important national sites.\nCodifying regulations developed by EPA in 1974 and 1975, the Prevention of Significant Deterioration (PSD) program focuses on preventing further deterioration of air quality in pristine areas of the country by specifying how much increase in pollution levels is permitted. Mandatory class I areas—those areas that receive the maximum amount of protection—include most national parks, national wilderness areas, and national memorial parks, currently 156 areas. PSD regulations apply to emissions of sulfur dioxide (SO 2 ), particulates (PM), and nitrogen oxides (NOx) from new and modified sources of air pollution.\nAlong with the PSD program for new sources, the Congress also added a new Section 169A, setting \"as a national goal the prevention of any future, and the remedying of any existing , impairment to visibility in mandatory class I Federal areas....\" PSD and Section 169A act in tandem, with PSD controlling new sources of impairment and Section 169A reducing emissions from existing sources of impairment. Under PSD, major new or modified sources in PSD areas must undergo preconstruction review and must install \"best available control technology\" (BACT); more stringent controls can be required if modeling indicates that BACT is insufficient to avoid violating an allowable PSD increment or the National Ambient Air Quality Standard itself. Under Section 169A, 26 categories of major stationary sources of pollution in existence on the date of enactment (1977), but not more than 15 years old as of that date, must install \"best available retrofit technology\" (BART) if the state determines the source may reasonably be anticipated to cause or contribute to any impairment of visibility in a class I area. Included in the list are electric generating units (EGUs).\nImplementing these provisions protecting visibility has not been easy, particularly Section 169A respecting existing sources. First, EPA had to define what visibility was. In general, visibility impairment from human activities manifests itself in two ways: (1) plume blight, where a clearly identifiable plume of smoke emanates from one or more sources; and (2) regional haze, where a uniform reduction in visual range occurs, or a layered discoloration by hovering bands of air tinged brown, yellow, or red. Second, EPA had to promulgate regulations within 24 months of enactment to assure that State Implementation Plans (SIPs) required (1) reasonable progress toward meeting the national goal mentioned earlier, and (2) compliance with several very specific provisions, including the Best Available Retrofit Technology (BART) requirements for existing sources.\nEPA promulgated rules in 1980 to address visibility impairment that was \"reasonably attributable\" to a single source or small group of sources (i.e., plume blight). As with many air pollution regulations, these visibility regulations are implemented by states through SIPs. In general, the 36 states with mandatory class I areas were required to revise their SIPs to assure reasonable progress toward the national visibility goal. The major elements of the regulation were (1) identifying existing sources causing visibility impairment and creating procedures for determining which existing stationary sources should be subject to BART requirements; (2) assessing potential adverse impacts from proposed new sources (or modified old sources) and recommending remedial actions via the New Source Review (NSR) process and the PSD program; (3) developing a 10-15 year long-term strategy to make \"reasonable progress\" toward the visibility goal; and (4) conducting visibility monitoring in mandatory class I areas.\nAs noted, these regulations deal with plume blight only—regional haze reduction was explicitly delayed until some future date. This lack of aggressive implementation of Section 169A extended to the implementation of the 1980 regulations as well. After 35 of 36 states missed the September 1981 deadline for final visibility plans, the Environmental Defense Fund sued the EPA in 1982 to implement the plume blight regulations. The suit was settled in 1984 with the EPA developing a phased-in schedule for compliance with a December 1986 deadline for states to revise their SIPs to include controls on existing sources that hinder visibility goals. This sequential implementation of plume blight regulations actually extended through 1989. So far, the only BART installation to occur under the 1980 regulations has been the installation of sulfur dioxide scrubbers at the Navajo Generating Station in Arizona in 1991.\nEPA's lack of initiative on visibility during the 1980s prompted the Congress to revisit the issue in the 1990 amendments to the Clean Air Act. Those actions included a new Title IV, controlling precursors of acid rain and regional haze, and a new Section 169B. In some ways, Section 169B was a triggering mechanism to force EPA to move on Section 169A with respect to regional haze. Specifically, the 1990 Amendments required EPA to establish a Grand Canyon Visibility Transport Commission (GCVTC) within 12 months of enactment (and other commissions upon its own discretion or petition from at least two states). Commissions were required to assess the scientific, technical, and other data available on visibility impairment from potential or projected emissions growth in the region. Based on those data, the commissions were to issue reports within four years to EPA recommending what measures, if any, should be taken to remedy such impairment. Within 18 months of receiving a commission's report, EPA was to carry out its responsibilities under Section 169A, including criteria for measuring \"reasonable progress\" toward the national goal. Finally, states affected by any regulations promulgated under Section 169A were required to revise their SIPs within 12 months of such promulgation.\nIn 1991, a Visibility Transport Commission for the region affecting visibility in Grand Canyon National Park was established. In June 1996, this commission (consisting of the governors of Arizona, California, Colorado, Nevada, New Mexico, Oregon, Utah, and Wyoming, and the leaders of five Indian tribes) approved a set of recommendations for improving western vistas. There were nine primary recommendations, including increased energy conservation, use of renewable energy, and emission reductions from stationary sources. The commission's Baseline Forecast anticipated that current regulatory programs would reduce emissions of sulfur dioxide from stationary sources (power plants, smelters, and other industrial sources) 13% by the year 2000, although additional measures under consideration might reduce emissions 20%-30%. In light of this uncertainty about the effects of current programs and the fact that emissions were projected to decline in the short term without additional regulation, the commission agreed to set only regional targets for sulfur dioxide emissions in the year 2000. The ultimate targets would be in the range of 50%-70% reduction by the year 2040, but \"interim targets may also be needed to ensure steady and continuing emission reductions and to promote investment in pollution prevention.\" If the targets are exceeded, this would trigger a regulatory program, probably including a regional cap on emissions, with market-based trading.", "The 1990 Clean Air Act Amendments required the EPA Administrator to take action under Section 169A within 18 months of receipt of a commission report. The proposed rule appeared in the Federal Register on July 31, 1997.\nThe final regional haze rule was published on July 1, 1999. The regional haze program represents a nationwide effort to protect 156 PSD class I areas from visibility impairment from manmade air pollution. All 50 states are included under the program—including those that do not have any class I areas within their boundaries—since pollution causing haze can travel beyond a state's boundaries and contribute to impaired visibility in a class I area located elsewhere. The rule encourages regional approaches. Indeed, the final rule includes special provisions (Section 309 program) that permit the former member-states of the Grand Canyon Visibility Transport Commission to implement their specific recommendations within the framework of the national regional haze program (Section 308 program).\nStates are required under Section 169A to develop SIPs that ensure reasonable progress toward the national goal. Under Section 308 of the rule, SIPs must contain the following:\nReasonable progress goals. States must establish goals expressed in deciviews that provide for reasonable progress toward achieving natural visibility conditions in class I areas by 2064. Calculations of baseline and natural visibility conditions. States must determine baseline conditions expressed in deciviews for the most impaired and least impaired days during 2000-2004. Long-term planning. States must submit a long-term strategy to address regional haze for each class I area within the state or affected by emissions within the state. The strategy must include compliance schedules, enforceable emission limitations, and other measures necessary to achieve reasonable progress goals. Monitor strategy. States must submit with the SIP a strategy for measuring, characterizing, and reporting regional haze. Best Available Retrofit Technology (BART). States must submit a BART implementation plan, including emission limitations and compliance schedules for each BART-eligible source that \"may reasonably be anticipated\" to contribute to visibility impairment in a class I area. States may choose to use a trading program or other alternative, if that alternative will achieve greater reasonable progress to natural visibility conditions than BART. Tracking Progress. SIPs must include several provisions to ensure the adequacy of the SIP. In particular, the SIP must include requirements for submitting SIP revisions to EPA every 10 years, beginning in 2018. Progress reports tracking the state's reasonable progress efforts are due every five years. Reports must include a determination of the adequacy of the state's SIP.\nAn alternative program is provided in Section 309 as an option for nine former members of the Grand Canyon Visibility Transport Commission (GCVTC). Five states chose to meet the EPA deadline for inclusion under this option. Based on the commission's 1996 report, Section 309 allows states to choose to follow the commission's recommendations for reducing visibility impairment in the 16 class I areas in Colorado rather than the Section 308 program, up to the year 2018. Focused primarily on SO 2 emissions, which are a major component of regional haze, states set voluntary \"SO 2 milestones,\" instead of requiring BART. If the milestones are not achieved, then a back-up mandatory emissions trading program would be activated to ensure compliance with the milestones. The successor organization to the GCVTC, the Western Regional Air Partnership (WRAP) submitted to EPA an annex to the commission's report in 2000 that identifies the voluntary SO 2 reduction milestones out to the year 2018, along with the back-up trading program details. The 2018 milestone of 510,000 tons would represent a reduction of 320,000 tons from 1990 emissions of 830,000 tons. EPA approved the annex in 2003.", "While working on the regional haze rule, EPA was also proposing to implement a new National Ambient Air Quality Standard (NAAQS) for very fine particulates (PM 2.5 ), which are key contributors to regional haze. To implement the 1997 PM 2.5 NAAQS, a monitoring network had to be established and three years of data collected before states could identify PM 2.5 nonattainment areas and begin the development of SIPs. Adhering to the separate schedules could lead some states to revising SIPs twice, once for visibility and then, a year or two later, for PM 2.5 attainment. As a result, EPA proposed that states preparing SIPs for attaining the 1997 PM 2.5 NAAQS combine it and their submittal of the regional haze SIP revisions. In P.L. 105-178 , enacted June 9, 1998, Congress codified this proposal and also extended deadlines for areas not designated nonattainment. The enacted language stipulates that SIPs implementing the regional haze rule be submitted on the same schedule as those for PM 2.5 nonattainment areas.\nThis linking of the implementation schedules of regional haze and PM 2.5 rules effectively extended the regional haze actions. Under the nationwide Section 308 program, states classified as attainment under the 1997 PM 2.5 NAAQS have one year after that designation (which occurred on December 17, 2004) to submit to EPA their revisions to SIPs to implement the regional haze requirements. But states classified as nonattainment under the 1997 PM 2.5 NAAQS will have three years after that designation to submit to EPA their revised SIP, allowing them to combine implementation of the regional haze rule with the 1997 PM 2.5 NAAQS compliance. Optional SIP schedules are provided for states that chose to develop a regional, coordinated approach to regional haze. Likewise, states choosing to follow the recommendations of the GCVTC have an alternative compliance schedule. Table 1 provides a rough implementation schedule for the regional haze rule based on EPA's latest estimated schedule for PM 2.5 compliance.", "The regional haze and PM 2.5 programs interact with other air quality programs as well—notably EPA's finalized Clean Air Interstate Rule (CAIR).", "Published May 12, 2005, CAIR addresses the effect of interstate transport of air pollutants on nonattainment of the NAAQS for fine particulates (PM 2.5 ) and the 8-hour ozone standard. For PM 2.5 , the rule finds that the interstate transport of SO 2 and NOx from 23 states and the District of Columbia contribute significantly to downwind nonattainment; for ozone, the rule finds that interstate transport of NOx from 25 states and the District of Columbia contribute significantly to downwind nonattainment of the 8-hour ozone standard. Both SO 2 and NOx are involved in regional haze and PM 2.5 , with SO 2 playing a particularly major role, so all three programs ultimately deal with some of the same sources of pollution—of which electric generating units are a major one.\nTo remedy the situation, CAIR generally follows (with some important exceptions) the methodology EPA employed with the NOx SIP Call, a regulation addressing regional ozone nonattainment. With CAIR, EPA proposes a region-wide emissions cap for NOx and SO 2 to be implemented in two phases—2010 (2009 for NOx) and 2015. Based on the methodology employed in the rule, EPA's estimates of emissions under the caps are provided in Table 2 . EPA determined the caps by applying \"highly cost effective\" pollution controls on electric generating units.", "Both the regional haze rule and CAIR address emissions of SO 2 and NOx. Although each could control emissions from any major source of these emissions, CAIR is focused on electric generating units, while the regional haze rule is focused on 26 different categories of sources. Therefore, as major sources of SO 2 and NOx, electric generating units become a critical point of interaction between CAIR and the regional haze rule. The contentious issue has been whether BART for EGUs can be and should be superseded by CAIR for affected EGUs.", "The Clean Air Act explicitly states that BART decisions are to be made according to their impact on visibility. As stated in Section 169A:\n...each major stationary source ... which, as determined by the State ... emits any air pollutant which may reasonably be anticipated to cause or contribute to any impairment of visibility in any such area, shall procure, install, and operate, as expeditiously as practicable (and maintain thereafter) the best available retrofit technology, as determined by the State ... for controlling emissions from such source for the purpose of eliminating or reducing any such impairment....\nEPA originally proposed guidelines to assist states in determining BART in 2001. After portions of the regional haze rule were remanded by the court in the American Corn Growers v. EPA decision, EPA revised and re-proposed its BART determination guidelines in May 2004. In particular, the proposed revisions focused on state determinations of individual source contributions, rather than on the collective contribution to visibility impairment as contained in the proposed regional haze rule and 2001 guidelines: \"... this reproposal focuses on the use of single source emission modeling for assessing the degree of improvement in visibility from various BART control levels.\"\nUnder Section 169A, BART is a plant-by-plant determination made by the state—except for EGUs over 750 Mw in capacity, for which EPA makes the determination. When EPA proposed its May 2004 revisions to the regional haze rule, it proposed to set the default 750 Mw EGU SO 2 reduction requirement at 95% removal or emission limitations in the range of 0.1 to 0.15 lb. SO 2 per million Btu. For units between 250 Mw and 750 Mw, EPA proposed a rebuttable presumption that states should require the same limitations. As stated by EPA:\nThis presumption would apply unless the State has persuasive evidence that an alternative determination is justified. Our intent is that it should be extrememly [ sic ] difficult to justify a BART determination less than the default control level for a plant greater than 750 Mw, and just slightly less difficult for a plant 750 Mw or smaller.\nOn July 6, 2005, EPA finalized its guidelines for determining BART. For coal-fired EGUs greater than 200 Mw, the BACT presumptive emissions limit for SO 2 was set at 95% removal or an emissions rate of 0.15 lb. SO 2 /mmBtu. NOx BACT presumptive limits for coal-fired EGUs are based on the coal-type burned and the firing configuration. The limits range from 0.15 lb./mmBtu NOx for tangential-fired boilers using subbituminous coal to 0.62 lb./mmBtu NOx for wet-bottom tangential-fired boilers using bituminous coal.\nThe 1999 regional haze rule also allowed for a trading program for implementing BART if the state requesting a trading program submitted analyses demonstrating \"that the emissions trading program or other alternative measure will achieve greater reasonable progress than would have resulted from the installation and operation of BART at all sources subject to BART in the State.\" Under the 1999 regional haze rule, the specific requirements for substituting emissions trading for BART were as follows:\n\"The State must demonstrate that this emission trading program ... will achieve greater reasonable progress than would be achieved through the installation and operation of BART.\" This demonstration must be based on analysis of the visibility improvement that would be achieved in class I areas. The trading program must apply to all BART-eligible sources unless the source has an enforceable emission limitation that the EPA and state determines meets BART. Emission reductions must occur by 2018 (the first long-term strategy period). \"A demonstration that the emission reductions resulting from the emission trading program ... will be surplus to those reductions resulting from measures adopted to meet requirements of the CAA as of the baseline date of the SIP.\"\nThe proposed 2001 BART guidelines also proposed guidelines for states to assist them in determining the appropriate state emission budgets (or caps) for their trading program to ensure it met the greater reasonable progress requirement. The proposed guidelines would have required dispersion modeling of BART and the trading program to ensure better visibility. Specifically, the modeling should identify (1) the difference in visibility conditions under both approaches for each class I area; and (2) the average difference in visibility over all class I areas affected by the region's emissions. The analysis would demonstrate greater reasonable progress if (1) visibility does not decline in any class I area; and (2) there is overall improvement in visibility as determined by comparing the average differences over all affected class I areas. These trading program guidelines were re-proposed on May 5, 2004, essentially unchanged.\nThese alternative program guidelines were not included in the final rule because of a D.C. Circuit Court decision vacating EPA's approval of the WRAP alternative trading program under Section 309 of the regional haze rule (the WRAP Annex Rule). Instead, on July 20, 2005, the EPA proposed new requirements for an emissions trading program that responded to the objections raised by the court. The final rule was published on October 13, 2006. With respect to the alternative trading program, the primary change to the existing guidelines was to bring the program requirement into compliance with the American Corn Growers v. EPA decision. Specifically, the revision permits states to use the same BART determination approach to develop a baseline estimate of BART in the alternative program, as it allows for source-by-source BART. As stated by EPA:\nIn short, to demonstrate that a trading program or other alternative program makes greater reasonable program than BART, the State can develop an estimate of BART emissions reductions using the same approach that it would use to establish source-by-source BART emission limitations under the BART guidelines.", "CAIR is designed to assist states in meeting the PM 2.5 and 8-hour ozone NAAQS by mitigating interstate air pollution. As a preferred implementation strategy, EPA encourages states to use a trading program to reduce emissions in a cost-effective manner. To set allocations, EPA compared the costs of various control strategies to determine the most cost-efficient allocation scheme. That cost analysis indicated that electric generating units were the most cost-effective source of emission reductions. Thus, like the NOx SIP Call before it, the emissions allocations under the CAIR proposed trading program are based on cost-effectiveness criteria.\nEPA opened the issue of substituting CAIR for BART in a supplemental proposed rule published June 10, 2004, that detailed the proposed CAIR model trading program. Among its provisions, the proposed supplemental rule would have permitted electric generating units to use the emission trading program under CAIR to meet the BART requirement imposed by the regional haze rule. To achieve this, EPA proposed to amend the trading program requirements under the regional haze rule. The proposed supplemental rule would have amended and revised the regional haze regulation to exempt electric utility sources that comply with the CAIR from the regional haze regulation's BART requirement. Specifically, the CAIR would have:\nRevised Section 308(e)(2) so that sources participating in the CAIR trading program would have been excluded from the requirement that a state demonstrate that its regional haze emission trading program \"will achieve greater reasonable progress than would be achieved through the installation and operation of BART.\" Inserted a renumbered Section 308(e)(3) providing that a state's BART-eligible electric generating units that participate in the CAIR trading program would not have to install and operate BART.\nThus, the proposed supplemental CAIR revisions to the regional haze rule would have done two things: (1) exempted states from having to demonstrate that sources complying with the CAIR through its proposed trading program would achieve greater reasonable progress than would be achieved through the installation and operation of BART; and (2) exempted such sources from BART.\nIn the final CAIR, EPA decided to defer the decision on substituting CAIR for BART for affected units until the BART guidelines are finalized. As stated by EPA:\nThe results clearly indicate that the CAIR will achieve greater reasonable progress than BART as proposed, measured by the proposed better-than-BART test. At this time, we can foresee no circumstances under which BART for EGUs could produce greater visibility improvement than the CAIR. However, for the reasons noted in section IX.C.1 above, we are deferring a final determination of whether the CAIR makes greater reasonable progress than BART until the BART guidelines for EGUs and the criteria for BART-alternative programs are finalized.\nIn the final BART rule, EPA finalized its determination that CAIR achieves greater progress than BART and may be used by states as a BART substitute. In making this determination, EPA notes that \"we are not constraining the discretion of States to determine which sources are subject to BART and to make BART determinations. CAIR-affected States are not required to accept our determination that CAIR may substitute for BART.\"", "The proposal by EPA to declare CAIR to be better than BART for individual BART-eligible electric generating units had been strongly hinted in its May 2004 proposed revisions to BART guidelines. In that proposal, EPA included a strong statement of support for both employing trading programs to address regional haze, and the use of CAIR as a \"better than BART\" alternative. As stated by EPA:\nBased on our current evaluation, we believe the [Interstate Air Quality Rule, later CAIR] ... as proposed, is clearly better than BART for those affected EGUs in the affected States which we propose to cover under the IAQR. We thus expect that the final IAQR would satisfy the BART requirements for affected EGUs that are covered pursuant to the final IAQR.\nAnalysis to support this declaration was provided in the June 2004 proposal supplemental rule for the CAIR trading program, and in the final CAIR. The Bush Administration uses a regional analysis of the visibility improvement resulting from BART and CAIR to justify exempting BART-eligible electric generating units from BART and from the requirement that trading rather than installing BART must yield greater reasonable progress. The two-part test examined the effects of the two programs on 116 class I areas with respect to potential visibility degradation. The analysis concludes that \"CAIR emissions reductions in the East produce significantly greater visibility improvements than source-specific BART.\" On a nationwide basis, EPA states:\n... the visibility modeling shows that for all 116 class I areas evaluated, the average visibility improvement, on the 20 percent worst days, in 2015 was 0.5 dv [deciview] under the CAIR cap-and-trade program in the East and BART in the West, but only 0.2 dv under the nationwide source-specific BART approach.", "This linking of CAIR to the regional haze rule is based on the programs' common characteristic of controlling sulfur dioxide and nitrogen oxides. EPA use of a proposed collective methodology designed to assist states in determining state emission budgets to justify excluding individual units from undergoing individual state-led BART review has proven contentious. Questions include the following:\nVisibility impacts on Class I Areas individually and collectively. Critics contend that EPA's analysis suggesting that \"nationwide\" the \"average\" visibility would improve more under a CAIR/BART program than a BART program is inadequate. They observe that Section 169A discusses BART in terms of visibility impairment of \"any\" class I area—not an average of all 156 class I areas or the 116 (29 in the East) class I areas EPA analyzed for its CAIR determination. EPA cites data limitations for not including other class I areas (5 in the East) in its analysis. With the final BART determination guidelines permitting such an analysis, litigation is likely. Stringency of BART versus CAIR . On an individual EGU basis, the 95% reduction requirement contained in EPA's BART guidelines is substantially more stringent than the overall 67% reduction in SO 2 emissions from a future 2015 baseline envisioned in CAIR. However, the scope of the two scenarios is different. For EGUs, BART is required nationwide on powerplants over 250 million Btu (thermal input basis) operating in 1977 but not more than 15 years old (1962) that may reasonably be anticipated to cause or contribute to any impairment of visibility in any class I area. CAIR's model trading program is a regional scheme focused on all EGUs that are greater than 25Mw within the 23 state PM 2.5 region. Achieving visibility goals. As noted above, using an analysis that grafted the CAIR trading program onto an individual BART program for the other 25 BART-eligible categories, EPA argues that CAIR is better than BART. Opponents argue that the analysis is insufficient—that a 1-2 deciview improvement will not achieve the CAA visibility goal. Instead, opponents assert that a 7-9 deciview improvement is necessary to achieve the CAA's visibility goal of preventing any future, and remedying any existing, visibility impairment in class I areas. Achieving such a goal will require BART controls on the level of EPA's proposed default levels, plus controls on additional EGUs such as required under CAIR.", "The Clean Air Act has evolved over time in response to a developing understanding of the environment, new technologies, and changes in the nation's transportation, energy, and industrial sectors. The result has been a patchwork of requirements that are not always consistent—and may even be incompatible—at any given moment. Moreover, implementing regulations change and are added to over time. Although the evolution of the act has resulted in a structure that some consider unwieldy, emissions of most air pollutants have substantially declined, and the number of persons living in areas where pollution exceeds standards has diminished.\nFrom a policy standpoint, EPA has presented the Clean Air Interstate Rule—and the accompanying Mercury (Hg) rule—as a \"suite of integrated air actions\" to reduce emissions of three pollutants: SO 2 , NOx, and Hg. By promulgating guidelines to help states determine appropriate state emissions budgets for their trading program and to exempt sources subject to the CAIR from the individual BART determinations required by Section 169A (visibility impairment), EPA appears to be trying to extend the \"suite\" to the visibility protection provisions of the CAA. In other words, EPA is endeavoring to transform CAIR from another layer on the already multilayered cake called the Clean Air Act to an integrative program that simplifies the layers.\nAs discussed, this effort to meld Section 169A (visibility) and Section 109 (NAAQS) implementation strategies based on their common characteristic of controlling sulfur dioxide and nitrogen oxides raises numerous issues. In the Clean Air Act, their only procedural link is the SIP process, but they have different scopes, purposes, and requirements. Because of the happenstance that the timing of the PM 2.5 NAAQS and the regional haze rules partly coincided, EPA proposed and Congress legislated that the initial implementation schedules of the SIP process for the 1997 PM 2.5 NAAQS and the SIP process for the regional haze rule be coordinated.\nNow EPA is linking the two programs by determining that certain CAIR program provisions can in effect substitute for related but different visibility requirements. Whether it can do this while accomplishing the express purposes and requirements of both Section 109 and Section169A is subject to debate and possible litigation. By using a collective analysis designed to assist states in determining state emission budgets to justify excluding individual units from undergoing individual state-led BART review, EPA concludes that the CAIR program adequately meets visibility requirements—a conclusion that is contentious. Indeed, opponents of the attempt have described it as regulatory \"bait and switch.\" This conflict is not surprising as EPA is attempting to integrate regulatory provisions that are separate in many essential respects.\nIt appears the Administration's goal is to redirect CAA compliance strategies toward a market-oriented cap-and-trade program—viewed by many observers as a more cost-effective approach to pollution control than direct regulation (such as the BART program). Such a redirection of compliance approaches has been proposed—and the Title IV acid rain provisions of the CAA are often cited as the preeminent example of its application. Several proposals have focused on electric generating units. One approach is a \"multi-pollutant\" strategy—a framework based on a consistent set of emissions caps, implemented through emissions trading. In February 2002, the Bush Administration announced a \"Clear Skies\" multi-pollutant proposal that would amend the Clean Air Act to place emission caps on electric utility emissions of SO 2 , NOx, and Hg. Implemented through a tradable allowance program, the emission caps would generally be imposed in two phases: 2008 and 2018. Although different in geographic scope, the Administration's Clean Air Interstate Rule and mercury rule are very similar in terms of reduction requirements as Clear Skies. However, unlike EPA's \"suite of integrated air action,\" Clear Skies contains significant conforming language to avoid conflicts with other CAA provisions such as Section 169A. The Administration has stated its preference for Clear Skies over its regulatory approach.\nHowever, the Congress has yet to move any multi-pollutant proposal to the floor, nor has it given EPA broad authority to reconstitute regulatory approaches into market-oriented ones. EPA's combining of CAIR and BART represents a regulatory initiative to achieve at least a partial step in coordinating regulatory programs under a market-oriented approach. It is possible, however, that a statutory solution could be necessary." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 3, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h1_full", "", "h0_title h2_full h1_title", "", "h0_full h2_title h1_title", "h1_full", "h2_full", "h2_full", "h2_full", "h3_full" ] }

{ "question": [ "What is the goal of Section 169A of the Clean Air Act?", "How does the Clean Air Act reduce pollution?", "What kinds of pollution contribute to impairment of visibility?", "Why was the EPA directed to issue regulations?", "What was the effect of the EPA delaying issuing regional haze rules?", "What did the haze rule mandate?", "How could states propose alternate trading programs for BART?", "What other air pollution control programs are affected by BART?", "Why does BART cause issues for CAIR?", "What does the CAIR do?", "What was EPA's solution to the issue involving BART and CAIR?", "What did critics have to say about EPA's decision?", "What is the EPA's expressed desire?", "Why is CAIR significant to the EPA's efforts to coordinate CAA programs?", "What legislation did the Administration propose?" ], "summary": [ "Section 169A of the Clean Air Act (CAA) sets \"as a national goal the prevention of any future, and the remedying of any existing, impairment to visibility\" in designated \"class I areas\" (e.g., national parks and wilderness areas).", "It requires 26 categories of major stationary sources of pollution—including electric generating units (EGUs)—in existence on the date of enactment (1977), but not more than 15 years old as of that date, to install \"best available retrofit technology\" (BART) if the state determines the source may reasonably be anticipated to cause or contribute to any impairment of visibility in any class I area.", "A key contributor to regional haze is very fine particles (PM2.5), to which sulfur dioxide (SO2) and nitrogen oxides (NOx) are important contributors. EGUs are major emitters of SO2 and NOx.", "The Environmental Protection Agency (EPA) was directed to issue regulations to assure that State Implementation Plans (SIPs) required (1) reasonable progress toward meeting the national goal and (2) compliance with specific provisions, including the BART requirements.", "However, EPA delayed issuing regional haze rules, and in 1990 Congress amended the CAA's visibility requirements. EPA issued the final regional haze rule on July 1, 1999.", "Among its provisions, the rule required \"reasonable progress\" toward visibility improvement and a state BART implementation plan.", "For BART, states could alternatively propose a trading program—but only if it achieved greater progress in improving visibility.", "The BART requirement's interaction with other air pollution control programs has become an issue—most notably its relation to the Clean Air Interstate Rule (CAIR) designed to reduce emissions crossing state lines and hindering compliance with National Ambient Air Quality Standards (NAAQS).", "At issue is how the model CAIR trading program for EGUs interacts with the BART requirement for EGUs.", "CAIR involves controls on SO2 and NOx, focuses on EGUs as the most cost-effective source to control, and proposes using a trading mechanism to accomplish reductions.", "In 2005, EPA made a final determination to exempt EGUs subject to the CAIR trading program from the Section 169A visibility BART program.", "Critics of EPA's proposal point out that Section 169A specifies protection of individual class I areas and that BART requirements would be more stringent than CAIR for individual sources; and they claim that overall, visibility improvements attributable to CAIR would not be adequate to meet CAA goals.", "EPA's effort to meld the visibility program with CAIR is consistent with its expressed desire to redirect CAA compliance strategies toward a market-oriented, cap-and-trade program, viewed by many as more cost-effective than direct regulation (such as BART).", "CAIR represents a regulatory initiative to achieve a step in coordinating certain CAA programs, but it may be that a statutory solution will be necessary.", "The Administration has proposed \"Clear Skies\" legislation to create a more integrated trading process for addressing SO2 and NOx emissions from EGUs, but it failed to be reported out of committee in the Senate." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, 0, -1, -1, 3, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Background", "BLM Headquarters, State, and Field Offices", "Lifecycle of Oil and Gas Wells", "BLM’s Bonding Regulations", "BLM’s 2012 Well Review and 2013 Bond Adequacy Review Policies", "BLM’s Actual Reclamation Costs and Potential Oil and Gas Well Liabilities Have Likely Increased, but the Agency Does Not Systematically Track These", "The Extent to which BLM Implemented Its Well Review Policy and Bond Adequacy Review Policy Directives Is Unclear", "Agency Officials and Stakeholders Identified Several Challenges BLM Faces in Managing Its Potential Oil and Gas Well Liabilities", "BLM Faces Challenges Identifying and Managing Shut-in Wells and Preventing Them from Becoming Orphaned", "BLM Faces Challenges Related to Limited Resources and Competing Priorities", "Agency Officials and Stakeholders Identified Several Additional Challenges BLM Faces in Managing Its Potential Liabilities", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of the Interior", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "This section provides information on (1) BLM headquarters, state, and field offices; (2) the lifecycle of oil and gas wells; (3) BLM’s bonding regulations; and (4) BLM’s 2012 well review and 2013 bond adequacy review policies.", "BLM is responsible for issuing leases for private entities to develop oil and gas resources on and under roughly 700-million acres of (1) BLM land, (2) other federal agencies’ land, and (3) private land where the federal government owns the mineral rights. According to BLM, approximately 32-million acres were leased for oil and gas operations at the end of fiscal year 2015. BLM also oversees oil and gas operations on 56-million acres of Indian lands.\nBLM administers its programs through its headquarters office in Washington, D.C.; 12 state offices; 38 district offices; and 127 field offices. Of these, 10 state offices and 33 field offices manage oil and gas programs, and these are located primarily in the Mountain West, the center of much of BLM’s oil and gas development. BLM headquarters develops guidance and regulations for the agency, and the state, district, and field offices manage and implement the agency’s programs. Because BLM has few acres of land in the eastern half of the United States, the Eastern States State Office, in Washington, D.C., is responsible for managing land in 31 states, and the remaining state offices generally conform to the boundaries of one or more states. Figure 1 shows the boundaries of the 12 BLM state offices.", "Once operators obtain federal oil and gas leases and drill wells, those wells can be actively producing, inactive, or reclaimed. An orphaned well is a well that BLM determined has no responsible or liable party and for which there is insufficient bond coverage for reclamation. This situation may occur, for example, when an operator has declared bankruptcy. Shut-in and temporarily abandoned wells are examples of types of inactive wells that can become orphaned. Shut-in wells are physically and mechanically capable of producing oil or gas in paying quantities or capable of service use. For example, an operator may put a well in shut- in status if it has not been connected to a sales line or the line is too far away and it is not economical to connect to at this time. Temporarily abandoned wells are another type of inactive well that is not physically or mechanically capable of producing oil or gas in paying quantities but that may have value for a future use. Figure 2 depicts the lifecycle of oil and gas wells overseen by BLM.", "The Mineral Leasing Act of 1920, as amended, requires that federal regulations ensure that an adequate bond is established before operators begin preparing land for drilling to ensure complete and timely reclamation of the land. Accordingly, BLM regulations require operators to submit a bond to ensure compliance with all of the terms and conditions of the lease, including, but not limited to paying royalties, plugging wells, and reclaiming disturbed land. BLM regulations generally require operators to have one of the following types of bond coverage: individual lease bonds, which cover all of an operator’s wells under one lease, and the minimum amount is set at $10,000; statewide bonds, which cover all of an operator’s leases in one state, and the minimum amount is set at $25,000; or nationwide bonds, which cover all of an operator’s leases in the United States, and the minimum amount is set at $150,000.\nBLM can accept two types of bonds: surety bonds and personal bonds. A surety bond is a third-party guarantee that an operator purchases from a private insurance company approved by the Department of the Treasury. The operator is required to pay a premium to the surety company to maintain the bond. These premiums can vary depending on various factors, including the amount of the bond and the assets and financial resources of the operator. If operators fail to reclaim the land they disturb, the surety company can either pay BLM the amount of the bond to help offset reclamation costs, or in some circumstances, BLM may allow the surety company to perform the required reclamation. A personal bond must be accompanied by one of the following financial instruments: certificates of deposit issued by a financial institution whose deposits are federally insured, granting the Secretary of the Interior authority to redeem it in case of default in the performance of the terms and conditions of the lease; cashier’s checks; negotiable Treasury securities, including U.S. Treasury notes or bonds, with conveyance to the Secretary of the Interior to sell the security in case of default in the performance of the lease’s terms and conditions; or irrevocable letters of credit that are issued for a specific term by a financial institution whose deposits are federally insured and meet certain conditions.\nIf operators fail to reclaim the land they disturb, BLM will redeem the certificate of deposit, cash the check, sell the security, or make a demand on the letter of credit to pay the reclamation costs.", "In response to our previous recommendations that BLM develop a comprehensive strategy to improve monitoring agency performance in conducting well reviews and bond adequacy reviews, BLM issued a 2012 well review policy and a 2013 bond adequacy review policy. These policies contain directives for conducting reviews when wells and bonds meet certain criteria. The well review policy directs: that field office officials evaluate every shut-in well at least once every 5 years; that field office officials review all wells that have been inactive for 25 years or longer and that have no anticipated beneficial use by March 29, 2013; that if field office officials determine that there are wells that are not capable of producing oil or gas in paying quantities or have no beneficial use, officials are to send the operator a written order directing the operator to demonstrate that these wells are capable of producing oil or gas in paying quantities or have a future beneficial use, or the operator is to submit plans to reclaim the wells; that each state office submit to BLM headquarters a consolidated annual report recording well reviews; and that the annual report identify the leases that were reviewed and the wells that were reviewed on each lease, and describe what follow-up action the field office official conducting the review performed.\nThe bond adequacy review policy directs: that field offices perform bond adequacy reviews on all bonds at least once every 5 years or whenever a bond review is warranted; that field offices verify and tie all federal wells to their appropriate bond number and enter bond information and bond adequacy review data into AFMSS; that field offices perform adequacy reviews on all bonds using specific instructions and a worksheet that assigns points for three risk factors: (1) status of wells covered by the bond (share of inactive wells, deep wells, and wells with marginal production); (2) operator-specific compliance history; and (3) reclamation stewardship diligence; that if the field office official performing the review determines that the bond amount is insufficient, the official is to take the necessary steps to determine the appropriate bond amount and increase the bond; that if the bond being reviewed is a statewide or nationwide bond, field offices are to review the wells within their field office jurisdiction; and that each BLM state office with an oil and gas program submit a semi- annual bond adequacy review report to BLM headquarters.", "BLM’s actual costs incurred to reclaim orphaned wells and potential liabilities have likely increased for fiscal years 2010 through 2017 based on our analysis of available information. Precisely how the agency’s actual reclamation costs and potential liabilities have changed is unclear because BLM does not systematically track them at an agency-wide level. BLM headquarters officials we interviewed told us that they did not have any information on actual costs incurred to reclaim orphaned wells and stated that BLM’s data systems were not designed to track incurred reclamation costs. In addition, AFMSS provides a snapshot of orphaned wells as identified at the time that the data are queried and does not provide data for prior time periods.\nBecause BLM headquarters does not record actual reclamation costs incurred at an agency-wide level, we requested documentation for the reclamation costs incurred by 13 selected BLM field offices for fiscal years 2010 through July 2017. This documentation identified about $2.1 million in reclamation costs incurred over this period, or an average of about $267,600 per year by these 13 field offices. We estimate that total actual reclamation costs for all field offices are likely to be higher than this amount as other field offices may have also reclaimed orphaned wells during this period. In January 2010, we found that, for all field offices across the agency, BLM spent about $3.8 million from fiscal years 1988 through 2009, or an average of about $171,500 per year. Comparing the average costs incurred by the 13 selected field offices to the data we previously reported demonstrates that actual total reclamation costs incurred have likely increased since 2010.\nIn addition to actual costs increasing, potential liabilities are also likely to have increased, though BLM does not systematically track information on potential liabilities that might result from an increase in the number of orphaned wells. Potential liabilities include costs that the agency may incur to reclaim wells that operators fail to reclaim. We believe these costs have also increased because the number of known orphaned wells on federal and Indian lands managed by BLM has increased. We identified changes in the number of known orphaned wells since we last reported on this matter in January 2010. In January 2010, we found that BLM had identified and was managing 144 orphaned wells. Over half of those 144 wells (75) were still identified in AFMSS as orphaned as of July 2017, and the total number of identified orphaned wells on federal lands had increased from 144 to 219. Also, BLM officials from the 13 selected field offices identified about $46.2 million in estimated potential reclamation costs associated with orphaned wells and inactive wells that officials deemed to be at risk of becoming orphaned.\nAlso concerning potential liabilities, our analysis of AFMSS data and OGOR production data through September 2016 found that BLM managed about 15,600 inactive wells, of which over 1,000 were inactive for 25 years or more. In contrast, a document provided to us by BLM headquarters indicates 325 wells had been inactive for 25 years or more as of around 2017. This document summarizes data from AFMSS queries conducted by BLM field and state offices at various times from 2013 through 2014 and queries conducted at various times from 2016 through 2017. BLM officials told us that this difference could be because AFMSS reports sometimes return conflicting data since the reports draw from current and historical statuses of wells from both AFMSS and OGOR. We combined AFMSS and OGOR data to identify the number of inactive wells because although BLM records the total number of wells on federal lands over time—a rough indicator of how potential reclamation costs may change—the agency does not systematically record more specific types of wells that may be at higher risk of becoming orphaned, such as inactive wells or wells that have been inactive for 25 years or more.\nMoreover, we identified inconsistencies between the data and the document provided to us by BLM headquarters summarizing the data. For example, BLM’s summary document did not include one state office, even though the data include that state office as having two wells that were inactive for 25 years or more in 2014. BLM’s summary document states that there had been a reduction in the number of wells that were inactive for 25 years or more between the times of the two data queries. However, because BLM does not systematically track the number of inactive wells, in particular those wells that are at high risk of becoming orphaned, the agency does not know how its potential liabilities may be changing. These liabilities include wells inactive for 25 years or more.\nAlthough we were unable to determine the full extent of the increase in BLM’s potential liabilities because BLM does not have the data needed for such an analysis, other factors also suggest such an increase. For example, there has been an increase in oil and gas development on federal lands, and therefore, there is the potential for an increase in the total number of wells on federal lands at risk of becoming orphaned and needing to be reclaimed in the future. BLM’s portfolio of oil and gas wells on federal lands has changed over the years, based on overall trends in the oil and gas industry. According to AFMSS data provided by BLM, the total number of wells on federal lands that are capable of production increased along with rising oil and gas prices, from about 89,600 wells in fiscal year 2010 to peaking to about 94,800 wells in fiscal year 2014. As oil and gas prices declined starting in 2014, the total number of wells capable of production also declined to about 94,100 wells in fiscal year 2016.\nIn addition, declining oil and gas prices (by nearly half from 2010 through 2017) have placed financial stress on oil and gas operators, thereby increasing bankruptcies and the risk of wells becoming orphaned. For example, coalbed methane—natural gas extracted from coal beds—was economical to produce when natural gas prices were higher and thousands of coalbed methane wells were drilled on federal lands. However, coalbed methane production has declined because the spread of shale gas production has driven down natural gas prices. Officials we interviewed in one BLM field office told us that the drop in natural gas prices contributed to an increasing number of bankruptcies for operators of coalbed methane wells. Our analysis of AFMSS data suggests that there were thousands of inactive coalbed methane wells as of October 2017. To the extent that market conditions remain unfavorable for coalbed methane production, BLM’s potential future reclamation costs may increase if any operators of these wells go bankrupt or are otherwise unwilling or unable to pay the full costs of reclamation, leaving these wells orphaned.\nAccording to federal internal control standards, management should use quality information, which should be complete, to achieve the entity’s objectives. However, BLM does not systematically or comprehensively track the agency’s actual costs incurred to reclaim orphaned wells and the information necessary to determine potential liabilities, including indicators of potential future reclamation costs, such as the number of inactive wells, orphaned wells, and estimates of reclamation costs for orphaned wells. BLM headquarters officials said that they sometimes check AFMSS to see how many orphaned wells there are, but without doing so systematically and recording the results of these checks, it is not possible to determine how the agency has been making progress in managing the number of orphaned wells. EPAct 2005 requires that the costs of reclaiming orphaned wells be recovered from persons or entities providing a bond or other financial assurance. Without systematically and comprehensively tracking actual reclamation costs incurred and the information necessary to determine potential liabilities including the numbers of orphaned wells and inactive wells over time, BLM cannot ensure that it has sufficient bond coverage or other financial assurances to minimize the need for taxpayers to pay for the costs of reclaiming orphaned wells.", "The extent to which BLM has implemented its well review policy and bond adequacy review policy is unclear. Specifically, we were unable to fully assess the extent to which BLM’s field and state offices have implemented directives included in these policies because of inconsistent well review information, inaccurate well and bond data in AFMSS, and inadequate monitoring of well and bond policies’ implementation.\nInconsistent well review information. We were unable to fully assess the extent to which BLM implemented some directives in the well review policy because the well review information reported by field offices differed across the agency. For example, officials we interviewed at the 13 selected BLM field offices had different understandings of what specific actions constitute a well review, and therefore differed in their understanding of which wells were to be included in the annual reports for documenting well reviews. Specifically, officials from 11 out of 13 selected field offices told us that a well review consisted of actions—such as reviewing a well’s status, conducting a physical inspection, and providing additional notices or letters to the well operator when a well is inactive. Officials in 2 other field offices told us that while they conduct similar actions, they consider the sole action of correcting data on a well’s status to constitute a well review. For example, a BLM official told us that one reported well review was conducted on a well that had been reclaimed in 1986 but that was not noted in AFMSS. The official told us that following this well review, they corrected the well status in AFMSS and noted that this well should not have been on the list of wells to review. While correcting well data helps improve the accuracy of AFMSS, when some offices count such corrections as well reviews and others do not, this variance results in inconsistent information in BLM’s annual well review reports.\nSuch inconsistencies in what counts as a well review may be the result of a lack of clarity in BLM’s well review policy that does not specify what constitutes a well review. Unlike the bond adequacy review policy, which provides instructions to field offices on how to conduct a bond adequacy review and directs field offices to use a specific worksheet to calculate bond adequacy, the well review policy does not contain specific instructions on what actions field offices are to take to conduct a well review, such as how to count reviews or report them. A January 2018 report by the Department of the Interior’s Office of Inspector General (OIG) similarly found that BLM’s well review policy does not specifically outline how to conduct and document reviews of shut-in wells (shut-in wells, as noted earlier, are inactive wells that are physically and mechanically capable of producing oil or gas in paying quantities or capable of service use). Under federal standards for internal control, management should design control activities to achieve objectives and respond to risks; such activities include appropriate documentation of internal control in management directives, administrative policies, or operating manuals. Without developing and communicating specific instructions outlining what actions constitute a well review for annual- reporting purposes, BLM cannot have reasonable assurance that its field offices are conducting and reporting on well reviews in a consistent manner.\nInaccurate well and bond data in AFMSS. Our ability to assess the extent to which BLM implemented its well review and bond adequacy review policies was impeded by inaccuracies in certain AFMSS data. BLM officials told us that some of the data in AFMSS on wells and bonds were not reliable. For example, BLM officials told us that there may be discrepancies between the bonds listed in AFMSS and the bonds listed in the Bond and Surety System, which is BLM’s official database for all oil and gas bonds. Officials told us that bonds may be missing from AFMSS because BLM field offices are responsible for manually entering the bond number from the Bond and Surety System into AFMSS.\nIn addition, AFMSS data we reviewed contained other inaccuracies. Specifically, the data we reviewed contained future dates for when wells were completed, or capable of production, when some wells last changed statuses, and when some well reviews were reportedly conducted. BLM officials told us that AFMSS allows users to enter future dates, which can result in inaccurate data. Having inaccurate dates for wells’ statuses and wells’ reviews is problematic because it means it is not possible to assess whether reviews are being conducted as directed by BLM policy. For example, BLM’s well review policy directs field offices to review each shut-in well every 5 years. BLM’s performance against this directive cannot be assessed without reliable information on when wells become shut-in and when well reviews are conducted.\nIn written responses to our request for information, BLM officials stated that AFMSS has some edit checks, but the accuracy of the data entered into AFMSS is dependent on field office officials responsible for data entry. BLM officials stated that AFMSS has some electronic safeguards, such as certain number fields only accepting numbers. In addition, AFMSS has dropdown menus and checkboxes to narrow the parameters of certain data being entered. However, there are no edit checks to prevent field offices from inputting future status dates. In addition, BLM’s data administration and management handbook establishes that data stewards are to, among other things, establish target quality levels, data quality plans (including audits and other quality assurance steps), and certify the quality of the data. BLM officials stated that they have national level AFMSS data stewards and information-technology data stewards. However, BLM officials stated that the agency has not defined AFMSS target quality levels and did not provide any data quality plans. Officials stated that BLM headquarters conducts annual data reviews and will periodically review sample well files to detect data inconsistencies and errors. In addition, BLM officials stated that field offices are responsible for certifying the accuracy of the data they enter into AFMSS, and BLM headquarters is responsible for providing oversight. However, BLM headquarters officials did not provide documentation of any data certifications or data reviews, raising concerns over the extent of this oversight.\nUnder federal standards for internal control, management should design control activities, including control activities used in information processing, to achieve objectives and respond to risks. Examples of such control activities include: conducting edit checks of data entered, accounting for transactions in numerical sequences, and comparing file totals with control accounts.\nWithout taking steps to improve AFMSS data quality, such as by conducting more edit checks and having data stewards certify the quality of the data, BLM cannot have reasonable assurance that management has the accurate information it needs to track whether field offices are conducting well and bond adequacy reviews as intended.\nIn its January 2018 report, the OIG found similar issues related to the accuracy of AFMSS data. Specifically, the OIG found that AFMSS data were unreliable due to inaccurate well status information. The OIG also found that BLM officials update AFMSS manually during a well review or as needed, as opposed to automating the data, meaning that information about the status of individual wells in AFMSS and data used for BLM’s annual well report are not timely. The OIG recommended that BLM develop and implement a quality control process to identify inaccurate or incomplete data in AFMSS. BLM concurred with this recommendation.\nInadequate monitoring of well and bond policies’ implementation. BLM headquarters has taken some actions to monitor the implementation of its well and bond adequacy review policies across the agency, but its efforts have been limited, and the agency cannot ensure that its policy directives have been fully implemented. For example, BLM headquarters officials told us that headquarters relies on national well review and bond adequacy review reports to monitor the extent to which field offices are conducting well and bond adequacy reviews. These well and bond adequacy review reports provide some information on how BLM field offices conducted their reviews during a given year, but the reports as previously mentioned above have data limitations and do not consistently record a field office’s progress in meeting the policies overall. For example, annual well review reports list the wells field offices reviewed in a given year, but do not compare this statistic to a list of the wells that each field office should have reviewed. Similarly, field offices’ bond adequacy review reports list the bonds that the field offices reviewed in a given year. However, the reports do not compare the bonds reviewed to a list of bonds each field office should have reviewed.\nIn addition, our analysis of 58 selected bonds reported as reviewed across the 13 selected field offices found that 4 bonds—about 7 percent—were not reviewed, even though field offices had reported that they had conducted the reviews. The bond adequacy review policy directs field offices to review all bonds once every 5 years or whenever a bond review is warranted. Therefore, the bond adequacy review reports on their own provide insufficient information for BLM headquarters to monitor progress about whether field offices are fully implementing the directive.\nWe also identified discrepancies between the annual well review and semi-annual bond adequacy review reports that state offices submitted to BLM headquarters and the information in headquarters’ national summary, which consolidates the state office information. These discrepancies limit the usefulness of the national summary for monitoring the extent to which field offices are conducting well and bond adequacy reviews as directed by the policies. For example, 3 out of 10 state offices reported a different number of bond adequacy reviews completed in their fiscal year 2016 state reports than what was reported in BLM’s fiscal year 2016 national report. Similarly, 6 out of 9 state offices reported a different number of completed well reviews in their fiscal year 2016 state report than what was reported in BLM’s fiscal year 2016 national report.\nSimilarly, the OIG’s January 2018 report found that BLM can only report its progress in reviewing wells that have been inactive for 25 years or more by using field office spreadsheets, coupled with AFMSS data. The report stated that using spreadsheets and AFMSS data have made it difficult, however, for BLM to demonstrate proper oversight. BLM’s headquarters officials had to ask state office officials how many wells had been reviewed and then had to summarize those results in a spreadsheet. The OIG recommended that BLM monitor and track reviews of shut-in wells in a management system. BLM concurred and stated that AFMSS and an update to AFMSS that is under development were the appropriate databases for monitoring and tracking well reviews.\nOverall, we found that BLM’s current approach to monitoring the agency’s progress in implementing its well and bond adequacy review policies has been limited. We reviewed leading practices for monitoring the implementation of agency policies. These practices call for, among other things: (1) periodically collecting and analyzing data on performance indicators, (2) establishing procedures for ensuring the quality of data on performance indicators, (3) documenting that monitoring plans were executed, and (4) considering performance information in making management decisions. Without taking actions to strengthen its approach to monitoring, such as collecting and analyzing data on performance indicators and ensuring the quality of those data, BLM’s ability to assess the extent to which field offices are reviewing all inactive wells and determining the adequacy of all bonds is limited.", "According to BLM officials and stakeholders we interviewed, BLM faces several challenges in managing its potential liabilities. In particular, BLM officials and stakeholders told us that one challenge in managing BLM’s potential liabilities was identifying and managing shut-in wells and preventing them from becoming orphaned. Another challenge identified was limited resources and competing priorities in reclaiming orphaned wells. Other challenges to managing BLM’s potential liabilities include difficulties in reviewing nationwide bonds, minimum bond amounts, and operators’ unresponsiveness.", "BLM officials from 6 of the 20 BLM offices—including headquarters and selected state and field offices—and 2 of the 10 stakeholders told us that one of the challenges that BLM faces in managing its potential liabilities is identifying and managing shut-in wells. As previously mentioned, shut-in wells are inactive wells that are physically and mechanically capable of producing oil or gas in paying quantities or capable of service use. Since shut-in wells may become orphaned and therefore involve BLM resources to reclaim, identifying and managing them is a way for BLM to manage its potential liabilities. BLM’s 2012 well review policy directs field offices to review all shut-in wells on federal and Indian lands every 5 years and to ensure that shut-in wells no longer capable of production are reclaimed. However, operators are generally not required to notify BLM when they place a well in shut-in status. As a result, officials noted that it is difficult for field offices to identify all shut-in wells in order to review them. Officials from one field office told us that identifying when a well becomes shut-in is challenging unless inspectors are able to physically find the well.\nEven when wells have been identified to BLM as shut-in, some BLM officials at selected field offices said that they have few policy tools to manage shut-in wells. In reviewing the well review policy, we found that it contains certain directives for wells that are temporarily abandoned, including that an operator is to conduct well integrity testing prior to placing a well in temporarily abandoned status and a 30-day limit for how long operators can place wells in temporarily abandoned status without receiving BLM approval. However, the policy contains no similar directives related to testing or limited time frames for placing wells in shut- in status. As a result, BLM may be unable to identify and reduce its inventory of shut-in wells, including wells that have been in shut-in status for an extended period of time.\nIn its January 2018 report, the OIG similarly found that the well review policy does not provide field offices the leverage to make an operator conduct integrity testing since the policy does not have instructions on the method, frequency, and way to proceed with a notice or order. Without having these test results available to them, the report found that BLM staff cannot be certain that an inactive well is environmentally sound and capable of production. The report recommended that BLM develop and implement guidance or update the well review policy to require integrity testing on inactive wells at specific periods.\nStrengthening the identification and management of shut-in wells could be particularly helpful in managing BLM’s potential liabilities because such wells have represented a large portion of orphaned wells. According to our analysis of AFMSS data, 138 of the 242 orphaned wells BLM manages were in shut-in status prior to becoming orphaned. Moreover, one of these wells had been in shut-in status since 1926. BLM’s Colorado and New Mexico state offices have taken steps to address the challenges associated with shut-in wells becoming orphaned. For example, in September 2016, BLM’s New Mexico state office issued a policy that directed operators to obtain BLM’s approval in order to place a well in shut-in status for more than 90 days and directed the operator to conduct periodic testing to verify that wells that have been inactive for more than 12 consecutive months remain capable of production. Under federal standards for internal control, management should design control activities—such as by clearly documenting internal control in management directives, administrative policies, or operating manuals—to achieve objectives and respond to risks. Without providing greater specificity in current policy or new supplemental guidance to all BLM field offices on how to identify and manage shut-in wells, the agency is at an increased risk of having unidentified shut-in wells, and wells that remain in shut-in status for extended periods of time, leading to increased potential liabilities if such wells become orphaned.", "BLM officials and stakeholders told us that one of the challenges BLM faces in managing its potential liabilities is limited resources, including staff and funding, and competing priorities. Specifically, officials from 14 of the 20 BLM offices and 3 of the 10 stakeholders told us that BLM field offices have limited staff and therefore prioritize other work, such as processing drilling permits, over conducting well and bond adequacy reviews, which are used to manage potential liabilities. BLM prioritizes processing drilling permits over well and bond adequacy reviews in part because the agency is required by statute to process drilling permits within 30 days of receiving a complete application. BLM headquarters officials told us that processing permits is the agency’s highest priority activity and that they ask field offices for monthly progress reports with projected goals for processing permits within the next 90 days, and compare the offices’ accomplishments to agency targets. BLM headquarters officials told us that prioritizing processing permits increases the workload at the national, state-office, and field-office levels.\nOfficials from one BLM state office told us that other challenges to managing its potential liabilities are staffing limitations and the time it takes to conduct bond adequacy reviews. These state office officials told us that bond reviews can take a long time to complete because some bonds are associated with several hundred wells. Similarly, officials from one field office stated that conducting bond adequacy reviews was time consuming and that they had only one staff member dedicated to conducting the reviews. In 2011, we found that a lack of resources and higher agency priorities were the primary reasons for why many BLM field office officials we interviewed had not conducted well and bond adequacy reviews or did not know the number of reviews they had conducted.\nIn addition, officials from 6 of the 20 BLM offices and 1 stakeholder told us that another challenge BLM faces in managing its potential liabilities is prioritizing funding to reclaim orphaned wells. For example, an official from one state office told us that securing funding to reclaim orphaned wells is a challenge because BLM does not set aside funding to pay for reclamation costs. BLM officials in one field office told us that they had not received funding from BLM headquarters specifically for reclamation in over 10 years, despite managing a growing number of orphaned wells. An official from this field office told us that without dedicated funds from BLM headquarters for this purpose, the field office was unable to reclaim the orphaned wells. In addition, officials from another field office told us that time frames for competing and awarding contracts to perform reclamation work do not coincide with securing funding from BLM headquarters, and that funding has to be obligated by the end of the fiscal year. These officials explained that in one instance, by the time they obtained funding for well reclamation, it was too late to issue a contract for the work.\nEPAct 2005 requires the establishment of a program to reclaim orphaned, abandoned, or idled oil and gas wells on federal lands. As part of this program, BLM conducts well reviews and bond adequacy reviews. As discussed above, about half of the orphaned wells BLM identified in 2009 were not reclaimed and remained orphaned in 2017, and BLM officials cited funding as the issue. The Project Management Institute, Inc. has established a standard on program management. Under the standard, program resource management planning ensures that all required resources are made available for managers to enable the delivery of benefits for a program. Resource management planning involves identifying existing resources and the need for additional resources. The program manager analyzes the availability of each resource, in terms of both capacity and capability, and determines how these resources will be allocated to avoid over-commitment or inadequate support. Such planning, through a resource management plan, forecasts the expected resources across a program to allow the program manager to identify potential resource shortfalls or conflicts over the use of scarce or constrained resources. The plan is also to describe guidelines for making program resource prioritization decisions and resolving resource conflicts.\nBased on our discussions with BLM headquarters and field office officials, BLM does not have a resource management plan. For example, when we discussed resources for reclaiming orphaned wells with BLM headquarters officials, they told us that some BLM offices obtain funding from state funds established for reclaiming orphaned wells, but not all offices have been able to access such funds. If unable to secure funding from the states, offices may request funding from BLM headquarters for reclamation, and as mentioned previously, occasionally try to use unexpended funds left at the end of a fiscal year. In its comments on the draft report, Interior noted that BLM engages in annual work planning processes designed to facilitate agency resource allocation decisions. However, BLM overall does not have information on the federal resources needed to reclaim known orphaned wells. Without developing a resource management plan addressing resources needed for conducting well and bond adequacy reviews and reclaiming orphaned wells, BLM cannot have reasonable assurance that it is achieving the program’s objectives.", "Agency officials and stakeholders cited additional challenges including BLM’s ability to review nationwide bonds, minimum bond amounts, and operator unresponsiveness.\nReviewing nationwide bonds. Officials from 10 of the 20 BLM offices told us that they encountered challenges reviewing nationwide bonds because of a lack of coordination between BLM offices. The purpose section of the bond adequacy review policy states that field offices are to review bonds to determine whether the bond amount appropriately reflects the level of potential risk posed by the operator. However, the bond adequacy review policy also states in a directive that if the bond being reviewed is a nationwide or statewide bond, field offices are only to review the wells within their field office. Officials from one field office told us that without insights into an operator’s activities in the jurisdictions of other field offices, bond adequacy reviews do not cover when an operator has been cited with an Incident of Noncompliance or the number of inactive wells the operator may have in other jurisdictions. These field office officials said that it is important to communicate and coordinate with other field offices when there is a need to require an operator to secure a larger bond. For example, to require a well operator to increase the amount of its bond, BLM must show that the operator meets the point system’s threshold in the bond adequacy review’s calculation worksheet. Officials in one state office told us that under a nationwide or statewide bond, an operator might not reach the agency’s threshold for requiring a bond increase based on an operator’s activities in the jurisdiction of one field office but may meet the threshold if BLM’s bond adequacy review assessed all of the operator’s operations within a state or across the nation.\nUnder federal standards for internal control, management should design control activities to achieve objectives and respond to risks, such as by clearly documenting internal controls, and having the documentation appear in management directives, administrative policies, or operating manuals. While BLM has documented its policy, the purpose of the policy to ensure that the bond amount appropriately reflects the level of potential risk posed by the operator conflicts with a directive of the policy that offices are only to review wells within their own jurisdiction. Officials told us that BLM is currently revising the bond adequacy review policy. As the agency revises its bond adequacy review policy, BLM has the opportunity to ensure that bond adequacy reviews reflect the overall risk presented by operators. By having the policy ensure that the reviews of nationwide and statewide bonds account for overall operator risk, BLM can have better assurance that it will reduce the likelihood of using taxpayer funds to pay to reclaim orphaned wells.\nMinimum bond amounts. Officials from 9 of the 20 BLM offices and 1 stakeholder told us that BLM faces challenges related to federal minimum bond amounts that in their opinion are too low. For example, officials from one BLM state office expressed concerns about operators with multiple wells covered by the minimum bond amounts, which the officials believed to be inadequate to cover total potential reclamation costs. Minimum bond amounts were set in the 1950s and 1960s and have not been updated to keep up with inflation. Specifically, the $10,000 minimum for individual bonds was established in 1960, and the bond minimums for statewide bonds ($25,000) and nationwide bonds ($150,000) were established in 1951. If adjusted to 2016 dollars, these amounts would be $63,613 for an individual bond, $189,825 for a statewide bond, and $1,138,952 for a nationwide bond. According to BLM headquarters officials, the agency does not require that operators provide full liability bonds. These officials told us that they believed that most operators would not be able to remain in business if bond amounts were based on estimated total reclamation costs.\nOperators’ unresponsiveness. Officials from 8 of the 20 BLM offices and 2 stakeholders told us that BLM faces challenges dealing with unresponsive operators when requiring operators to increase bond amounts or issuing Incidents of Noncompliance. For example, officials from one BLM state office told us that operators do not always respond to letters informing them of a requirement to secure an increase in their bond. Officials from another BLM state office told us that the agency can place operators on a noncompliance list prohibiting them from holding leases or conducting operations on federal lands. However, these officials also said that they have seen operators ask relatives to obtain leases in order to circumvent such prohibitions. Officials from one field office told us of one particular instance in which BLM had spent over 7 years attempting to enforce the requirements for reclamation activities. BLM had issued an Incident of Noncompliance, but the operator did not respond and instead reorganized as a separate corporate entity. Subsequently, the operator went bankrupt, requiring BLM to restart the communications process from the beginning with the newly formed entity. BLM officials told us that the agency has very little leverage when companies change their name or reorganize in an attempt to evade performing required reclamation activities. BLM headquarters officials told us that working with operators was a delicate balance, especially when oil and gas prices are down, and BLM field offices would benefit from conducting periodic operator outreach to have an open dialogue with the operators.", "BLM is responsible for overseeing oil and gas development on federal lands and for balancing the sometimes competing priorities of encouraging oil and gas development, while ensuring that when wells run dry, operators return well sites to their original natural conditions. Federal laws, regulations, and BLM’s own policies call for the agency to take various actions to manage its potential oil and gas well liabilities and reclaim orphaned wells. However, BLM does not systematically or comprehensively track how much the agency has spent to reclaim orphaned wells or information, such as the number of orphaned wells and inactive wells over time, necessary to determine the agency’s potential liabilities. Without systematically or comprehensively tracking information on BLM’s well reclamation costs and indicators of potential future costs, its ability to monitor its progress and plan for its potential liabilities associated with orphaned wells is limited.\nIn addition, implementation of BLM’s well and bond adequacy review policies by the field offices is hampered by officials having different understandings of what constitutes a well review. This variance is because BLM’s well review policy does not outline specific instructions on what actions field offices should take when conducting a well review. This situation results in inconsistent ways of conducting well reviews and annually reporting on them. Without developing and communicating specific instructions outlining what actions constitute a well review for annual-reporting purposes, BLM cannot have reasonable assurance that its field offices are conducting and reporting on well reviews in a consistent manner. Further, inaccuracies in certain AFMSS data, such as the dates that wells last changed statuses, raise questions about the quality of data BLM headquarters uses to determine the extent to which its offices are implementing the well review and bond adequacy review policies. BLM has not taken steps to improve AFMSS’ data quality such as through the use of additional edit checks to prevent field offices from inputting erroneous data or having data stewards certify the quality of the data. Without taking such steps, BLM cannot have reasonable assurance that management has accurate information it needs to track whether field offices are conducting well and bond adequacy reviews as intended. In addition, BLM’s approach to monitoring the implementation of its well and bond adequacy review policies is limited because the reports the agency uses to monitor implementation provide insufficient and at times conflicting information. Without taking actions to strengthen its approach to monitoring, such as collecting and analyzing data on performance indicators and ensuring the quality of those data, BLM’s ability to assess the extent to which field offices are reviewing all inactive wells and determining the adequacy of all bonds will continue to be limited.\nBLM officials and stakeholders identified several challenges that BLM faces in managing its potential oil and gas well liabilities, including identifying and managing certain inactive wells—specifically wells that are in shut-in status and that have the potential to become orphaned. This problem is because operators are generally not required to notify BLM when they place a well in shut-in status. Without providing greater specificity in current policy or supplemental guidance to all field offices, the federal government may face increased potential liabilities if shut-in wells become orphaned. In addition, BLM faces challenges related to limited resources and competing priorities, such as not setting aside funding to pay for reclaiming orphaned wells. Without developing a resource management plan addressing resources needed for conducting well and bond adequacy reviews and reclaiming orphaned wells, BLM cannot have reasonable assurance that it is achieving the program’s objectives. BLM also faces challenges related to conducting nationwide and statewide bond adequacy reviews because the bond adequacy review policy overall contains conflicting information on how field offices are to review bonds’ adequacy. BLM is currently revising the bond adequacy review policy and has an opportunity to ensure that the reviews of nationwide and statewide bonds reflect operators’ overall risks.", "We are making the following seven recommendations to BLM: The Director of BLM should systematically and comprehensively track the actual costs BLM incurs when reclaiming orphaned wells and the information, including the number of orphaned wells and inactive wells over time, necessary to determine the agency’s potential liabilities. (Recommendation 1)\nThe Director of BLM should develop and communicate specific instructions on what actions constitute a well review for annual-reporting purposes. (Recommendation 2)\nThe Director of BLM should take steps to improve AFMSS data quality, for example, by conducting more edit checks and by having data stewards certify the quality of the data. (Recommendation 3)\nThe Director of BLM should strengthen its approach to monitoring field offices’ implementation of the well review and bond adequacy review policies, such as by collecting and analyzing data on performance indicators and ensuring the quality of those data. (Recommendation 4)\nThe Director of BLM should provide greater specificity in current policy or supplemental guidance to all BLM field offices on how to identify and manage all shut-in wells. (Recommendation 5)\nThe Director of BLM should develop a resource management plan addressing resources needed for conducting well and bond adequacy reviews and reclaiming orphaned wells. (Recommendation 6)\nThe Director of BLM should, in revising the bond adequacy review policy, ensure that the reviews of nationwide and statewide bonds reflect the overall risk presented by operators. (Recommendation 7)", "We provided a draft of this report to the Department of the Interior for review and comment. In its comments, reproduced in appendix II, Interior generally concurred with our recommendations. Interior stated that, following GAO’s 2011 report on potential oil and gas well liabilities, BLM implemented comprehensive policies to better manage and minimize the risks of idle and orphaned wells on federal and Indian lands. Interior agreed that there are areas where BLM can improve the accuracy of its data and further reduce the risks associated with idle and orphaned wells.\nInterior indicated that it will update and improve its existing policies and guidance consistent with the findings and recommendations in our report.\nIn response to our sixth recommendation—that BLM develop a resource management plan addressing resources needed for conducting well and bond adequacy reviews and reclaiming orphaned wells—Interior stated that BLM conducts annual work planning processes which facilitate decisions regarding the allocation of agency resources and requested additional information clarifying how our recommendation fits into or differs from these. We expanded our description of resource management planning and added language regarding BLM’s annual work planning processes to the report. However, we were not able to review the scope or adequacy of BLM’s annual work planning processes as they relate to resource planning for well and bond reviews and reclaiming orphaned wells for this report.\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, the Secretary of the Interior, 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 have any questions about this report, please contact me at (202) 512-3841 or ruscof@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 (1) how BLM’s actual costs incurred to reclaim orphaned wells and potential oil and gas well liabilities have changed, if at all, for fiscal years 2010 through 2017; (2) the extent to which BLM has implemented its 2012 well review and 2013 bond adequacy review policies; and (3) BLM officials’ and stakeholders’ views on what challenges, if any, BLM faces in managing its potential liabilities.\nTo examine how BLM’s actual reclamation costs incurred and potential oil and gas well liabilities have changed, we analyzed data in BLM’s Automated Fluid Minerals Support System (AFMSS) on oil and gas wells on federal and Indian lands, including inactive wells—which represent potential liabilities. We reviewed documentation provided by BLM and compared BLM’s policies and procedures on recording information on actual costs incurred to reclaim orphaned wells and potential liabilities against the information and communication standard outlined in Standards for Internal Control in the Federal Government. We selected and interviewed officials from 13 BLM field offices because, according to fiscal year 2016 data from the Department of the Interior’s Office of Natural Resources Revenue (ONRR) Oil and Gas Operations Report (OGOR) data system we analyzed, these offices were responsible for about 80 percent of all oil and gas wells managed by BLM. In addition, we interviewed officials from the 6 BLM state offices associated with the 13 selected field offices (see table 1). Findings from selected offices cannot be generalized to those we did not include in our review.\nHowever, because AFMSS does not contain information on actual costs incurred to reclaim orphaned wells, we obtained documentation of the actual reclamation costs that 13 selected BLM field offices incurred for fiscal years 2010 through July 2017. To analyze these costs, we reviewed purchase orders, invoices, and other documentation for actual reclamation work performed. We also obtained documentation, including spreadsheets with estimated potential reclamation costs that these 13 selected field offices faced as of July 2017. To assess the reasonableness of estimated reclamation costs, we reviewed estimates provided by officials from the selected field offices and compared those to historical actual costs that we previously reported in January 2010. We determined the overall estimated reclamation costs were sufficiently reasonable for providing a sense of the general magnitude of potential costs, though we did not assess the underlying inputs or assumptions used. The information we received is not generalizable to reclamation costs for other BLM offices that we did not review.\nWe also analyzed AFMSS data on the number of wells capable of production on federal lands from fiscal years 2010 to 2016. The AFMSS database provides a snapshot of the time that the data are queried, and so does not include historical data over time. As such, to examine the number of inactive wells on federal and Indian lands and how long these have been inactive, we combined AFMSS data with data from the OGOR data system through September 2016. The Department of the Interior requires monthly OGORs from operators, which document and record the volume of oil and gas produced from wells on federal and Indian lands. From AFMSS, we identified the appropriate population of wells by selecting wells only located on federal and Indian lands, and excluded wells that were on state or private lands. Because we did not find data in AFMSS on how long a well had been in its last recorded status to be reliable, we analyzed production records from the OGOR data system. We also excluded data on wells that were in statuses in which there was no associated potential liability, such as wells pending an application for permit to drill.\nFor each reporting date through September 2016, we aggregated data from multiple well completions to the 10-digit unique well identifier level. We then matched the unique well identifiers in AFMSS to those listed in the OGOR data system to enumerate inactive wells by duration of inactivity. For each reporting date, we designated wells with at least one completion showing non-zero production volumes or in drilling or monitoring status in the OGOR data system as active. We also designated a well as active at a certain date if AFMSS data indicated any of its completions were completed on that date. Otherwise we deemed wells where all completions had zero production reporting on a date as inactive for the corresponding period. In some cases, (i) no OGOR records existed with non-zero production volumes or drilling or monitoring well status and (ii) no AFMSS well completion date was provided, and so we calculated inactivity by using the earliest record date for that well in the OGOR data set. We discussed our methodology for calculating the number of wells with BLM officials. We compared the number of inactive wells from our analysis to those reported in BLM national and state reports to identify data inconsistencies. In addition, we analyzed AFMSS reports, as of July 2017, to analyze data on the number of orphaned wells. To assess the reliability of OGOR and AFMSS data, we reviewed agency documents, met with relevant agency officials, and performed electronic testing by verifying, for example, missing or out-of-range data values. We found the data for the number of inactive wells and how long they have been inactive as well as the data for the number of wells BLM has identified as orphaned to be sufficiently reliable for our purposes.\nTo determine the extent to which BLM has implemented its 2012 and 2013 policies for conducting well reviews and bond adequacy reviews, we reviewed applicable laws and analyzed the well review and bond adequacy review policies. We reviewed information contained in BLM’s well review and bond adequacy review reports for fiscal year 2016 as well as data generated through AFMSS on bonds and wells as of October 2017. We were unable to fully assess BLM’s performance against the directives in the agency’s 2012 well review and 2013 bond adequacy review policies due to limited agency data and documentation as discussed in the report. Specifically, we identified data accuracy and consistency concerns with some of the data elements in the agency’s well review and bond adequacy review reports as well as some AFMSS data on wells and bonds, which we discuss in this report. We performed electronic testing by verifying out-of-range values, such as dates of well reviews conducted that were listed as being in the future. We also interviewed officials from BLM headquarters, the 13 selected field offices, and the 6 associated BLM state offices, to obtain information on the extent to which the selected offices implemented the 2012 and 2013 policy directives. We compared BLM’s procedures detailing how field offices are to count or report a well review as well as procedures for maintaining data quality against the control activities standard outlined in Standards for Internal Control in the Federal Government. We also compared BLM’s procedures for monitoring implementation of policy directives against leading practices for monitoring agency policies.\nWe also reviewed documentation for a random, non-generalizable sample of 62 well reviews and 58 bond adequacy reviews, as reported by the 13 selected BLM field offices, for a total of 120 reviews. A GAO statistician selected a random sample of five well reviews for unique well numbers and five bond reviews of unique bond numbers that the 13 selected field offices had reviewed from the fiscal year 2016 well report and bond adequacy report. Due to variations in field offices’ reporting, some well and bond reviews from prior fiscal years were also included in the random selection. The Farmington field office also did not conduct any bond adequacy reviews in fiscal year 2016, and so we included bond reviews that the field office conducted in fiscal year 2015 in the random selection. In addition, the Pinedale and Rawlins field offices had not conducted any bond adequacy reviews in fiscal year 2016. As a result, we randomly selected additional reviews from fiscal year 2015 for those field offices. The Pinedale, Rawlins, and Colorado River Valley field offices conducted less than 5 bond reviews in each office in that fiscal year, so we selected and reviewed documentation in support of only those reviews they had conducted. We assessed the documentation to determine whether or not field offices conducted reviews and complied with selected directives of the well review and bond adequacy review policies. Information from our documentation reviews is not generalizable to all BLM field offices but provides illustrative examples of the information contained in BLM well and bond adequacy reviews.\nTo examine BLM officials’ and stakeholders’ views on what challenges, if any, BLM faces in managing its potential oil and gas well liabilities, we conducted semi-structured interviews with officials from BLM headquarters, the 13 selected BLM field offices, and the 6 BLM state offices associated with these 13 field offices. In addition, we interviewed or obtained written responses from a standard set of questions from 8 representatives of stakeholder organizations. These representatives were knowledgeable about BLM’s oil and gas well management, and included academic, environmental, industry, and state organizations (see table 2). In addition, we spoke with knowledgeable officials from the Department of the Interior’s Office of Natural Resources Revenue (ONRR) and the Department of the Interior’s Office of Indian Energy and Economic Development, Division of Energy and Mineral Development. To identify knowledgeable stakeholders, we conducted a literature search, reviewed previous GAO reports, and obtained recommendations from BLM officials and stakeholders using a snowball technique in which an initial group of BLM officials and stakeholders we interviewed identified additional contacts to interview. From this list, we selected stakeholders who could provide a range of viewpoints. We generally asked the same questions during each interview but also discussed individual stakeholders’ perspectives, as appropriate. In our interviews, we asked officials and stakeholders what challenges, if any, BLM offices face in managing their potential oil and gas well liability. We also asked what challenges, if any, BLM offices face in conducting well reviews and bond adequacy reviews. To identify the challenges identified most often in the interviews, two analysts developed categories of challenges identified by BLM offices and stakeholders, and each analyst independently determined whether each BLM office and stakeholder had identified challenges that fit into these categories. The two analysts discussed and resolved any differences in their coding. The views of the BLM officials, stakeholders, and other agency personnel we interviewed are not generalizable to BLM officials, similar stakeholders, and other agency personnel who we did not interview. Lastly, we compared how BLM identified and managed certain inactive wells, as well as how it managed nationwide and statewide bonds, against the control activities standard outlined in Standards for Internal Control in the Federal Government and BLM’s resource management practices against certain requirements in the Energy Policy Act of 2005 (EPAct 2005) and leading practices by the Project Management Institute in The Standard for Program Management.\nWe conducted this performance audit from November 2016 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.", "", "", "", "In addition to the contact named above, Quindi Franco (Assistant Director), Marie Bancroft (Analyst-in-Charge), Richard Burkard, John Delicath, Cindy Gilbert, Shylene Mata, Celia Mendive, Dan Royer, Barbara Timmerman, Carolyn Voltz, Jack Wang, and Jina Yu made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "h2_full", "", "", "h2_full", "h0_full", "h1_full", "h2_title", "h2_full", "", "h2_full", "h1_full", "", "", "h0_full h3_full", "", "", "", "" ] }

{ "question": [ "What does GAO's analysis infer about BLM's actual costs?", "What did GAO's analysis of data show about BLM's liabilities for reclaiming oil and gas wells?", "What information is BLM's database missing?", "Why is the lack of information tracking an issue for BLM?", "Why was GAO unable to fully assess the extent to which BLM field and state offices have implemented agency policies?", "What discrepancies did GAO identify?", "How effective is BLM's monitoring of field offices?", "What are leading practices for monitoring the implementation of agency policies?", "What happens once wells cease production?", "Why does BLM consider oil and gas wells on federal and Indian lands as potential liabilities?", "How does BLM manage these potential liabilities?", "What did GAO review about BLM?", "How did the GAO go about reviewing BLM?", "What does the report examine?" ], "summary": [ "GAO's analysis indicates that the Bureau of Land Management's (BLM) actual costs incurred and potential liabilities for reclaiming oil and gas wells have likely increased for fiscal years 2010 through 2017.", "Based on GAO's analysis of data obtained from 13 of BLM's 33 field offices that manage oil and gas programs, the average annual reclamation cost was $267,600, an increase compared to the $171,500 annual average across all BLM offices that GAO reported in 2010. Similarly, GAO's analysis of BLM data found that the number of known orphaned wells, those that generally have no responsible or liable parties, for all field offices has increased from 144 in 2010 to 219 as of 2017.", "However, BLM's database that contains information on oil and gas wells on federal and Indian lands does not collect information on costs incurred or on potential liabilities that might result from an increase in the number of orphaned wells.", "Without systematically tracking such information, BLM does not have assurance that it has sufficient bonds or financial assurances to cover the costs of reclaiming orphaned wells.", "GAO was unable to fully assess the extent to which BLM field and state offices have implemented the agency's policies on reviewing wells and bond adequacy in part because of deficiencies in BLM's monitoring approach. For example, reports BLM headquarters used to monitor field offices' implementation of the policies have limitations.", "GAO identified discrepancies between the well and bond adequacy review reports that BLM state offices submitted to headquarters and the national summary consolidating states' information. Out of 10 state offices, 3 reported a different number of reviews completed in fiscal year 2016 than what BLM reported in its fiscal year 2016 national summary.", "Without strengthening BLM's approach to monitoring, its ability to assess field offices' reviews of all inactive wells and determine the adequacy of all bonds is limited.", "Leading practices for monitoring the implementation of agency policies call for taking steps such as collecting and analyzing data on performance indicators.", "Once wells cease production, they can become inactive and potentially orphaned if an operator does not perform required reclamation and if an operator's bond is insufficient to cover the expenses.", "BLM considers oil and gas wells on federal and Indian lands and the associated leased lands as potential liabilities for the federal government because BLM may have to cover the costs of reclaiming well sites.", "To better manage its potential liabilities, BLM issued well and bond adequacy review policies in 2012 and 2013, respectively.", "GAO was asked to review how BLM manages its potential oil and gas well liabilities.", "GAO analyzed BLM's policies and data and interviewed BLM officials and representatives from stakeholder organizations.", "This report examines, among other things: (1) how BLM's actual costs and potential oil and gas well liabilities have changed for fiscal years 2010 through 2017 and (2) the extent to which BLM has implemented its well and bond review policies." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 1, -1, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "The Labor Market Experiences of Older Displaced Workers", "The Incidence of Displacement", "The Post-Displacement Experience", "Duration of Unemployment Among the Reemployed", "The Rate of Reemployment", "Nonparticipation in the Labor Force", "Post-Displacement Compensation", "Policy Responses", "Retraining", "Wage Insurance" ], "paragraphs": [ "", "The United States is projected to experience two major demographic changes that could substantially affect labor markets in future years. The demographic changes are the aging of the U.S. population and the slowdown in U.S. population growth. Both are expected to raise the total dependency ratio (the number of younger and older persons relative to the economically productive population). The old-age dependency ratio (the number of older persons per 100 individuals in the working-age population) will account for most of the increase.\nBecause the rise in the dependency ratio reflects an increase in (generally active) life expectancy, it represents an unmitigated gain in welfare. But to some economists and policymakers, a high dependency ratio raises concerns about how a small workforce will provide for a relatively large number of dependents without a decline in the U.S. standard of living.\nAt least two means have been suggested to prevent this scenario from coming to fruition. One is that productivity continue increasing at the high average rate attained over the 1960-2000 period. This outcome is possible given the inverse relationship between labor force and productivity growth. Some suggest, however, that the educational attainment of recent immigrants and their offspring might temper future increases in labor quality which helped spur productivity growth in the past. Another possibility is that the labor force will not be as small as anticipated in the future because older members of the population will extend their working lives to reflect the increase in life expectancy.\nHealthy older individuals face a number of impediments to spending more years in the labor force, however. Late career employees who involuntarily lose long-held jobs through no fault of their own could also be among those who have the most difficulty delaying retirement.\nThe ability of older displaced persons to continue working has implications for society beyond mitigating labor shortages. If these workers exhaust any unemployment benefits for which they might be eligible, they presumably will draw down assets including retirement nest eggs. As a result, they might remain in the labor force to restore depleted savings and to reach planned retirement asset values; however, those unable to find new jobs could become eligible for means-tested government assistance (e.g., Food Stamps and Supplemental Security Income). Even older displaced workers who become reemployed—but in jobs with wages substantially below those on their lost jobs—might be unable to save as much as they had intended for their fast-approaching retirements. Thus, they too could eventually qualify for means-tested aid.\nThis report analyzes the labor market experiences of those older workers who have involuntarily lost long-held jobs for reasons unrelated to their own performance (e.g., veteran factory workers at plants closed because of import competition, experienced information technology workers whose jobs have been outsourced to workers in other countries, and mid-level managers in positions eliminated through corporate restructuring). It examines current policies targeted at the reemployment of older displaced workers which, if successful, might lengthen their stay in the workforce.", "There is no single definition of displaced workers or of older workers. Definitions differ by the variables available in surveys and by statute. Shortly after the issue of worker dislocation emerged, the U.S. Bureau of Labor Statistics (BLS) developed the Displaced Worker Supplement (DWS) to the Current Population Survey (CPS) which queries different groups of households over time. Every two years since the mid-1980s, the DWS has been administered with the January or February CPS to determine the number, characteristics, and labor market outcomes of adults who reported that they had lost or left jobs as a result of a plant/company shutdown or move, insufficient work, or position/shift abolished.\nIn its definition of displaced workers, BLS includes only workers who had worked for their employers for at least three years before being discharged, as they are expected to have greater difficulty becoming reemployed than more recent hires. When utilizing the DWS or other databases, analysts sometimes do not apply a tenure screen. Similarly, some researchers may define older workers as having attained a given age minimum (e.g., at least 40 or 55 years old), while others also set an upper limit (e.g., below age 65) to avoid the complexities introduced by eligibility for public and private retirement benefits.\nBegun in 1992, the longitudinal Health Retirement Study (HRS) survey focuses specifically on older individuals, which it defines as persons over the age of 50. Analysts are able to utilize the HRS to examine displacement among older workers because it asks individuals whether their jobs ended as a result of business closings and permanent layoffs (i.e., for reasons other than poor performance).\nResearchers have begun to utilize the administrative records of the unemployment insurance (UI) system as well. Its major benefit over survey data is that it offers virtually universal coverage of workers on the payrolls of employers in a given state. Having very large database, even when limiting the analysis to older workers, enables analysts to make detailed estimates (e.g., by industry). In addition, the UI records contain earnings histories over several years, which allows determination of long-term changes in earnings. And, unlike the DWS and HRS, the information in UI records is not self-reported.", "Just over 900,000 workers aged 55 and older who had at least three years of tenure were displaced during the 2005-2007 period, according to the most recent DWS data. Older persons comprised one in four long-tenured workers displaced between January 2005 and December 2007.\nThe displacement rate is defined as the share of all employed persons with three or more years of tenure who lost long-held jobs. The relationship between the displacement rate of older workers compared to younger workers has fluctuated over time, according to the DWS data. But, some empirical analyses estimate that the relative rate of displacement among older workers (variously defined) increased from the 1980s to the 1990s. A heightened risk of job loss among older workers may be related to the increase in displacement over time caused by position/shift abolishment. This reason for involuntary job loss is thought to reflect corporate restructuring, which seemingly has taken a heavier toll on experienced (aged 40 to 64) white-collar workers, such as managers, in the more recent period. Other analyses have not uncovered an increase in the risk of displacement among older workers, but because \"job tenure, not age, drives displacement trends ... declining job tenure suggests older workers could be more vulnerable in the future.\"", "Older workers typically incur greater adverse consequences than younger workers from displacement according to the measures analyzed below. Those older persons whose jobs are terminated through no fault of their own often have subsequent labor market outcomes that also compare unfavorably with nondisplaced older workers. Explanations for these patterns are presented below as well.", "A relatively greater number of older than younger displaced workers experience long spells of unemployment before becoming reemployed. Among those with new jobs in January 2008, 20% of long-tenured displaced workers at least 55 years old had been unemployed for half a year or longer, in contrast with 12% of displaced workers aged 25 through 54. Older displaced workers spend the most time unemployed: At 6.3 weeks without work as of January 2008, this was two weeks beyond the median period among reemployed 25- to 54-year-olds who had been displaced between 2005 and 2007. Reflecting this disparity, a slightly larger share of reemployed older job losers, when compared to prime-age job losers, had exhausted their unemployment insurance benefits.\nTwo explanations offered for older workers' typically longer duration of unemployment are a greater preference for leisure and more non-labor income. The results of one analysis suggest that this is not the case. Instead, the author estimates that the longer unemployment spells and larger earnings losses of older displaced workers are due more to their inferior job prospects.", "The displacement of older workers ends with comparatively few finding new jobs. Somewhat more than one-half of long-tenured displaced workers at least 55 years old were reemployed in January 2008, compared to 72.6% of 25- to 54-year-olds. (See column 4 of Table 1 .) The group's low reemployment rate was heavily influenced by its oldest members: fewer than one in five displaced workers at least 65 years old who were dismissed between 2005 and 2007 were again working in January 2008.\nFurther, according to an analysis of 1992-1996 HRS data, older displaced workers subsequently have lower employment rates than a comparable group of older nondisplaced workers due, in part, to the short-lived nature of post-displacement jobs. The disparity in employment rates was estimated to be particularly true of persons in their 60s. The impact of displacement on employment status was found to be long-lasting as well. For example, only 60% of men and 55% of women who lost their jobs at 55 years of age were employed two years later, in contrast with 80% employment rates for nondisplaced workers the same age; there was little narrowing of the employment gap even four years after termination, when the rate among older displaced workers was about 20% less than the rate among their nondisplaced counterparts.\nThe lower employment rate of older displaced workers compared to either younger workers or to older nondisplaced workers appears related to the restricted opportunities that older jobseekers typically encounter. Older persons' comparatively limited access to jobs could be due to age discrimination (which is difficult to measure directly because of methodological issues) and to lawful considerations of employers. One study estimated that steep wage profiles, compensation packages with defined benefit pensions, and high demand for computer skills are positively associated with older jobseekers' constrained access to employment (measured by the more concentrated occupational distribution of newly hired older workers compared to younger new-hires and older workers generally). The authors concluded that\n[t]he current structure of the labor market does not appear well suited for later retirement [i.e., longer working lives] ... given the restricted employment opportunities facing older workers ... who switch jobs, or opportunities that would face non-switching older workers were they to change jobs [e.g., those who want to continue working, but in non-career bridge jobs, after retiring from their long-time employers].\nThe presence of health benefits in a firm's compensation package also could deter employers from hiring older workers because of their typically above-average health care costs. It sometimes has been argued that if firms are able to make older workers absorb their higher costs by paying them lower wages, the benefit would not be a barrier to reemployment. Based upon an analysis of 1984-2000 DWS data, however, reemployed workers age 55 and older failed to experience greater tradeoffs of wages for health benefits than other displaced workers. Accordingly, another study estimated that employers with health benefit plans have significantly fewer newly hired 55-64 year olds on their payrolls.\nU.S. labor markets have demonstrated an enormous capacity for change over the years. Even if firms alter their compensation structures and mix\nin response to the increase in the number of older workers, the legal restrictions on mandatory retirement, the increase in Social Security retirement age, and the declining importance of defined benefit pension plans. ...there is likely to remain a sizable number of older workers facing constrained [employment] opportunities both within and following their long-term career jobs.", "Older job losers leave the labor force in numbers disproportionate to their presence in the displaced workers population: While workers age 55 and older comprised one-fourth of all long-tenured workers displaced during 2005-2007, they accounted for one-half of all those who stopped supplying their labor. An analysis of retirees in the 1992-1998 HRS estimated that displacement is one key predictor of involuntary withdrawal from the labor market for older persons. The comparatively long periods of unfruitful job search that older displaced workers engage in, mentioned above, might cause them to conclude that no jobs are available and withdraw from the labor force at a relatively high rate.\nThe increase in exit rates from the labor force is especially marked among persons 65 or more years old (69.0%). This implies that another contributory factor to labor force withdrawal is age-dependent, namely, eligibility for other sources of income (e.g., Social Security benefits, private pensions, and penalty-free access to Individual Retirement Accounts).", "Relatively more older displaced workers who find new full-time jobs earn less than they had on the full-time jobs they lost. Based upon January 2008 data from the DWS, a larger share of long-tenured older workers compared to 25-54 year olds displaced from full-time positions were paid lower wages in their new full-time jobs (43% and 37%, respectively).\nThere is a very strong relationship between the change in earnings and tenure on the lost job. The average earnings loss is dramatically larger when the worker had accumulated substantial tenure on the lost job. ... This is consistent with the destruction of job specific human capital when a long-term job ends. The estimates with respect to age, which show a weak relationship with the earnings change, taken together with the estimates with respect to tenure, generally confirm the standard finding that older job losers, who are more likely to have lost a high-tenure job, suffer larger wage declines than do younger workers.\nIn addition, relatively more workers at least 55 years old who lost long-held full-time jobs between 2005 and 2007 were employed part-time in January 2008. Not only would fewer hours of work be expected to yield smaller paychecks, but also the wage rate of part-time jobs generally is lower than that of full-time jobs.\nWhen part-time and full-time wage and salary workers are considered together, as was done in a study involving data from the 1994-2000 DWS, real (inflation-adjusted) weekly earnings of reemployed workers fell to a greater degree the older the worker. Compared to workers age 20 to 29, real earnings on the subsequent job were 4.2% less among 30-39 year olds; 6.7% less among 40-49 year olds; 7.1% less among 50-59 year olds; and 34.4% less among displaced workers at least 60 years old. In addition, displaced workers continue to earn significantly less than they would have had they not been discharged for up to 10-12 years after termination. For some workers displaced in their 50s, then, the period of reduced earnings could last for all their remaining years in the labor force.\nThe reason for which older workers leave their jobs affects the degree of earnings loss they incur. A study that utilized HRS data on workers between 45 and 75 years old who changed employers in the 1986-2004 period estimated that wages of reemployed retirees and displaced workers fell much more than the wages of older workers who quit or left their jobs for other reasons (e.g., relocation, poor health and disability, and family or child care responsibilities). In the case of older displaced workers, specifically, pay cuts averaged 12%. Older males who held the job they lost for 10 or more years were estimated to experience an especially large drop in average earnings upon reemployment (20%). The substantial wage losses of older workers who were laid off from long-held jobs could be partly related to the large proportion that found new jobs in different industry groups (60%) where their skills might not be as highly prized. In addition, it was determined that two in five older men displaced from jobs in which they had worked for more than 10 years no longer had pension coverage upon reemployment.\nA study that utilized UI administrative records for the state of Connecticut provides confirmation that older (40 and over) displaced workers who change industries upon reemployment suffer an especially large decrease in earnings. An older worker who lost a job in the auto manufacturing industry, for example, and accepted a new job in a nonmanufacturing industry experienced the largest decrease in earnings. This reflects the substantial impact on earnings of the loss of firm-specific skills for displaced factory workers. The researchers also compared the experiences of older workers who found new jobs after being displaced in mass layoffs (defined as an employment cut of 30% or more at the firms that let them go) between 1999 and 2004 with a comparable age group of workers continuously employed over the period. They estimated that earnings losses were larger the older the displaced worker was.\nOverlaid on their sharply lower earnings and pension coverage is a marked decrease in additions to the value of pension benefits. According to an analysis of 1992-1998 HRS data that examined individuals aged 50-75, the gain in pension wealth from delaying retirement is significantly reduced for older displaced males. (For older women, the decrease is not statistically significant.) The lower earnings, estimated to be 41% for men and 38% for women, in combination with this reduced \"pension gain\" were found to significantly dampen the motivation to find another job after displacement. Changes in wages and pension accumulations, however, were estimated to explain very little of the substantially higher rate of retirement among older displaced workers compared to older nondisplaced workers. While some older displaced workers may be unwilling to accept new jobs that pay considerably less than their former jobs, many more may retire because they are unable to obtain new jobs. The study's results suggest that, compared to changes in wages and pension-related financial considerations, other obstacles to reemployment may better explain the high retirement rates of older displaced workers (e.g., employer reluctance to train older individuals and age discrimination).", "The Dislocated Worker program under Title I of the Workforce Investment Act (WIA) and the Trade Adjustment Assistance (TAA) program are meant to help displaced workers obtain new employment by providing job search assistance and training among other services. Those eligible for the Dislocated Worker program are more broadly defined than the group examined in this report. The TAA program, in contrast, is limited to workers who have lost jobs due to imports of articles that compete with U.S.-produced goods and to shifts of production outside the United States.", "The WIA program does not reserve a portion of its funding for older displaced workers. Similarly, TAA does not distinguish between older and other displaced workers, but as an entitlement program, any TAA-eligible older worker would be assured of receiving services if they chose to. The TAA program also provides reemployment assistance beyond that offered under WIA's Dislocated Worker program (e.g., relocation allowances).\nIn effect, WIA and TAA attempt to keep older displaced workers in the labor force by addressing some of the reemployment barriers and financial disincentives discussed above. In light of employer reluctance to train older workers (either because of the short time period in which to recoup their investment or because of stereotyping), the programs draw upon public funds to do so. To the extent that employers' high demand for up-to-date computer skills limits older workers' access to jobs, the provision of such training through WIA and TAA could expand older workers' job opportunities. Training may thus serve a purpose beyond the human capital investment motive of raising workers' skill levels to increase post-displacement wages. However, taxpayer subsidized training does not come with the guarantee of a job at its end.\nFairly few evaluations have been conducted of training programs for displaced workers. Of the displaced worker programs that have been examined, some provided more job search assistance than retraining, solely provided reemployment bonuses, or had methodological shortcomings (e.g., insufficient follow-up periods and failure to differentiate types of training).", "Publicly subsidized training is in one sense intended to compensate workers for the persistent impact on employment and earnings of job loss that is a regularly occurring byproduct of labor market adaptation to economic change (e.g., dissemination of technological and other innovations in the workplace, heightened international competition in provision of goods and services). By contrast, unemployment insurance (UI) only compensates displaced workers during the period of job search; it neither motivates them to find new jobs nor insulates them from the extended effect of displacement on employment and wages. Recognizing that the nation's UI system provides only short-term compensation and that retraining may not be the optimal solution for all displaced workers, some analysts have recommended that experienced workers who lose jobs for reasons unrelated to their performance receive a supplement if the earnings on their post-displacement jobs are less than on their pre-displacement jobs. (A wage supplement is sometimes referred to as wage insurance.)\nIn the Trade Act of 2002, Congress established a five-year demonstration program specifically for older workers eligible for the TAA program—the Alternative Trade Adjustment Assistance (ATAA) program—which allows eligible workers at least 50 years old to receive an earnings supplement for two years. To obtain the supplement workers must, within 26 weeks of job loss, take a full-time position with wages below those of their former jobs; the new job must pay less than $50,000 as well. The supplement, which is funded from the Federal Unemployment Account, equals 50% of the difference between the wages on the old and new jobs, up to a maximum of $10,000 over the two-year period of receipt.\nAccording to its proponents, wage insurance might enhance the reemployment prospects of displaced workers by prompting them to consider even those positions that pay substantially less than the jobs they lost. During their initial period of employment, these workers also might have the opportunity to receive on-the-job training that makes them more productive and qualifies them for pay increases which narrow the gap between their pre-and post-displacement wages by the end of their eligibility for wage supplements. If the supplement is available for a limited time from the date of job loss, the payment also could encourage speedier reemployment because its value effectively declines the longer unemployment continues. Thus, in addition to enabling displaced workers to remain in the labor force, a wage insurance program might reduce UI costs.\nBased upon the extremely limited evidence available thus far, the actual benefits of a wage insurance program appear to be extremely modest. The Canadian Earnings Supplement Project was conducted from July 1995 to October 1998 to estimate whether the availability of a pay supplement promoted and sped reemployment of displaced workers eligible for unemployment benefits. The two-year supplement was designed to replace 75% of the earnings loss of a displaced worker (up to $250 per week) who found a new, lower paying, full-time (30 hours a week) job within a 26-week period. Displaced workers were randomly assigned to a group that was offered the supplement and to a group that was not. The low take-up rate —about 20% of supplement group members received payments— largely reflects an inability to quickly find new full-time jobs . The availability of a supplement was not found to affect the timing or intensity of job search among supplement versus control group members. (The only statistically significant impact on job search was to prompt a few displaced workers to consider a broader range of jobs.) Absent speedier reemployment of supplement over control group members, then, the program did not lower unemployment insurance costs. Although the program was estimated to produce a small, statistically significant difference in the full-time reemployment rate of supplement compared to control group members, the difference occurred toward the end of the period during which jobseekers were eligible for the supplement. This difference in full-time reemployment rates—4.4 percentage points at its widest—was found to gradually diminish; by one year after the workers had been assigned to the supplement and control groups, their full-time reemployment rates essentially were and remained the same. The program's most noticeable effect was on the compensation of the few supplement recipients: The supplement, which averaged $8,705 over 64 weeks, represented a large portion of the incomes of these individuals.\nSome information is available on the experience of older displaced workers (age 55 and above) who were included in the Canadian Earnings Supplement Project. The researchers estimated that age was one of the primary determinants of reemployment during jobseekers' eligibility for the supplement: Each additional year of age lowered, by about one percent, the likelihood of finding a full-time position. Workers with long tenure at their employers, who tend to be at the older end of the age spectrum, also were found to have a reduced probability of reemployment during the eligibility period. Full-time reemployment rates did not differ significantly between supplement and control group members age 55 and older.\nAs to the U.S. experience with the ATAA program, it thus far appears hampered by implementation problems that may have dampened worker access to wage supplements. The demonstration went into effect in August 2003, but a majority of states reported various difficulties (e.g., creating payment systems separate from their existing UI check-issuing systems and tardy guidance from the U.S. Department of Labor). As a result, only 19 states had the wage insurance program up and running in 2003.\nIt should be kept in mind that wage insurance and training operate on the supply side. They do not address the demand-side barriers to reemployment discussed above. The only federal program that focuses on the seemingly limited job opportunities of older unemployed workers is the Senior Community Service Employment Program (SCSEP), Title V of the Older Americans Act. It creates part-time public service jobs for persons aged 55 and older who have low incomes and poor employment prospects.\nTo the extent that demand-side rather than supply-side obstacles prevent substantial numbers of older displaced workers from obtaining new jobs, then raising the eligibility age of Social Security may not succeed at delaying retirements among members of this group. Not only might older displaced workers be unable to ameliorate potential shortages by extending their working lives, but they also might live in reduced circumstances and qualify for means-tested government benefits as a result of their unplanned retirements. Further, older workers voluntarily retiring from long-held jobs who want to extend their stay in the labor force by taking non-career (bridge) jobs could be thwarted from doing so by these same demand-side obstacles." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 3, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h1_title", "", "h1_full", "", "h1_full", "h1_full", "", "h2_full", "", "h2_full" ] }

{ "question": [ "What could happen to the United States that could greatly affect labor markets?", "What are the demographic changes?", "How are the changes expected to affect the dependency ratio?", "How can a rising dependency ratio be mitigated?", "What difficulties could older workers experience?", "How do the labor market outcomes of older displaced workers compare with older nondisplaced workers?", "What about the labor market outcome comparison of older workers and younger workers?", "What are the purposes of the Dislocated Worker program of the Workforce Investment Act and the Trade Adjustment Act?", "How are older workers' reemployment difficulties addressed from the demand side?", "What does the Senior Community Service Employment Program do?" ], "summary": [ "The United States is projected to experience two major demographic changes that could greatly affect labor markets in the future.", "The demographic changes are the aging of the U.S. population and the slowdown in population growth.", "Both are expected to raise the total dependency ratio (the number of younger and older persons relative to the economically productive population).", "One way to lessen the dependency ratio's expected increase is for people to spend more years in the labor force.", "Older workers who involuntarily lose long-held jobs through no fault of their own could experience great difficulty delaying their retirement.", "Older displaced workers usually have labor market outcomes that compare unfavorably with older nondisplaced workers, such as long-lasting lower employment rates.", "Older workers often are more adversely affected by displacement than younger workers as well. For example, older workers disproportionately end displacement by exiting the labor force than by finding new jobs.", "Both the Dislocated Worker program of the Workforce Investment Act and Trade Adjustment Assistance (TAA) are designed to actively help eligible displaced workers, regardless of age, find new jobs (e.g., by providing training). In addition, the Alternative Trade Adjustment Assistance program for TAA-eligible older workers offers a wage supplement to those who become quickly reemployed in full-time jobs that pay less than their lost jobs.", "The only federal program that addresses older workers' reemployment difficulties from the demand side is the Senior Community Service Employment Program (Title V of the Older Americans Act).", "It creates part-time public service jobs for older persons with low incomes and poor job prospects." ], "parent_pair_index": [ -1, 0, 1, -1, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 3, 3, 3 ] }

{ "title": [ "", "U.S. Agricultural Exports", "Economic and Other Factors in Agricultural Trade", "USDA's Agricultural Export Programs", "Market Development Programs", "Authorized Annual Funding Levels", "Market Access Program (MAP)20", "Foreign Market Development Program (FMDP)24", "Emerging Markets Program (EMP)25", "Quality Samples Program (QSP)26", "Technical Assistance for Specialty Crops (TASC) Program27", "Export Credit Guarantees", "GSM-102 Program29", "Facility Guarantee Program (FGP)38", "Dairy Export Incentive Program (DEIP) Repealed", "Funding", "Reorganization of Trade Functions at USDA", "Issues for Congress", "U.S. Agricultural Exports in a Downturn", "Trans-Pacific Partnership Agreement (TPP)", "Cuban Market for U.S. Farm Products", "Trade Distorting Foreign Farm Subsidies", "Reorganizing Trade and Farm Services Functions Within USDA", "Public Sector Role and Effectiveness in Export Promotion", "Congressional Efforts to Eliminate Export Promotion Programs Come Up Short", "Market Access Program Reforms of the 1990s", "Appendix. Value of U.S. Agricultural Trade" ], "paragraphs": [ "", "Agricultural exports are important to both farmers and the U.S. economy. With the productivity of U.S. agriculture growing faster than domestic demand, farmers and agriculturally oriented firms rely heavily on export markets to sustain prices and revenue. According to the U.S. Department of Agriculture's (USDA's) Economic Research Service (ERS), agricultural exports have exceeded agricultural imports in every year since 1960 ( Table A-1 ). The value of agricultural exports has exceeded imports by a wide margin in recent years, but this trend reversed course in FY2015, with the positive balance expected to narrow further in FY2016 ( Figure 1 ). In FY2014, U.S. agricultural exports reached a peak of $152.3 billion, topping the previous record high of $141.1 billion in FY2013. Agricultural imports have risen steadily over this period, climbing from $103.9 billion in FY2013 to $114 billion in FY2015, narrowing the agricultural trade surplus from $43.1 billion in FY2014 to $25.7 billion in FY2015.\nLooking to FY2016, USDA projects that the trends that resulted in a narrower farm trade surplus in FY2015 will persist. The agency expects U.S. exports to recede to $125 billion while imports climb to $118.5 billion, resulting in a substantially smaller farm trade surplus of $6.5 billion in FY2016 and marking what would be the smallest surplus since FY2006.\nFor perspective, USDA estimates that during the most recent three years (2013-2015), the value of U.S. agricultural exports accounted for between 10% and 11% of total U.S. exports, while U.S. agricultural imports made up 5% of total imports. Within the agricultural sector, the importance of exports looms even larger, accounting for 20% of the value of overall agricultural production in 2013, the most recent year for which USDA data are available.\nForeign markets represent the largest outlet for a number of U.S. farm commodities while providing a substantial market for many other agricultural products. During the 2014/2015 marketing year, export markets absorbed 69% of U.S. cotton production, 41% of wheat output, and 47% of the soybean harvest. In the livestock sector, USDA estimates the export share of pork, broiler meat, and beef production in 2015 amounted to 20%, 16%, and 10%, respectively. Foreign markets also represent the largest outlet for certain specialty crops, including tree nuts. USDA indicates that during the 2014/2015 season, export markets absorbed 71% of the marketable production of U.S. walnuts, 68% of almond production, 75% of the pecan crop, and 59% of pistachios.\nThe top country destinations for U.S. agricultural exports in FY2013 are given in Table 1 . In FY2012, China surpassed North American Free Trade Agreement (NAFTA) partner Canada as the leading market for U.S. agricultural exports, and China retained the top spot in FY2015.\nThe leading agricultural commodity exports by value in FY2015 are shown in Table 2 . Strong demand for soybeans, especially from China, helped make soybeans the largest U.S. agricultural export commodity that year.\nConcerning the composition of agricultural exports, bulk commodities such as soybeans and corn continue to rank at the top of the list of farm exports by value, but the mix of exports continues to favor high value products (HVPs) over bulk commodities. The HVP category includes such products as live animals, fruits and vegetables, nuts, fats, hides, feeds, sugar products, meat, milk, grain products, and processed fruits and vegetables. In FY2015, HVP products comprised 67% of all U.S. agricultural exports, about the same as in FY2013 and compared with a 62% share in FY2010. USDA projects that the HVP share of U.S. farm exports will continue to increase, potentially reaching 74% of the total by 2025. The growth in HVP sales is expected to be led by increases in animal-based products and horticultural products.\nAgricultural exports make a significant contribution to the overall U.S. economy. USDA estimates that each dollar of agricultural exports stimulates an additional $1.27 in business activity, while each $1 billion in agricultural exports supports 7,550 jobs.\nNearly every state produces agricultural commodities that are exported. Actual exports of agricultural commodity production by state are not available as such, but USDA provides estimates of commodity exports by state based on data for U.S. farm cash receipts. Table 3 provides a listing of the 10 states with the highest estimated shares of U.S. agricultural exports by value in calendar year (CY) 2014. These 10 states accounted for 56% of total U.S. agricultural exports that year.", "U.S. and global trade are greatly affected by the growth and stability of world markets. Changes in world population, economic growth, and income; tastes and preferences in foreign markets; and exchange rates are most likely to alter global food demand. U.S. domestic farm policies that affect price and supply, as well as trade agreements with other countries, also influence the level of U.S. agricultural exports. According to USDA, world economic growth—particularly sustained relatively high growth in developing countries—provides a foundation for increases in global food demand, trade, and agricultural exports.\nDeveloping countries are expected to drive most of the growth in demand for U.S. agricultural exports in the years ahead, reflecting the outlook for faster population growth in these countries and rising incomes associated with an expanding middle class. These economic trends, coupled with younger population demographics and increased urbanization, are closely associated with greater diversification of diets and increased demand for meat, dairy products, and processed foods that tend to shift import demand in favor of feedstuffs and HVPs.\nGlobal economic growth is projected to rise to 3.1% in 2016 from 2.8% in 2015, according to USDA. Table 4 contains a breakdown of growth prospects by major regions and key countries. Economic growth is expected to be led by moderately stronger growth in the United States, a further uptick in economic activity in the European Union and Africa, and relatively stable growth prospects in Asia and Oceania overall amid slower growth in China. A further downturn in Brazil's economic prospects may weigh on growth prospects in South America.\nA leading factor in the decline in the value of U.S. agricultural exports in FY2015 was lower prevailing market prices for numerous farm commodities. For instance, the average farm prices of 2014-crop soybeans and corn (marketed from September 1, 2014, to August 31, 2015) were lower than average prices for the 2013 crops by 22% and 17%, respectively. Farm prices for major animal products—including beef cattle, hogs, broilers, and milk—were also lower in 2015 compared to 2014, thereby contributing to the lower dollar value of export sales in FY2015.\nAnother factor influencing U.S. agricultural trade is the value of the U.S. dollar relative to foreign currencies. Following a 10-year period of dollar depreciation from 2002 to 2011, the U.S. currency has since strengthened. The dollar is projected to continue to strengthen relative to most foreign currencies in 2016, though not as sharply as it appreciated in 2015 ( Figure 2 ). In part, the stronger U.S. dollar reflects relatively favorable economic prospects for the U.S. economy compared with circumstances elsewhere. For agriculture, a stronger dollar makes U.S. commodities more expensive in local currency for foreign buyers and renders U.S. products less competitive in relation to commodities from export competitors with weaker currencies, such as Brazil and Argentina. In this way the stronger dollar contributed to a lower level of farm exports in FY2015 with projected dollar strengthening expected to have a similar effect in FY2016. The stronger dollar also encourages increased levels of U.S. agricultural imports by making foreign products cheaper in U.S. dollar terms.\nU.S. trade policy and geopolitical events also factor into the level of agricultural exports. Trade liberalization efforts aim to expand international commerce by lowering various barriers to trade and broadening access to foreign markets. These efforts include multilateral agreements under the auspices of the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), as well as regional trade agreements such as NAFTA, and bilateral free trade agreements, including the recent Korea-U.S. Free Trade Agreement (KORUS FTA).\nGeopolitical events, such as economic sanctions, can influence the scope of trade in agricultural products as well. The effects of sanctions are often temporary, as commodities are fungible and trade flows tend to realign. One such event was the embargo that President Jimmy Carter imposed on U.S. grain sales to the Soviet Union in January 1980 in response to the Soviet invasion of Afghanistan in December 1979. At the time, the Soviet Union was the largest importer of U.S. grain and feed. The quantity of U.S. grain and feed exports to the Soviet Union plunged by 66% in 1980, but total exports of U.S. grain and feed that year climbed by 10% as other importers absorbed the displaced grain.\nMore recently, on August 7, 2014, Russia banned the import of certain foods—including certain beef, pork, poultry, fish, seafood, fruits, nuts, vegetables, sausages, and prepared foods—from a number of Western countries, including the United States, in retaliation for economic sanctions imposed on Russia for its actions in Ukraine. Banned food imports from the affected countries amounted to 22% of the value of Russia's food imports in 2013. The U.S. share of the affected product imports amounted to about 9% of the total but comprised only about 0.5% of annual U.S. agricultural exports. In the wake of the ban, U.S. agricultural exports to Russia have fallen from a total of 712,697 metric tons in 2013 to 565,652 metric tons in 2015. Shipments of poultry meat and products have been severely affected, declining from 276,636 metric tons in 2013 prior to the ban to zero in 2015.", "Recognizing the importance of agricultural exports to the financial well-being of the U.S. farm sector, farm bills have typically included programs that promote commercial agricultural exports. The 2014 farm bill continues this pattern.\nUSDA's Foreign Agricultural Service (FAS) works to improve the competitive position of U.S. agriculture in the global marketplace. To this end, FAS administers several export programs designed to improve the competitive position of U.S. agricultural goods in the world marketplace with the objective of facilitating export sales and improving foreign market access for U.S. farm products. The trade title of the 2014 farm bill, the Agricultural Act of 2014 (Title III of P.L. 113-79 ), as signed into law on February 7, 2014, establishes policy for five years through FY2018.\nThe law reauthorizes and amends USDA's foreign agricultural export programs. Budget authority for these programs is mandatory and not subject to annual appropriations. Funds required for these export programs are provided directly by the Commodity Credit Corporation (CCC) through its borrowing authority.\nAgricultural export programs generally fit within three broad groupings:\n1. Export market development programs, 2. Export credit guarantee programs, and 3. Direct export subsidies.\nThe 2014 farm bill made several changes to Title III but left intact most programs that facilitate overseas market development and sales. Key changes include alterations to the Export Credit Guarantee Program to align it with WTO rulings concerning its use in facilitating exports of U.S. cotton and the elimination of the Dairy Export Incentive Program (DEIP), which effectively curtailed the use of direct export subsidies. The bill also directs the Secretary of Agriculture to establish the position of Under Secretary of Agriculture for Trade and International Affairs as part of a reorganization of the agency's trade functions.", "FAS supports U.S. industry efforts to build, maintain, and expand overseas markets for U.S. food and agricultural products. FAS administers five market development programs:\n1. Market Access Program (MAP), 2. Foreign Market Development Program (FMDP), 3. Emerging Markets Program (EMP), 4. Quality Samples Program (QSP), and 5. Technical Assistance for Specialty Crops Program (TASC).\nIn general, these programs provide matching funds to U.S. organizations to conduct a wide range of activities, including market research, consumer promotion, trade servicing, capacity building, and market access support. FAS also facilitates U.S. participation in a range of international trade shows. The 2014 farm bill extended legislative authorization of CCC funds for these market development programs for FY2014 through FY2018. Export programs are funded through the borrowing authority of the CCC.", "Mandatory annual funding for market development programs as authorized in the 2014 farm bill includes $200 million for MAP, $34.5 million for the FMDP, $10 million for the EMP, and $9 million for TASC. QSP is authorized under the CCC Charter Act, not the farm bill, and is funded through CCC's borrowing authority.", "MAP—which aids in the creation, expansion, and maintenance of foreign markets for U.S. agricultural products—was originally authorized by the Agricultural Trade Act of 1978 ( P.L. 95-501 , as amended) and is administered by FAS. MAP provides funding to nonprofit U.S. agricultural trade associations, nonprofit U.S. agricultural cooperatives, nonprofit state-regional trade groups, and small U.S. businesses for overseas marketing and promotional activities, such as trade shows, market research, consumer promotions for retail products, technical capacity building, and seminars to educate overseas customers. MAP funds assist primarily value-added products, such as cotton, fruits, dairy products, meat, nuts, wood products, wine, and seafood. MAP funds can be used to support both generic promotions and brand-name promotions. Generic promotions are undertaken by nonprofit trade associations, state regional groups, and state agencies to increase demand for a specific commodity (e.g., peas, lentils, cotton) with no emphasis on a particular brand.\nMAP funds may be spent by the participating organizations themselves (direct funding) or redistributed to entities that have applied to participating organizations for MAP assistance (indirect funding). Since FY1998, USDA policy has been to prohibit the allocation of MAP funds to large U.S. companies. Agricultural cooperatives and small U.S. companies can receive assistance under the brand program, which seeks to establish consumer loyalty for their brand-name products. To conduct branded product promotion activities, individual companies must provide a funding match of at least 50% of the total marketing cost. For generic promotion activities, trade associations and others must meet a minimum 10% match requirement.\nAlthough MAP is a mandatory program and hence does not require an annual appropriation, agriculture appropriations acts have on occasion capped the amounts that could be spent on the program or imposed other restraints on programming. For example, the FY1996 Agriculture Appropriations Act prohibited MAP spending to promote exports of mink pelts or garments. Since 1993, no MAP funds may be used to promote tobacco exports.\nMAP has been targeted for cuts by some Members of Congress who maintain that it is a form of corporate welfare, or to help offset increased expenditures on other programs, but such efforts have been unsuccessful. MAP funding steadily increased from $90 million in FY2000 to $200 million in FY2006, where it has remained. The 2014 farm bill reauthorized CCC funding for MAP at then-current mandatory funding levels of $200 million annually through FY2018.", "FMDP was established in 1955 and, like MAP, has the primary objective of assisting industry organizations in the expansion of export opportunities. The 2014 farm bill reauthorizes CCC funding for FMDP for FY2014-FY2018 at an annual level of $34.5 million. The 1996 farm bill provided new statutory authority for the program. Funding for FMDP has been maintained at $34.5 million since the 2002 farm bill.\nFMDP funds industry groups, with a match requirement, to undertake activities such as consumer promotions, technical assistance, trade servicing, and market research by the government and industry groups. Unlike MAP, which mainly promotes consumer goods and brand-name products, FMDP mainly promotes generic or bulk commodities.", "EMP assists U.S. entities in developing, maintaining, and expanding the exports of U.S. agricultural commodities and products by providing partial funding for technical assistance activities that promote U.S. agricultural exports to emerging markets. Emerging markets are defined as any country or regional grouping that (1) is taking steps toward a market-oriented economy through the food, agriculture, or rural business sectors of the economy of the country; (2) has the potential to provide a viable and significant market for U.S. agricultural commodities or products; (3) has a population greater than 1 million; and (4) has a per-capita income level below the level for upper-middle-income countries as determined by the World Bank.\nThe program is intended primarily to support export market development efforts of the private sector, but its resources may also be used to assist public agricultural organizations. Technical assistance may include activities such as feasibility studies, market research, sector assessments, orientation visits, specialized training, business workshops, and similar undertakings.\nThe 2014 farm bill extended EMP through FY2018, authorizing up to $10 million of CCC funding annually through FY2018—unchanged from the 2008 farm bill—to carry out technical assistance activities to promote U.S. agricultural exports and address technical barriers to trade in emerging markets.", "QSP assists U.S. agricultural trade organizations in providing small samples of their agricultural products to potential importers in emerging markets overseas. QSP focuses on industrial and manufacturing users of products, not end-use consumers, and allows manufacturers overseas to do test runs to assess how U.S. food and fiber products can best meet their production needs. Priority is given to projects targeting developing nations or regions with a per-capita income of less than $10,725 and a population greater than 1 million. Priority is also given to projects designed to expand exports where a U.S. commodity's market share is 10% or less. Operating under the authority of the CCC Charter Act of 1948, FAS used $1.06 million of CCC funds in FY2013, $1.29 million in 2014, and $1.57 million in FY2015 to carry out the program. The USDA estimated net expenditures of $2.55 million in FY2016, while the President's budget for FY2017 estimates net expenditures of $2.56 million.", "TASC aims to assist U.S. exporters by funding projects that address sanitary, phytosanitary, and technical barriers that prohibit or limit U.S. specialty crop exports. The 2008 farm bill defined specialty crops as all cultivated plants, and the products thereof, produced in the United States except wheat, feed grains, oilseeds, cotton, rice, peanuts, sugar, and tobacco. The 2014 farm bill broadened TASC's scope, replacing \"related barriers\" with \"technical barriers,\" which allows TASC to fund projects that address technical barriers to trade that are not related to a sanitary or phytosanitary barrier.\nThe types of activities covered include seminars and workshops, study tours, field surveys, pest and disease research, and preclearance programs. The 2014 farm bill authorizes TASC funding of $9 million annually from FY2014 through FY2018, unchanged from the FY2011-FY2013 authorization levels. Also under this section of the bill, Congress directed the Secretary of Agriculture to conduct an economic study of the existing market in the United States for Atlantic spiny dogfish within 90 days of the bill's enactment. According to USDA, the report was communicated to the appropriate committees of the House and Senate on May 22, 2014.", "For FY2014 through FY2018, the 2014 farm bill reauthorized USDA-operated export credit guarantee programs, which were first established in the Agricultural Trade Act of 1978 ( P.L. 95-501 ) to facilitate sales of U.S. agricultural exports. Under these programs, private U.S. financial institutions extend financing at prevailing market interest rates to countries that want to purchase U.S. agricultural exports with a CCC guarantee that the loans will be repaid. In guaranteeing these loans, the CCC assumes the risk of default on payments by the foreign purchasers on loans for U.S. farm exports. Two export credit guarantee programs were reauthorized: the short-term credit guarantee program (GSM-102) and the Facility Guarantee Program (FGP).", "The GSM-102 program guarantees repayment of short-term financing extended by approved foreign banks, mainly in developing countries, for purchases of U.S. food and agricultural products by foreign buyers. The GSM-102 program aims to encourage commercial exports of U.S. agricultural products on competitive credit terms for buyers in countries where credit is necessary to maintain or increase U.S. sales but financing may not be available without CCC guarantees. Eligible countries are those that USDA determines can service the debt backed by the guarantees. The use of CCC guarantees for foreign aid, foreign policy, or debt rescheduling purposes is prohibited. The CCC selects agricultural commodities and products according to market potential and eligibility based on applicable legislative and regulatory requirements. All products must be entirely produced in the United States. Eligible products include a broad range of agricultural commodities and HVPs.\nThe leading recipients of export credit guarantees over the years have been Mexico, South Korea, Iraq, Algeria, and the former Soviet Union. In FY2015, the major beneficiary countries (in terms of loan amounts guaranteed) were Mexico ($250.4 million), South Korea ($224.3 million), and Turkey ($189.6 million). On a regional basis, the largest allocation of guarantees in FY2015 went to South America ($434 million), the Caribbean ($217.2 million), Central America ($200.1 million), Southeast Asia ($154.8 million), and Africa and the Middle East ($115.5 million). GSM guarantees facilitate sales of a broad range of commodities, with wheat, soybeans, and soybean meal at the top of the list by value in FY2015. Table 5 provides a list of the leading GSM-102 funded commodity exports in FY2015.\nUnder the 2014 farm bill, funding for the GSM-102 program is reauthorized. The value of U.S. agricultural exports that can benefit from export credit guarantees remains at $5.5 billion annually. Net federal outlays under the GSM-102 program have been negative in most years going back to the mid-1990s (i.e., generating revenue for the government) as program fees and interest from rescheduled debts and the like have generally exceeded the cost of defaults, approaching revenue of $200 million in a number of years. Years in which net outlays under GSM-102 have represented a cost to the government are estimated to have been fewer in number and generally far smaller in amount—typically under $15 million per fiscal year, with FY2010 the stand-out exception at an estimated $109 million. Federal costs associated with administering the program are separate, amounting to approximately $7 million a year.\nTo address differences that have arisen over how the United States might comply with the WTO cotton case won by Brazil, the final law grants flexibility to the Secretary of Agriculture to make changes to the credit guarantee program, following consultation with the House and Senate Agriculture Committees, to meet terms agreed upon by both countries.\nThe 2014 farm bill also amended this program in three ways to address, at least in part, Brazil's criticism of how it is administered:\n1. The maximum loan guarantee term is reduced to two years from three years. 2. The requirement that the Secretary of Agriculture maximize the amount of credit guarantees made available each year is repealed. 3. The provision restricting the Secretary's ability to adjust program fees is also repealed in order to allow fees to fully cover the costs of the program's operation, thereby avoiding any implicit subsidy.\nAlthough the enacted 2014 farm bill shortened the maximum length of credit guarantees from three years previously to not more than 24 months, FAS has established a maximum repayment term under GSM-102 of 18 months, with actual terms subject to variation by country. The 18-month limit for repayment reflects the October 2014 memorandum of understanding between the United States and Brazil that was one of a number of U.S. actions taken to address Brazil's successful WTO complaint that U.S. cotton support programs were depressing international cotton prices and thereby harming Brazil's cotton industry.\nPreviously, under the 2008 farm bill ( P.L. 110-246 ), Congress repealed the GSM-103 program, which guaranteed longer-term financing of between three and 10 years. This action was also taken in response to the WTO Brazil cotton decision.", "Under the general provisions of the GSM-102 program, the CCC provides funding to guarantee financing under the FGP. The FGP guarantees financing of goods and services exported from the United States to improve or establish agriculture-related facilities in emerging markets. Eligible projects must improve the handling, marketing, storage, or distribution of imported U.S. agricultural commodities and products. Under GSM-102, the farm bill authorized not less than $1 billion through FY2018 to promote U.S. agricultural exports to emerging markets, including the FGP. In FY2014, FAS programmed no funds for FGP pending the publication of a new rule. As of April 2016, the program was still inactive pending a final rule that was expected to be issued by the end of FY2016, at which point the program is to be reactivated, according to USDA. The inactive status of FGP notwithstanding, the agency estimated a program level of $100 million FY2016, climbing to $500 million for FY2017.", "The 2014 farm bill repealed DEIP effective immediately. Terminating the program was consistent with a WTO commitment to eliminate the use of export subsidies. DEIP was established under the 1985 farm bill ( P.L. 99-198 ) to assist in the export of U.S. dairy products. DEIP was included in the commodity title (Title I), not the trade title (Title III), where most export programs are located. The purpose of DEIP was to develop international export markets in regions where U.S. dairy products were not competitive due to the presence of subsidized products from other countries. The original purpose of the program was to counter the adverse effects of foreign dairy product subsidies, primarily those of the European Union. Eligible commodities under DEIP included milk powder, butterfat, and various cheeses.\nThe program level for DEIP has varied over years depending on the dairy price situation. No DEIP bonuses were awarded from FY2005 through FY2008. In response to lower milk producer returns in 2008 and 2009, USDA reactivated the program in July 2009 to provide support in FY2009-FY2010. No DEIP subsidies have been provided since FY2010.", "As mentioned earlier, USDA's agricultural export programs are funded through the authority of the CCC at levels established in statute. Annual appropriations acts, however, sometimes amend the spending limits on these mandatory programs. Table 6 shows USDA foreign export program activity levels for FY2012 through FY2016 and also includes the dollar amounts the Administration has budgeted for these programs for FY2017. The account for GSM-102 reflects program level activity or, for FY2016-FY2018, authorization levels.", "A new element in the 2014 farm bill required the Secretary of Agriculture, in consultation with the House and Senate Agriculture Committees and House and Senate Appropriations Committees, to propose a plan to reorganize the international trade functions of USDA. The law directed the Secretary to report to the congressional committees on the plan within 180 days of the farm bill's enactment date of February 7, 2014, and to implement the reorganization plan not later than one year after the report is submitted. The law also directed the Secretary to include in the plan the establishment of the position of Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs within USDA. This position, which requires Senate confirmation, is responsible for serving as a multi-agency coordinator of sanitary and phytosanitary issues that arise in the course of trade in agricultural products and for addressing agricultural non-tariff trade barriers. The timeline for establishing this position is within one year of the Secretary's report to Congress.\nCurrently, USDA's Under Secretary for Farm and Foreign Agricultural Affairs oversees the operation of FAS in addition to the Farm Service Agency and the Risk Management Agency. The creation of the position of Under Secretary for Trade and Foreign Agricultural Affairs would appear to segregate the domestic from the export-oriented programs.\nAs of the end of April 2016, the report that Congress directed the Secretary to prepare for Congress had not been transmitted. With the process of proposing a reorganization plan and establishing the new Under Secretary position incomplete, Congress directed the USDA Office of Chief Economist in December 2015 to contract with an independent organization to assist in completing this task and to consult with the congressional committees of jurisdiction. To fund this effort, Congress provided $1 million as part of the FY2016 Agricultural Appropriations Act, P.L. 114-113 (for more, see \"Reorganizing Trade and Farm Services Function within USDA\" below).", "", "The value of U.S. agricultural exports climbed by nearly 60% between FY2009 and FY2014, reaching a record $152 billion. Thereafter, U.S. farm exports receded to $139 billion in FY2015, and USDA projects that exports will decline further to $125 billion in FY2016, which would mark the lowest ebb for farm exports since FY2010 ( Table A-1 ). Export earnings have declined in tandem with generally ample world harvests, resulting in lower market prices and a stronger U.S. dollar vis-a-vis trading partner currencies, which has reduced U.S. competitiveness in relation to other exporters, including Brazil and Argentina. In FY2015, the downturn in export sales was led by lower unit prices for several major commodities—such as wheat, corn, broiler meat, and pork—the effect of which was compounded by a reduction in the quantities of these commodities exported.\nGiven that about 20% of U.S. agricultural production is shipped abroad, export sales are manifestly an important contributor to agricultural prices, farm income, and the financial well-being of a broad array of interests within the U.S. agribusiness sector, including crop and livestock processors and farm input suppliers, among others. Considering the sharp fall in net cash farm income in recent years—to a forecast $91 billion in 2016 from a peak of $135 billion in 2012 and 2013—Congress might consider the possible advantages and potential downsides of addressing opportunities and market circumstances that could contribute to an increase in U.S. agricultural exports, which could include the following three.", "TPP, a regional FTA that the U.S. government has concluded with 11 other Pacific-facing countries, would, in part, provide improved access to these markets for agricultural products—through a reduction in tariff rates and expanded tariff-rate quotas—for a broad range of U.S. agricultural products (see \"U.S. Agricultural Trade and the Trans-Pacific Partnership Agreement\" textbox). Two TPP countries with which the United States does not have an existing FTA are considered to be particularly attractive growth prospects for U.S. agricultural exports: Japan, a food importer with a large population, high per-capita income, and highly protected agricultural sector; and Vietnam, in view of its sizable population and rapidly growing economy.\nUSDA has argued that FTAs (such as NAFTA and numerous bilateral FTAs) have contributed substantially to a steep increase in U.S. agricultural exports in recent decades. As noted earlier, the TPP agreement has drawn broad support within U.S. agriculture and within the agribusiness and food sectors generally. But TPP also has its detractors, who contend that the terms are unbalanced and the potential benefits to U.S. agriculture and food industry interests are oversold while the downside risks are minimized. Among food and farm critics of the TPP are the United Food and Commercial Workers International Union and the National Farmers Union, both of which have broad objections to TPP, as well as elements of the U.S. rice industry and tobacco producers, which object to specific provisions in the agreement that concern treatment of their commodities. Congress would need to enact implementing legislation for TPP to have the force of law for the United States.", "Numerous farm and agribusiness groups have pointed to Cuba as a market that could become a significantly larger importer of U.S. farm products. This reflects Cuba's heavy dependence on agricultural imports to feed its population of 11 million, the considerable transportation cost and delivery time advantages that U.S. exporters have over competitors (such as Brazil and Vietnam) due to the close proximity of major U.S. ports to Cuba, and the broad range of U.S. agricultural products available for export. Title IX of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA, P.L. 106-387 ) opened a window in the long-standing U.S. embargo on trade with Cuba by permitting exports of agricultural products. Thereafter, U.S. farm exports to Cuba climbed from zero in 2000 to $685 million in 2008 but since then have receded, amounting to $149 million in 2015. In a report issued in 2015, USDA compared the potential for U.S. agricultural exports to Cuba to the Dominican Republic, noting that the Dominican Republic market bears similarities to Cuba in terms of population and per-capita income. But whereas the Dominican Republic imported an annual average of $1.1 billion of U.S. farm products between 2012 and 2014, Cuba's average annual imports were far lower at $365 million over the same period.\nTSRA specifically prohibits the use of private financing to underwrite exports of agricultural products (except through third-country financial institutions) and prohibits any access to U.S. government export promotion programs for Cuba. Numerous farm groups contend that the restrictions on financing, which in practice tend to limit sales to Cuba to cash transactions, comprise a major impediment to expanding U.S. farm exports by making terms for U.S. products less competitive than those offered by alternative suppliers. In a March 2016 report, the U.S. International Trade Commission concluded that U.S. agricultural exports to Cuba could post significant gains if U.S. restrictions on trade were removed. In particular, it noted that U.S. agricultural suppliers view the inability to offer credit and travel to Cuba to facilitate transactions as key obstacles to increasing farm exports.\nIn 2015, and in early 2016, the Obama Administration issued a policy of general approval for the export to Cuba of certain additional categories of goods and followed this up in January 2016 by permitting U.S. private export financing of these goods. But agricultural products continued to be excluded from private U.S. financing due to the prohibition imposed under TSRA. Critics of the Obama Administration's policy initiative to engage Cuba diplomatically and move toward more normal bilateral relations point out that Cuba remains a one-party communist regime with a poor record on human rights, and they contend that reforms that demonstrate a commitment to democracy and human rights should precede a relaxation in the U.S. sanctions regime.", "In recent years, U.S. agricultural interests and policymakers have become increasingly concerned that U.S. agricultural exports are being displaced by developing country competitors. The concern is that certain export competitors have benefited from increasingly generous government support—including domestic price support programs, production subsidies, and export subsidies—which has led to the accumulation of domestic surpluses irrespective of market conditions. Disposing of these surpluses can weigh on international market prices and distort trade patterns. Foreign surpluses resulting from high government support levels may displace both imports of U.S. farm products to countries that employ trade-distorting subsidies and U.S. exports to third country markets. Generous price supports and production subsidies—and in some cases export subsidies—have insulated producers from price signals in international markets and have led to exports that are often below domestic prices and production costs.\nIn 2015, the House Agriculture Committee held several hearings on this topic. The committee heard testimony from academics, economic consultants, and commodity groups, including representatives of the cotton, sugar, wheat, and dairy industries. The testimony centered on the variety of methods by which advanced developing countries (such as Brazil, China, India, Thailand, and Turkey) provide support that exceeds their WTO obligations and, consequently, distorts trade to the detriment of U.S. agricultural interests.\nEstablishing disciplines on agricultural support programs has traditionally been the province of the WTO and its predecessor, GATT. Lodging a complaint with the WTO against another member government for violating WTO rules under dispute settlement provides an established framework for seeking redress. Beyond pursuing individual complaints via dispute settlement on a case-by-case basis, multilateral negotiations within a trade \"round\" can rewrite the rules of trade for WTO members. The Doha Round of multilateral trade negotiations that was launched in 2001 was intended to address agricultural trade issues broadly, including domestic support levels, market access, and export competition. But the negotiations reached an impasse in 2009 and have made little progress since then.", "Another activity that might evoke continued congressional oversight involves the reorganization of the trade functions at USDA as required by the enacted 2014 farm bill. As noted above, following consultations with the House and Senate Agriculture Committees, a report outlining the Secretary of Agriculture's reorganization plan was to have been submitted to those committees by early August 2014, but by the end of April 2016 the reorganization plan had not been completed. At a hearing of the House Appropriations Committee on March 17, 2016, Deputy Under Secretary for Farm and Foreign Agricultural Services Alexis Taylor stated that USDA hoped to provide the required report to Congress by the end of the current year. The FY2016 Agricultural Appropriations Act ( P.L. 114-113 ) set a revised deadline of mid-June 2016 for transmitting the report on a proposed reorganization plan to Congress.\nAs part of this reorganization proposal, the 2014 farm bill also calls for the Secretary to establish within USDA the position of Under Secretary of Agriculture for Trade and Foreign Affairs. As noted previously, the creation of this new position implies the organizational separation of key domestic farm programs, such as crop insurance, from the main export-oriented programs discussed in this report. Considering that both of these functions currently fall within the purview of the Under Secretary for Farm and Foreign Agricultural Services—and in view of the importance of these program activities to the agricultural sector—Congress might have a keen interest in considering the Secretary's plan and in overseeing the subsequent reorganization effort.", "Historically, many Members of Congress have been highly supportive of MAP and cite the benefits the program brings to U.S. agricultural industries through export market development abroad. Although the program has its detractors, strong support for export market development programs has been reflected in Congress's rejection in FY2010 and FY2011 of the Administration's proposals to reduce MAP funding by 20% in each of those years. The Administration has not requested reductions in MAP funding since FY2011.\nAlso, the continuity that the 2014 farm bill provides in terms of extending most agricultural export programs speaks to ongoing congressional support for this type of activity. The elimination of DEIP as part of the new law appeared to be mainly a function of fundamental changes the law makes in the structure of federal support programs for milk producers, a U.S. commitment to eliminate direct export subsidies, and a recognition that no activity had been recorded under DEIP since FY2010.\nAt the same time, a concern raised by some Members of Congress with respect to MAP and FMDP is whether the federal government should play an active role at all in helping agricultural producer organizations and agribusiness entities market their products overseas. Some argue that MAP and FMDP are forms of corporate welfare in that they fund activities that private firms could and would otherwise fund for themselves. Other critics argue that the principal beneficiaries are foreign consumers and that funds could be better spent, for example, instructing U.S. firms on how to export. Program supporters emphasize that foreign competitors, especially EU member countries, also spend money on market promotion and that U.S. marketing programs help keep U.S. products competitive in foreign markets.", "The concerns of critics notwithstanding, Congress has continued to demonstrate support for programs that promote farm exports. In considering the House Agriculture Committee-reported farm bill ( H.R. 1947 ), the House in 2013 rejected by substantial margins two amendments that sought to retire two farm export promotion programs. An amendment to repeal MAP ( H.Amdt. 191 ), offered by Representative Steve Chabot, failed by a vote of 98-322, while the House also turned down by 103-322 another amendment ( H.Amdt. 193 ) offered by Representative Mo Brooks that sought to terminate EMP. A core argument advanced in both cases was that taxpayer money ought not be spent on promotional activities that should and could be borne by private interests.\nDuring the House Agriculture Committee's markup of the same bill in 2013, no amendments that sought to eliminate or scale back farm export programs were considered. Similarly, in marking up its farm bill, S. 954 , in 2013, the Senate Agriculture Committee did not consider any amendments to curtail agricultural export programs. Likewise, during the floor debate on S. 954 in 2013, the Senate did not consider any amendments that sought to curb or end agricultural export programs.", "In the early 1990s, some Members raised specific concerns about the effectiveness of MAP operations, specifically questioning the program's cost-effectiveness and impact and citing its lack of support for small businesses and displacement of private sector marketing funds. In response, Congress directed USDA to make significant changes to MAP. In 1996, Congress through the appropriations process prohibited FAS from providing direct assistance for brand-name promotions to companies that are not recognized as small businesses under the Small Business Act. In 1997, Congress prohibited large companies from receiving indirect assistance from MAP as well. Giving priority to small businesses did result in a substantial increase in the small business share of MAP assistance for brand-name promotion by 1997.\nFAS also established a five-year limit (a \"graduation requirement\") on the use of MAP funds for companies that use funds to promote a \"specific branded product\" in a \"single market,\" unless FAS determined that further assistance was still necessary to meet program objectives (generic marketing was not subject to the graduation requirement). FAS later revised the regulations in 1998 to limit each company to no more than five years (consecutive or nonconsecutive) of MAP funding for brand-name promotions per country. Finally, Congress added a requirement that each participant certify that MAP funds supplement—rather than supplant—its own foreign market development expenditures.\nA 1999 study by the then General Accounting Office (GAO) reviewed a number of studies looking at MAP's effectiveness and concluded that while changes had been made to the program, the economic benefits of export programs (including MAP) were unclear. It stated that \"few studies show an unambiguously positive effect of government promotional activity on exports.\" In 2009 testimony before the Senate Finance Committee, GAO said that U.S. export promotion activities were in need of strengthened performance management systems.\nA 2010 report by IHS Global Insight sponsored by FAS concluded that USDA's market development expenditures have had a positive and significant impact on U.S. agricultural trade. Global Insight concluded that increased spending on market development under MAP and FMD over the period 2002-2009—from roughly $125 million per year in FY2001 to $234.5 million annually during the FY2002-FY2009 period—is estimated to have raised the U.S. share of foreign agricultural imports by 1.3 percentage points, a rise to 19.9% from 18.6% under a no-increase scenario. Global Insight concluded that, in value terms, by FY2009 this additional market development activity was responsible for a 6% boost in U.S. agricultural exports to $96.1 billion that year, compared with $90.5 billion under a modeling scenario in which MAP and FMDP spending were held to the lower FY2001 levels.", "" ], "depth": [ 0, 1, 1, 1, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 2, 2, 1, 2, 3, 3, 3, 2, 2, 3, 3, 4 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full", "h1_full", "h1_full", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "h0_title h2_title", "h0_full h2_title", "h2_full", "h2_full", "h2_full", "h2_full", "", "", "", "" ] }

{ "question": [ "Why are U.S. agricultural exports a bright spot in the U.S. balance of trade?", "Why has the trend of increasing sales and agricultural surplus reversed in recent years?", "Why is this trend of decreasing exports concerning for farm income?", "How do agricultural imports compare to exports?", "What is the purpose of the Foreign Agricultural Service of USDA?", "What are the five market development programs that FAS administers?", "What does the USDA's Commodity Credit Corporation do?", "What did the 2014 farm bill do?", "What actions could Congress take to navigate the more challenging market environment for U.S farm exports?", "How could the Trans-Pacific Partnership Agreement help to remove impediments to farm exports?", "What would the effect be on trade with Cuba if Congress repealed statutory restrictions on trade?", "What do foreign subsidies do to U.S. farm exports?" ], "summary": [ "U.S. agricultural exports have long been a bright spot in the U.S. balance of trade, with exports exceeding imports in every year since 1960.", "But the trend of recent years—increasing export sales and a wider agricultural trade surplus—was reversed in FY2015, and the reversal is expected to be more pronounced in FY2016. After climbing to a record $152.3 billion in FY2014, U.S. farm exports declined to $139.7 billion in FY2015, and the U.S. Department of Agriculture (USDA) projects a further reduction to $125 billion in FY2016.", "Exports are a major outlet for many farm commodities, representing about 20% of the value of farm production, making exports an important contributor to farm income.", "Meanwhile, the value of U.S. agricultural imports has continued to climb: In consequence, the U.S. agricultural trade surplus fell to $25.7 billion in FY2015 from a peak of $43.1 billion in FY2014, and it is projected to narrow further to $6.5 billion in FY2016.", "The Foreign Agricultural Service (FAS) of USDA administers five market development programs that aim to assist U.S. industry efforts to build, maintain, and expand overseas markets for U.S. agricultural products.", "The five are the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for Specialty Crops Program (TASC).", "Through the GSM-102 Program and the Facility Guarantee Program, USDA's Commodity Credit Corporation (CCC) guarantees loans so that private U.S. financial institutions will extend financing to buyers in emerging markets that want to purchase U.S. agricultural products.", "The 2014 farm bill shortened the loan term on which export credit guarantees would be made available to conform to U.S. commitments in the World Trade Organization (WTO). 3. Direct export subsidy programs. The 2014 farm bill terminated the Dairy Export Incentive Program (DEIP), which had been inactive for several years.", "In view of the more challenging market environment for U.S. farm exports, Congress could weigh possible opportunities to expand foreign markets and remove impediments to farm exports.", "For example, the Trans-Pacific Partnership Agreement (TPP), if implemented, would lower many tariffs that Japan and other TPP nations impose on U.S. farm and food exports.", "Also, numerous U.S. agricultural interests assert that U.S. farm exports to Cuba could increase if Congress were to repeal statutory restrictions on this trade.", "In addition, U.S. farm groups and lawmakers have identified foreign subsidies as distorting trade and displacing U.S. farm exports." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 3, 3, 3, 3, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Organization of This Report", "U.S. Public Diplomacy Background", "Legislative Authority", "State Department Basic Authorities Act of 1956", "United States Information and Education and Exchange Act of 1948", "Mutual Educational and Cultural Exchange Act of 1961", "United States International Broadcasting Act of 1994", "Moves Toward a Permanent U.S. Public Diplomacy Capacity", "United States Information Agency", "USIA in Washington", "Bureau of Information", "Bureau of Educational and Cultural Affairs", "Bureau of Management", "U.S. International Broadcasting", "USIS in the Field", "USIA's Budget and Staff Levels", "Appropriations", "Personnel", "Abolishing USIA and Transferring Public Diplomacy to the State Department", "Transfer of USIA Functions to the State Department", "Independence for the Broadcasting Board of Governors (BBG)", "Current Structure of Public Diplomacy Within the Department of State", "Public Diplomacy Organization in Washington", "Bureau of Educational and Cultural Affairs (ECA)", "Bureau of International Information Programs (IIP)", "The Bureau of Public Affairs (PA)", "Office of Policy Planning and Resources (R/PPR)", "Office of Private Sector Outreach (R/PSO)", "Public Diplomacy in the Field", "Differences Between USIA and the State Department", "Authority", "Funding", "Assignments and Evaluations", "Support in the Field", "Broadcasting Board of Governors", "Public Diplomacy Budget", "State Department", "International Broadcasting", "Public Diplomacy Personnel", "Other Government Agencies Communicating with Foreign Publics", "Department of Defense Communications", "Department of Defense Strategic Communication Activities", "Department of Defense Strategic Communication Doctrine and Coordination Efforts51", "USAID", "Additional Actors", "National Strategy and Interagency Coordination Efforts", "Current Issues Concerning U.S. Public Diplomacy", "Leadership", "National Strategy", "Global Communications Environment", "New Approach to Communicating with Foreign Publics", "Adherence to Traditional Public Diplomacy Principles", "Adaptive and Culturally Sensitive Communications", "Comprehensive Approach and Long-Term Focus", "Integrated, Whole-of-Government Implementation", "Agency Roles and Interagency Coordination", "DOD: Filling the Communications Gap", "Coordination Difficulties", "State Department Organizational Issues", "The Culture of Official Diplomacy in the State Department", "Public Diplomacy in the State Department Hierarchy", "A New Agency for Public Diplomacy?", "Personnel: Recruitment, Training, and Utilization", "Recruiting and Training", "Effective Use of Public Diplomacy Officers", "Outreach Activities", "Exchange Programs", "English Language Education", "America Centers/America Houses", "Information Resources and Internet Presence", "International Broadcasting", "Criticism of the Organization of International Broadcasting", "Leveraging Non-public Sectors: Expertise, Best Practices, and Innovation", "Creating an Independent Support Organization", "Research, Monitoring, and Evaluation of Public Diplomacy Activities", "Prohibiting Domestic Dissemination of Public Diplomacy Information: Smith-Mundt Act", "Recent Legislative Action", "Strategy for Public Diplomacy and Strategic Communication", "Interagency Coordination", "Agency Roles and Responsibilities", "State Department Public Diplomacy Organization", "DOD Communications Activities", "Personnel/Human Resources", "America Centers, Libraries, and Increased Outreach", "Increased Exchanges", "International Broadcasting", "Research, Monitoring, and Evaluation", "Increasing Public Diplomacy Best Practices and Expertise", "Provisions Related to Restrictions on Domestic Dissemination of Public Diplomacy Information" ], "paragraphs": [ "", "The United States has long sought to influence the peoples of foreign countries through public diplomacy (PD) efforts. Public diplomacy provides a foreign policy complement to traditional government-to-government diplomacy, which is dominated by official interaction carried out between professional diplomats. Unlike public affairs, which focus communications activities intended primarily to inform and influence domestic media and the American people, U.S. public diplomacy includes efforts to interact directly with the citizens, community and civil leaders, journalists, and other opinion leaders of another country. PD seeks to influence that society's attitudes and actions in supporting U.S. policies and national interests. Public diplomacy is viewed as often having a long-term perspective that requires working through the exchange of people and ideas to build lasting relationships and understanding of the United States and its culture, values, and policies. The tools of public diplomacy include people-to-people contact; expert speaker programs; art and cultural performances; books and literature; radio and television broadcasting and movies; and, more recently, the Internet. In contrast, traditional diplomacy involves the strong representation of U.S. policies to foreign governments, analysis and reporting of a foreign government's activities, attitudes, and trends that affect U.S. interests. There is a growing concern among many in the executive branch, the Congress, the media, and other foreign policy observers, however, that the United States has lost its public diplomacy capacity to successfully respond to today's international challenges in supporting the accomplishment of U.S. national interests.\nPublic diplomacy capacity and capabilities atrophied in the years following the dissolution of the Soviet Union in 1991. U.S. public diplomacy efforts were carried out primarily by the U.S. Information Agency (USIA), created in 1953, as well as U.S. non-military international broadcasting by entities such as Voice of America, Radio Free Europe, and Radio Liberty. These entities had been well resourced throughout the Cold War; however, with the end of the Soviet threat, those resources dwindled as it was believed that there was no ideological fight still to win. Many analysts believe that the United States generally placed public diplomacy on a \"back burner\" as a relic of the Cold War. In 1999, new legislation abolished USIA and folded its responsibilities into the State Department, again with reduced resources for public diplomacy. After the 9/11 terrorist attacks, and with U.S. combat operations in Iraq and Afghanistan, interest in public diplomacy as a foreign policy and national security tool was renewed. Concerns about the events in the Middle East focused the attention of policy makers on the need for a sound, well-resourced public diplomacy program. This concern was heightened by the realization that the worldwide perception of the United States has declined considerably in recent years with the United States often being considered among the most distrusted and dangerous countries in the world.\nAs the United States sought to revitalize its PD initiatives, it became clear the changes in the world order and changes caused by the Internet and information technology in general created a new dynamic for U.S. public diplomacy initiatives. The world of international communications and information sharing is undergoing revolutionary changes at remarkable speeds. The rapid increase in available sources of information, through the proliferation of global and regional broadcasters using satellite technologies, as well as the global reach of news and information websites on the Internet, has diversified and complicated the shaping of attitudes of foreign populations. Individual communicators now have the ability to influence large numbers of people on a global scale through social networking, providing a direct challenge to the importance of traditional information media and actors. Traditional media, such as newspapers, have created online interactive exchanges between providers and consumers of information by allowing readers to comment on news reporting. New online social media networks such as weblogs, Twitter, MySpace, and Facebook allow individuals to connect with one another on a global scale, providing opportunities for \"many-to-many\" exchanges of information that bypass the \"one-to-many\" sources that formerly dominated the information landscape. In addition, the method of information delivery and receipt has been fundamentally changed, with cell phones and other handheld mobile devices capable of sending and receiving large amounts of written, visual, and audio information. Communication of information through these new media, regardless of how they depict the United States, contribute to the impressions about the United States and its society. It is in this ever expanding and accelerating global communications environment that U.S. public diplomacy and international broadcasting must operate, \"competing for attention and for credibility in a time when rumors can spark riots, and information, whether it's true or false, quickly spreads across the world, across the internet, in literally instants.\"\nThe attitudes and perceptions of foreign publics created in this new environment are often as important as reality, and sometimes can even trump reality. These attitudes affect the ability of the United States to form and maintain alliances in pursuit of common policy objectives; impact the cost and the effectiveness of military operations; influence local populations to either cooperate, support or be hostile as the United States pursues foreign policy and/or military objectives in that country; affect the ability to secure support on issues of particular concern in multilateral fora; and dampen foreign publics' enthusiasm for U.S. business services and products. Under Secretary of State for Public Diplomacy and Public Affairs Judith McHale, in discussing the implications of foreign perceptions and attitudes on U.S. foreign policy and national security, said,\nGovernments inclined to support U.S. policies will back away if their populations do not trust us. But if we do this right, if we develop relationships with people around the world, if they trust us as a partner, this dynamic will be reversed. Less cooperative regimes will be forced to moderate their positions under popular pressure. To the extent that we succeed, threats we face today will diminish and new partnerships will be possible.\nToday, 14 Cabinet-level departments and over 48 independent agencies and commissions participate in at least one form of official public diplomacy, mostly regarding exchanges or training programs. Yet because of the increasing recognition of public diplomacy's key role in the conduct of U.S. foreign affairs, many in the executive branch, Congress, think tanks, non-governmental organizations, and news media debate different approaches to improving U.S public diplomacy to respond to new challenges, determining public diplomacy authorities and responsibilities, defining and executing public diplomacy strategy, and adequately resourcing public diplomacy.", "The body of this report is divided into five sections. The first section provides background information on U.S. public diplomacy, its legislative foundations, and the history of modern U.S. public diplomacy including the former USIA. The second section discusses the abolishment of USIA and the transfer of its functions to the Department of State. The third section discusses the current structure of public diplomacy within the Department of State as well as its budget and personnel levels. The fourth section gives a detailed overview of some of the major related policy issues and perceived challenges to the effectiveness of U.S. public diplomacy, and proposed reforms and solutions. Finally, the fifth section describes proposed legislation intended to reform and improve U.S. public diplomacy.", "This section provides an overview of the legislative authorities for the conduct of public diplomacy activities within the U.S. government. It continues with a discussion of the historical context of U.S. civilian-led public diplomacy as it developed since World War I, the creation of USIA in 1953, and its activities and organization. It also provides budget and personnel information for the former USIA.", "Four acts provide the current foundational authority of the U.S. government to engage in public diplomacy in its many venues, and establish the parameters and restrictions regarding those authorities: the State Department Basic Authorities Act of 1956; the United States Information and Educational Exchange Act of 1948; the Mutual Educational and Cultural Exchange Act of 1961; and the United States International Broadcasting Act of 1994.", "The State Department Basic Authorities Act of 1956, as amended (P.L. 84-885; 22 U.S.C. §§ 2651a, 2669 et seq.), authorizes six Under Secretaries of State for the Department of State, specifically requiring that there be an Under Secretary for Public Diplomacy. Section 1(b)(3) of the Act (22 U.S.C. § 2651a(b)(3)), in describing the position of the Under Secretary for Public Diplomacy, states that the Under Secretary has \"the primary responsibility to assist the Secretary and the Deputy Secretary in the formation and implementation of United States public diplomacy policies, including international educational and cultural exchange programs, information, and international broadcasting.\" The section enumerates several responsibilities of the Under Secretary, including preparing an annual strategic plan for public diplomacy, ensuring the design and implementation of appropriate program evaluation methodologies, and assisting the United States Agency for International Development (USAID) and the Broadcasting Board of Governors (BBG) in presenting the policies of the United States.\nSection 60 of the act (22 U.S.C. § 2732), entitled \"Public Diplomacy Responsibilities of the Department of State,\" requires the Secretary of State to make public diplomacy an integral component in the planning and execution of U.S. foreign policy. The Secretary is to make every effort to coordinate the public diplomacy activities of the federal agencies, work with the Broadcasting Board of Governors to develop a comprehensive strategy for the use of PD resources, and establish long-term measurable objectives. The Secretary is also to work with USAID and other private and public assistance organizations to ensure that information on the assistance the United States is providing is disseminated widely, and particularly to the people in the recipient countries.", "The United States Information and Education and Exchange Act of 1948, as amended (P.L. 80-402; 22 U.S.C. § 1431 et seq.), also known as the Smith-Mundt Act, served as the post-World War II charter for peacetime overseas information and education exchange activities. Section 501 (22 U.S.C. § 1461) states that the objective of the Act is \"to enable the Government of the United States to promote a better understanding of the United States in other countries, and to increase mutual understanding between the people of the United States and the people of other countries.\" The section authorizes the Secretary of State to prepare and disseminate \"information about the United States, its people, and its policies, through press, publications, radio, motion pictures, and other information media, and through information centers and instructors abroad.\" Section 501, unlike previous government public information efforts, prohibits materials developed under the authorities of this Act from being disseminated within the United States, its territories, or possessions:\n(a).... Subject to subsection (b), any information (other than \"Problems of Communism\" and the \"English Teaching Forum\" which may continue to be sold by the Government Printing Office) shall not be disseminated within the United States, its territories, or possessions, but, on request, shall be available in the English language at the Department of State, at all reasonable times following its release as information abroad, for examination only by representatives of United States press associations, newspapers, magazines, radio systems, and stations, and by research students and scholars, and, on request, shall be made available for examination only to Members of Congress.\n(b)(1) The Director of the United States Information Agency shall make available to the Archivist of the United States, for domestic distribution, motion pictures, films, videotapes, and other material prepared for dissemination abroad 12 years after the initial dissemination of the material abroad or, in the case of such material not disseminated abroad, 12 years after the preparation of the material.\nSection 502 of the act (22 U.S.C. § 1462) also placed limitations on the international information activities of the government so that it would not compete with corresponding private information dissemination if it is found to be adequate, and ensured that the government would not have a monopoly in the production and sponsorship of short wave or any other medium of information. Further, in protecting the private sector and helping it, Section 1005 (22 U.S.C. § 1437) states that a duty of the Secretary of State shall be to utilize, to the maximum extent practicable, \"the services and facilities of private agencies, including existing American press, publishing, radio, motion picture, and other agencies through contractual arrangements or otherwise.\" Further, the government was to utilize the private agencies in each field \"consistent with the present and potential market for their services in each country.\"", "The Mutual Educational and Cultural Exchange Act of 1961, as amended (P.L. 87-256; 22 U.S.C. § 2451 et seq.), also known as the Fulbright-Hays Act, authorizes U.S. exchange programs as a public diplomacy tool. Section 101 of the Act (22 U.S.C. § 2451) states the Act's four-fold purpose:\nto increase mutual understanding between the people of the United States and the people of other countries by means of educational and cultural exchanges; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations, and the contributions being made toward a peaceful and more fruitful life for people throughout the world; to promote international cooperation for educational and cultural advancement; and to assist in the development of friendly, sympathetic, and peaceful relations between the United States and the other countries of the world.\nUnder Section 102 (22 U.S.C. § 2452), the President is authorized to take action when he considers that certain steps would strengthen international cooperation. Among the activities authorized by this Act are the following:\nproviding grants, contracts, or otherwise for educational and cultural exchanges for U.S. citizens and citizens of other countries; providing for participation in international fairs and expositions abroad; providing for the interchange of books, periodicals, and government publications, and the reproduction and translations of such material; providing for the interchange of technical and scientific material and equipment, and establishing and operating centers for cultural and technical interchanges; assisting in the establishment, expansion, maintenance, and operation of schools and institutions of learning abroad, and fostering American studies in foreign countries; promoting foreign language and area studies training for Americans; providing of U.S. representation at international nongovernmental educational, scientific, and technical meetings; and promoting respect for and guarantees of religious freedom abroad and by interchanges and visits between the United States and other nations of religious leaders, scholars, and religious and legal experts in the field of religious freedom.\nSection 103 (22 U.S.C. § 2453) authorizes the President to enter into international agreements with foreign governments and international organizations to advance the purposes of this Act, and to provide for equitable participation and support for the implementation of these agreements. Section 104 (22 U.S.C. § 2454) authorizes the President to delegate his authorities to other officers of the government as he determines to be appropriate. The Department of State and USAID are responsible for the vast majority of U.S. sponsored exchanges. However, several other federal agencies, such as the National Institutes of Health, also administer exchange programs under this presidential delegation.\nSection 112 of this act (22 U.S.C. § 2460) establishes a Bureau of Educational and Cultural Affairs in the Department of State to be responsible for managing, coordinating, and overseeing various programs and exchanges, including the J. William Fulbright Exchange Program, the Hubert H. Humphrey Fellowship Program, the International Visitors Program, the American Cultural Centers and Libraries abroad, and several others.", "The United States International Broadcasting Act of 1994, as amended ( P.L. 103-236 ; 22 U.S.C. 6201 et seq.), reorganizes U.S. non-military international broadcasting (hereafter referred to as U.S. international broadcasting). It creates the nine-member Broadcasting Board of Governors (BBG), whose members are appointed by the President with the advice and consent of the Senate, and the International Broadcasting Bureau (IBB), which operates under the BBG to administer Voice of America and Cuba Broadcasting. It also places all U.S. international broadcasting under the authority of the BBG. The mission of the BBG is \"to promote freedom and democracy and to enhance understanding by broadcasting accurate, objective and balanced news and information about the United States and the world to audiences abroad.\" Section 305(d) of the act (22 U.S.C. § 6204) charges the Secretary of State and the BBG with respecting the professional independence and integrity of the International Broadcasting Bureau, its broadcasting services, and the grantees of the Board.\nSection 303 of the act (22 U.S.C. § 6202) establishes standards and principles for U.S. international broadcasting. In the list of principles, the act states that such broadcasting shall include\nnews that is consistently reliable and authoritative, accurate, objective, and comprehensive; a balanced and comprehensive projection of U.S. thought and institutions, reflecting the diversity of U.S. culture and society; clear and effective presentation of the policies, including editorials, broadcast by the Voice of America, which present the views of the U.S. government and responsible discussion and opinion on those policies; the capability to provide a surge capacity to support U.S. foreign policy objectives during crisis abroad; and programming that meets needs of the people who remain underserved by local media voices.", "U.S. government efforts to communicate with foreign publics have historically increased as perceived threats to national security grow, particularly during times of war. During World War I, President Woodrow Wilson established the Committee on Public Information (Creel Committee), which represented the U.S. government's first large-scale efforts at information dissemination to both domestic and foreign audiences. President Wilson established the Committee initially to counter German propaganda, but it began disseminating its own distortions of the truth and propaganda to both U.S. and foreign audiences. At the end of the First World War, the Creel Committee was disbanded.\nDuring the Second World War, President Franklin Roosevelt established the Office of War Information (OWI) to provide American and foreign audiences with news of the war, U.S. war policies, and the activities and aims of the U.S. government. Voice of America (VOA), which is the oldest of the U.S. government radio broadcasting services, was an integral part of OWI's programs. In 1948, President Harry Truman issued Executive Order 9608, terminating the OWI and transferring its international information functions to the Department of State. VOA, which also was transferred to the State Department, then became the official overseas broadcast arm of the United States.\nAs the United States became more deeply involved in the Cold War with the Soviet Bloc nations, the United States and the Congress began creating programs to counter Soviet influence and once again compete in a war of hearts and minds. The original Fulbright Act of 1946 was enacted to mandate peacetime international exchange programs. In 1948, Congress passed the Smith-Mundt Act, described previously. While serving as the charter for peacetime overseas information programs, some contend that this act was intended from the outset to provide the authority for the U.S. government to engage vigorously in a non-military battle with the Soviet Union, which then U.S. diplomat and Soviet specialist George Kennan described as having declared psychological war on the United States, a war of ideology requiring a fight to the death. This was a significant departure in U.S. public information policy in that it provided for a permanent peacetime information effort.\nOn August 1, 1953, following the recommendations of several commissions, President Dwight Eisenhower created the independent United States Information Agency (USIA) to organize and implement U.S. government international information and exchange programs in support of U.S. foreign policy.", "With its establishment in 1953, USIA became the agency responsible for executing U.S. public diplomacy efforts to understand, inform, and influence foreign publics in promotion of the U.S. interests, and to broaden the dialogue between Americans and foreign publics. USIA's stated goals were\nexplaining and advocating U.S. policies in terms that are credible and meaningful in foreign cultures; providing information about the official policies of the United States, and about the people, values, and institutions which influence those policies; bringing the benefits of international engagement to American citizens and institutions by helping them build strong long-term relationships with their counterparts overseas; and advising the President and U.S. government policy-makers on the ways in which foreign attitudes will have a direct bearing on the effectiveness of U.S. policies.", "During the 46 years of the Cold War, USIA was headed by a director, a deputy director, and three associate directors who led its major bureaus: the Bureau of Information, the Bureau of Educational and Cultural Affairs, and the Bureau of Management. USIA's support offices included the Office of Public Liaison, the Office of the General Counsel, and the Office of Research and Media Reaction. The Office of Research and Media Reaction conducted polling activities and also provided daily analysis of overseas press opinion on U.S. foreign policy. USIA regional affairs offices supported and coordinated activities in the field, where USIA was known as the U.S. Information Service (USIS). Figure 2 below provides an organization chart for USIA.", "The Bureau of Information produced and distributed to USIS offices in the field a variety of publications in as many as 30 languages supporting U.S. policy objectives, such as an explanation of U.S. drug policy. The bureau also published books and pamphlets providing information on U.S. history, politics, economy, and culture, and adopted new technologies for information delivery. The bureau utilized new technologies as they became available, such as teletype, to move informational materials to the field. When the bureau began utilizing the Internet, availability of printed materials and other types of information grew dramatically. Examples of information sent through electronic media from Washington headquarters included\nthe Washington File, which provided official U.S. public statements on U.S. policy; a USIA website, and temporary USIA-sponsored, issue-specific websites such as a site covering the Kyoto Climate Change Conference; access to the Foreign Affairs Documentation Collection, which contained selected authenticated versions of treaties and other international agreements; and an electronic journal with articles that could be downloaded as formatted publications for print distribution on a variety of topics, from providing background on U.S. society and values to NATO-enlargement issues.\nIn addition, the bureau's Speakers Program sent several hundred recognized U.S. speakers to foreign countries each year. U.S. embassies could organize speaking engagements on college campuses, with the press, or with the general public. While their trips were sponsored by the U.S. government, these speakers expressed their own views, which proved attractive to audiences, according to many public diplomacy officers:\nWhen the United States Information Agency existed, there were on-going debates between public diplomacy officers and political officers as to whether official speakers and official events should stick to the party line or incorporate opposing ideas as well.... When USIA-sponsored academics respectfully differed with current policy, the result from the audiences was unalloyed admiration for the courage of the U.S. in showcasing free and open discussion.\nThe Information Bureau also made speakers available through video and telephone conferences to ensure a more timely discussion of current issues. A link for a video conference using satellites could be established through several embassies at one time.", "The Bureau of Education and Cultural Affairs was responsible for the administration of relationships with a variety of educational and cultural exchanges. The bureau administered both the academic exchanges and the professional and cultural exchanges. Examples of academic exchanges are the Fulbright Program, which provides for the exchange of students, scholars, and teachers between the United States and other countries, and the Hubert H. Humphrey Fellowship Program, which facilitates academic study and internships in the United States for mid-career professionals from developing nations. The professional and cultural exchanges included the International Visitors Program, which brought current and promising leaders of other countries to the United States to travel around the country, meet their counterparts, and learn about and experience U.S. society and culture. The bureau also ran programs for cultural ambassadors, such as musicians, artists, sports figures, and writers to share American culture with foreign publics.", "As the name suggests, the Bureau of Management provided agency-wide management support and administrative services. USIA had control of its own human resources program with its own recruiting, employment, assignments and career tracks that were separate from the Department of State. It also controlled its own budget and support of its own operations.", "During the life of USIA, the relationships between USIA and U.S. international broadcasting varied. For many years, all broadcasting services were housed within USIA. Later, surrogate broadcasting was under an independent Board of International Broadcasting (BIB), which had an indirect relationship with USIA leadership. With the enactment of the United States International Broadcasting Act of 1994, as discussed previously, all U.S. international broadcasting services were consolidated under a new Broadcasting Board of Governors (BBG) within USIA.\nThe BBG had responsibility for supervising, directing, and overseeing the operations of the International Broadcasting Bureau (IBB). The IBB included the worldwide broadcasting services of the Voice of America (VOA) and television's Worldnet, Cuba Broadcasting, an Engineering and Technical Operations Office, and various support services. The BBG also had funding and oversight authority over surrogate radio grantees: Radio Free Europe/Radio Liberty (RFE/RL) and Radio Free Asia (RFA). Among BBG's responsibilities was to review and evaluate the operations of the radios, and assess their quality, effectiveness, and professional integrity. It also was responsible for determining the addition or deletion of the language services under the IBB. In 1999, the U.S. government and surrogate services broadcast hours included\n660 hours of weekly VOA programming in 53 languages; 24 hours-a-day of radio and 4½-hour-per-day television broadcasting in Spanish to Cuba; and over 500 hours per week of RFE/RL programming in 23 languages to Central Europe, Russia, Iran, Iraq, and the republics of the former Soviet Union, then referred to as Newly Independent States (NIS).", "In 1999, USIA operated 190 USIS posts in 142 countries. At that time, 520 USIA foreign service officers staffed these posts with the support of 2,521 locally hired foreign service nationals (FSN). The USIA officers were posted at embassies, consulates, and USIS libraries around the world.\nUSIS planned and implemented its activities and programs on a country-specific basis, targeting particular audiences identified by the post. Six geographic offices supported and coordinated USIS efforts: the Office of African Affairs, the Office of Inter-American Affairs, the Office of East Asian and Pacific Affairs, the Office of West European and Canadian Affairs, the Office of East European and NIS Affairs, and the Office of North African, Near Eastern and South Asian Affairs (NEA).\nThere were three principal USIS foreign service positions at an embassy or consulate abroad:\nThe public affairs officer (PAO) was responsible for managing the embassy's information and cultural activities. The PAO was the senior advisor to the ambassador and other embassy officials on public diplomacy strategies for policy implementation, public opinion in the country, and various embassy activities, and oversaw the work of the other public diplomacy officers posted to the embassy. The information officer (IO) worked with the host country and international media, and was the embassy spokesperson. The IO drafted policy guidance on key issues of public interest, arranged press events, issued press releases, arranged live WORLDNET interactive satellite television/teleconference linking local opinion makers with U.S. government officials or other American specialists on time-sensitive issues. The IO worked with local editors and reporters explaining U.S. policies and issues regarding U.S. society and culture, and provided support for American journalists working in the country. The cultural affairs officer (CAO) administered the educational and cultural exchange programs, and arranged programs, lectures, and seminars with U.S. speakers, artists, musicians, and other representatives of U.S. culture. The CAO also worked with local publishers to reprint and translate American books and publications.\nThe work of the USIS officer involved advocating U.S. positions, but also involved working with a much larger segment of the host country's society to discuss both broad U.S. government policy, and more specific issues of mutual interest to that country, such as U.S. import quotas or visa issuance policies. In order to communicate convincingly across a broader segment of contacts, USIS officers had to \"study and absorb the political and cultural climate of the host country, the better to craft messages and offer insights about America which can be coherently read in the local context.\"", "", "Prior to the dissolution of USIA and the consolidation of its functions into the Department of State, the FY1999 appropriations request for USIA was approximately $1.12 billion. Table 1 provides USIA budget and appropriations information sorted by major account.", "The authorized personnel strength reported by USIA for FY1999 is illustrated in Table 2 .", "The Foreign Affairs Agencies Consolidation Act of 1998 (Subdivision A of Division G of P.L. 105-277 ) (Consolidation Act) abolished USIA. The Act transferred USIA's functions to the Secretary of State. It also created the position of Under Secretary for Public Diplomacy in the Department of State. A number of factors have been identified as important to this transfer of public diplomacy responsibilities, not all of which bore directly on the improvement or importance of having a robust U.S. public diplomacy capability. First, the end of the Cold War meant that the central justification for a strong public diplomacy mechanism, namely, the ideological fight against the Soviet Union, no longer existed. After more than four decades of engaging the Soviet Union and its allies in ideological warfare, the Cold War came to an end with the collapse of the Soviet Union. The United States was the sole superpower, and the spread of democracy seemed to be on the march around the world. Many believed that the United States and the rest of the free world had won the war of ideas, and terms such as the \"end of history\" became popular. Some considered USIA an expendable \"Cold War relic.\" USIA had a difficult time defining its mission in this new context, attempting to focus on new issues such as trade and economic liberalization.\nSecond, while some saw a greatly diminished need for public diplomacy resources in general, others perceived a specific weakness in the public diplomacy apparatus represented by an independent USIA that operated separately from the State Department. As one commentator argued, U.S. public diplomacy is characterized by two types of activities: advocating for U.S. foreign policy, and building mutual understanding between Americans and foreign peoples. Arguments for keeping public diplomacy in an organization separate from the State Department often focus on the importance of developing long-term relationships with the people of foreign countries, in order to create a foundation of mutual understanding, values, and interests that prepares the ground for acceptance of specific U.S. policies and actions. Placing those duties too close to the short-term policy activities of traditional diplomats within the State Department might diminish the importance of long-term efforts to achieve mutual understanding. On the other hand, public diplomats also endeavor to explain U.S. actions and policies to foreign publics in a positive light, advocating for the United States on day-to-day, shorter-term issues moving through foreign news cycles. For these activities, some argue, a closer proximity and relationship to those in the State Department responsible for foreign policy and U.S. actions abroad would improve the synchronization and coordination of public diplomacy with official diplomacy and specific foreign policy. This argument has been bolstered as advances in technology required ever quicker communications in support of policies as news and information is spread instantly to a global audience in a 24-hour-a-day media cycle. The case of abolishing USIA and folding public diplomacy into the State Department has been described as placing quick public diplomacy responses on policy issues ahead of the protection of long-term mutual understanding efforts.\nThird, and related to the first two factors, certain Members of Congress and leadership within the executive branch were seeking to reorganize and streamline government in general, as well as to reduce the size and resources of U.S. foreign policy agencies in particular. Concerns about the U.S. national debt, annual federal budget deficits, and the size of government led to initiatives to \"reinvent government\" and reap a \"peace dividend\" in the form of agency and bureaucracy consolidation. USIA became part of a group of foreign affairs agencies, along with the Arms Control and Disarmament Agency (ACDA) and the Agency for International Development (USAID), that were targeted as prime candidates for consolidation into the State Department. After an extended period of political wrangling in Congress and the Clinton Administration over issues not related to public diplomacy or arms control, Congress passed the Consolidation Act eliminating USIA and ACDA, with USAID surviving but in a restructured form.", "Originally, USIA's Bureau of Information Programs and the Bureau of Educational and Cultural Affairs were consolidated into a new State Department Bureau of Information Programs and International Exchanges. The bureau was responsible for educational and cultural affairs and production of information programs to advocate for U.S. policy positions with foreign audiences. State's Bureau of Public Affairs incorporated the work of running foreign press centers, and the geographic area offices became part of their respective regional bureaus at State. USIA's research office was integrated into the State Department's Bureau of Intelligence and Research.\nThe Bureau of Information Programs and International Exchanges was subsequently divided, and now consists of the Bureau for International Information Programs, headed by a Coordinator, and the Bureau for Educational and Cultural Exchanges, headed by an Assistant Secretary.", "Though the Consolidation Act dismantled USIA, it also established the Broadcasting Board of Governors as an independent entity within the executive branch. The Consolidation Act required the Secretary of State and the BBG to respect the professional independence and integrity of the International Broadcasting Bureau (IBB), charged with administering day-to-day broadcast operations, the BBG's broadcasting services, and the grantees of the BBG. This separation, and the requirement to respect the independence and the integrity of the broadcasters, maintained (1) an established deniability for U.S. diplomats when foreign countries objected to a particular broadcast, and (2) a firewall between the Department of State and the broadcasters to prove a degree of independence for the broadcasters. However, the Consolidation Act also recognized the importance of consistency between U.S.-sponsored broadcasting and the broad foreign policy objectives of the United States, as well as the importance of broadcasting as a foreign policy tool. It made the Secretary of State a permanent voting member of the board and authorized the Secretary to assist the Board in carrying out its function by providing information and guidance on foreign policy issues as the Secretary deems appropriate.", "Many recent recommendations for reform of the public diplomacy structure call for a new agency or other entity to remove public diplomacy from the State Department's responsibilities, or to reorganize or reform State Department organization to better accommodate public diplomacy. This section explains the current structure of public diplomacy organization, as well as the organization of U.S. international broadcasting, and recent budget information.", "Planning, funding, and implementation of public diplomacy programs are led by the Department of State through the Under Secretary of State for Public Diplomacy and Public Affairs, a position created by Section 1(b)(3) of the State Department Basic Authorities Act of 1956, as amended (22 U.S.C. § 2651a(b)(3)). The Under Secretary's organization, carrying the State Department designation of \"R,\" is tasked with leading the U.S. government's overall public diplomacy effort, increasing the impact of educational and cultural exchange, and developing and utilizing new technologies to improve the efficiency of public diplomacy programs. Judith McHale was sworn in as Under Secretary of State for Public Diplomacy and Public Affairs on May 26, 2009.\nThree bureaus and two offices report to the Under Secretary:\nthe Bureau of Educational and Cultural Affairs (ECA) headed by an Assistant Secretary; the Bureau of International Information Programs (IIP) headed by a Coordinator; the Bureau of Public Affairs (PA) headed by an Assistant Secretary; the Office of Policy, Planning and Resources (R/PPR) headed by a Director, and the Office of Private Sector Outreach (R/PSO), also headed by a Director.", "Like its earlier USIA version, ECA's mission is to foster mutual understanding between the people of the United States and the people of other countries by means of educational and cultural exchanges. To achieve this goal, the Offices of Academic Exchange Programs, Citizen Exchanges, English Language Programs, Exchange Coordination and Designation, Global Educational Programs, and International Visitors implement programs for educational and professional exchange and leadership and professional development.\nThe Fulbright Program, which is administered by the Office of Academic Exchange Programs, is often considered the flagship of such exchanges. For the 2008-2009 academic year, with total available funding of $262,454,000, approximately 7,000 new Fulbright awards were made. Of these, 1,500 were for U.S. students, 2,700 for visiting students, 1,400 for U.S. scholars, 900 for visiting scholars, and the remainder for awards under the Fulbright teacher program.\nThe Office of Private Sector Exchanges oversees 15 different categories of citizen exchanges bringing foreign nationals to the United States: Alien Physicians, Au Pairs, Camp Counselors, Government Visitors, International Visitors, Interns, Professors, Research Scholars, Short-Term Scholars, Specialists, Students-Secondary, Students-College/University, Summer Work Travel, Teachers, and Trainees. This office\ndesignates the sponsoring organizations that implement the international exchange programs; oversees organizations' compliance with federal regulations concerning each exchange category; and investigates and resolves problems that may arise in the exchange programs and the treatment of the participating international exchange students.\nThe Office has designated more than 1,400 sponsoring organizations to administer international exchanges. The State Department estimates that more than 300,000 individuals participate in these exchange programs annually; currently there are over 1 million alumni of U.S. exchange programs around the world. These alumni include more than 40 Nobel laureates and more than 300 current and former heads of state or government.\nExchange programs offer highly varied experiences. The Office of Citizen Exchanges implements cultural, professional, sports, and youth programs. For example, the Citizen Exchange Office administers the \"Cultural Envoy Program.\" This program seeks to promote cross-cultural understanding and collaboration by sharing American artistic traditions with foreign audiences. It has sponsored dancers and choreographers to teach American dance; blues musicians; off-Broadway companies; and choirs to show the breadth of American performing arts.\nThe Obama Administration has expressed its support for exchanges, stating that such programs foster engagement and dialogue among all citizens around the world, particularly with key \"influencers\" including educators, clerics, journalists, women, and youth. It provides these influencers first-hand experience with Americans and U.S. values and culture.", "Like its USIA forerunner, the Bureau of Information Programs, IIP administers programs that present information on foreign policy, society, and values to foreign audiences through print and electronic resources in several languages to improve international receptiveness to the United States, its people and national interests. The bureau also provides policy and technical support for outreach efforts through U.S. embassies and consulates in more than 140 countries.\nIIP continues a publication program that produces 40 to 50 publications annually in Arabic, Chinese, English, French, Persian, Russian, Spanish, and other languages, when appropriate, on topics that explore U.S. policy, society, and culture. These IIP produced books range from pocket-sized publications to illustrated \"coffee-table\" books. Topics include Free at Last: The U.S. Civil Rights Movement , Being Muslim in America , and Outline of the U.S. Economy . IIP also translates literary and non-fiction titles by American authors into several languages and, working through the embassies, establishes joint publishing agreements with local publishers. The translations can be full-length books, condensed editions, anthologies, and special adaptations in book form.\nIIP also continues the speakers program and operates American Corners. As most freestanding American Centers were closed in major foreign city centers largely due to security concerns about terrorism, America Corners took their place as embassies partnered with host country institutions such as universities and libraries to house U.S. material and host events for the local population to meet visiting U.S. officials and speakers. Unlike American Centers, which were staffed by U.S. personnel, American Corners are often staffed by the partnered institution's personnel.\nIIP has increased its information presence on the Internet in recent years. America.gov provides videos, blogs, timelines, web chats, articles and news stories on world events, American society, and U.S. policies, in several major languages. Videos on the website generally run for little more than a minute, and discuss a wide variety of subjects from the diversity of religions in America to the experience of a young Chinese American cartoonist growing up in the United States. Ejournal is a monthly electronic magazine providing information on a wide variety of subjects such as jury trials, U.S. presidential transitions, and multicultural literature.\nIIP also has a 10-person Digital Outreach Team that communicates on popular Arabic, Persian, and Urdu blogs, news sites, and discussion groups to explain U.S. foreign policy and counter misinformation. The Digital Outreach Team members identify themselves as employees of the Department of State as they interact on 25 to 30 Internet sites per week. The team posts short comments as well as longer op-ed pieces and translated videos previously produced by IIP.\nThe joint ECA-IIP Grants Division provides grants to organizations to carry out educational and cultural programs and free exchange of information.", "The Bureau of Public Affairs (PA) has a separate mission and audience from IIP's. While IIP's work and products are made for foreign audiences, and by law cannot be developed for domestic consumption, PA's function is to inform the American public about U.S. foreign policy, and to share American concerns and views with U.S. policymakers. The bureau\nconducts press briefings for domestic and foreign press corps; manages the State Department website at State.gov; arranges town meetings and schedules speakers to visit communities in the United States to discuss U.S. foreign policy; and prepares the historical studies on U.S. diplomacy and foreign affairs matters.", "R/PPR provides the Under Secretary with strategic planning and performance measurement capability for public diplomacy and public affairs initiatives so that public diplomacy resources can be allocated to meet national security objectives. The Evaluation and Measurement Unit (EMU) within PPR was created in 2004 to evaluate all public diplomacy programs in Washington and in the field through the development of data collection methods and analytical procedures.", "R/PSO seeks to develop working relationships with private sector leaders in U.S. companies, universities, and foundations to promote foreign policy objectives such as countering violent extremism, empowering women business and civic leaders, and strengthening international education.", "Each U.S. embassy maintains a public affairs section to manage informational and cultural programs in a host country. The section is tasked with explaining U.S. government policy and actions to that country's officials, media, and people. At large embassies the section's overall responsibilities are shared by a cultural affairs officer (CAO) and an information officer (IO), while at other embassies the duties are handled by the public affairs officer (PAO). The CAO or PAO manages cultural programs designed to educate foreign publics about the United States, and to dispel false conceptions about Americans, American attitudes and beliefs, and life in the United States. These programs include sending foreign individuals to the United States for various periods of time for professional and educational exchange. The public affairs section also sponsors trips by American cultural ambassadors as previously mentioned in the ECA discussion, and brings American speakers to the host country to engage the people on important issues. The PAO will also often conduct informal outreach by attending receptions and concerts in the host country, and by hosting receptions for foreign individuals in his or her home.\nIn addition, the PAO also coordinates the embassy's communications with the media in the host country, and is the only embassy person, besides the U.S. ambassador, who is authorized to speak directly to the press. The PAO issues press releases on current issues concerning U.S. government policy or action, and responds to inquiries in press conferences and interviews provided to local media. The PAO will inform Washington of this activity as well as provide analysis on the coverage of such activities. The PAO, as well as other public diplomacy officers (PDO), makes presentations to various groups and institutions within the host country. The PAO also must perform a number of administrative duties within the embassy, related to supporting the ambassador, and manage exchange and other public diplomacy programs, budgets, and personnel within the public affairs section.", "There are a number of differences in organization and operations of public diplomacy between the former USIA and the current State Department public diplomacy structure.", "In USIA, the agency's director had a direct line of authority to the geographical area offices, and public diplomacy officers (PDOs) were part of a chain of command that descended directly from the director. At the State Department, in contrast, much of the public diplomacy staff is located in separate public diplomacy offices in the regional and functional bureaus, outside R's organizational structure. These public diplomacy offices within each bureau are designed to place PDOs in close contact with the bureaus' policy-makers, in order to improve integration of traditional and public diplomacy on foreign policy issues. Therefore, while public diplomacy policy and planning fall under the R's authority, public diplomacy staff in the regional and functional bureaus are under the authority of the Under Secretary of State for Political Affairs in the case of regional bureaus, as well as the various under secretaries heading the functional organizations within State.", "Funds for public diplomacy activities are disbursed and expended differently within the State Department in comparison to the former USIA. Funding for public diplomacy has a separate line in the State Department's operating account and is sequestered from other funds within the State Department. Funding for public diplomacy activities and for salaries of foreign service nationals (FSNs) employed in public diplomacy positions is provided through allotments from the budget of the Under Secretary of State for Public Diplomacy and Public Affairs. Under secretaries and assistant secretaries outside R may not transfer public diplomacy funds to other uses within their organizations. Unlike USIA, however, R does not have complete control over public diplomacy funding. Because PDOs located in each of the regional and functional bureaus are in many cases the primary actors undertaking public diplomacy activities in the department, day-to-day expenditure of public diplomacy funds is dictated by the regional and functional bureaus themselves, not by R.", "PDO assignments and evaluations are handled differently in the State Department. The USIA Director made all position assignments through USIA's dedicated human resources office, and the Director's direct chain of command implemented all performance evaluations and promotion decisions. Evaluations were based primarily on an Officer's public diplomacy skills and accomplishments. The State Department, on the other hand, uses its department-wide Human Resources Bureau to make assignments and to evaluate PDOs alongside other FSOs from the other four career cones (Consular, Economic, Management, Political) in the department. Under the State Department's generalist approach to the careers of its FSOs, the department regularly assigns PDOs to non-public diplomacy positions, and also fills public diplomacy positions with FSOs from other cones. Evaluations of PDOs within State are based on a general set of criteria not specifically related to accomplishment and skill in public diplomacy. The fact that R does not administer employee performance evaluations for the PD officers at posts abroad or in the regional and functional bureaus represents a significant difference from the evaluation structure of the former USIA.", "Critics of the current organizational structure also contend that since the old USIA regional bureaus became part of the Department of State's regional bureaus, PDOs assigned to U.S. posts and missions abroad no longer get the same support from the State Department regional and functional bureaus.\nThe \"area directors\" for each region of the world supervised a staff of FSOs in a single Washington office who were all experienced public diplomacy professionals and who had served abroad, usually in that region. These area offices were efficient in evaluating field requests because they understood in detail what the circumstances were that the PAO was operating in, and they were prompt in responding to the PAO.", "With the enactment of the United States International Broadcasting Act of 1994 ( P.L. 103-236 ), all U.S. international broadcasting services were consolidated under a new Broadcasting Board of Governors (BBG) within USIA. In 1998, Congress passed legislation establishing the BBG as an independent entity within the executive branch at the same time it abolished USIA. The BBG, which acts independently of the Department of State, is composed of nine members, with the Secretary of State serving as a voting member ex officio and providing foreign policy information and guidance to the Board. By ensuring broadcasting independence while at the same time institutionalizing guidance from the Secretary of State, the legislation struck a balance between U.S. international broadcasting that is credible in the view of foreign audiences and support for the foreign policy objectives of the United States. The President appoints the remaining eight members to three-year terms, and the members are confirmed by the Senate.\nThe BBG has responsibility for supervising, directing, and overseeing the operations of the International Broadcasting Bureau (IBB). The IBB, whose director is appointed by the BBG, supervises the worldwide broadcasting services of the Voice of America (VOA) and Worldnet television broadcasts, Cuba Broadcasting (Radio and TV Marti), an Engineering and Technical Operations Office, and various support and transmission services to the broadcasters. The BBG also has funding and oversight authority over surrogate radio grantees: Radio Free Europe/Radio Liberty (RFE/RL) which also operates Radio Farda (Iran) and Radio Free Iraq; Radio Free Asia (RFA); and the Middle East Broadcasting Network which operates Radio Sawa and Alhurra television. Among BBG's responsibilities is reviewing and evaluating the operations of the radios, and assessing their quality, effectiveness, and professional integrity. It is also responsible for determining the addition or deletion of the language services under the IBB. See Figure 4 .", "Funding for public diplomacy is located in annual State Department/Foreign Operations appropriations legislation, which includes funds appropriated for public diplomacy within the State Department and separate funding for international broadcasting.", "The State Department includes its requests for funding of public diplomacy under the Diplomatic and Consular Programs heading in appropriations legislation, as well as under a number of other headings, such as Educational and Cultural Programs. Table 3 denotes public diplomacy appropriations for FY2008-2009 and the FY2010 request.", "Table 4 below shows appropriations for the BBG for FY2008-2009, and the FY2010 request.", "Table 5 provides staff numbers in the major areas of public diplomacy function within the State Department. The FY2009 request included appropriations to fund an additional 20 public diplomacy positions for both domestic and overseas positions in IIP, as well as new locally engaged staff overseas.", "While the State Department is the recognized lead for U.S. public diplomacy efforts, a number of government agencies engage in communications with foreign publics by virtue of their missions. The Department of Defense (DOD) and the Agency for International Development (USAID) are two organizations with clear foreign policy aspects to their activities. A number of other agencies conduct exchanges under the Mutual Educational and Cultural Exchange Act of 1956 (MECEA), and, with the advent of instant global communication through satellite and Internet media, more agencies must consider the effect of their messaging on foreign publics than before. An overview of DOD and other agencies' efforts follows.", "The Department of Defense (DOD) has focused increasingly on improving its communications with foreign publics, as well as measuring and assessing the effect its words and actions have on populations living in the areas where U.S. military operations are taking place. It has attempted to shift its focus in many cases from traditional military operations and missions to the non-kinetic, information- and influence-based activities contemplated within concepts of \"strategic communication,\" integrating communication and influence guidance throughout operational planning and execution. DOD has defined the term \"strategic communication\" as\n[f]ocused United States Government efforts to understand and engage key audiences to create, strengthen, or preserve conditions favorable for the advancement of United States Government interests, policies, and objectives through the use of coordinated programs, plans, themes, messages, and products synchronized with the actions of all instruments of national power.\nTwo observations may be made about this definition. First, although the term \"strategic communication\" (SC) is attributed to DOD activities to a much greater extent than other government agencies, its definition of the term includes the efforts of the entire U.S. government. Second, the definition describes a process of activity, not an organizational structure within DOD or any other government agency. In DOD, activities related to strategic communication are primarily supported by three capabilities: (1) Information Operations (IO), and primarily within IO, Psychological Operations (PSYOP); (2) Public Affairs (PA); and (3) Defense Support to Public Diplomacy (DSPD). Military Diplomacy (MD) and Visual Information (VI) also support SC-related activities. In addition, while the term \"public diplomacy\" as used by the State Department describes communications with foreign populations, strategic communication involves DOD interacting with and influencing foreign publics, military adversaries, partner and non-partner governments, other U.S. government agencies, and the American people.", "DOD undertakes a number of specified activities through SC-support organizations such as PSYOP, PA, and VI, and has in recent years increased its communication efforts on the Internet as well as in areas where kinetic military operations are ongoing, including Iraq and Afghanistan. It has also attempted to improve the understanding of foreign societies in order to better communicate with these publics. Beginning in 2007, for instance, DOD created small teams of social scientists and anthropologists, known as Human Terrain Teams, and embedded them in brigades in Iraq and Afghanistan. These teams are responsible for providing insights into the customs and values of local populations.\nIn addition, responding to the release of the 2007 National Strategy for Public Diplomacy and Strategic Communication, which called for relevant agencies to provide information on activities related to the goals and concepts in the Strategy (see \" National Strategy and Interagency Coordination Efforts \" below), DOD identified a number of specific SC-related programs and activities. These included a number of government-to-government and military-to-military activities, but DOD also described programs for interaction with foreign publics, and related activities. As DOD considers messages conveyed through actions a major part of strategic communication in addition to those delivered through words, it included the department's humanitarian assistance activities as important to interaction with foreign populations, and also described the activities of its PA organization that publicize such assistance to explain the source of that assistance. Deeds-based SC activities also included the Global Maritime Partnership, which involves deployment of Navy warships and hospital ships to conduct civil-military operations in foreign countries as well as deliver humanitarian assistance.\nA number of programs designed to support the effort to counter terrorist and extremist groups also were listed. The Trans-regional Web Initiative (TRWI) directed Combatant Commands (COCOMs) to create regionally focused websites with tailored communications to foreign audiences and measure and assess their effectiveness. The department created the Expanded Trans-Regional PSYOP Program (ETRP) to unify and synchronize communications themes and objectives across all theatres, guiding individual COCOM-created communications to selected foreign audiences in each region. ETRP authorized communications through audio-visual, telephonic, and web-based applications. DOD has also created Regional Centers for Security Studies, which provide educational opportunities in the United States and Germany for key foreign audiences on regional security issues. These centers create networks of influential alumni who \"serve as a vanguard of indirect strategic communications efforts.\"\nDOD is also seeking to measure and assess more effectively the effects of its actions and messages on foreign populations, and to develop improved communications. DOD has identified a number of activities and capabilities required to achieve these goals, including the following:\nutilizing network science in addition to opinion polling to identify key audiences, key issues, and effective communications activities; using new software to track and analyze Internet activity to identify trends, developing issues, and local, regional, and global sentiment; identifying and tracking the statements, actions, and attitudes of key foreign opinion leaders; utilizing independent inspector teams to interact directly with foreign populations to determine communication and influence problems and to alter actions and words to improve explanation and acceptance of DOD actions; and mapping social communications systems for reference in building communications strategies.", "DOD created the office of the Deputy Secretary of Defense for Support to Public Diplomacy in 2007 to coordinate DOD communications with other government entities. With reports surfacing that the office was providing guidance to military commanders that did not meet DOD's standards of accuracy and transparency, Michele A. Flournoy, appointed in early 2009 as Under Secretary of Defense for Policy, abolished the office and the Deputy Assistant Secretary position. In its place as a coordinating entity for strategic communication strategy and activities within DOD, Under Secretary Flournoy created the Global Strategic Engagement Team (GSET) headed by Rosa Brooks, senior advisor to the Under Secretary.\nThe GSET is currently in the midst of reviewing the overall DOD approach to enterprise-wide strategic coordination; existing SC-related capabilities and activities; recent DOD documents regarding SC concepts, principles, goals, and best practices; and avenues for creating formal SC doctrine. Ms. Brooks has also instituted a Global Strategic Engagement Coordinating Committee, represented by the various organizations that provide crucial support to DOD's strategic communication efforts, including PA, Legislative Affairs, IO, Joint Staff, and the Office of the Under Secretary of Defense for Policy itself. This Committee provides the opportunity for policy discussion and oversight, creation of a common orientation toward SC issues and coordination, as well as senior-level SC review and direction. Ms. Brooks's team is directing reviews of existing SC capabilities such as IO to analyze their activities and doctrine in support of wider SC coordination and integration efforts. As this process has begun recently, DOD officials anticipate a timeline of several months before the initial review process is finished.", "It is acknowledged that USAID, because of its administration of foreign assistance, has an important role in public diplomacy. The agency creates long-standing relationships between the United States and the people of other countries, relationships that are capable of influencing foreign publics to view U.S. policies and actions as beneficial and to cooperate with U.S. government initiatives. Since the 9/11 terrorist attacks, USAID claims it has increased its outreach to foreign publics to better explain the humanitarian and assistance programs intended to improve the living conditions and development of vulnerable populations. USAID employs its own public diplomacy officers, called Development Outreach and Communication Officers, to carry out USAID's mission to inform host country publics about U.S. assistance efforts. These Officers develop mission-specific communication strategies based on audience research and including goals, objectives, action plans, and budgets required to carry them out. USAID provides its Communications Officers with specialized training and has developed a field manual for communicating with foreign publics.\nUSAID works with the State Department through the State-USAID Joint Policy Council and Management Council to coordinate the two agencies' public diplomacy efforts. In addition, the Secretary of State is encouraged to work with USAID and other private organizations in ensuring when practicable that assistance provided through USAID, whether it is in the provision of commodities and services or funding large civil works projects, is clearly marked \"from the American people,\" with the logo of USAID.", "While State and USAID sponsor nearly four-fifths of U.S. and foreign participants in educational and cultural exchange programs, other government agencies are responsible for the remaining participants in exchange programs authorized under the Mutual Educational and Cultural Exchange Act of 1961. Examples include the short-term exchange of scientists program at the National Cancer Institute, and the Architectural and Transportation Barriers Compliance Board with its 74 foreign participants in 2007. These exchanges, while not having been designed strictly as public diplomacy initiatives, nevertheless have the same effect with foreign participants meeting, working with, and living in the United States.\nA number of congressionally mandated NGOs, many founded during the Cold War, continue to receive appropriated funds to perform work in support of U.S. foreign policy objectives. These NGOs seek to develop long-term relationships and to improve foreign populations' understanding of and attitudes toward the United States. Among these organizations are the National Endowment for Democracy (NED), the Asia Foundation, the East West Center at the University of Hawaii, and the Eisenhower Exchange Fellowship Program.\nAlthough most U.S. government agencies do not have a mandate to communicate with foreign publics, Internet and satellite broadcasting technologies make any public messages and statements instantly available to a global audience. Thus, when the Secretary of the Treasury discusses the state of the U.S. economy and steps that the department is proposing, or the Administrator of the Environmental Protection Agency discusses pollution standards or the agency's position on climate change, all are communicating to foreign publics even if that is not the intent.", "There have been numerous attempts to create government-wide strategies and to foster interagency coordination for public diplomacy and strategic communication in recent years, but none has been regarded as successful. The National Security Council established a Strategic Communication Policy Coordinating Committee in 2002, and tasked it with creating a national strategy for strategic communication. Although a draft strategy was produced, it was not released, and this Policy Coordinating Committee was disbanded with the advent of the war in Iraq. President George W. Bush created the Office of Global Communications in July 2002, with a similar assignment to provide strategic direction to U.S.-government communications, but instead it performed only day-to-day public affairs functions, providing guidance on policy messaging. It was disbanded in 2005.\nIn April 2006, National Security Advisor Stephen Hadley authorized creation of a new Policy Coordinating Committee for Public Diplomacy and Strategic Communication (PCC), to be led by the Under Secretary of State for Public Diplomacy and Public Affairs, with support from the Deputy National Security Advisor for Strategic Communication and Global Outreach. The PCC was intended to act as the principal interagency coordination body for U.S. government communications with foreign publics, and is comprised of representatives from the State Department, DOD, the Department of the Treasury, the National Security Council, the intelligence community, and other agencies. The Global Strategic Engagement Center, established by former Under Secretary of State for Public Diplomacy and Public Affairs James K. Glassman, acts as a subject-matter advisory group for the PCC, and also serves as a response unit for counterterrorism communications. It is staffed by civilian personnel from the State Department, the Central Intelligence Agency, and other agencies, as well as by active-duty military personnel.\nIn 2007, the PCC released the National Strategy for Public Diplomacy and Strategic Communication. It articulates three strategic objectives for U.S. government communications with foreign publics:\n1. America must offer a positive vision of hope and opportunity that is rooted in our most basic values. 2. With our partners, we seek to isolate and marginalize violent extremists who threaten the freedom and peace sought by civilized people of every nation, culture and faith. 3. America must work to nurture common interests and values between Americans and peoples of different countries, cultures and faiths across the world.\nIt identifies three main target audiences: (1) key influencers, those who can effectively guide foreign societies in line with U.S. interests; (2) vulnerable populations, including the youth, women and girls, and minority groups; and (3) mass audiences, who are more connected to information about the United States and the world than ever before through new and expanding global communications media. The Strategy identifies three public diplomacy priorities:\nexpand education and exchange programs, \"perhaps the single most effective public diplomacy tool of the last fifty years\"; modernize communications, including a heightened profile for U.S. officials in foreign media, increased foreign language training for U.S. diplomats, and utilization of Internet media such as web chats, blogs, and interactive websites; and promote the \"diplomacy of deeds,\" publicizing U.S. activities to benefit foreign populations through humanitarian assistance, health and education programs, and economic development, as well as U.S. government activities that show respect for foreign culture and history.\nAs the first steps toward better interagency coordination and unity of effort with regard to public diplomacy and strategic communication, the Strategy asked each relevant agency to develop an agency-specific plan to implement the objectives of the Strategy, as well as to increase information sharing with other agencies to encourage clear and consistent messaging across all U.S. government communications to foreign publics.\nAlthough the Strategy was considered a step forward in government-wide coordination of communications efforts, it was criticized for failing to clearly define agency roles and responsibilities, and implementation of the Strategy has been lacking, especially with regard to the creation and coordination of agency-specific plans. In addition, the PCC does not convene regularly, although Rosa Brooks, Senior Advisor to Under Secretary of Defense for Policy Michele Flournoy, currently meets regularly with Under Secretary of State for Public Diplomacy and Public Affairs Judith McHale to discuss interagency issues and plans concerning public diplomacy and strategic communication. In light of these deficiencies, Congress has mandated creation of a new strategy for public diplomacy and strategic communication. Section 1055 of the National Defense Authorization Act for Fiscal Year 2009 ( P.L. 110-417 ) requires the President to submit by the end of 2009 a report on a federal government strategy for public diplomacy and strategic communication to specified congressional committees. For more information see the section entitled \" Recent Legislative Action .\"\nThe National Security Council (NSC) also provides fora for interagency public diplomacy and strategic communication coordination. When events occur that may impact counterterrorism efforts or that generally require coordinated response, the NSC convenes the International Crisis Communication Team, which includes NSC, White House, DOD, and State Department representatives, as well as other agency representatives as needed, to coordinate a government-wide communication response. In addition, in May 2009, President Obama announced the creation of a Global Engagement Directorate (GED) within the NSC, \"to drive comprehensive engagement policies that leverage diplomacy, communications, international development and assistance, and domestic engagement and outreach in pursuit of a host of national security objectives....\" As part of the activities of the GED, NSC holds weekly interagency policy committee meetings that can directly concern public diplomacy and strategic communication issues.", "A number of issues currently present challenges to the future implementation of U.S. public diplomacy efforts. These issues relate to the following:\nleadership; strategy at the national level; roles, responsibilities, and interagency coordination; organizational issues within the State Department; personnel matters; exchanges and other outreach activities; U.S. international broadcasting; leveraging outside expertise and best practices; monitoring and evaluation of public diplomacy; and restrictions on domestic dissemination of public diplomacy information.\nCongress might wish to take these issues into account when considering new legislation or conducting oversight over U.S. public diplomacy and strategic communication. A number of Members of Congress have already proposed legislation in the 111 th Congress that touches upon a number of the issues discussed in this section.", "As with many other efforts at reform and improvement of government effectiveness, leadership, both at the presidential and agency level, is crucial. This seems to hold especially true with regard to the U.S. government's communications with foreign publics, as the President is the government's most high-profile communicator. President Obama has made communicating to the world a priority thus far in his Administration. He has made major speeches in Europe, Russia, Egypt, and Ghana, and has given an exclusive interview to the television broadcaster Al Arabiya, a leading source of information programming in the Middle East. He has addressed directly his vision that the United States will engage with the world in an atmosphere of mutual respect and shared values and goals. In the White House, he has created a Global Engagement Directorate within the National Security Council that, the President has asserted, will rely on government communications as well as other non-military elements of national power to meet national security objectives.\nAccording to some, however, the President's leadership has not manifested itself sufficiently in reform-minded proposals necessary to improve the public diplomacy apparatus within the State Department, the interagency coordination process for communications with foreign publics, and the effectiveness of U.S. public diplomacy on the whole. Foremost in the comments of some was the lack of agency-level leadership for public diplomacy, as the position of Under Secretary of State for Public Diplomacy and Public Affairs was left vacant for the first four months of the Obama Administration (as it was at many times during past Administrations). Some feared this delay could signify that changes to public diplomacy, at least within the State Department, would not receive top priority from the new Administration. In May 2009, President Obama filled the Under Secretary position, appointing Judith McHale. Although Under Secretary McHale has extensive experience in broadcasting both domestically and abroad, some observers noted her lack of experience with the State Department's bureaucracy, taking it as a possible sign that the Obama administration does not expect to raise the profile of public diplomacy within the State Department and across other pertinent agencies. Furthermore, some criticized Under Secretary McHale's lack of experience with traditional public diplomacy activities, the expansion and improvement of which many see as crucial to reestablishing the effectiveness of U.S. public diplomacy overall. Although it certainly remains to be seen what impact Under Secretary McHale will have on public diplomacy within her organization at the State Department, it may be that the Obama Administration, as some have suggested, is content with concentrating major communications efforts intended for foreign audiences in the White House, and in the President himself. (See \" Agency Roles and Interagency Coordination \", and \" State Department Organizational Issues ,\" below, for more discussion on the State Department's role.)", "The National Defense Authorization Act for Fiscal Year 2009 ( P.L. 110-417 ) requires the President to report to Congress, no later than December 31, 2009, on the creation of a new national strategy for public diplomacy and strategic communication. This strategy will replace the June 2007 National Strategy for Public Diplomacy and Strategic Communication, which has been criticized by some as deficient in both construction and implementation. Several studies have considered creation of a new national strategy for communicating with foreign publics and have provided recommendations. Analyzing these recommendations, there seems to be an emerging consensus on the need for a new U.S. national strategy to address certain core public diplomacy issues in order to ensure effective communications with foreign publics. These issues include (1) effectively placing U.S. public diplomacy within the global communications environment; (2) providing a reconsidered, more sophisticated approach to public diplomacy and strategic communication; (3) and ensuring the integrated, flexible, whole-of-government implementation of public diplomacy strategy to meet the objectives of U.S. foreign policy.", "Much discussion about U.S. public diplomacy concerns the nature of the global communications environment, and the position both of the U.S. government and the United States as a whole in that environment. Personal communications technology is relatively inexpensive and increasingly available to higher numbers of people, and communications technology and new media are expanding rapidly. Non-state actors, including NGOs, corporations, and individuals, can now exert exponentially higher communications capabilities through the improvement in speed and capacity of the Internet. The Internet has given rise to new phenomena in communications technology. According to one report, for example, an individual blogger can today reach more people globally than could the British Broadcasting Service (BBC) or the Voice of America (VOA) thirty years ago. The Internet has also raised the importance of so-called \"many-to-many\" communications media, where networks of actors can both receive messages from and send messages to each other in a continuous two-way conversation. This differs from traditional \"one-to-many\" communications, through which one information source provides one message to large numbers of people. Also, the \"many-to-many\" communications model has made message influence a matter of convincing potential consumers to choose to receive information from a plethora of communications sources. Rather than consuming programming and information from a limited number of sources that \"push\" information to large numbers of people, now foreign publics can \"pull\" information from the sources they deem to be most representative of their interests or most trustworthy. In addition, while the influence of traditional media has fallen as the Internet has grown in importance, many new actors have moved into traditional broadcasting, with a proliferation of new satellite broadcast networks having gained a large share of listeners and viewership in recent years.\nThese developments in new communications media have complicated the work of U.S. public diplomacy, reducing the guaranteed audience the United States used to enjoy, and increasing the number of information sources where the U.S. government seeks an influential message presence. These challenges exist alongside the perceived need for improving traditional public diplomacy activities. From the several calls to expand and improve traditional U.S. international broadcasting, as well as to expand the United States' ability to conduct in-country, person-to-person public diplomacy, it is apparent that a new national strategy would require an approach that meets the challenges of traditional outreach and contemporary communications media and technology simultaneously. Internet communications, including social media networks such as Twitter and Facebook, have characteristics of both broadcast communications, such as the ability to communicate written and spoken words, still images, and motion pictures to a wide audience, and in-country, person-to-person outreach, which engenders personal relationships connected in networks of individuals connected by common interests, not just common geography. Thus, the new U.S. national strategy could attempt to integrate outreach approaches from these two traditionally separate communications areas to create effective outreach solutions for the challenges created by the global communications environment.", "Pointing to various perceived deficiencies in recent U.S. public diplomacy efforts, some observers have suggested implementing a newly considered, sophisticated approach to public diplomacy that provides frameworks, tools, and techniques to meet clear strategic objectives in order to improve the government's ability to communicate with foreign populations.", "Certain recommendations have stressed the importance of the central principles underpinning theories of effective public diplomacy activities. These include the principle that communications with foreign publics should be open and truthful, and any covert communications activities that must be undertaken by the U.S. government should be effectively separated from the communications undertaken by public diplomacy actors. Also, the United States should \"listen\" to foreign publics, that is to say, U.S. public diplomacy activities should encourage and sustain two-way communications between U.S. public diplomacy actors and members of foreign populations, especially those \"key influencers\" within such populations. U.S. public diplomacy efforts would adhere to these principles as they meet identified objectives, including cultivating common understanding between citizens of the United States and foreign populations, and promoting shared values and interests. According to some, increasing common understanding could include teaching Americans more about the cultures, languages, and interests of foreign countries and peoples. In the opinion of some analysts, integrating such principles into a national strategy to be implemented by all relevant government agencies could represent a step forward for U.S. government communications with foreign publics.", "Many recommendations call for a more nuanced approach to U.S. public diplomacy efforts, placing emphasis on understanding how different foreign publics perceive U.S. government messages and whether they trust U.S. government messengers. For example, there are calls for U.S. public diplomacy to be more delicate in the way it promotes and defends America to foreign publics. Some argue that U.S. government communicators must determine whether touting and promoting American values, such as human rights, rule of law, democracy, or free trade, might backfire due to the perception of foreign publics that U.S. policies do not follow those values, either at home or abroad. Some have also suggested that any defense of certain unpopular U.S. policies and actions in foreign countries, especially in a manner that some characterize as arrogant or dismissive, should in some cases be eschewed altogether as it damages the long-term trust of U.S. government messages by foreign populations. When U.S. policies are unpopular within a given foreign population, public diplomacy messages could instead focus on the drawbacks and deficiencies of U.S. adversaries and opponents in the corresponding country or region. Other recommendations suggest better utilization of non-U.S. government messengers, especially individuals identified as \"key influencers,\" to deliver messages that will aid U.S. interests and allow U.S. government actors to stay out of the spotlight.\nUnder this approach, determining which type of messenger to utilize in any given situation would be made continuously based on knowledge of the cultural and political climate within a given target population developed over the long term. In addition, the strict controls over U.S. government messages and information have clashed with the need for Public Diplomacy Officers to have access and permission to employ every tool of communication with foreign publics. Flexible, adaptive communications might provide the most potential for success in achieving U.S. public diplomacy and related foreign policy objectives. Increased public diplomacy resources and training, both to enhance traditional public diplomacy capabilities as well as to take advantage of new communications techniques and technologies, could provide a more complete public diplomacy toolkit, thus improving the flexibility of communications response proposed.", "Some have called for U.S. public diplomacy strategy and approaches to concentrate on comprehensive and long-term objectives in support of U.S. foreign policy. Some observers of U.S. communications with foreign publics describe the focus in recent years on communications in support of counterterrorism as necessary, but in some ways too narrow and shortsighted in terms of the proper exercise of overall U.S. public diplomacy. Although the terrorism threat and engagement with the Muslim world must take some precedence in the current national security environment, there are warnings that overemphasis of communications efforts on isolated issues and regions might cause the weakening of relationships with the publics of other important countries and regions. Some argue that because the greatest impact of public diplomacy efforts is the creation of deep, long-term relationships with foreign publics that build a lasting trust of the U.S. government as an honest messenger, resources and personnel for public diplomacy must be deployed in sufficient amount and numbers in all regions of importance. Such comprehensive, global coverage could improve the likelihood that when the next crisis arises, the U.S. government will have a ready-made network of relationships with the relevant foreign publics on which it can rely for, if not outright support, at least an honest discussion of the issues and an accepting outlet for U.S. messaging. Even in an age of instant global communications from nearly unlimited sources, therefore, the existence of long-term networks of communication between trusted U.S. public diplomacy actors and members of foreign publics, based both on geographical and virtual connections, could improve the effectiveness of U.S. communications.", "Some experts have claimed that U.S. public diplomacy and strategic communication is not guided by a national strategy that integrates communications efforts across government or within other foreign policy and national security objectives. Without a national strategy, agencies pursue their own communications interests, leading to disunity of voice, redundant messaging, and the possibility of communications working at cross-purposes. Each relevant government agency could be required to provide a plan for communicating with foreign publics, and these plans could serve as the basis for government-wide coordination of public diplomacy efforts. (See \" Agency Roles and Interagency Coordination \" below.)\nCertain recommendations for improving public diplomacy and strategic communications call for integration of communications issues within already existing strategies for other uses of U.S. national power, including traditional diplomacy, foreign assistance, and national defense. Such integration might increase the incidence of policy makers considering public diplomacy issues at the creation of policies, instead of bringing U.S. public diplomacy actors into situations after the fact to quell opposition to U.S. actions from foreign publics. In May 2009, the Obama Administration announced the creation of the Global Engagement Directorate (GED) within the National Security Council. The GED is intended to coordinate several different elements of national power, including communications, to achieve national security goals. Although the GED is still in its nascent stages, it may serve as a locus for the implementation of a new national strategy for public diplomacy and strategic communication, integrated into other strategic platforms, as has been recommended.", "The Department of State is the lead agency and the primary practitioner of public diplomacy within the U.S. government. Yet, as previously explained, several U.S. government agencies participate in at least one form of official public diplomacy or strategic communication activity. Most of these agencies primarily participate in engagement with foreign publics through foreign exchange programs, and DOD and USAID communicate in various ways with foreign publics based on their respective international missions. U.S. international broadcasting, overseen by the Broadcasting Board of Governors (BBG), is another major independent public diplomacy actor. Many observers suggest that while multiple government actors have a proper role to play in public diplomacy, those roles need definition, and the corresponding activities require coordination. Such efforts might encourage conflict between agencies currently engaging with foreign publics, as questions of authority and turf come to the fore.\nComplicating the determination of proper public diplomacy roles and coordination of effort across government is the fact that many agencies do not expressly focus on communicating with foreign publics. Certain agencies may not have specific authority or programs for communicating with foreign publics. Given the global and instant nature of communications, however, their public statements can reach the foreign populations, and their actions in some cases could affect those populations' attitudes toward the United States. Identifying the effect each agency has on foreign publics might be required before any roles can be defined and coordinated. Another difficulty arises from the use of different terminology regarding communications with foreign publics. While the State Department has long relied on the term \"public diplomacy\" to describe its communications with foreign publics, DOD has adopted the term \"strategic communication\" to describe its activities. Also, the term \"engagement\" has entered the lexicon of terms describing U.S. government interface with foreign populations. Placing activities that are similar in nature under categories with different terms and definitions could continue to obstruct attempts to delineate the foreign-public communications roles of the numerous agencies involved in such activities.\nAlthough some recommend strengthening State Department authorities and leadership for public diplomacy and strategic communication, the importance of ensuring that other agencies have the capability to communicate effectively with foreign publics has also been recognized. This seems to apply especially to agencies and departments that possess as part of their reasons for existence some sort of engagement with the people of foreign countries. Thus, DOD and USAID, as examples, have strong needs for maintaining a communications capacity, because they operate in foreign countries, their work affects foreign publics, and they must be able to explain the intentions and policies behind their activities. A coordinated communications effort could maintain the State Department as lead public diplomacy actor, communicating with foreign publics on the overall range of foreign policy issues affecting those populations, as well as informing foreign publics on the culture and other aspects of the United States and the American people that would aid deeper mutual understanding and cooperation. Other government agencies operating abroad would then supplement such communications with specialized information pertaining to the work they are performing in each foreign country, to enhance the effectiveness of their particular projects and missions.", "Many observers, including some Members of congressional committees, have criticized DOD's expansion into non-military communications and public diplomacy that they believe the State Department should undertake. One of the oft-stated reasons for this expansion is the degradation of the State Department's capacity to conduct public diplomacy and other traditionally civilian-led international activities due to the lack of resources and funding. DOD strategic communication spending, on the other hand, has increased, totaling at least $10 billion since the 9/11 terror attacks. Spending on information operations (IO) has increased from $9 million for FY2005 to a nearly $1-billion request for FY2010. For its part, DOD officials, including Secretary of Defense Robert Gates, have expressed their desire for State and other pertinent civilian agencies to receive the resources they need to effectively carry out their responsibilities. DOD in general explains that public diplomacy activities are the responsibility of the State Department, and that DOD has merely a support role in that area. Yet DOD continues to \"fill the gap\" when it comes to the perceived deficiencies of State Department public diplomacy capacity and efforts.\nSome of this gap-filling may occur because of the importance of communications with foreign publics in areas where U.S. armed forces are carrying out military operations and security is a factor, primarily in Iraq and Afghanistan, and the difficulty U.S. civilian agencies have operating in such environments. There are signs, however, that DOD communications with foreign publics might continue to increase. As counterterrorism and counterinsurgency have gained importance in overall U.S. military planning and strategy, communicating with and \"winning the hearts and minds\" of foreign populations that may produce terrorists and insurgents have become increasingly important to the success of the mission. Regional combatant commands such as the United States Africa Command (AFRICOM) have placed significant importance on strategic communication and public diplomacy activities. DOD program spending on non-military communications to foreign publics under IO has increased from $9 million to nearly $1 billion in annual funding since FY2005, according to the House Appropriations Committee. Because DOD does not break out strategic communication or public diplomacy figures in its annual budget requests, overall DOD spending on communicating with foreign populations is not known.\nWhatever the reasons for the expansion of DOD engagement with foreign publics, many analysts see problems with it. The House Appropriations Committee recently commented on its concerns:\nThe Committee has serious concerns about ... the Department's assumption of this mission area [certain new information operations programs] within its roles and responsibilities. Much of the content of what is being produced ... is focused so far beyond a traditional military information operation that the term non-traditional military information operation does not justly apply. At face value, much of what is being produced appears to be United States Military, and more alarmingly non-military propaganda, public relations, and behavioral modification messaging.\nThis statement seems to parallel the historical aversion to military communications with foreign publics that resulted in the State Department's primacy in public diplomacy. This was a primary reason for creating the civilian USIA after World War II to lead U.S. public diplomacy efforts.\nOther criticisms focus on DOD's dual role in communicating with foreign publics. While both civilian agencies and the U.S. military public diplomacy seek to inform foreign publics about America and U.S. policies in a truthful manner, the military also engages in communications designed specifically to achieve military objectives, including military deception. DOD has also been involved in \"supposed efforts to minimize target audience knowledge of United States' government sponsorship of certain production materials,\" including the planting of news stories in foreign media, as well as operation of news and entertainment websites such as Magharebia.com that do not carry a \".mil\" or \".gov\" designation and whose government sources are not obviously labeled. DOD has not always made clear delineations between public diplomacy and military operation communications within its organization, and some claim that the military's dual messaging role may lead to confusion, broken trust, and rejection of U.S. government communications in foreign publics.", "Even if agency roles for public diplomacy across the U.S. government were to become more clearly defined, there will likely still be a substantial amount of work required to effectively coordinate public diplomacy and related communications efforts among all agencies. As explained previously, the Office of Global Communications in the White House did not provide strategic direction for communications with foreign publics as originally intended. Most observers have not characterized the Strategic Communication and Public Diplomacy Policy Coordinating Committee (PCC), headed by the Secretary of State, as successful in fostering interagency coordination of communications with foreign publics, or in implementing the June 2007 National Strategy for Public Diplomacy and Strategic Communication. The Global Strategic Engagement Center (GSEC) has not been resourced to effectively carry out directives emanating from the PCC. One recommendation for improving interagency coordination would create a robust coordination organization within the National Security Council (NSC), with a Deputy National Security Advisor for Strategic Communication (DNSA) heading a new Strategic Communication Policy Committee. This DNSA would possess legal authority to assign agency roles and to direct funding for public diplomacy and strategic communication, with a direct relationship to an Associate Director for Strategic Communication in the Office of Management and Budget (OMB). As discussed above, the President has created the GED within NSC to facilitate coordination of global engagement, but it is not clear if this interagency process will lead to a shift of authorities for public diplomacy or other activities to the NSC. Some have concerns over a new NSC structure, as it might simply add another stakeholder in an already complicated web of public diplomacy and strategic communication actors and activities. Other recommendations call instead for the reinforcement of State's lead authority over public diplomacy and strategic communication, by requiring the PCC to meet at regular, frequent intervals, and ensuring that complete information on all U.S. government open and covert communications activities, including those undertaken by DOD and the intelligence agencies, is reported to R for interagency coordination purposes. GSEC would be staffed and resourced at higher levels to act as a fully operational secretariat supporting the PCC by building networks of public diplomacy actors across all pertinent government agencies to enable coordinated efforts.", "There are several criticisms currently leveled at the public diplomacy organization and authorities within the Department of State. Critics contend that these organizational problems present major stumbling blocks to improving the effectiveness of U.S. public diplomacy as well as public diplomacy's stature within overall U.S. foreign policy.", "The most fundamental criticism is that the State Department's culture of official diplomacy, centering on the protocols of diplomat-to-diplomat interaction and short-term policy considerations, is not entirely compatible with the practice of public diplomacy. Unlike official diplomacy, public diplomacy discussions often take place in informal environments amongst a multitude of participants, only one of which is the U.S. government. The intended audiences of U.S. public diplomacy efforts are highly diverse, containing a spectrum of viewpoints present in any society, unlike the controlled and exclusive foreign government audience a traditional diplomat encounters. While the conduct of traditional diplomacy can focus on specific issues of bilateral relations with another country's government, public diplomacy is intended to focus foremost on long-term relationships with several different sectors of a foreign population that may or may not produce any specific advancement of current U.S. policy objectives or result with regard to U.S. interests.\nAlso, some have identified a clash between the State Department's bureaucratic process of communication and the practice of public diplomacy outreach. Owing to the sensitivity of official diplomatic communication, some analysts argue, the State Department has developed a multi-level clearance process that can be time-consuming and restrictive. In contrast, they explain, effective public diplomacy officers are reliant on the ability to communicate freely and flexibly with foreign publics, often in informal settings and in an informal manner. Because public diplomacy officers within the State Department are burdened with a cumbersome clearance process, some say the effectiveness of their outreach is hampered. There have been suggestions that public diplomacy communication be given a pared-down clearance process to enable responsive engagement with foreign populations on important issues.\nThese basic differences in concept, conduct, and results can lead to a lack of importance placed on public diplomacy, some argue, within those parts of the State Department and U.S. embassies that do not have direct experience with outreach to foreign publics. It can also lead to the misunderstanding that public diplomacy is primarily a tool used to placate foreign publics when they react negatively to U.S. government activities and official bilateral relations in promotion of its foreign policy. Many commentators state that public diplomacy leaders often do not play an equal role with other decision makers when foreign policy is made, leading to public diplomacy that is largely reactive in nature, diminishing its effectiveness.\nOther observers assert, however, that while there have been some problems with the integration of public diplomacy into the State Department since the abolition of USIA in 1999, placing public diplomacy within the State Department structure is the best way to ensure that U.S. foreign policy is being promoted in a coordinated fashion through both official diplomatic efforts and communications with foreign publics. They also state that the integration of public diplomacy officers with officers from the other foreign service cones within the State Department has increased the familiarity of the State Department with public diplomacy in a way that could not have occurred otherwise. As foreign service officers from other career tracks get public diplomacy experience from their rotations outside their cones, they will be able to gain an appreciation for public diplomacy that they can apply once they return to positions in their chosen career tracks.", "Some have suggested that placing the head of public diplomacy in an Under Secretary position, and thus subject to the direction of Secretary of State, is equal to subordinating public diplomacy to traditional, official diplomacy, with concomitant detrimental effects on the importance of public diplomacy as a tool of foreign policy. Converting the Under Secretary position to a Deputy Secretary position has been suggested as one possible way of raising the profile of public diplomacy to the highest levels of policy making within the State Department. Other recommendations focus on improving the authorities of the Under Secretary and her organization (\"R,\" in State Department parlance) within the current structure. As explained in the \" U.S. Public Diplomacy Background \" section of this report, the Under Secretary does not enjoy overriding operational control over public diplomacy activities, personnel, and resources in Washington or at U.S. missions overseas. Unlike the geographic area offices that were at the USIA Director's disposal, public diplomacy staffs within State's regional bureaus answer to the regional Assistant Secretaries and the Under Secretary for Political Affairs. At embassies, public diplomacy officers are subject to the primary direction of the Chief of Mission, and they report back to Washington through the regional bureaus, not through R. To remedy some of these perceived problems, some analysts have recommended that the President provide new authorities to the Under Secretary for Public Diplomacy and Public Affairs in the areas of public diplomacy policy, budgets, and utilization of public diplomacy personnel. Creation of dedicated Deputy Assistant Secretaries (DAS) for Public Diplomacy within each of the regional bureaus could also create a more robust capability for strategic approaches to outreach tailored to each geographic region and country. A DAS in each bureau would provide the Under Secretary a higher-level group of officers who could potentially better carry out strategic initiatives conceived within R. Junior public diplomacy officers in each regional DAS's organization could handle more routine public diplomacy duties to free the DAS to play a more important role in the overall work and direction of each regional bureau.\nAt U.S. foreign missions, it has been suggested, the public affairs officer (PAO) heading public diplomacy efforts could administer a discretionary fund solely for public diplomacy activities, monitored by R, creating a dedicated resource and focus on public diplomacy within each embassy. At least one report has made a far-reaching recommendation to create regional public diplomacy hubs, based on the current handful of media hubs, that would establish separate facilities for public diplomacy organized along a regional structure similar to that of DOD's combatant commands. These regional hubs would coordinate U.S. public diplomacy efforts in a particular region, and would act as the primary Washington-field coordination and feedback nexus for public diplomacy. This concept of public diplomacy hubs would seem to place importance on the separation of public diplomacy from other U.S. mission activities, although the public diplomacy function would remain within the State Department's purview through its foreign missions.", "Although numerous perceived problems with the State Department's public diplomacy organization have been identified, it appears that most experts are not willing to promote re-creating USIA or setting up a new government agency in order to restore the separation of public diplomacy from the State Department. Senator Sam Brownback introduced legislation in the 110 th Congress that would have created a National Center for Strategic Communications, which would have served as the new focal point for public diplomacy and strategic communication for the U.S. government. Under this proposal, the public diplomacy apparatus within State would have been transferred to the Center, and the Center would also have had a defined leadership role in interagency coordination for communications with foreign publics. Broadcasting would have been placed under the leadership of the Center as well.\nFor a number of reasons, however, most expert opinion appears focused on making improvements to the State Department's organizational structure removing the public diplomacy function to a new agency. First, standing up a new government agency would take a significant amount of time. Second, creating new bureaucracies is not seen as an optimal solution—creating a new bureaucracy that does not consolidate older organizations, but actually separates organizational structures into separate bureaucratic entities. A new agency for public diplomacy would require a new management bureau to replace the State Department's management organization that the Under Secretary for Public Diplomacy and Public Affairs currently relies upon. A new inspector general for the public diplomacy agency would also need to be created, among other things.\nThird, many observers have noted the current debate over the public diplomacy roles and responsibilities of several government agencies, especially between the State Department and DOD, as an impediment to successfully creating a new agency. It could be expected that any problems with the determination of roles and the improvement of interagency coordination would be intensified with any effort to create a new agency, as different government actors would likely seek to further protect their perceived authorities in the area of communications with foreign publics. Interagency coordination would likely not improve through legislation designating a new agency as the lead on public diplomacy and strategic communication, given that current legislative language clearly designating the State Department as lead on such communications has not resolved questions about roles and authorities thus far.", "The size, utilization, and fitness of the Department of State's public diplomacy workforce is a central issue for the discussions on improving U.S. public diplomacy. A primary area of concern is the number of personnel carrying out public diplomacy duties within the Department of State. Although the number of foreign service officers overall have increased recently, the number of officers specializing in public diplomacy is at a significantly low level, in comparison to the apex of USIA's activities during the Cold War. Public Diplomacy Officer (PDO) numbers have dropped consistently during the decade after USIA's abolition. Overall numbers of civil servants and locally engaged staff (LES) assigned to public diplomacy duties have also declined substantially. Several analysts have called for increases in the number of personnel for public diplomacy assignments, as high as 100% over current numbers, to augment the human capital required to cultivate a culture of mutual understanding and shared values with foreign publics. These increases would include more LES, who can provide a ready-made, deep-seated connection to their own people. Increases in public diplomacy personnel could also create a human resources \"float\" that would allow all public diplomacy slots to be filled while also providing a certain percentage of public diplomacy officers with opportunities for public diplomacy training.", "Some analysts argue for improving public diplomacy recruiting and training. They note that the State Department does not actively recruit individuals who already have public diplomacy experience or skills. The U.S. Advisory Commission on Public Diplomacy recently found that the Foreign Service Officer Test and Oral Assessment do not specifically test for communication skills and public diplomacy instincts. According to the Commission, hiring experienced officers could rapidly improve outreach efforts. Improving public diplomacy capabilities at the entry-level positions, however, will not immediately address another deficiency in public diplomacy personnel: the current shortage of mid-level officers, which arose due to accelerated promotion and retirements among PDOs. Some experts have called for the short-term appointment of former public diplomacy officers to fill this mid-level gap.\nMany have called for improving public diplomacy training. While public diplomacy courses available to foreign service officers have increased in recent years, many argue that too many courses focus on administration, such as managing exchange programs, and too few on public diplomacy theory, techniques, and execution. There are several calls for an increase in foreign language training for to address deficiencies in language skills among Officers in public diplomacy posts. Private-sector partnership training has been encouraged to support the leveraging of private sector communications capacity and expertise. Some commentators suggest increased alternative training, including distance learning at post and on-the-job programs. Increased LES training, both abroad and in Washington, has also been recommended.", "There are numerous concerns over the utilization of PDOs. First, many observers believe that PDOs do not spend enough time in public diplomacy positions. They note that the rate of public diplomacy position vacancies within the department and at foreign posts has ranged near 20% during recent years, while at the same time a large percentage of PDOs are placed in non-public diplomacy positions. Some PDOs must wait until their third or fourth rotations before being assigned a public diplomacy position, yet many public diplomacy positions are filled by FSOs from the other cones (consular, management, economic, and political). Because of these conditions, some argue that public diplomacy expertise and experience have been critically reduced. Suggestions for remedying this situation include requiring early-career public diplomacy postings for PDOs; increasing the number of public diplomacy rotations for each PDO; lengthening public diplomacy rotations for PDOs; and allowing PDOs with specific cultural and language skills to rotate exclusively within the geographic area appropriate to their expertise. Other analysts counter, however, that outside-cone rotations are necessary to maintain the generalist approach to a career in the Foreign Service, which the State Department values highly.\nSecond, some have criticized the State Department for allowing public diplomacy positions to be heavily burdened with administrative responsibilities. They assert that the public affairs officer (PAO), the senior public diplomacy officer at a U.S. embassy, has been transformed into a manager generally supporting the ambassador, unable to focus on outreach or strategic public diplomacy planning. Similarly, some reports claim that junior- and mid-level public diplomacy officers also are expected to focus primarily on administrative tasks. This perceived lack of importance placed on active outreach is reinforced by the lack of career incentives to demonstrate commitment to public diplomacy activities. The U.S. Advisory Committee on Public Diplomacy reported in 2008 that the Department of State's employee evaluation report (EER), used to determine promotions, does not contain a section devoted to public diplomacy. Also, in the work requirements statements (WRS) of some public diplomacy officers, only one of 11 job requirements described substantive public diplomacy outreach, while nine were squarely administrative in nature. Some of these seeming anomalies in assessment might factor into problems for career advancement, as PDOs are \"promoted at the lowest rate of any track.\"", "Some observers have suggested that outreach to foreign publics must increase in general, both in the overall number and frequency of public diplomacy activities and in the techniques and tools of communications for public diplomacy. These increases are recommended for both educational and cultural exchange and international information programs; they include both traditional, in-person activities in foreign countries, and the \"virtual\" presence of U.S. public diplomacy on the Internet and other related forms of communications media.", "There is widespread consensus that educational and cultural exchange programs supported by the U.S. government are highly effective public diplomacy tools. Exchanges target influential audiences within foreign publics, and provide them with experiences of American society. They build an environment of mutual understanding by creating a cadre of both American and foreign citizens who develop a first-hand knowledge of another culture, and they create long-term relationships that can be drawn upon to enhance cooperation and understanding between the United States and foreign countries. Many analysts have recommended increases in exchanges in order for the United States to further benefit from the long-term connections they create. Although exchanges funding and participation have increased in recent years, and the number of visas for foreign exchange participants coming to the United States have also begun to rise after a period of decline, some have called for significant increases in exchanges funding, up to 100% over current levels. Certain increases have occurred in exchanges involving individuals from Muslim-majority countries as well as American Muslims, but some analysts have cautioned against concentrating exchanges increases in just one or a few regions. Exchange participation between Americans and foreign nationals from developing countries have also increased.", "Some observers have focused on the importance of increasing English language education for foreign populations provided by U.S. missions abroad, contending that the reduction in such language instruction represents a significant lost opportunity to engage foreign publics and to encourage long-lasting connections with and goodwill toward the United States. They claim that other countries are much more successful teaching foreign publics their respective native languages, including the United Kingdom, which devotes a greater amount of resources to English language instruction than the United States. U.S. missions abroad have engaged in more English language instruction in recent years, but there are calls for greater increases, as well as better efforts to leverage the connections made to foreign publics in the language classes to create robust, active language-graduate alumni groups in a similar fashion to alumni of foreign exchanges. Because fees may be charged to provide English language classes to foreign publics, it is suggested that U.S. missions could expand language instruction without requiring as much new funding as other projects, making the types of long-term connections possible through language education that is much more cost-effective. Although keeping costs low for English language classes is considered important, one recommendation for increased language education suggests that the United States needs also to increase the number of official U.S.-mission staff instructors instead of hiring subcontractors, to ensure instructor quality. Permanent staff instructors could be expected to increase country, cultural, and native language expertise within U.S. mission staff through direct contact with the population.", "During the Cold War and the existence of USIA, the United States operated a large number of \"America Centers,\" facilities that were open to foreign publics and provided a substantial physical U.S. presence in the centers of large foreign cities. At these Centers foreign citizens could avail themselves of libraries and reading rooms, English language instruction, U.S. speaker programs on a wide range of topics, and exhibitions of American films, among other outreach programs. Although some of these types of facilities still exist, most have been closed. With the end of the Cold War, many observe, America Centers were considered expendable. Added to the decreased emphasis on public diplomacy's overall importance, security concerns for all U.S. government facilities abroad came to the fore after the bombings of the U.S. embassies in Kenya and Tanzania in 1998. Legislation passed soon after these bombings required U.S. missions abroad to be \"co-located\" on one secure campus, unless a specific waiver is granted. Several America Centers, most often located in city centers and separate from the main U.S. embassy complex, were not housed in facilities that met the requirements of these new security rules. To make up for the loss of the America Centers, U.S. embassy complexes now house Information Resource Centers (IRCs), but the IRCs have much less to offer foreign publics than did the America Centers. Also, because U.S. embassies have been hardened against terrorist attacks and have developed more stringent security measures, members of foreign publics have more difficulty accessing IRCs as compared to the open access to former America Centers. Many IRCs require foreign citizens to make appointments with IRC staff before they may visit. In addition, many U.S. embassies have moved well outside city centers, limiting further the number of individuals visiting the IRCs.\nSome analysts see the closure of America Centers as a key deficiency in U.S. outreach to foreign publics, because such Centers served high numbers of foreign citizens and were critical points of contact for the United States to build long-term relationships with foreign publics. Some have pointed out that as the United States has retreated from outreach in important countries and regions, other countries, including Iran, have increased their presence and influence in the same places. It has been recommended, therefore, that the U.S. government seek to reestablish America Centers in the downtown areas of large cities in countries where important U.S. foreign policy interests can be served. These recommendations state that while security at America Centers is a key consideration, security interests should not trump engagement with foreign publics. Some have called for waivers of the co-location requirement in order to allow America Centers to exist as freestanding facilities, with the understanding that such Centers may be closed if the security situation involves too much risk. A Senate report on U.S. public diplomacy called for temporary closure of Centers experiencing security issues, not an outright abandonment of the facilities as has occurred in the past.", "Some observers recommend resurrecting certain international information programs that have atrophied in recent years, such as programs to translate books from English into Arabic. Calls have also been made for publishing more and more effective U.S. informational materials and interactive applications on the Internet, given its potential to reach mass audiences. Such materials could include new online libraries, online English language instruction, and robust websites containing more publications. These recommendations parallel suggestions for increasing outreach activities online, including augmenting the capabilities of the State Department's Digital Outreach Team, which responds to misinformation about the United States on prominent online discussion sites, as well as investing more heavily in the most up-to-date communications technologies, both in hardware and software. Determining how to best reach targeted audiences with such information, understanding what information and formats will best serve U.S. foreign policy interests, and building trust in U.S. government messages will be challenges to effective online information outreach just as they are to traditional outreach accomplished through a physical presence. If anything, these challenges might be more difficult to address given the lack of control over the receipt and effect of messages on the Internet, preventing their misuse or distortion, and determining what effect such messages had through valid feedback.", "The current state of U.S. international broadcasting is also the subject of debate. First, some argue that U.S. international broadcasting needs to be better integrated with U.S. foreign policy activities, strategies, and goals, in order to more effectively advance U.S. national interests. Since the United States International Broadcasting Act of 1994 created an independent Broadcasting Board of Governors (BBG), there has been a perception among some that U.S. international broadcasters might make programming decisions that distract or detract from U.S. public diplomacy efforts at both the government-wide and individual U.S. mission levels. This perception has persisted despite the inclusion of the Secretary of State as a voting member of the BBG. Affording the State Department, or perhaps a new government agency for international broadcasting, the authority to more directly supervise broadcasting programming might develop international broadcasting into a more effective tool for advancing U.S. interests. The primary counterargument to such integration of international broadcasting is based on journalistic integrity. Some argue that unless international broadcasting is independent of the political, policy-driven influences of government agencies, international broadcasting will lose its credibility and thereby become less useful in gaining the trust of foreign publics. They assert that independent international broadcasting is imperative to provide an example of a free press in a democracy to foreign publics where little or no free press exists.", "Some observers criticize the organization of U.S. international broadcasting as well. They assert that the current structure of numerous independent U.S. broadcasters, some directly supervised by the International Broadcasting Bureau (IBB), and some operating as surrogate grantees, has produced inefficiencies and redundancies across a spectrum of organizational factors. These include duplication of services and programming, a lack of coordination among the broadcasters on program content, and a non-integrated technology infrastructure that results in inefficient use of resources. Because each broadcaster retains a substantial amount of independent discretion over what it will broadcast, some criticize the lack of an overall strategy for U.S. international broadcasting itself. Perceived problems exist concerning over- or under-programming in certain foreign languages, lack of efficient utilization of new communications media, and deficient programming models and audience research. Some commentators have recommended a complete review of U.S. international broadcasting to determine whether a streamlining of the organizational structure is needed to consolidate broadcasters in order to encourage creating and implementing clear strategy and reducing redundancies. Others, however, counter that promotion of U.S. government-run broadcasting services in general undermine U.S. policies concerning the problems of state-run media, government enterprises that in many countries still represent biased, non-reliable sources of information, and suggest privatizing surrogate U.S. broadcasters to ensure credibility.\nThere are also concerns regarding individual U.S. international broadcast entities. Some have questioned the resourcing of VOA in recent years, claiming that the new Middle East broadcast entities have swallowed up a considerable portion of funding that could otherwise have been used to bolster VOA programming, especially programming in Arabic. At the same time, two of the new Middle East broadcasters, television broadcaster Alhurra and its counterpart Radio Sawa, have had numerous problems and have garnered considerable criticism. Observers have characterized the management and oversight of the broadcasters as poor. Critics have characterized the overall performance of Alhurra as deficient, as it attempts to gain market share of audiences in competition from Arab broadcast powerhouses such as Al Jazeera and Al Arabiya. Alhurra has been forced to restrict the open discourse on its channel due to criticism from Congress and elsewhere after it allowed terrorist organizations and Holocaust deniers to freely promote their views on air; the result of the restricted discourse, it is argued, has damaged Alhurra's credibility with the Arab public. The BBG for its part has claimed that Alhurra enjoys the highest audience of any non-Arab broadcaster in the Middle East. Radio Sawa's effectiveness has been questioned given that its ratio of broadcast content is heavily skewed toward popular music instead of substantive news and informational programming.", "Some studies and reports have recommended increasing the utilization of private and non-profit sector (together, \"non-public sector\") expertise, resources, best practices, and innovation as an important strategy for improving the capacity, effectiveness, and timeliness of U.S. public diplomacy. These recommendations highlight the fact that the communications and information technology expertise of the U.S. private sector is highly sophisticated and advanced. Private sector individuals and organizations can provide existing, tested information products and tools to the government, thereby allowing the U.S. government to quickly leverage outside expertise to improve public diplomacy efforts. They also point to the current global communications environment, in which individual actors and NGOs in the United States can act as important communicators, suggesting that the U.S. government should coordinate with such communicators in order to ensure maximum effectiveness and clarity of messages from U.S. sources. At least one study states that partnership between U.S. public diplomacy and the non-public sector should be a core principle guiding government communications with foreign publics.", "Although the Under Secretary for Public Diplomacy and Public Affairs currently has an Office of Private Sector Outreach (R/PSO) within her organization, there are recommendations for an independent support organization to increase public diplomacy expertise, best practices, and innovation for use by the U.S. government through partnership with the private sector. Such an organization would allow the U.S. government to build close working relationships with non-public sector communications experts from academia, NGOs, and business. The support organization could directly employ such experts, with varying lengths of appointments, instead of merely contracting or providing grants to non-public sector organizations or individuals, ensuring greater impetus toward integrated, coordinated communications research, planning, and other activities. In this way, advocates argue, such an organization would expand the scope of public/non-public partnerships currently undertaken by R/PSO, which does not focus on cooperation with individual communications and public diplomacy experts as such.\nSuch an independent public diplomacy support organization, as envisioned by some observers, would take on a number of duties, including the following, among others:\nconducting research on innovative techniques and new technologies for U.S. public diplomacy efforts, and leveraging and experimenting with the latest forms of new media for use by U.S. public diplomacy practitioners; strengthening U.S. government capability to formulate, coordinate, and execute strategic public diplomacy planning within individual government agencies to implement requirement of the upcoming national strategy for public diplomacy and strategic communication; utilizing research data on results of public diplomacy and other communications efforts to synthesize best practices, and serve as a comprehensive clearinghouse for government public diplomacy actors to access such practices; in addition to its independent functions, contracting with government agencies to provide program-specific public diplomacy services; partnering with and making grants to private organizations to engage in new public diplomacy efforts, as well as to evaluate effectiveness of such efforts; and raising funds from outside sources to fund innovative communications initiatives that could serve dual government/business purposes.\nSupporters of such an organization anticipate that it will encourage early government adoption of new communications techniques and proven best practices, and encourage interagency cooperation in a \"turf-free\" environment.", "It has been repeated often in recent years that global opinion of the United States has declined drastically, and that there have been huge shifts in that opinion, from overwhelming support after the 9/11 terrorist attacks to general dissatisfaction with U.S. actions regarding the war in Iraq and counterterrorism efforts, among other issues. The worsening polling data have been linked to the challenges currently facing U.S. public diplomacy and of the failure of that public diplomacy to improve the U.S. standing in the conception of foreign publics. Recently, however, some worldwide polls have show favorable increases in the image of the United States among foreign publics, with connections being made between that rise and the high initial favorability of President Obama around the world. Yet some have warned that polling data, which can provide fleeting information on opinion based on a snapshot in time, is not sufficient to explain the success or failure of U.S. outreach to foreign publics. Polling numbers, they argue, cannot substitute for sophisticated evaluation of the U.S. relationship with respective foreign publics and the effectiveness of U.S. public diplomacy efforts.\nIn addition to polling, it is asserted that the United States must build a comprehensive system of evaluating the performance of public diplomacy efforts, determining effectiveness by matching results to stated strategic objectives and goals enumerated in a national strategy. Only once such goals are set out, some argue, will useful performance measurements be produced. Even with a national strategy in place, however, challenges remain for gathering data regarding U.S. public diplomacy activities and analyzing such data to determine their successful performance. Some observers have commented that U.S. missions abroad do a poor job of recording data for use in evaluating outreach efforts, lacking the resources, guidance, and processes necessary to compile useful feedback information. One report states that the reliability of data gathering and evaluation at foreign posts is harmed by public diplomacy officers' fear that reporting any outreach efforts to be ineffective may have detrimental effects on their careers and opportunities for promotion.\nIn recent years the Office of Management and Budget (OMB) has rated public diplomacy efforts as \"not performing,\" based on the fact that the results of those efforts were not demonstrated. OMB has, however, rated the evaluation efforts of the Bureau of Educational and Cultural Exchange (ECA) as \"fully performing,\" finding a clear system of indicators for measuring success. ECA's system for evaluation includes reliance on data gathered from exchange participants and a well developed and sustained network of exchange alumni, measuring both the outcome and impact of different exchanges on participants and their respective home communities and countries. ECA's methods of evaluation might not be expected to translate to other public diplomacy activities for which audiences are large and disparate, messages are often much more diffuse, and impact on target audiences is more difficult to assess. Nevertheless, it seems that ECA's evaluation system has been drawn on as an example for creating the Evaluation and Measurement Unit (EMU) in R's Office of Policy, Planning, and Resources. EMU's approach to research and evaluation seems to be promising. Both the Public Diplomacy Impact (PDI) project, evaluating performance, and the Mission Activity Tracker (MAT), gathering data on all public diplomacy activities, are intended to comprehensively document public diplomacy activities and measure their impact on a global scale. Many observers want the State Department to ensure that such research and analysis is translated into user-friendly guidance, tools, and techniques for improving public diplomacy at the country level. Some also suggest creating techniques to test the effect of public diplomacy programs prior to full implementation with foreign publics, to avoid unforeseen problems and pitfalls.\nResearch and evaluation of both U.S. public diplomacy activities conducted on the Internet, and the vast number of communications undertaken by other actors on the Internet, from governments to individuals, is seen as a critical issue for U.S. public diplomacy. This is due to the daunting nature of assessing the impact of individual messages within an ever expanding universe of communication, and the perception that effective Internet messaging is becoming increasingly central to any effective communications strategy. It has been recommended that the U.S. government should invest in developing and improving the science and application of social network analysis and automated sentiment analysis in order to provide U.S. public diplomacy new tools for understanding and harnessing the instant, global, networked communications environment of the Internet. Although such analytical tools may not ensure the dominance of U.S. government messaging, they may provide public diplomacy practitioners with the advantage of superior information as they attempt to gain influence online.", "As explained earlier in this report, current law restricts the State Department's domestic dissemination of public diplomacy information and its authority to communicate with the American public in general. These legislative provisions are intended to protect the American people from the State Department's attempts to influence foreign populations, ostensibly preventing to some extent the U.S. government's propagandizing of its own people. Some have argued that the domestic dissemination provision in Section 501 of the Smith-Mundt Act was also intended to protect the business interests of the U.S. media by ensuring the State Department would not fill its news-reporting role, and to guard against the growth of influence of the employees of the State Department, believed in the post-World War II years to be filled with communist sympathizers.\nThe Smith-Mundt provisions have come under increasing criticism in recent years, and are seen as anachronisms in the current global communications environment. There have been calls to remove the Smith-Mundt Act's prohibition of domestic dissemination and related restrictions in order to bring U.S. government communications legislation in line with the realities of the current global communications environment. A number of perceived problems with these restrictions have been identified. The State Department provides information to and conducts outreach with foreign publics using the Internet, which, given the Internet's global availability, can be accessed domestically by U.S. citizens. U.S. international broadcasting, also covered by the restrictions, uses satellite and Internet broadcast technologies that can be accessed in the United States. Even when interpreting the domestic dissemination restrictions to prohibit only intended dissemination of public diplomacy information domestically in order to find no violation of the law by the State Department, the effectiveness of the restrictions, it is argued, has been fundamentally undermined by these pervasive global communications technologies. At the same time, however, the State Department is required to take measures to comport with these legislative restrictions, which may also reduce the overall effectiveness of its public diplomacy activities. Use of certain new communications technologies and techniques may be curtailed to avoid the risk of inadvertently propagandizing the American public. The State Department must also keep its public diplomacy and public affairs operations separate, even though both functions are headed by the Under Secretary of State for Public Diplomacy and Public Affairs, and communicate on the same issues for \"separate\" audiences. In addition to the possible detrimental effects of the State Department's public diplomacy efforts, the Department of Defense has interpreted the Smith-Mundt Act's restrictions on domestic dissemination of information to apply to its communications efforts as well. Congress has recently asked DOD to review this interpretation to determine whether it is justified, given the possibility that such interpretation has limited DOD's capability to communicate with foreign publics.\nThere are some possible advantages to maintaining the Smith-Mundt restrictions, however. They might, for instance, promote a differentiation of foreign versus domestic messages that serves to maintain a tailored approach to public diplomacy. By banning the production of public diplomacy information for domestic use, these provisions encourage information products and outreach programs that focus exclusively on foreign publics. Without such domestic prohibitions, U.S. public diplomacy efforts may become dominated by a preoccupation with communicating to the American people for political effect, to the detriment of creating effective, targeted communications to specific foreign populations. This may exacerbate a perceived weakness in U.S. outreach to foreign publics overall, namely, the lack of country-level and regional public diplomacy strategies based on deep understanding of cultures and effective local communication approaches. On the other hand, those calling for amending the Smith-Mundt Act's domestic dissemination restriction argue that the American people would benefit from a more transparent understanding of their government's communications efforts in foreign countries. Some have suggested that direct dissemination of public diplomacy information to Americans may help build a domestic constituency for foreign affairs, international development, and diplomatic efforts in general, the lack of which has long been lamented as a primary reason for the relative inattention to providing resources for more robust conduct of U.S. foreign policy.", "Congress has recently proposed and enacted legislation that would make changes to U.S. public diplomacy. Enacted during the 110 th Congress, Section 1055 of the National Defense Authorization Act for Fiscal Year 2009 ( P.L. 110-417 ) is a key provision that requires the President to submit by the end of 2009 a report on a federal government strategy for public diplomacy and strategic communication to specified congressional committees. The report must include the following elements:\nA comprehensive interagency strategy that integrates specific foreign policy objectives with overall communications with foreign publics; considers consolidating and elevating government leadership for public diplomacy and strategic communication, and the possibility of creating a single office to direct government-wide efforts; and improves interagency coordination on public diplomacy and strategic communications. A study of whether an independent support organization for public diplomacy and strategic communication should be created to provide guidance and assessment to the federal government. A description of the roles and responsibilities of the National Security Council, Department of Defense, and Department of State regarding public diplomacy and strategic communication, as well as how these organizations currently coordinate efforts.\nSection 1055 requires an another report from the President to be submitted two years after the first report providing the status of implementation of the strategy, progress toward achieving strategic benchmarks, and any changes made to the strategy. In addition, the section directs the Secretary of Defense to submit by the end of 2009 to the Armed Services Committees a report on the current organizational structure within DOD for advising the Secretary of strategic communication, and the possibility of creating an advisory board within DOD (with representation from other relevant agencies) responsible for strategic communication and public diplomacy strategic direction and communication priorities.\nSeveral pieces of legislation proposed thus far in the 111 th Congress concern changes to, improvements in, and funding for public diplomacy. The Foreign Relations Authorization Act, Fiscal Years 2010 and 2011, H.R. 2410 (111 th Congress), which contains a subtitle on \"Public Diplomacy at the Department of State,\" as well as other several other pertinent provisions, is a central bill related to public diplomacy. Several other bills are devoted to or include provisions directly related to U.S. public diplomacy efforts, covering a broad array of concerns, many of which are directly parallel to the important issues discussed in the previous section of this report. These bills include provisions regarding strategy for communications with foreign publics; agency roles and interagency coordination; personnel and human resources issues; increased outreach activities and exchanges; reforming the organization of U.S. international broadcasting; research, monitoring, and evaluation; leveraging the best practices knowledge and public diplomacy expertise both within government, and from private sector/nongovernmental actors, possibly through an independent support organization; and creating exception to the restrictions on domestic dissemination of information prepared for public diplomacy purposes by the Department of State. In addition, certain committee reports on Defense authorizations and appropriations for FY2010 include reporting requirements concerning DOD's communications with foreign publics. Provided below are descriptions of legislative provisions related to public diplomacy and strategic communication, organized by issue.", "S. 1707 ( P.L. 111-73 ): Section 101(c)(6)(C) of the Enhanced Partnership with Pakistan Act of 2009 provides the sense of Congress that the United States should have a coordinated strategic communication strategy for engagement with the people of Pakistan to meet the bilateral cooperation goals of the act.\nH.R. 2647 ( P.L. 111-84 ): Section 1242(b) of the Senate version of the National Defense Authorization Act for Fiscal Year 2010 requires the President to submit an annual counterterrorism strategy report. Paragraph (1)(G) requires the report to include a description of strategic communication and public diplomacy activities undertaken to counter terrorist recruitment and radicalization.\nH.R. 490 : Section 2(b) requires the Secretary of State to submit a \"quadrennial review\" to the Senate Foreign Relations and House Foreign Affairs Committees by October 1, 2012, and every four years thereafter. Such review would consist of a comprehensive examination of U.S. government foreign affairs activities, including public diplomacy efforts. Section 2(d)(4) provides that the quadrennial review's contents would include recommendations for improvements in public diplomacy initiatives.\nH.R. 2387 : Section 4(a)(2) of the Strategy and Effectiveness of Foreign Policy and Assistance Act of 2009 requires the President to report to Congress on long-term strategies for U.S. national security and foreign affairs, including a description of how public diplomacy efforts are \"related to a long-term strategy that advances national security objectives and needs of the United States.\"\nH.R. 2410 : Division B of this bill is entitled the Pakistan Enduring Assistance and Cooperation Enhancement (PEACE) Act of 2009. It authorizes implementation of a public diplomacy strategy for Pakistan that would highlight the weaknesses of extremists operating in Pakistan, degrade the ability of extremist groups to get their messages to the Pakistani people, and increase person-to-person and technical and cultural exchange between U.S. citizens and business and their Pakistani counterparts.\nS. 894 : Section 4(a)(6) of the Success in Countering Al Qaeda Reporting Requirements Act of 2009 requires the President to report on all U.S. government strategic communication and public diplomacy efforts to counter terrorist recruitment and radicalization as part of reporting on overall counterterrorism strategy.", "H.R. 489 : Section 3 of the Strategic Communication Act of 2009 requires a report from the Secretary of State that would include information on current efforts to coordinate U.S. government strategic communication and public diplomacy, international broadcasting, and military information operations. The Section also requires reporting that would discuss the possibility of creating an strategic communication organization within the National Security Council to lead interagency coordination.\nH.R. 2410 : Section 211 would amend Section 60 of the State Department Basic Authorities Act of 1956 (22 U.S.C. § 2732) to give the primary responsibility for coordinating unified public diplomacy activities to the Secretary of State. The Section provides for creation of an interagency coordination working group, to meet at least once every three months, to be chaired by the Secretary of State and to include representatives of other relevant agencies. These relevant federal agencies would be required to designate a representative to conduct ongoing consultations and coordination concerning public diplomacy. The Section does not provide a seniority requirement for such representatives.", "H.R. 2410 : Section 211 would amend Section 60 of the State Department Basic Authorities Act of 1956 (22 U.S.C. § 2732) to require federal agencies involved in public diplomacy to report to the President annually on the public activities undertaken by each respective agency, and directs the President to provide such reports to the Secretary of State. Such reports would be expected to provide a clearer explanation of the current public diplomacy roles of different agencies, and provide opportunities to better define or to alter such roles.", "H.R. 489 : Section 3 of the Strategic Communication Act of 2009 directs the Secretary of State to submit a report assessing the possibility of elevating public diplomacy personnel within the hierarchy of the State Department, including designating certain public diplomacy officials (presumably within the regional and functional bureaus) as Deputy Assistant Secretaries or Senior Advisors to the Assistant Secretary, and elevating the Coordinator of International Information Programs to the Assistant Secretary level.", "H.Rept. 111-166 on H.R. 2647 ( P.L. 111-84 ) : The report of the House Armed Services Committee on the National Defense Authorization Act for Fiscal Year 2010 requires detailed information on the strategic communication workforce within DOD, including analysis of the skills and competencies of strategic communication personnel, strategic communications gaps being filled by contractors, and assessment of top-level guidance on strategic communication recruiting, policy, organization, and management. The Committee's report also directs DOD to provide information on its military public diplomacy, including a list of all activities that may be considered to fall within the category of public diplomacy. It further requires description of the performance metrics for such activities; current management of military public diplomacy (given the recent disestablishment of the Deputy Assistance Secretary of Defense—Support to Public Diplomacy); coordination of military public diplomacy with regional theater plans; and assessment of the feasibility of a DOD-State Department exchange for informational and public diplomacy programs.\nH.Rept. 111-230 on H.R. 3326 : The House Appropriations Committee included a section on DOD's Information Operations in its report on the FY2010 DOD appropriations bill. The Committee states that DOD's budget justification for its Information Operations request of $1 billion is \"woefully inadequate,\" especially given the massive increase in requested funding that totaled only $9 million for FY2005. The Committee also explains its concerns over DOD's moves into non-military communications with foreign publics, and the questionable effectiveness of the programs. In a classified annex, the Committee lists a number of Information Operations programs that DOD should terminate immediately, and reduces funding accordingly, by $500 million. The Committee also states that the remaining funding will not be available until DOD reports on all Information Operations programs, including information on strategies, goals, target audiences, and measuring effectiveness, as well as detailed budget and spend information.\nS.Rept. 111-35 on S. 1390 : The Senate Armed Services Committee, in its report on the Senate version of the National Defense Authorization Act for Fiscal Year 2010, focused on the wide array of strategic communication activities that DOD undertakes, and the estimated $10 billion DOD has spent on strategic communication since 9/11. It states that DOD does not break out budget figures for strategic communication, and that the Committee cannot determine what parts of DOD are carrying out the programs, and cannot conduct proper oversight for the programs. It requires the Under Secretary of Defense—Policy and the Under Secretary of Defense—Comptroller to develop detailed strategic communication budgets for 2011, clearly explaining the objectives and funding levels for its strategic communication and public diplomacy activities.", "H.R. 2311 : Section 2 of the United States-China Diplomatic Expansion Act of 2009 provides funding for hiring new local public diplomacy staff for the U.S. foreign mission in China.\nH.R. 2410 : Section 212 provides for the establishment of a Public Diplomacy Reserve Corps, made up of mid- and senior-level former foreign service officers to fill the current shortage of mid-level public diplomacy officers within the Foreign Service. Reserve officers would serve for six-month to two-year appointments. Section 301 requires the Secretary of State to expand the Foreign Service in general by 1,500 officers over the next two fiscal years. This number would likely include new public diplomacy officers.", "S. 1707 ( P.L. 111-73 ): Section 101(a)(5) of the Enhanced Partnership with Pakistan Act of 2009 authorizes the President to provide assistance to Pakistan to strengthen U.S. public diplomacy. Section 101(b) lists activities that would be supported by such assistance, including, in paragraph (5)(A), strengthening public diplomacy to combat militant extremism and increase understanding of the United States through encouraging civil society leaders to speak out against extremist violence.\nH.R. 2311 : Section 2 of the United States-China Diplomatic Expansion Act of 2009 provides new funding for public diplomacy programs and related information technology infrastructure in China.\nH.R. 2410 : Section 213 provides for the reestablishment of America Centers, recognizing the current shortfalls of the International Resource Centers (IRCs) and the decreased U.S. presence in important foreign city centers. Such Centers would be run as free-standing facilities through partnerships with qualified local or regional organizations. The Secretary of State is required under the section to consider waiving the security co-location requirements of Section 606(a)(2)(B) of the Secure Embassy Construction and Counterterrorism Act of 1999 (22 U.S.C. § 4865(a)(2)(B)). Section 214 would amend Section 1(b)(3) of the State Department Basic Authorities Act of 1956 (22 U.S.C. § 2651a(b)(3)) to require the Under Secretary for Public Diplomacy and Public Affairs to establish libraries and resource centers in connection with U.S. foreign missions. Section 214 states that such libraries and centers should be open to the public, and should include among their cultural outreach screenings of appropriate U.S. films. The information in such facilities and such U.S. films should be available online to the extent practicable. Section 215 provides for grants to encourage distribution of American independent documentary films in foreign countries, and distribution of foreign documentaries in the United States.\nH.R. 3701 : Section 2 of the More Books for Africa Act of 2009 finds the need for books to be more readily available in Africa, and Section 3 states the sense of Congress that providing books to Africa is a powerful tool of public diplomacy. Section 4 provides for establishment of the More Books for Africa Program in USAID to provide not fewer than 3,000,000 books from the United States per year.\nH.R. 3714 : Section 2(b) of the Daniel Pearl Freedom of the Press Act of 2009 requires the Secretary of State to create the Freedom of the Press Grant Program, which would provide grant funding to nonprofit and international organizations to promote press freedom worldwide through training and professionalization of skills for foreign journalists. The Under Secretary of State for Democracy, Human Rights, and Labor would administer the Program in conjunction with the Under Secretary of State for Public Diplomacy and Public Affairs.\nS. 587 : Section 12 of the Western Hemisphere Energy Compact provides $5 million in funding for public diplomacy activities concerning renewable energy in the Western Hemisphere, with at least 50% of funding to be provided for educational programs through local civil society organizations.", "S. 1707 ( P.L. 111-73 ): Section 101(b)(5)(B) of the Enhanced Partnership with Pakistan Act of 2009 authorizes the President to provide assistance to Pakistan for increasing exchange activities under the Fulbright Program, the International Visitor Leadership Program, and the Youth Exchange and Study Program.\nH.R. 2647 ( P.L. 111-84 ): Section 1263 of the of the Victims of Iranian Censorship (VOICE) Act (Subtitle D of Title XII of Division A) provides for the creation of the Iranian Electronic Education, Exchange, and Media Fund. This Fund, to be administered by the Secretary of State, would support the development of technologies and programs to increase the Iranian people's access to media, especially through the Internet. Paragraphs (3) and (4) of subsection (d) include in the authorized uses of funding the creation of Internet-based distance-learning programs and U.S.-Iranian exchange programs.\nH.R. 1969 : Section 402 of the Vietnam Human Rights Act of 2009 states that it is the policy of the United States that U.S. exchange programs with Vietnam should promote the advancement of freedom and democracy in that country.\nH.R. 2311 : Section 5 of the United States-China Diplomatic Expansion Act of 2009 authorizes funding for Chinese language exchanges.\nH.R. 2410 : The bill contains provisions for new exchange programs in Title II, Subtitle B. These include exchanges and related educational programs for students from Central Asia, Mexico and South and Central America, and Sri Lanka; professional development exchanges for Liberian women legislators and Liberian women congressional staff, as well as Afghan women legislators; and establishment of a U.S.-Caribbean educational exchange program. Title VII of H.R. 2410 provides for the establishment of the Senator Paul Simon Study Abroad Foundation, a government corporation that would provide grants to increase the number of American students studying abroad, especially in nontraditional countries, to increase U.S. citizens' knowledge of other countries and foreign language skills. Division B of H.R. 2410 , the Pakistan Enduring Assistance and Cooperation Enhancement (PEACE) Act of 2009, authorizes increased educational exchanges between the United States and Pakistan.\nH.R. 2985 : This legislation requires the Secretary of State to establish the Ambassador's Fund for Strategic Exchanges to bring foreign \"political, economic, civil society, and other leaders to the United States for short-term exchange visits to advance key United States strategic goals.\" Exchanges would take place in groups of 8-10 visitors, over five to eight days, and focus on certain broad strategic goals. Funding would come from ECA and U.S. embassies in a cost-sharing arrangement.\nH.R. 3328 : The Gandhi-King Scholarly Exchange Initiative Act of 2009 provides for the establishment of an exchange program between India and the United States. The Gandhi-King Scholarly Exchange Initiative would provide multiple opportunities for exchange according to Section 3(a) of the act, including a public diplomacy forum focusing on the work of Mohandas Gandhi and Martin Luther King, Jr., a professional training initiative for conflict resolution, and student exchanges.\nS. 230 : Section 503 of the International Women's Freedom Act of 2009 would amend Section 102(b) of the Mutual Educational and Cultural Exchange Act of 1961 (22 U.S.C. 2452(b)) to include a provision to support international exchanges that promote the respect for and protection of women's rights abroad.\nS. 384 : Section 301 of the Global Food Security Act of 2009 would amend Part I, Title XII of the Foreign Assistance Act of 1961 (FAA; P.L. 87-195) to include provisions for assistance to university partners for improvement of agriculture abroad. It would add a new Section 298 to the FAA, which would give authority to the President to provide assistance for agriculture programs through universities. Section 298(b) lists types of support, including paragraph (5) of the subsection, which includes agricultural education opportunities through international exchanges.\nS. 589 : This bill provides for the establishment of an Office of Volunteers for Prosperity in the U.S. Agency for International Development (USAID), which would administer a newly created Global Service Fellowship Program. The Program would be designed to \"promote international volunteering opportunities as a means of building bridges across cultures, addressing critical human needs, and promoting mutual understanding.\"", "H.R. 2647 ( P.L. 111-84 ): Section 1262 of the Victims of Iranian Censorship (VOICE) Act (Subtitle D of Title XII of Division A) authorizes $15 million for the BBG's International Broadcasting Operations Fund, and $15 million to its Capital Improvements Fund, for expenditures to increase U.S. international programming in Farsi to Iran. Uses authorized include efforts to stop the Iranian government's blocking of U.S. international broadcasting to Iran, and creation and expansion of Farsi programming.\nH.R. 363 : This bill, the United States Broadcasting Reorganization Act of 2009, would abolish the Broadcasting Board of Governors and the International Broadcasting Bureau, and transfer international broadcasting authorities to a new United States International Broadcasting Agency. A bipartisan Board of Governors, appointed by the President, would oversee U.S. international broadcasting within the agency. Among its functions would be to review broadcasting activities and their effectiveness within the context of U.S. foreign policy objectives and American guiding principles, such as freedom and democracy. The act requires the new Agency to submit annual reports to the President and Congress on broadcasting activities with emphasis on this review function for meeting foreign policy objectives.\nH.R. 1969 : Section 401 of the Vietnam Human Rights Act of 2009 provides funding to stop the government of Vietnam from jamming the signal of Radio Free Asia.\nS. 230 : Section 502 of the International Women's Freedom Act of 2009 would amend Section 303(a)(8) of the United States International Broadcasting Act of 1994 ( P.L. 103-236 ) to add respect for women's rights to the broadcasting standards of the Broadcasting Board of Governors.", "H.R. 489 : Section 3 of the Strategic Communication Act of 2009 provides for establishment of a Center of Strategic Communication that would be tasked with, among other things, developing monitoring and evaluation tools and techniques, and performing analysis on foreign public opinion, cultural influence, and media influence.\nH.R. 2410 : Section 214(c) requires the Advisory Commission on Public Diplomacy to report to the House Foreign Affairs and Senate Foreign Relations Committees, one year after enactment of H.R. 2410 , on the effectiveness of libraries, resource centers, and online outreach authorized by the section. Section 216 requires the Commission to review and assess the effectiveness of U.S. public diplomacy policies, activities, and programs every two years, and report to the Secretary of State and the House Foreign Affairs and Senate Foreign Relations Committees on its findings. As part of its the review, the Commission would be entitled to receive any information it requests from federal agencies involved in public diplomacy or strategic communication activities and from the Broadcasting Board of Governors.", "H.R. 489 : Entitled the Strategic Communication Act of 2009, this bill authorizes the Secretary of State to solicit offers from organizations specializing in research and analysis to create a Center for Strategic Communication. The Secretary would choose one organization to establish the Center as a tax-exempt corporation. The Center would be tasked with providing information and analysis to government decision makers on communications with foreign publics; developing communications plans and programs, leveraging private sector and academic institution expertise and resources; and providing public diplomacy services to the government utilizing nongovernmental organizations and private sector knowledge. The Secretary of State would designate a liaison to coordinate between the Center and the State Department, as well as DOD, the Department of Justice, the Department of Homeland Security, and the Director of National Intelligence. The act provides the Center $250 million from the State Department budget each fiscal year.\nH.R. 2410 : Although it does not call for a new independent support organization for public diplomacy, Section 216 would amend Section 604(a)(2) of the United States Information and Educational Exchange Act of 1948 (22 U.S.C. § 1469(a)(2)) to improve the public diplomacy expertise of Commission members by requiring that at least four members possess \"substantial experience in the conduct of public diplomacy.... \" Section 303 authorizes the Secretary of State to establish a Lessons Learned Center within the State Department to serve as a \"central organization for collection, analysis, archiving, and dissemination of observations, best practices, and lessons learned by, from, and to Foreign Service officers.... \" The Center would be tasked with creating a system for evaluating performance of State Department and Foreign Service activities, which would likely include public diplomacy activities.", "H.Rept. 111-166 on H.R. 2647 ( P.L. 111-84 ): The report of the House Armed Services Committee on the National Defense Authorization Act for Fiscal Year 2010 encourages DOD to conduct a legal review of the Smith-Mundt Act's restriction on domestic dissemination of public diplomacy information as it applies to DOD. The Committee states its opinion that the restriction does not apply to DOD, and should not be allowed to hamper DOD's Internet-based strategic communication, which the Committee currently finds to be inadequate and unable to properly respond to enemies' online communications in real time.\nH.R. 363 : Section 4 of the United States International Broadcasting Act of 2009 would restate Section 305 of the United States International Broadcasting Act of 1994 to set out authorities and functions of a new United States International Broadcasting Agency. Subsection (b) provides for an exception to the general prohibition on domestic dissemination of information materials intended for distribution abroad, making broadcasting to the Middle East available to U.S. satellite and cable operators. It also makes an U.S. international broadcasting in any language available to U.S. satellite and cable operators if a foreign broadcaster in a corresponding country has access to U.S. operator transmissions. Also, Section 8 of the act would amend Section 501 of the Smith-Mundt Act, the provision that contains the restriction on domestic dissemination, to allow the Secretary of State to make information available to foreign publics on the Internet \"without regard to whether such material can be accessed domestically.\"" ], "depth": [ 0, 1, 2, 1, 2, 3, 3, 3, 3, 2, 1, 2, 3, 3, 3, 3, 2, 2, 3, 3, 1, 2, 2, 1, 2, 3, 3, 3, 3, 3, 2, 2, 3, 3, 3, 3, 1, 1, 2, 2, 2, 1, 2, 3, 3, 2, 2, 1, 1, 2, 2, 3, 3, 4, 4, 4, 3, 2, 3, 3, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 2, 3, 2, 3, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_full", "", "", "", "h1_title", "h1_full", "", "", "h1_full", "", "", "h0_title h2_full h1_title", "h1_full", "h1_title", "h1_full", "h1_title", "", "", "h1_full", "", "h0_title h1_full", "h0_full", "", "h0_title", "h0_full", "", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "h2_full", "", "h2_full", "", "", "h2_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How is public diplomacy defined?", "What are examples of public diplomacy activity?", "What was the purpose of the United States Information Agency during the Cold War?", "What happened to USIA after the Soviet Union dissolved?", "What were the effects of the 9/11 terror attacks on public diplomacy?", "What do some people think about the abolishing of USIA?", "What is a new central issue for the Department of Defense and the U.S. military?", "What effect has the rise of Internet communications had on communication with foreign publics?", "What are issues of importance regarding public diplomacy?", "Why might requirements for effective interagency cooperation be considered?", "What are the topics of the current proposed legislation in the 111th Congress?", "What will happen during the second session of the 111th Congress?" ], "summary": [ "Public diplomacy is defined in different ways, but broadly it is a term used to describe a government's efforts to conduct foreign policy and promote national interests through direct outreach and communication with the population of a foreign country.", "Public diplomacy activities include providing information to foreign publics through broadcast and Internet media and at libraries and other outreach facilities in foreign countries; conducting cultural diplomacy, such as art exhibits and music performances; and administering international educational and professional exchange programs.", "During the Cold War, the United States Information Agency (USIA) led U.S. public diplomacy efforts, with a primary mission of combating Soviet propaganda and the spread of communism.", "Once the Soviet Union dissolved in 1991, USIA's role was diminished, and its resources were reduced during the 1990s. Finally, USIA was abolished in 1999 as part of a post-Cold War reorganization, with public diplomacy responsibilities folded into the Department of State.", "After the 9/11 terror attacks, there was new interest in promoting effective public diplomacy, as a struggle against extremist ideologies became crucial to the overall fight against terrorism. In recent years, many observers have called for increased resources for and improvement of U.S. public diplomacy efforts.", "Some argue that abolishing USIA was a mistake and that the State Department is ill-suited to conduct long-term public diplomacy.", "Also, the Department of Defense and the U.S. military have increased significantly their role in communicating with foreign publics. Determining public diplomacy roles, responsibilities, and coordination procedures among civilian and military actors has therefore become a central issue.", "In addition, with the rise and rapid evolution of Internet communications, the U.S. government must determine how to effectively communicate with foreign publics in an increasingly complex, accessible, and democratized global communications environment.", "Determining levels of public diplomacy funding, for programs and personnel, will continue to be of central importance. Establishing capabilities to improve monitoring and assessment of public diplomacy activities, as well as to leverage expertise and best practices outside government, may be important to increasing public diplomacy effectiveness. Questions of possible reorganization of public diplomacy authorities and capabilities, through legislation or otherwise, may be considered.", "Requirements for effective interagency cooperation and coordination, as well as creation of a national public diplomacy strategy and whole-of-government approaches may be created to improve effective communication with foreign publics.", "Several pieces of legislation proposed thus far in the 111th Congress concern changes to, improvements in, and funding for public diplomacy.", "Congressional consideration of these bills, and continued interest in U.S. public diplomacy, are expected to continue during the 111th Congress's second session." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, -1, 2, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "", "Overview", "Political and Security Dynamics", "May 2018 Election, Unrest, and Government Formation", "Seeking the \"Enduring Defeat\" of the Islamic State", "The Future of the Popular Mobilization Forces", "The Kurdistan Region and Relations with Baghdad", "Humanitarian Issues and Stabilization", "Humanitarian Conditions", "Stabilization and Reconstruction", "Economic and Fiscal Challenges", "U.S. Policy and Issues in the 116th Congress", "Security Cooperation and U.S. Training", "U.S. Foreign Assistance", "Stabilization and Issues Affecting Religious and Ethnic Minorities", "The United States and Iran in Iraq", "Outlook", "Appendix. Select Legislation in the 116th Congress" ], "paragraphs": [ "", "After over 15 years characterized by conflict, violence, and zero-sum political competition, Iraqis are working to open a new chapter in their country's development and are debating the future of their relationship with the United States. The Iraqi government declared military victory against the Islamic State organization in December 2017, but insurgent attacks by remaining IS fighters continue to threaten Iraqis in some areas. Iraq's security forces are rebuilding after years of intense fighting. Notwithstanding significant U.S. and international assistance, Iraq's security forces still lack some operational, intelligence, logistical, and management capabilities needed to protect their country. More than 4 million internally displaced Iraqis have returned home, but extensive stabilization and reconstruction are needed in liberated areas. An estimated 1.7 million Iraqis remain as internally displaced persons (IDPs), and Iraqi authorities have identified $88 billion in reconstruction needs over the next decade.\nU.S. and other foreign troops remain in Iraq at the invitation of the Iraqi government and provide advisory and training support to the Iraqi Security Forces (ISF), including peshmerga forces associated with the Kurdistan Regional Government (KRG). However, some Iraqi political groups—including some with ties to Iran—are pushing for U.S. and other foreign troops to depart; they may force formal consideration of a resolution to that effect in the Iraqi parliament. Such a resolution would likely be nonbinding (if adopted), but nevertheless could create significant political and diplomatic complications for U.S. and Iraqi leaders, and might prompt more fundamental policy reconsiderations on both sides.\nThe Iranian government has viewed instability in neighboring Iraq as a threat and an opportunity since 2003, and works to influence the security sector decisions of Iraqi leaders. It also maintains ties to some armed groups in Iraq, including some units of the Popular Mobilization Forces (PMF)—volunteer militias recruited to fight the Islamic State. The PMF have been recognized as an enduring component of Iraq's national security establishment pursuant to a 2016 law that calls for their integration under existing command structures and administration. U.S. officials have recognized the contributions that PMF volunteers have made to Iraq's fight against the Islamic State; they also remain wary of the potential for Iran-linked elements of the PMF to evolve into permanent proxy forces, whether they remain tied to the Iraqi state or work outside formal Iraqi government and military control. U.S. policy seeks to support the long-term development of Iraq's military, counterterrorism, and police services as alternatives to the continued use of PMF units to secure Iraq's borders, communities, and territory recaptured from the Islamic State.\nU.S. concerns about Iranian government policies have intensified in recent years, and Iraq has become a venue for U.S.-Iranian competition. Iran's government supported insurgent attacks on U.S. forces during the U.S. presence from 2003 to 2011. Since then, U.S.-Iranian competition has remained contained and nonviolent, but there is no certainty it will remain so, as demonstrated by indirect fire attacks in 2018 on U.S. diplomatic facilities, attacks attributed by U.S. officials to Iranian proxy groups. Iraqi leaders are trying to prevent their country from being used as a battleground for regional and international rivalries and seek to build positive, nonexclusive ties to their neighbors and global powers.\nBroad U.S. efforts to put pressure on Iran extend to the Iraqi energy sector, where years of sanctions, conflict, neglect, and mismanagement have left Iraq dependent on purchases of natural gas and electricity from its Iranian neighbors. Since 2018, Iraqi leaders have sought relief from U.S. sanctions on related transactions with Iran. The Trump Administration has granted temporary permissions, and current U.S. initiatives encourage Iraq to diversify its energy relationships with its neighbors and develop more independence for its energy sector. U.S. officials promote U.S. companies as potential partners for Iraq through the expansion of domestic electricity generation capacity and the introduction of technology to capture the large amounts of natural gas that are currently flared (burned at wellheads).\nOil production and exports are the lifeblood of Iraq's public finances and economy and have reached all-time highs. Oil export revenues provide Iraq's government with significant financial resources, but oil proceeds also have contributed to the creation of a state-centric economic model in which public sector employment and contracting have crowded out private sector activity. Public investment and reconstruction spending is financed through deficit spending, borrowing, and international aid, and Iraq's finances remain vulnerable to price changes in global oil markets. While Iraq's young, growing population and geographic location ( Table 1 ) make it an attractive market for foreign investment, bureaucratic constraints, service interruptions, corruption, and security and political concerns continue to deter some investors. The U.S. government supports Iraq's compliance with reform targets pursuant to IMF agreements and promotes an expansion of U.S.-Iraqi trade and investment ties. However, future U.S. investment prospects in Iraq may be contingent on the broader political and security relationship.\nOverall, the United States faces complicated choices in Iraq. The 2003 invasion unseated an adversarial regime, but unleashed more than a decade of violent insurgency and terrorism that divided Iraqis, while creating opportunities for Iran to strengthen its influence in Iraq and across the region. Since 2003, the United States has invested both militarily and financially in stabilizing Iraq. Since 2014, U.S. policy toward Iraq has focused on ensuring the defeat of the Islamic State as a transnational insurgent and terrorist threat. The Islamic State threat has been reduced, but Iraqi security needs remain considerable and both countries are examining the impetus and terms for continued U.S. investment in Iraq.\nSuccessive U.S. Administrations have sought to keep U.S. involvement and investment minimal relative to the 2003-2011 era, pursuing U.S. interests through partnership with various entities in Iraq and the development of those partners' capabilities, rather than through extensive U.S. military deployments. U.S. economic assistance bolsters Iraq's ability to attract lending support and is aimed at improving the government's effectiveness and public financial management. The United States is the leading provider of humanitarian assistance to Iraq and also supports post-IS stabilization activities across the country through grants to United Nations agencies and other entities.\nThe Trump Administration has sustained a cooperative relationship with the Iraqi government and has requested funding for FY2020 to support Iraq's stabilization and continue security training for Iraqi security forces. The size and mission of the U.S. military presence in Iraq have evolved as conditions on the ground have changed since 2017; they could change further if Iraqi officials revise their current requests for continued U.S. and international security assistance.\nThe 116 th Congress has appropriated funds to provide security assistance, humanitarian relief, and foreign aid for Iraq ( P.L. 116-6 ), and is considering appropriations and authorization requests for FY2020 that would largely continue U.S. policies and programs on current terms. It remains to be seen whether Iraq and the United States will be able to pursue opportunities to build a bilateral relationship that is less defined by conflict and its aftermath. To do so, leaders on both sides will likely have to continue creatively managing unusually complex political and security challenges.", "Since the U.S.-led ouster of Saddam Hussein in 2003, Iraq's Shia Arab majority has exercised greater national power both in concert and in competition with the country's Sunni Arab and Kurdish minorities. While intercommunal identities and rivalries remain politically relevant, competition among Shia movements and coalition building across communal groups are now major factors in Iraqi politics. Notwithstanding their ethnic and religious diversity and political differences, many Iraqis advance similar demands for improved security, government effectiveness, and economic opportunity. Some Iraqi politicians have broadened their political and economic narratives in an attempt to appeal to disaffected citizens across the country. Years of conflict, poor service delivery, corruption, and sacrifice have strained the population's patience with the status quo, adding to the pressures that leaders face from the country's uncertain domestic and regional security environment.\nAlthough the Islamic State's exclusive control over distinct territories in Iraq has now ended, the U.S. intelligence community assessed in 2018 that the Islamic State \"has started—and probably will maintain—a robust insurgency in Iraq and Syria as part of a long-term strategy to ultimately enable the reemergence of its so-called caliphate.\" In January 2019, Director of National Intelligence Dan Coats told Congress that the Islamic State \"remains a terrorist and insurgent threat and will seek to exploit Sunni grievances with Baghdad and societal instability to eventually regain Iraqi territory against Iraqi security forces that are stretched thin.\"\nThe legacy of the war with the Islamic State strains security in Iraq in two other important ways. First, the Popular Mobilization Committee (PMC) and its militias—the mostly Shia Popular Mobilization Forces (PMF) recruited to fight the Islamic State—have been recognized as enduring components of Iraq's national security establishment. This is the case even as many PMF units continue to operate outside the bounds of their authorizing legislation and the control of the Prime Minister. The U.S. intelligence community considers Iran-linked Shia elements of the PMF to be the \"the primary threat to U.S. personnel\" in Iraq.\nSecond, national and KRG forces remain deployed across from each other along contested lines of control while their respective leaders are engaged in negotiations over a host of sensitive issues. Following a Kurdish referendum on independence in 2017, the Iraqi government expelled Kurdish peshmerga from some disputed territories they had secured from the Islamic State, and IS fighters now appear to be exploiting gaps in ISF and Kurdish security to survive. PMF units remain active throughout the territories in dispute between the Iraqi national government and the federally recognized Kurdistan Region of northern Iraq, with local populations in some areas opposed to the PMF presence.\nAmid unrest in southern Iraq during late summer 2018, the State Department directed the temporary evacuation of U.S. personnel and temporary closure of the U.S. Consulate in Basra after indirect fire attacks on the consulate and the U.S. Embassy compound in Baghdad. U.S. officials attributed the attacks to Iran-backed forces and said that the United States would hold Iran accountable and would respond directly to attacks on U.S. facilities or personnel by Iran-backed entities. The incidents highlight the potential for U.S.-Iran tensions to escalate in Iraq.", "Iraqis held national legislative elections in May 2018, electing members for four-year terms in the 329 seat Council of Representatives (COR), Iraq's unicameral legislature. Turnout was lower in the 2018 COR election than in past national elections, and reported irregularities led to a months-long recount effort that delayed certification of the results until August. Political factions spent the summer months negotiating in a bid to identify the largest bloc within the COR—the parliamentary bloc charged with proposing a prime minister and new Iraqi cabinet ( Figure 2 ).\nThe distribution of seats and alignment of actors precluded the emergence of a dominant coalition. The Sa'irun (On the March) coalition led by populist Shia cleric and longtime U.S. antagonist Muqtada al Sadr's Istiqama (Integrity) list placed first in the election (54 seats), followed by the predominantly Shia Fatah (Conquest) coalition led by Hadi al Ameri of the Badr Organization (48 seats). Fatah includes several individuals formerly associated with the Popular Mobilization Committee (PMC) and its militias—the mostly Shia Popular Mobilization Forces (PMF), which were recruited to fight the Islamic State. Those elected include some figures with ties to Iran (see \" The Future of the Popular Mobilization Forces \" and Figure 5 below).\nFormer Prime Minister Haider al Abadi's Nasr (Victory) coalition underperformed expectations to place third (42 seats), while former Prime Minister Nouri al Maliki's State of Law coalition, Ammar al Hakim's Hikma (Wisdom) list, and Iyad Allawi's Wataniya (National) list also won significant blocs of seats. Among Kurdish parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK) won the most seats, and smaller Kurdish opposition lists protested alleged irregularities. As negotiations continued, Nasr and Sa'irun members joined with others to form the Islah (Reform) bloc in the COR, while Fatah and State of Law formed the core of a rival Bin'a (Reconstruction) bloc.\nUnder an informal agreement developed through the formation of successive governments, Iraq's Prime Minister has been a Shia Arab, the President has been a Kurd, and the COR Speaker has been a Sunni Arab.\nIn September, the first session of the newly elected COR was held, and members elected Mohammed al Halbousi, the Sunni Arab governor of Anbar, as COR Speaker. Hassan al Kaabi of the Sa'irun list and Bashir Hajji Haddad of the KDP were elected as First and Second Deputy Speaker, respectively.\nIn October, the COR met to elect Iraq's President, with rival Kurdish parties nominating competing candidates. COR members chose the PUK candidate–former KRG Prime Minister and former Iraqi Deputy Prime Minister Barham Salih—in the second round of voting. Salih, in turn, named former Oil Minister Adel Abd al Mahdi as Prime Minister-designate and directed him to assemble a slate of cabinet officials for COR approval. Abd al Mahdi is a consensus Shia Arab leader acceptable to the rival Shia groups in the Islah and Bina blocs, but he does not lead a party or parliamentary group of his own. Some observers of Iraqi politics assess Abd al Mahdi as generally pliable and unable to assert himself relative to others who have large followings or command armed factions. COR members have confirmed most of Abd al Mahdi's cabinet nominees, but the main political blocs remain at an impasse over the Ministries of Interior, Defense, and Justice.\nAs government formation talks proceeded during the summer of 2018, large protests and violence in southern Iraq highlighted some citizens' outrage with electricity and water shortages, lack of economic opportunity, and corruption. Unrest appeared to be amplified in some instances by citizens' anger about heavy-handed responses by security forces and militia groups. Dissatisfaction exploded in the southern province of Basra during August and September, culminating in several days and nights of mass demonstrations and the burning by protestors of the Iranian consulate in Basra and the offices of many leading political groups and militia movements. Arguably, the Abd al Mahdi government's success or failure in demonstrating progress on the issues that sparked the protests will be an important factor in determining its viability and longevity.", "As of March 2019, Iraqi security operations against IS fighters are ongoing in governorates in which the group formerly controlled territory or operated—Anbar, Ninewa, Salah al Din, Kirkuk, and Diyala. These operations are intended to disrupt IS fighters' efforts to reestablish themselves as an organized threat and keep them separated from population centers. Press accounts and U.S. government reports describe continuing IS attacks on Iraqi Security Forces and Popular Mobilization Forces, particularly in rural areas. Independent analysts describe dynamics in parts of these governorates in which IS fighters threaten, intimidate, and kill citizens in areas at night or where Iraq's national security forces are absent. In some areas, new displacement has occurred as civilians have fled IS attacks. Overall, however violence against civilians has dropped considerably from its 2014 highs ( Figure 3 ). In cities like Mosul and Baghdad residents and visitors have enjoyed increased freedom of movement and security, although IS activity is reported in Mosul and fatal security incidents have occurred in areas near Baghdad and several other locations since January 2019 ( Figure 4 ).", "Iraq's Popular Mobilization Committee (PMC) and its associated militias—the Popular Mobilization Forces (PMF)—were founded in 2014 and have contributed to Iraq's fight against the Islamic State, but they have come to present an implicit challenge to the authority of the state. The PMF are largely but not solely drawn from Iraq's Shia Arab majority: Sunni, Turkmen, and Christian PMF militia also remain active. Despite expressing appreciation for PMF contributions to the fight against IS, some Iraqis and outsiders have raised concerns about the future of the PMC/PMF and some of its members' ties to Iran.\nAt issue has been the unwillingness of some PMC/PMF entities to subordinate themselves to the command of Iraq's elected government and the ongoing participation in PMC/PMF operations of groups reported to receive direct Iranian support. As noted above, the U.S. intelligence community has described Iran-linked Shia militia—whether PMF or not—as the \"primary threat\" to U.S. personnel in Iraq, and has suggested that the threat posed by Iran-linked groups will grow as they press for the United States to withdraw its forces from Iraq.\nMany PMF-associated groups and figures participated in the May 2018 national elections under the auspices of the Fatah coalition headed by Badr Organization leader Hadi al Ameri. Ameri and other prominent PMF-linked figures such as Asa'ib Ahl al Haq (League of the Righteous) leader Qa'is al Khazali nominally disassociated themselves from the PMC/PMF in late 2017, in line with legal prohibitions on the participation of PMC/PMF officials in politics. Nevertheless, their movements' supporters and associated units remain integral to some ongoing PMF operations, and the Fatah coalition's campaign arguably benefited from its PMF association.\nDuring the election and in its aftermath, the key unresolved issue with regard to the PMC/PMF has remained the incomplete implementation of a 2016 law calling for the PMF to be incorporated as a permanent part of Iraq's national security establishment. In addition to outlining salary and benefit arrangements important to individual PMF volunteers, the law calls for all PMF units to be placed fully under the authority of the commander-in-chief (Prime Minister) and to be subject to military discipline and organization. Through early 2019, U.S. government reporting states that while some PMF units are being administered in accordance with the law, most remain outside the law's prescribed structure. This includes some units associated with Shia groups identified by U.S. government reports as receiving or as having received Iranian support. In January 2019, the U.S. intelligence community assessed that the PMC/PMF \"plan to use newfound political power gained through positions in the new government to reduce or remove the U.S. military presence while competing with the Iraqi security forces for state resources.\"\nIn general, the popularity of the PMF and broadly expressed popular respect for the sacrifices made by individual volunteers in the fight against the Islamic State create complicated political questions for Iraqi leaders. Iraqi law does not call for or foresee the dismantling of the PMC/PMF structure, and proposals to the contrary appear to be politically untenable at present. Given the ongoing role PMF units are playing in security operations against remnants of the Islamic State in some areas, rapid, wholesale redeployments of PMF units might create new opportunities for IS fighters to exploit in areas where replacement forces are not immediately available. That said, U.S. military officials report that \"competition over areas to operate and influence between the PMF and the ISF will likely result in violence, abuse, and tension in areas where both entities operate.\"", "The Kurdistan Region of northern Iraq (KRI) enjoys considerable administrative autonomy under the terms of Iraq's 2005 federal constitution, but issues concerning territory, security, energy, and revenue sharing continue to strain ties between the Kurdistan Regional Government (KRG) and the national government in Baghdad. In September 2017, the KRG held a controversial advisory referendum on independence, amplifying political tensions with the national government (see textbox below). The referendum was followed by a security crisis as Iraqi Security Forces and PMF fighters reentered some disputed territories that had been held by KRG peshmerga forces. P eshmerga fighters also withdrew from the city of Kirkuk and much of the governorate. Baghdad and the KRG have since agreed on a number of issues, including border and customs controls, the export of oil from some KRG-controlled fields, and the transfer of funds to pay the salaries of some KRG civil servants. As talks continue, the ISF and peshmerga remain deployed across from each other at various fronts throughout the disputed territories ( Figure 6 ).\nThe KRG delayed overdue legislative elections for the Kurdistan National Assembly in the wake of the referendum crisis and held them on September 30, 2018. Kurdish leaders have since been engaged in regional government formation talks while also participating in cabinet formation and budget negotiations at the national level. The KDP won a plurality (45) of the 111 KNA seats in the September 2018 election, with the Patriotic Union of Kurdistan (PUK) and smaller opposition and Islamist parties splitting the balance. With longtime KDP leader Masoud Barzani's term as president having expired in 2015, his nephew, KRG Prime Minister Nechirvan Barzani, appears set to succeed him. Masoud Barzani's son, security official Masrour Barzani, seems set to assume the KRG prime ministership.\nSince the election, factions within the PUK have appeared to have differences of opinion over KRG cabinet formation, while KDP and PUK differences have been apparent at the national level. During government formation talks in Baghdad, the KDP sought to name the Kurdish candidate for the Iraqi national presidency, but a majority of COR members instead chose Barham Salih, a PUK member. In March 2019, KDP and PUK leaders announced a four-year political agreement that reportedly includes joint commitments on the formation of the new KRG government and candidates for the Iraqi national Minister of Justice position and governorship of Kirkuk.\nU.S. officials have encouraged Kurds and other Iraqis to engage on issues of dispute and to avoid unilateral military actions. U.S. officials encourage improved security cooperation between the KRG and Baghdad, especially since IS remnants appear to be exploiting gaps created by the standoff in the disputed territories. KRG officials continue to express concern about the potential for an IS resurgence and chafe at operations by some PMF units in areas adjacent to the KRI.", "", "U.N. officials report several issues of ongoing humanitarian and protection concerns for displaced and returning populations and the host communities assisting them. With a range of needs and vulnerabilities, these populations require different forms of support, from immediate humanitarian assistance to resources for early recovery. Protection is a key priority in areas of displacement, where for example, harassment of displaced persons by armed actors and threats of forced return have occurred, as well as in areas of return. By December 2017, more Iraqis had returned to their home areas than those who had remained as internally displaced persons (IDPs) or who were becoming newly displaced. Nevertheless, humanitarian conditions remain difficult in many conflict-affected areas of Iraq.\nAs of February 28, 2019, more than 4.2 million Iraqis displaced after 2014 had returned to their districts, while more than 1.7 million individuals remained as displaced persons (IDPs). Ninewa governorate hosts the most IDPs of any single governorate (nearly one-third of the total), reflecting the lingering effects of the intense military operations against the Islamic State in Mosul and other areas during 2017 ( Table 2 ). Estimates suggest thousands of civilians were killed or wounded during the Mosul battle, which displaced more than 1 million people.\nThe Kurdistan Region of Iraq (KRI) hosts nearly 700,000 IDPs (approximately 40% of the 1.7 million remaining IDPs nationwide). IDP numbers in the KRI have declined since 2017, though not as rapidly as in some other governorates. According to IOM, conditions for IDPs in Dohuk governorate remain the most challenging in the KRI, where most IDPs live in camps or critical shelters (makeshift tents/abandoned buildings/informal settlements), according to International Organization for Migration surveys.\nThe U.N. Office for the Coordination of Humanitarian Affairs (UNOCHA) 2019 funding appeal, the Iraq Humanitarian Response Plan (HRP), anticipates that as many as 6.7 million Iraqis will require some form of humanitarian assistance in 2019 and seeks $701 million for 1.75 million of the most vulnerable Iraqis. As of March 2019, the appeal had received $6.5 million (1%). The United States was the top donor to the 2018 Iraq HRP. Since 2014, the United States has contributed nearly $2.5 billion to humanitarian relief efforts in Iraq, including more than $498 million in humanitarian support in FY2018.", "U.S. stabilization assistance to areas of Iraq that have been liberated from the Islamic State is directed through the United Nations Development Program (UNDP)-administered Funding Facility for Stabilization (FFS) and through other channels. According to UNDP data, the FFS has received more than $830 million in resources since its inception in mid-2015, with 1,388 projects reported completed and a further 978 projects underway or planned with the support of UNDP-managed funding.\nIn January 2019, UNDP identified $426 million in stabilization program funding shortfalls in five priority areas in Ninewa, Anbar, and Salah al Din governorates \"deemed to be the most at risk to future conflict\" and \"integral for the broader stabilization of Iraq.\" The UNDP points to unexploded ordnance, customs clearance delays, and the growth in volume and scope of FFS projects as challenges to its ongoing work.\nAt a February 2018 reconstruction conference in Kuwait, Iraqi authorities described more than $88 billion in short- and medium-term reconstruction needs, spanning various sectors and different areas of the country. Countries participating in the conference offered approximately $30 billion worth of loans, investment pledges, export credit arrangements, and grants in response. The Trump Administration actively supported the participation of U.S. companies in the conference and announced its intent to pursue $3 billion in Export-Import Bank support for Iraq.\nIraqi leaders hope to attract considerable private sector investment to help finance Iraq's reconstruction needs and underwrite a new economic chapter for the country. The size of Iraq's internal market and its advantages as a low-cost energy producer with identified infrastructure investment needs help make it attractive to investors. Overcoming persistent concerns about security, service reliability, and corruption, however, may prove challenging. The formation of the new Iraqi government and its success or failure in pursuing reforms may provide key signals to parties exploring investment opportunities.", "The public finances of the national government and the KRG remain strained, amplifying the pressure on leaders working to address the country's security and service-provision challenges. The combined effects of lower global oil prices from 2014 through mid-2017, expansive public-sector liabilities, and the costs of the military campaign against the Islamic State have exacerbated national budget deficits. The IMF estimated Iraq's 2017-2018 financing needs at 19% of GDP. Oil exports provide nearly 90% of public-sector revenue in Iraq, while non-oil sector growth has been hindered over time by insecurity, weak service delivery, and corruption. The 2019 budget expands public salaries and investments.\nIraq's oil production and exports have increased since 2016, but fluctuations in oil prices undermined revenue gains until the latter half of 2017. Revenues have since improved, and Iraq has agreed to manage its overall oil production in line with mutually agreed Organization of the Petroleum Exporting Countries (OPEC) output limits. In February 2019, Iraq exported an average of nearly 4 million barrels per day (mbd, including KRG-administered oil exports), above the March 2019 budget's 3.9 mbd export assumption and at prices above the budget's $56 per barrel benchmark. The IMF projects modest GDP growth over the next five years and expects growth to be stronger in the non-oil sector if Iraq's implementation of agreed measures continues as oil output and exports plateau.\nFiscal pressures are more acute in the Kurdistan region, where the fallout from the national government's response to the September 2017 referendum further strained the KRG's already weakened ability to pay salaries to its public-sector employees and security forces. The KRG's loss of control over significant oil resources in Kirkuk governorate, coupled with changes implemented by national government authorities over shipments of oil from those fields via the KRG-controlled export pipeline to Turkey, contributed to a sharp decline in revenue for the KRG during 2018. The resumption of exports from Kirkuk in late 2018, and an agreement between the KRG and Baghdad providing for the payment of some public sector salaries in exchange for KRG oil export proceed deposits in national accounts, has improved the situation as of March 2019.\nRelated issues shaped consideration of the 2018 and 2019 budgets in the COR, with Kurdish representatives criticizing the government's budget proposals to allocate the KRG a smaller percentage of funds to the KRI than the 17% benchmark reflected in previous budgets. National government officials argue that KRG resources should be based on a revised population estimate, and agreements reached for the national government to pay KRG civil service and peshmerga salaries in the 2019 budget are linked to the KRG placing 250,000 barrels per day of oil exports under federal control in exchange for financial all ocations for verified expenses. KRG oil contracts may limit the region's ability to meet this target, but the transfer of national funds to the KRG appears likely to ease fiscal pressures that had required payment limits that fueled protests.", "", "Iraqi military and counterterrorism operations against remnants of the Islamic State group are ongoing, and the United States military and its coalition partners continue to provide support to those efforts at the request of the Iraqi government. U.S. and coalition training efforts for various Iraqi security forces are ongoing at different locations, including in the Kurdistan region, with U.S. activities carried out pursuant to the authorities granted by Congress for the Iraq Train and Equip Program and the Office of Security Cooperation at the U.S. Embassy in Baghdad (OSC-I). From FY2015 through FY2019, Congress authorized and appropriated more than $5.8 billion for train and equip assistance in Iraq ( Table 3 ).\nThe Trump Administration is requesting an additional $745 million in FY2020 defense funding for Iraq programs under the Counter-ISIS Train and Equip Fund. The request proposes continued support to the Iraqi Counterterrorism Service (CTS), Army, Federal Police, Border Guards, Emergency Response Battalions, Energy Police, Special Forces ( Qwat Khasah ), and KRG Ministry of Peshmerga forces (see below). The request seeks $45 million for OSC-I.\nThe Trump Administration, like the Obama Administration, has cited the 2001 Authorization for Use of Military Force (AUMF, P.L. 107-40 ) as the domestic legal authorization for U.S. military operations against the Islamic State in Iraq and has notified Congress of operations against the Islamic State in periodic reports on the 2002 Iraq AUMF ( P.L. 107-243 ). The U.S. government has referred to both collective and individual self-defense provisions of the U.N. Charter as the relevant international legal justifications for ongoing U.S. operations in Iraq and Syria. The U.S. military presence in Iraq is governed by an exchange of diplomatic notes that reference the security provisions of the 2008 bilateral Strategic Framework Agreement. To date, this arrangement has not required the approval of a separate security agreement by Iraq's Council of Representatives.\nU.S. military officials stopped officially reporting the size of the U.S. force in Iraq in 2017, but have confirmed that there has been a reduction in the number of U.S. military personnel and changes in U.S. capabilities in Iraq since that time. U.S. military sources have stated that the \"continued coalition presence in Iraq will be conditions-based, proportional to the need, and in coordination with the government of Iraq.\" As of March 2019, 71 U.S. troops have been killed or have died as part of Operation Inherent Resolve (OIR), and 77 have been wounded. Through September 2018, OIR operations since August 2014 had cost $28.5 billion.\nAs of March 2019, U.S. and coalition forces have trained more than 190,000 Iraqi security personnel since 2014, including more than 30,000 Kurdish peshmerga . Notwithstanding these results, in September 2018, Department of Defense (DOD) officials told the DOD Inspector General that there remains \"a significant shortfall in Coalition trainers\" and confirmed that coalition forces are working to develop more capable and numerous Iraqi trainers to meet identified needs. In 2018, NATO leaders agreed to launch NATO Mission Iraq (NMI) to support Iraqi security sector reform and military professional development.\nOverall, DOD reports indicate that Iraq's security forces continue to exhibit \"systemic weaknesses\" including poor intelligence gathering and fusion, operational insecurity, ongoing corruption, reliance on coalition aircraft for air support, and overly centralized leadership, among other problems. U.S. and coalition plans for 2019 include a more intense focus on developing the capacity of various Iraqi police, border, and energy forces to hold recaptured territory. Through 2018, coalition advisers prioritized assistance to Iraqi forces conducting offensive operations against the Islamic State. In November 2018, the Lead Inspector General for Overseas Contingency Operations (LIG-OCO) questioned whether the coalition \"has sufficient advisors to support both ongoing offensive operations and to help hold forces secure areas cleared.\"\nU.S. arms transfers and security assistance to Iraq are provided with the understanding that U.S. equipment will be responsibly used by its intended recipients, and the 115 th Congress was informed about the unintended or inappropriate use of U.S.-origin defense equipment, including a now-resolved case involving the possession and use of U.S.-origin tanks by elements of the Popular Mobilization Forces.", "Since 2014, the U.S. government has provided Iraq with State Department- and USAID-administered assistance to support a range of security and economic objectives (in addition to the humanitarian assistance mentioned above). U.S. Foreign Military Financing (FMF) funds have supported the costs of continued loan-funded purchases of U.S. defense equipment and have helped fund Iraqi defense institution-building efforts. U.S. loan guarantees also have supported well-subscribed Iraqi bond issues to help Baghdad cover its fiscal deficits. Since 2014, the United States also has contributed nearly $2.5 billion to humanitarian relief efforts in Iraq, including more than $498 million in humanitarian support in FY2018. The Trump Administration also has directed additional support since 2017 to persecuted religious minority groups in Iraq, negotiating with UNDP to direct U.S. contributions to the UNDP Funding Facility for Stabilization (FFS) to the Ninewa Plains and other minority populated areas of northern Iraq (see \" Stabilization and Issues Affecting Religious and Ethnic Minorities \" below).\nThe FY2019 foreign operations appropriations act ( H.J.Res. 31 , P.L. 116-6 ) appropriates $150 million in Economic Support Fund (ESF) aid, along with $250 million in FMF and other security assistance funds. Of the ESF funds, $50 million is to be made available for stabilization purposes, according to the act's explanatory statement. The act also directs funds to support transitional justice programs and accountability for genocide, crimes against humanity, and war crimes in Iraq. The Administration's FY2020 request for bilateral assistance seeks more than $165 million to continue stabilization and other nonmilitary assistance programs in Iraq ( Table 4 ).\nThe United States also contributes to Iraqi programs to stabilize the Mosul Dam on the Tigris River, which remains at risk of collapse due to structural flaws, overlooked maintenance, and its compromised underlying geology. Collapse of the dam could cause deadly, catastrophic damage downstream. In September 2018, the State Department noted that Iraq is working to stabilize the dam, but judged that \"it is impossible to accurately predict the likelihood of the dam's failing.\"", "State Department reports on human rights conditions and religious freedom in Iraq have documented the difficulties faced by religious and ethnic minorities in the country for years. In some cases, these difficulties and security risks have driven members of minority groups to flee Iraq or to take shelter in different areas of the country, whether with fellow group members or in new communities. Minority groups that live in areas subject to long-running territorial disputes between Iraq's national government and the KRG face additional interference and exploitation by larger groups for political, economic, or security reasons. Members of diverse minority communities express a variety of territorial claims and administrative preferences, both among and within their own groups. While much attention is focused on potential intimidation or coercion of minorities by majority groups, disputes within and among minority communities also have the potential to generate tension and violence.\nIn October 2017, Vice President Mike Pence said in a speech that the U.S. government would direct more support to persecuted religious minority groups in the Middle East, including in Iraq. As part of this initiative, the Trump Administration has negotiated with UNDP to direct U.S. contributions to the UNDP Funding Facility for Stabilization (FFS) to the Ninewa Plains and other minority-populated areas of northern Iraq. In October 2017, USAID solicited proposals in a Broad Agency Announcement for cooperative programs \"to facilitate the safe and voluntary return of Internally Displaced Persons (IDPs) to their homes in the Ninewa plains and western Ninewa of Iraq and to encourage those who already are in their communities to remain there.\" In parallel, USAID notified Congress of its intent to obligate $14 million in FY2017 ESF-OCO for stabilization programs.\nIn January 2018, USAID officials released to UNDP a $75 million first tranche of stabilization assistance from an overall pledge of $150 million that had been announced in July 2017 and notified for planned obligation to Congress in April 2017. According to the January 2018 announcement, USAID \"renegotiated\" the contribution agreement with UNDP so that $55 million of the $75 million payment \"will address the needs of vulnerable religious and ethnic minority communities in Ninewa Province, especially those who have been victims of atrocities by ISIS\" with a focus on \"restoring services such as water, electricity, sewage, health, and education.\" USAID Administrator Mark Green visited Iraq in June 2018 and engaged with ethnic and religious minority groups in Ninewa. He also announced $10 million in awards under USAID's October 2017 proposal solicitation. At the end of the third quarter of 2018, UNDP reported that 259 projects in minority communities were complete out of 486 overall projects completed, planned, or under way in the Ninewa Plains.\nInclusive of the January announcement, the United States has provided $216.8 million to support the FFS—which remains the main international conduit for post-IS stabilization assistance in liberated areas of Iraq. According to UNDP, overall stabilization priorities for the FFS program are set by a steering committee chaired by the government of Iraq, with governorate-level Iraqi authorities directly responsible for implementation. UNDP officials report that earmarking of funding by donors \"can result in funding being directed away from areas highlighted by the Iraqi authorities as being in great need.\" In January 2019, UNDP identified $426 million in stabilization program funding shortfalls in five priority areas \"deemed to be the most at risk to future conflict\" and \"integral for the broader stabilization of Iraq.\"\nTrump Administration requests to Congress for FY2018-FY2020 monies for Iraq programs included proposals to fund continued U.S. contributions to post-IS stabilization. Additional funds notified to Congress for U.N.-managed stabilization programs in Iraq were obligated during 2018. U.S. officials are currently seeking greater Iraqi and international contributions to stabilization efforts in Iraq and Syria.", "The Trump Administration seeks more proactively to challenge, contain, and roll back Iran's regional influence, while it attempts to solidify a long-term partnership with the government of Iraq and to support Iraq's sovereignty, unity, security, and economic stability. These parallel (and sometimes competing) goals may raise several policy questions for U.S. officials and Members of Congress, including\nthe makeup and viability of the Iraqi government; Iraqi leaders' approaches to Iran-backed groups and the future of militia forces mobilized to fight the Islamic State; Iraq's compliance with U.S. sanctions on Iran; the future extent and roles of the U.S. military presence in Iraq; the terms and conditions associated with U.S. security assistance to Iraqi forces; U.S. relations with Iraqi constituent groups such as the Kurds; and potential responses to U.S. efforts to contain or confront Iran-aligned entities in Iraq or elsewhere in the region.\nIran-linked groups in Iraq have directly targeted U.S. forces in the past; some of them may be able and willing to do so again under certain circumstances. U.S. officials blamed these groups for apparent indirect attacks on U.S. diplomatic facilities in Basra and Baghdad in 2018. These attacks followed reports that Iran had transferred short-range ballistic missiles to Iran-backed militias in Iraq, reportedly including Kata'ib Hezbollah. The 115 th Congress considered proposals directing the Administration to impose U.S. sanctions on some Iran-aligned Iraqi groups, and enacted legislation containing reporting requirements focused on Iranian support to nonstate actors in Iraq and other countries. Iran has sometimes intervened in Iraq directly, including by conducting air strikes against Islamic State forces advancing on the border with Iran in 2014 and by launching missiles against Iranian Kurdish groups encamped in parts of northern Iraq in 2018.\nNew or existing efforts to sideline Iran-backed groups, via sanctions or other means, might challenge Iran's influence in Iraq in ways that could serve stated U.S. government goals. The United States government has placed sanctions on some Iran-linked groups and individuals for threatening Iraq's stability and for involvement in terrorism. Some analysts have argued \"the timing and sequencing\" of sanctions \"is critical to maximizing desired effects and minimizing Tehran's ability to exploit Iraqi blowback.\"\nU.S. efforts to counter Iranian activities in Iraq and elsewhere in the region also have the potential to complicate the pursuit of other U.S. interests in Iraq, including U.S. counter-IS operations and training. When President Trump in a February 2019 interview referred to the U.S. presence in Iraq as a tool to monitor Iranian activity, several Iraqi leaders raised concerns. Iran-aligned Iraqi groups since have referred to President Trump's statements in their political campaign to force a U.S. withdrawal.\nMore broadly, U.S. confrontation with Iran and its allies in Iraq could disrupt relations among parties to the consensus government in Baghdad, or even precipitate civil conflict, undermining the U.S. goal of ensuring the stability and authority of the Iraqi government. While a wide range of Iraqi actors have ties to Iran, the nature of those ties differs, and treating these diverse groups uniformly risks ostracizing potential U.S. partners or neglecting opportunities to create divisions between these groups and Iran.\nJust as the Administration has used sanctions to curb Iranian influence in Iraq, it also has used U.S. foreign assistance as leverage to limit Iranian involvement in Iraqi governance. As Iraqis debated government formation in 2018, the Trump Administration signaled that decisions about future U.S. assistance efforts would be shaped by the outcome of Iraqi negotiations. Specifically, the Administration stated that the assumption of authority in the new government by Iraqis perceived to be close to or controlled by Iran would prompt the United States to reconsider U.S. support. In the end, Iraqis excluded figures with close ties to Iran from cabinet positions. U.S. officials have argued that the United States does not seek to sever Iraq's relationships with neighboring Iran, but striking a balance in competing with Iran-linked groups and respecting Iraq's independence may continue to pose challenges.\nIraq's relations with the Arab Gulf states also may shape the balance of Iranian and U.S. interests. U.S. officials have praised Saudi efforts since 2015 to reengage with the Iraqi government and support normalization of ties between the countries. In December 2015, Saudi officials reopened the kingdom's diplomatic offices in Iraq after a 25-year absence, and border crossings between the two countries have been reopened. Saudi Arabia and the other GCC states have not offered major new economic or security assistance or new debt relief initiatives to help stabilize Iraq, but actively engaged in and supported the February 2018 reconstruction conference held by Iraq in Kuwait. Saudi and other GCC state officials generally view the empowerment of Iran-linked Shia militia groups in Iraq with suspicion and, like the United States, seek to limit Iran's ability to influence political and security developments in Iraq.", "Negotiations among Iraqi factions following the May 2018 election have not fully resolved all questions about Iraq's future approach to U.S.-Iraqi relations. Former Prime Minister Abadi, with whom the U.S. government worked closely, could not translate his list's third-place finish into a mandate for a second term. His successor, Prime Minister Adel Abd al Mahdi, served in Abadi's government; U.S. officials have worked positively with him in the past. Nevertheless, the nature and durability of the political coalition arrangements supporting his leadership are unclear, and he lacks a strong personal electoral mandate.\nSimilarly, Iraqi President Barham Salih is familiar to U.S. officials as a leading and friendly figure among Iraqi Kurds, but he serves at a time of significant political differences among Kurds, and amid strained relations between Kurds and the national government. Salih has supported continued U.S.-Iraqi cooperation but also has rebuked some statements by U.S. officials. While Baghdad-KRG ties have improved relative to their post-2017 referendum low point, it remains possible that the national government could more strictly assert its sovereign prerogatives with regard to foreign assistance to substate entities, and/or that KRG representatives could seek expanded aid or more direct foreign support.\nAs negotiations over cabinet positions conclude in Baghdad, Iraq's government is expected to debate the implementation of the national budget, reform of the water and electricity sectors, employment and anticorruption initiatives, and various national security issues. Among the latter may be proposals from some factions calling for the reduction or expulsion of U.S. and other foreign military forces from Iraq. Some Iraqi groups remain vocally critical of the remaining U.S. and coalition military presence in the country and argue that the defeat of the Islamic State's main forces means that U.S. and other foreign forces should depart. These groups also accuse the United States of seeking to undermine the Popular Mobilization Forces or to otherwise subordinate Iraq to U.S. preferences.\nMost mainstream Iraqi political movements or leaders did not use the U.S. military presence as a major wedge issue in the run-up to or aftermath of the May 2018 election, and U.S. officials express confidence that many Iraqi military leaders and key political figures do not want to end Iraq's security partnership with the United States. Nevertheless, Members of Congress and U.S. officials face difficulties in developing policy options that can secure U.S. interests on specific issues without provoking major opposition from Iraqi constituencies. At the same time, Iraqi leaders may wonder whether the 2019 U.S. drawdown from Syria might augur a similar U.S. drawdown in Iraq. If Iraqi leaders seek to develop alternative sources of support should the United States decide to leave Iraq, then such sources could include Iran.\nDebates over U.S. military support to Iraqi national forces and substate actors in the fight against the Islamic State illustrated this dynamic, with some U.S. proposals for the provision of aid to all capable Iraqi forces facing criticism from Iraqi groups that may harbor suspicions of U.S. intentions or fear that U.S. assistance could empower their domestic rivals. To date, U.S. aid to the Kurds has been provided with the approval of the Baghdad government, though some Members of Congress have advocated for assistance to be provided directly to the KRG. U.S. concern about the unwillingness of some PMF units and armed groups to subordinate themselves to the national command authority of Iraq's elected government is another example. The strained relationship between national government and Kurdish forces along the disputed territories and the future of the Popular Mobilization Forces are issues that will doubtless recur in debates over the continuation of prevailing patterns of U.S. assistance.\nOversight reporting to Congress suggests that DOD estimates the Iraq Security Forces are \"years, if not decades\" away from ending their \"reliance on Coalition assistance,\" and DOD expects \"a generation of Iraqi officers with continuous exposure to Coalition advisers\" would be required to establish a self-reliant Iraqi fighting force. According to the Lead Inspector General for Overseas Contingency Operations (LIG-OCO), these conditions raise \"questions about the duration of the OIR mission since the goal of that mission is defined as the 'enduring defeat' of ISIS.\"\nTo achieve that goal, DOD may seek the continuation of U.S. and coalition training and advisory relationships with Iraq over a long, but as yet unspecified, period of time and on a consistent if as yet undefined scale. This may present questions to Congress about whether or how best to authorize and fund future U.S. security assistance to Iraq, and whether current bilateral agreements with the government of Iraq are sufficient and viable. The financial structure of U.S. security support efforts also could evolve. In the past, some in Congress have called for U.S. military training or other aid to Iraq to be provided on a reimbursement or loan basis, while with other major oil exporters like Saudi Arabia, long-term training activities have been funded by the recipient country through Foreign Military Sales. Iraq is already a significant FMS customer.\nIt seems reasonable to expect that Iraqis will continue to assess and respond to U.S. initiatives (and those of other outsiders) primarily through the lenses of their own domestic political rivalries, anxieties, hopes, and agendas. Reconciling U.S. preferences and interests with Iraq's evolving politics and security conditions may thus require continued creativity, flexibility, and patience.", "H.R. 571 . A bill to impose sanctions with respect to Iranian persons that threaten the peace or stability of Iraq or the Government of Iraq.\nSubject to national security waiver, the bill would direct the President to impose sanctions on \"any foreign person that the President determines knowingly commits a significant act of violence that has the direct purpose or effect of—(1) threatening the peace or stability of Iraq or the Government of Iraq; (2) undermining the democratic process in Iraq; or (3) undermining significantly efforts to promote economic reconstruction and political reform in Iraq or to provide humanitarian assistance to the Iraqi people.\"\nThe bill would further require the Secretary of State to submit a determination as to whether Asa'ib Ahl al Haq, Harakat Hizballah al Nujaba, or affiliated persons and entities meet terrorist designation criteria or the sanctions criteria of the bill. The bill also would direct the Secretary of State to prepare, maintain, and publish a \"a list of armed groups, militias, or proxy forces in Iraq receiving logistical, military, or financial assistance from Iran's Revolutionary Guard Corps or over which Iran's Revolutionary Guard Corps exerts any form of control or influence.\"\nThe U.S. government designated Harakat Hizballah al Nujaba pursuant to Executive Order 13224 on terrorism in March 2019.\nA similar bill would direct the President to impose sanctions on select groups without a national security waiver ( H.R. 361 ).\nThe bill reflects amendments reported to Congress by the House Foreign Affairs Committee and endorsed by the House during the 115 th Congress ( H.R. 4591 ).\nS.J.Res. 13 . A joint resolution to repeal the authorizations for use of military force against Iraq, and for other purposes.\nThe joint resolution would repeal the Authorization for Use of Military Force against Iraq Resolution ( P.L. 102-1 ; 105 Stat. 3; 50 U.S.C. 1541 note) of January 14, 1991, and the Authorization for Use of Military Force against Iraq Resolution of 2002 ( P.L. 107-243 ; 116 Stat. 1498; 50 U.S.C. 1541 note) of October 16, 2002." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 2, 2, 3, 2, 1, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h0_full h4_full h5_full", "h3_full h2_full h1_title", "h1_full", "h2_full", "h2_full", "h3_full", "h4_title", "h4_full", "h4_full", "", "", "", "", "", "", "h5_title h2_full", "h5_full" ] }

{ "question": [ "What happened after Iraq's government declared military victory against ISIS/ISIL?", "Why do 5,000 U.S. troops remain in Iraq?", "What are the responses to 5,000 U.S. troops remaining in Iraq?", "What was the purpose of Iraq's national elections in 2018?", "Why was it difficult for political legislators to identify a majority bloc of legislators?", "What did the protests and violence in southern Iraq highlight?", "What did President Salih direct Adel Abd al Mahdi to do?", "What progress has been made towards assembling cabinet officials for COR approval?", "How effective have Iraqi politicians been in appealing to disaffected citizens?", "Why do Iraqi citizens remain frustrated with the Iraqi government?", "What are figures associated with the PMF doing with their COR seats?", "Why does KRI hold administrative autonomy?", "Why were tensions amplified between KRG and the national government?", "What have been the results so far of this political tension?", "What issues face Iraqi citizens and leaders as they look to the future?", "How successful has the resettlement of Iraqi citizens been so far?", "How is Iraq fairing with reconstruction and stabilization after the war with the Islamic State?", "What is the purpose of U.S. engagement in Iraq since 2011?", "What is the Trump Administration doing in Iraq?", "Why is the Trump Administration requesting funding from Congress for Iraq efforts?" ], "summary": [ "Iraq's government declared military victory against the Islamic State organization (IS, also ISIS/ISIL) in December 2017, but insurgent attacks by remaining IS fighters continue to threaten Iraqis as they shift their attention toward recovery and the country's political future.", "Approximately 5,000 U.S. troops remain in Iraq at the invitation of the Iraqi government and provide advisory and training support to Iraqi security forces.", "However, some Iraqi political groups are calling for U.S. and other foreign troops to depart, and they may seek to force Iraqi government action on this question during 2019.", "Iraqis held national elections in May 2018, electing members to Iraq's unicameral legislature, the 329-seat Council of Representatives (COR).", "Political factions spent months negotiating in a bid to identify a majority bloc of legislators to form the next government, but the distribution of seats and alignment of actors precluded the emergence of a dominant coalition.", "Meanwhile, protests and violence in southern Iraq highlighted some citizens' outrage with poor service delivery, lack of economic opportunity, and corruption.", "Salih, in turn, named former Oil Minister Adel Abd al Mahdi as Prime Minister-designate and directed him to assemble a slate of cabinet officials for COR approval.", "COR members have confirmed most of Abd al Mahdi's cabinet nominees, but key political groups are at an impasse over certain ministries, including the Ministry of Interior and the Ministry of Defense.", "Iraqi politicians have increasingly reached across sectarian political and economic lines in recent years in an attempt to appeal to disaffected citizens, but ethnic and religious politics remain relevant and Iraqi citizens remain frustrated with government performance.", "Iraq's neighbors and other outsiders, including the United States, are pursuing their respective interests in Iraq, and their competition creates additional challenges for Iraqi leaders. Paramilitary forces have grown stronger and more numerous in Iraq since 2014, and have yet to be fully integrated into national security institutions.", "Some figures associated with the volunteer Popular Mobilization Forces (PMF) that were organized to fight the Islamic State participated in the 2018 election and won COR seats, including critics of U.S. policy who have ties to Iran and are demanding the United States withdraw its military forces.", "The Kurdistan Region of northern Iraq (KRI) enjoys considerable administrative autonomy under the terms of Iraq's 2005 constitution, and the KRG held legislative elections on September 30, 2018.", "The KRG had held a controversial advisory referendum on independence in September 2017, amplifying political tensions with the national government, which then moved to reassert security control of disputed areas that had been secured by Kurdish forces after the Islamic State's mid-2014 advance.", "National government security forces and Kurdish peshmerga are deployed along contested lines of control, as leaders negotiate a host of sensitive issues.", "Daunting resettlement, stabilization, and reconstruction needs face Iraqi citizens and leaders as they look to the future.", "More than 4 million Iraqis uprooted during the war with the Islamic State group have returned to their home communities, but many of the estimated 1.7 million Iraqis who remain internally displaced face significant political, economic, and security barriers to safe and voluntary return.", "Stabilization efforts in areas recaptured from the Islamic State are underway with United Nations and other international support, but many immediate post-IS stabilization priorities and projects are underfunded. Iraqi authorities have identified $88 billion in broader reconstruction needs to be met over the next decade.", "In general, U.S. engagement in Iraq since 2011 has sought to reinforce unifying trends and avoid divisive outcomes.", "The Trump Administration seeks to continue to train and support Iraqi security forces, while hoping to limit negative Iranian influence.", "The 116th Congress is considering Administration requests for funding to provide security assistance, humanitarian relief, and foreign aid in Iraq and may debate authorities for and provide oversight of the U.S. military presence in Iraq and security cooperation and aid programs. For background, see CRS Report R45025, Iraq: Background and U.S. Policy." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, -1, 3, -1, 0, -1, -1, -1, 1, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 4, 4, 4, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Cyprus—Slow to Use Its Gas4", "Aphrodite Field—A First Step", "Possibility of Additional Discoveries", "Turkish Relations", "Egypt—Domestic Demand Key9", "Domestic Gas Shortage", "Zohr Field—A Big Find", "Lebanon—Still Waiting16", "Possible Resources", "Dispute with Israel", "Israel—Natural Gas Enters Its Market23", "Natural Gas Resources—Growing Fast", "Gas Transforms the Electricity Sector", "Israel's Natural Gas Export Potential", "Egypt", "Jordan", "Palestinian Authority", "Turkey", "Reducing Carbon Emissions", "U.S. Interest in the Region's Natural Gas Development" ], "paragraphs": [ "", "Interest in the Eastern Mediterranean as a natural gas resource base has been growing since Israel made its first large-scale natural gas discovery in 2009. (See Figure 1 .) The Tamar Field off the Israeli coast was the first of a series of large-scale natural gas discoveries in the region. Significant subsequent discoveries have been made in Israel (Leviathan), Cyprus (Aphrodite), and Egypt (Zohr), while Lebanon has been actively trying to assess its resources. In 2010, the United States Geological Survey (USGS) estimated that there could be up to an additional 122 trillion cubic feet of undiscovered natural gas resources in the Levant Basin, which underlays a large portion of the Eastern Mediterranean Sea. The USGS report also indicated that there could be up to 1.7 billion barrels of recoverable oil in the Levant Basin, making future oil discovery possible.\nHowever, the downturn in global oil and natural gas prices, starting in mid-2014, has constrained the development of resources and made markets more competitive. Projects that are deemed costly, difficult, or problematic have been put on hold in many circumstances. Many companies no longer have the financial resources or motivation to develop resources in challenging environments. For the Eastern Mediterranean, this has meant a slowdown in developing some of the natural gas that has been discovered, delaying the exploration for new discoveries, and requiring greater effort to find markets for the region's natural gas.\nEurope, given its proximity to the Eastern Mediterranean, is the most logical market for Eastern Mediterranean natural gas production. In the aggregate, though, European natural gas consumption has generally been in decline since 2010, offsetting some of the decline in European production. Imports to Europe rose by more than 10% in 2015, negating the drop in imports from 2011 to 2014. Should Eastern Mediterranean natural gas enter the European natural gas market, it will face strong competition from Europe's traditional suppliers—Russia, Norway, and Algeria—as well as from U.S. liquefied natural gas (LNG) exports, which started in 2016.\nFor the most part, the Eastern Mediterranean countries either do not use natural gas as a fuel (i.e., Cyprus and Lebanon ) or are essentially self-sufficient in natural gas (i.e., Israel and Syria) (see Figure 2 and Table 1 ), except for Greece and Turkey, which are heavily dependent upon imports. Egypt, which has large natural gas resources, started importing natural gas in 2015 to meet its subsidized demand ( Table 1 data is from 2014 and shows Egypt as a net exporter of natural gas). Egypt's situation may change in the medium term if it can curb its subsidies for natural gas or change its policies to promote more natural gas development. Development of the region's natural gas resources could meet the potential growing needs of most of the countries in Table 1 , and add some diversification of supply for Turkey. For this to occur, many geopolitical hurdles would need to be overcome and new infrastructure would have to be built.\nAlthough the relatively recent discoveries are large for the region, they represent only a small amount globally. The natural gas reserves of the countries represented in Table 1 are less than 1.5% of the world's reserves. Regional production in 2014 was under 2% of global production, while consumption was over 3%.", "Cyprus is politically and territorially divided between the Greek Cypriot Republic of Cyprus and Turkish Cypriot administered area of northern Cyprus. Efforts by the Republic of Cyprus and other Eastern Mediterranean countries—most notably Israel—to agree on a division of offshore energy drilling rights without a plan for unification of the island have been opposed by Turkey and Turkish Cypriots. The Republic of Cyprus appears to anticipate considerable future export revenue from drilling in the Aphrodite Field, a natural gas field off Cyprus's southern coast. However, contention on this issue appears to have been deemphasized in negotiations between Greek and Turkish Cypriots, which have resumed via U.N. mediation following the election of Mustafa Akinci as Turkish Cypriot leader in April 2015.\nCyprus is heavily dependent on foreign oil imports to meet its energy needs (see Figure 3 ). Most electricity in Cyprus is generated by oil-fired power plants. Domestically using gas from the Aphrodite Field could help relieve some of this dependence and natural gas could supplant oil as the primary fuel for power generation. However, using natural gas for power generation would require new infrastructure to be built, especially natural gas-fired fueled power plants. Relieving dependence on oil imports for power generation could help Cyprus reduce carbon emissions.", "Noble Energy discovered the Aphrodite Field offshore of Cyprus in 2011. The field was estimated to hold between 5 and 8 trillion cubic feet (tcf) of natural gas reserves. Cyprus has announced its intention to develop the field and begin exporting gas by 2019. Cyprus currently has no natural gas infrastructure. The lack of natural gas infrastructure on the island makes it difficult and potentially costly for Cyprus to utilize gas from the Aphrodite Field domestically. Doing so would require the construction of both overland pipelines in Cyprus to deliver the gas and power plants or industrial facilities that could use the gas. Cyprus could either build an LNG export terminal to send gas to Europe or route the gas through LNG terminals in neighboring countries. Constructing a pipeline connecting Aphrodite to Egyptian LNG export terminals would be far less expensive than constructing an LNG facility in Cyprus. Exporting gas from Aphrodite through Egypt would take advantage of Egypt's underutilized Idku terminal, which is currently operating at 10% of its 2013 capacity because of subsidized domestic demand.", "Cyprus concluded its third licensing round for offshore exploration in July 2016. This latest round includes blocks adjacent to the Egyptian Zohr supergiant field and has attracted the interest of a small number of international companies. Exploration rights for this round of licensing are expected to be awarded in early 2017.", "The Republic of Cyprus is globally recognized as the legitimate government of Cyprus and is a member of the European Union. Turkey refuses to recognize the Republic of Cyprus and instead recognizes the Turkish Republic of Northern Cyprus. Turkey maintains up to 40,000 troops in Northern Cyprus. Negotiations to unify the island under one equally administered federation between Turkish Cyprus and the Republic of Cyprus accelerated in 2015. While some commenters are optimistic about potential agreements, no resolution has yet been reached. Although Turkey has not specifically contested ownership of the Aphrodite Field, Turkey strongly opposes the development of Cypriot natural gas resources unless the Turkish Cypriots will share in the financial benefits or until a resolution of the \"Cyprus problem\" is found.\nSince its recent reconciliation with Israel, Turkey has stepped up interest in importing Israeli natural gas via a pipeline that would run through the Cypriot economic zone. Cyprus has maintained, and again stated in early July, that it would not allow any gas pipeline connecting Israel and Turkey to be constructed in its exclusive economic zone until a Cyprus solution is found. A Cyprus government spokesperson characterized Cyprus as \"a state under occupation\" and reiterated the belief of the Greek Cypriot government that it would be unreasonable to approve a pipeline going to \"an occupying power.\" This development has stalled further progress on a potential pipeline connecting Israel and Turkey.", "The Egyptian government's attempt to spark economic growth in order to stave off public unrest has had mixed results. In 2015, Egypt's economy grew at its fastest rate (4.2%) since 2010. On the other hand, Egypt's government is facing a shortage of dollar-denominated currency, which is affecting its ability to import food and fuel. Additionally, tourism receipts in 2015 have declined because of terrorism fears, as have revenues from transit fees from the Suez Canal, a major source of foreign exchange. Although Egypt is a large producer of natural gas, it became a net importer in 2015, primarily because of government policies subsidizing domestic consumption. The country's budget outlays have benefitted by the drop in prices for its imports of natural gas and oil.\nNatural gas is the largest source of energy in Egypt, accounting for just under half of primary energy consumption (see Figure 4 ). In addition, natural gas fueled 77% of Egypt's electricity generation in 2013. Oil is also a major component of Egypt's domestic energy mix. Egypt is a major producer of both natural gas and oil, and has yet to begin utilizing large quantities of renewable energy.", "Formerly a net exporter of natural gas, Egypt is currently facing a natural gas shortage. This is primarily caused by the government subsidizing the cost of fuel consumption and creating more demand. Additionally, domestic policies that force natural gas producers to sell a percentage of their production domestically at lower than international prices have, in the past, curbed interest in developing new natural gas resources. Egyptian natural gas production peaked at 6.1 bcf/d in 2009 and dropped 27% to 4.4 bcf/d between 2009 and 2015. Decreases in production have been largely due to decreasing offshore resources, political unrest, and domestic policies. The political uprising against then-President Hosni Mubarak in 2011 also decreased investment in discovering new sources of gas. The resulting shortage caused disruptions to industrial production and power outages. Demand for gas from the industrial and power sectors, which account for 85% of gas use in Egypt, is set to rise 22% by 2021.\nEgypt stopped regular LNG exports in 2014 and is actively seeking new sources of natural gas. Egypt currently imports between 1.0 and 1.1 bcf/d of natural gas, but is projected to increase to 2.0 bcf/d. In the spring of 2016, Egypt exported two cargoes of LNG from the Idku LNG facility. These shipments are not likely part of a trend towards greater LNG exports, and Egypt expects to be an LNG importer until at least 2022. Including the Zohr Field, Egypt is developing 12 natural gas projects, with a total investment of $33 billion.", "The supergiant Zohr Field was discovered in August 2015 by Eni SPA, an Italian company. The Zohr Field, which holds up to 30 tcf and is valued at over $100 billion, is the largest discovery to date in the Eastern Mediterranean. It is also one of the largest natural gas discoveries in the world in recent years. Driven by high domestic demand for natural gas, Egypt has begun efforts to bring the Zohr Field online quickly and believes that developing the field will help it reduce gas imports. Gas produced at the Zohr site could reach domestic markets in Egypt by 2017. Egypt does not have any plans to export gas from the Zohr project.", "Rivalries in the wider Middle East region have exacerbated recurring challenges for Lebanon, which have contributed to a divided government and a weakened business environment. A politically and communally diverse cabinet, led by Prime Minister Tammam Salam since early 2014, has not made major steps toward development of Lebanon's energy resources. Lebanon is almost entirely dependent on oil imports for its energy consumption (see Figure 5 ). Lebanon does not currently consume any natural gas. Repeated attacks on the Arab Gas pipeline from Egypt, which has supplied Lebanon with gas in the past, have made it infeasible for Lebanon to import natural gas.", "By one industry estimate, Lebanon could have up to 15 tcf of recoverable offshore gas resources. Lebanon has not yet authorized any companies to begin exploratory work to discover possible resources, nor have state agencies confirmed possible gas deposits. In 2013, Lebanon began screening companies for pre-qualification to bid on exploration rights in the Mediterranean. While 46 companies pre-qualified, political gridlock prevented Lebanon from awarding exploration rights. Lebanon still must issue decrees defining both a taxation policy and which blocks are to be opened for exploration.\nThere are a number of factors in Lebanon that could potentially inhibit future progress on the exploration and development of possible gas resources. First, more than one million refugees displaced by the Syrian civil war have entered Lebanon. The state has had to divert substantial resources to address the refugee crisis, and persistent Syria-related domestic security challenges may distract from efforts to develop gas in the Mediterranean. Second, the Lebanese parliament has remained gridlocked and has failed to elect a new president over two dozen times since 2014. Until a political compromise is reached, the gridlocked parliament may have trouble moving forward with an agreement to grant exploration rights.", "Lebanon and Israel are currently locked in a dispute over maritime boundaries. The 1949 Israel-Lebanon armistice line serves as the de facto land border between the two countries, and Lebanon claims roughly 330 square miles of waters that overlap with areas claimed by Israel based in part on differences in interpretation of relative points on the armistice line. Lebanon has threatened to use its military to defend its claims and has called on foreign powers to help resolve the dispute. To date, there has been no violence. Neither the Tamar Field nor the planned development of the Leviathan Field is located within the disputed area. Lebanon has cited its boundary dispute with Israel as a primary obstacle to the exploration and development of its gas resources. Development of Israel's natural gas resources has not been delayed by Lebanese claims. It is possible that the disputed area could be the cause of additional tension between Israel and Lebanon as Israel continues to develop its gas reserves.\nCritics of the Lebanese government allege that mismanagement, not disputes with Israel, is the primary reason why Lebanon has lagged behind Israel in natural gas exploration and development.\nU.S. officials are working with Lebanese and Israeli leaders to resolve the dispute. Lebanon objects to a 2010 Israel-Cyprus agreement that draws a specific maritime border delineation point relative to the 1949 armistice line.\nIn seeking to help Israel and Lebanon resolve their differences on this question, the United States appears to be interested in facilitating a more hospitable commercial environment for all parties involved (including U.S. energy companies), and in preventing the dispute from exacerbating long-standing animosities between the two countries. It is unclear to what extent U.S. diplomacy on this issue can facilitate changes in the current Israeli and Lebanese stances.", "Israeli officials routinely express optimism that the economic promise of Israel's energy resources can attract the industrial help it needs to be realized, and this optimism may prove justified. However, given that Israel does not have a significant offshore exploration and production (E&P) sector, it relies on the expertise of international companies. The obstacles posed by antitrust deliberations, along with other energy industry concerns about Israel's regulatory regime pertaining to domestic consumption requirements and possible price ceilings could create difficulties for future development.\nIsrael has 6.4 tcf of proven reserves, which are the second largest in the Eastern Mediterranean region behind Egypt. After making significant natural gas discoveries in 2009 and 2010, Israel began to focus its future energy needs on natural gas, including discussions on exporting natural gas regionally and globally. Israel has begun to integrate natural gas into its energy mix, comprising almost 30% of its 2015 primary fuel needs.", "Oil makes up the largest component of Israel's energy mix, primarily from imports, while domestic natural gas is the fastest growing fuel (see Figure 6 ). Israel did not consume natural gas in large quantities before 2003. Natural gas consumption grew steadily from 2003 to 2009, and doubled between 2009 and 2015. The discovery of the Tamar, Dalit, and Leviathan fields by U.S.-based Noble Energy in 2009 and 2010 created the potential for Israel to become a net exporter of natural gas. Israel's natural gas reserves—natural gas that has been discovered and can be expected to be economically produced—prior to the Noble Energy discoveries were estimated at 1.5 tcf or about 16-years' worth at pre-2011 production levels. Production from the Tamar Field has spurred a dramatic increase in Israeli natural gas use. Natural gas now accounts for almost 30% of all Israeli fuel consumption (up from 11% in 2008) and over half of the country's electricity production.\nProduction at the Tamar Field began in 2013, and production of the Leviathan Field is now scheduled to begin within the next four years. Producing at expected capacity, the Leviathan and Tamar fields, along with Israel's other existing natural gas fields, hold up to almost 22 years' worth of gas.\nDevelopment of the Leviathan F ield could increase Israel's energy security in the short term. Currently, all of Israel's domestically consumed gas comes from a single pipeline in the Tamar F ield. Development of the Leviathan F ield would add diversity to Israel's domestic supply and provide enough resources to meet Israel's natural gas needs on its own. It could also increase Israel's energy security in the long term by creating the potential for Israel to become a net exporter of natural gas. Noble Energy has already signed an agreement to export gas from the Leviathan F ield to Egypt.", "Israel's use of natural gas for electric power generation has increased from 33% in 2009, when the Tamar Field was discovered, to 42% when the Tamar Field went into production in 2013. As of 2016, it is estimated that natural gas comprises more than half of Israel's electricity needs.\nIn late May of 2016, the Leviathan partners signed an 18-year agreement worth $3 billion to provide up to 459 bcf of natural gas to a new privately operated power plant in central Israel. The Leviathan partners also signed a $1.3 billion deal with Edeltech, Israel's largest private power producer, in January for 212 bcf to be delivered over 18 years. Fulfilling both domestic agreements could be achieved through Leviathan's projected initial daily production.\nContinued integration of natural gas into Israel's electrical sector and overall energy mix would allow the country to increase the domestic share of energy production. Israel imports all of its coal and most of its oil. Conversion to natural gas from coal for power generation would also likely decrease Israel's greenhouse gas and other emissions. However, this would require major investment and take many years to achieve.", "Israel has also expressed interest in exporting gas, but this has been delayed by a number of factors. Israel's antitrust regulator initially held up Leviathan's development because of concerns regarding monopolistic effects on Israel's energy market. After the government reached new terms with the stakeholders in Tamar and Leviathan, it overrode the antitrust regulator's action. In March 2016, Israel's Supreme Court invalidated the development agreement because it ruled that the agreement did not give future governments sufficient flexibility to change pricing or other key terms. The energy companies and the Israeli government negotiated a second agreement in late May 2016, and Israel is expected to start exporting gas by 2019. Exports from the Leviathan Field have the potential to generate billions of dollars of revenue over the next several decades.\nThere are a number of possible destinations in the region for Israeli natural gas exports, which may have geopolitical benefits. However, questions exist regarding Israel's ability to create and sustain energy ties with Arab and other Muslim-majority neighbors whose relations with Israel are marked by ongoing or intermittent political disputes and/or sensitivities based on strong, long-standing anti-Israel public sentiment. It is unclear to what extent political difficulties with neighbors might be mitigated by the potential material benefits of energy cooperation or by other considerations, and how satisfactory logistical and transportation frameworks and security measures might be implemented. Israel might calculate that a prominent role for Noble Energy, a U.S. company, in projects linked with export deals might make the deals less vulnerable to anti-Israel populism.", "Rapidly rising domestic demand forced Egypt to halt LNG exports in 2014. Egyptian natural gas supply has been further hampered relative to demand due to numerous attacks and service disruptions on the Arab Gas Pipeline. Egypt is seeking additional sources of gas, and the Tamar consortium, which includes U.S. Noble Energy, has already signed an agreement with a private Egyptian firm promising to provide Egypt with natural gas via an undersea pipeline. Although Israeli gas imports are politically unpopular in Egypt, Cairo has indicated that it will not intervene in private agreements to import Israeli gas. However, domestic disputes could complicate the construction of the pipeline, which needs legal approval from the government.", "Attacks on the Arab Gas Pipeline from Egypt have caused shortfalls of natural gas supply in Jordan. That, coupled with growing demand, has led Jordan to look to import natural gas as LNG. In May 2015, Jordan began importing LNG through a floating storage and regasification unit (FSRU). Noble Energy signed two agreements worth $500 million with private Jordanian mineral companies and reached a preliminary $15 billion agreement with Jordan's National Electric Power Co. Israel has approved the construction of pipelines connecting Israel and Jordan to supply the gas. The approval of the pipelines is an indication that exporting gas to Jordan enjoys significant political support from within Israel.", "The Palestinian Authority (PA) and the Leviathan consortium led by Noble Energy reached agreement in January 2014 on a 20-year supply of gas to a proposed power plant in the West Bank city of Jenin when Leviathan comes online. Analysts have speculated on the possibility for Israeli gas or gas from the PA-administered Marine (sometimes known as \"Marine A\") field to supply the Gaza Strip's energy-starved power plant. Political and security concerns, particularly Hamas's presence in Gaza, have complicated this issue. Depending on a number of variables, potentially reunified PA rule over the West Bank and Gaza might either present opportunities to make energy arrangements for the Gaza plant, or lead to further obstacles. Uncertainty regarding Israeli-Palestinian relations and the PA's future could affect Israeli control over offshore resources and the shipment of gas from these resources to the West Bank and Gaza.", "In June 2016, Israel and Turkey agreed to fully normalize diplomatic relations that had worsened in 2010. For more information, see CRS Report R44000, Turkey: Background and U.S. Relations In Brief , by Jim Zanotti. Reportedly, prospects of a natural gas pipeline between Israel and Turkey partly contributed to the improvement in relations, though discussions remain in preliminary stages and any project would likely take years to complete. Exporting gas to Turkey via pipeline could allow Israeli gas to reach the European market and supply markets in Turkey.\nHowever, as referenced above, the development of a pipeline connecting Leviathan to Turkey could be hindered by the ongoing conflict in Cyprus. Any pipeline constructed would likely have to pass through the exclusive economic zone of Cyprus, giving it the ability to veto potential projects.", "Israel is a signatory to the Paris Accords and has pledged to reduce greenhouse gas emissions to 26% below 2005 levels by 2030. Shifting remaining coal power production would nearly achieve this goal. Natural gas fired power plants typically emit only 58% as much CO 2 per kWh generated as coal fired plants. Converting all coal capacity to natural gas would reduce CO 2 emissions by about 13.95 million tons per year, or about 24.4% of Israel's 2005 level of emissions. Actual emissions reductions will probably be lower than this figure because it is unlikely that Israel will completely abandon coal power.", "Although the United States is essentially independent in its natural gas resources, it has expressed interest in the Eastern Mediterranean natural gas resources, particularly in the development of Israel's resources. Congress and the Obama Administration have undertaken a variety of efforts in regard to the region's natural gas.\nIn May 2016, Senators Murkowski and Cantwell sent a letter to the Secretary of Energy, Ernest Moniz, regarding the establishment of the U.S.-Israel Energy Center. The creation of the center was included in the U.S.-Israel Strategic Partnership Act of 2014 ( P.L. 113-296 ). In addition to the creation of the center, the act stated, \" ... United States-Israel energy cooperation and the development of natural resources by Israel are in the strategic interest of the United States.\" Both the United States and Israel, albeit on a different scale, have undergone major transformations in their energy sectors, especially in natural gas development. The new law (in Section 12) highlights these changes and encourages closer ties in the energy sector between the two countries. Additionally, H.R. 5066 was introduced during the 114 th Congress, which would authorize the President to provide assistance to Israel in protecting its offshore natural gas fields.\nIn May 2016, the State Department's U.S. Special Envoy and Coordinator for International Energy Affairs, Amos Hochstein, delivered the keynote address at Lebanon's Third Forum on Oil and Gas. According to press accounts, Hochstein encouraged Lebanese officials to take advantage of their country's hydrocarbon potential. The State Department has been actively engaged in mediating the maritime dispute between Lebanon and Israel. Additionally, Hochstein visited Cyprus in November 2014 to discuss energy development, including Cyprus' Exclusive Economic Zone (EEZ) and issues it is having with Turkey." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 3, 3, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h1_full", "", "", "", "h0_title h2_title", "h2_full", "h0_full", "h0_title h1_title", "h0_full h1_full", "h0_full", "h0_title h2_title h1_title", "h0_full", "h1_full", "h2_full", "h2_full", "h2_full", "h2_full", "h2_full", "h1_full", "" ] }

{ "question": [ "What discovery altered the dynamics of the Eastern Mediterranean region?", "What did the discovery of large natural gas fields mean for Israel?", "What gas fields have been discovered in the region?", "Why are these gas field discoveries significant for Cyprus and Egypt?", "Why is Lebanon in conflict with Israel?", "How has the Tamar find affected Israel's energy?", "Why are these natural gas-fired power plants beneficial for Israel?", "What could the discovery of gas do for Lebanon's energy infrastructure?", "Why does Israel have the potential to become a gas exporter?", "Why does Jordan require Israel's gas?", "Why is Turkey a possible destination for Israel's gas?", "How could these gas exports make it to Turkey?" ], "summary": [ "Since 2009, a series of large natural gas discoveries in the Levant Basin have altered the dynamics of the Eastern Mediterranean region.", "Israel's discovery of the Tamar Field and subsequent discovery of the larger Leviathan Field created the potential for the country to become a regional player in the natural gas market.", "Israel's discovery of the Tamar Field and subsequent discovery of the larger Leviathan Field created the potential for the country to become a regional player in the natural gas market. Since the initial Israeli discoveries, Cyprus and Egypt have also found new gas deposits in the Mediterranean. The Aphrodite Field was discovered by U.S. firm Noble Energy in Cypriot waters in late 2011 and the massive Zohr Field was found in Egyptian waters by Italian firm Eni in 2015.", "These discoveries create the potential for Cyprus to export gas and for Egypt to meet more of its domestic gas needs.", "Israeli gas discoveries have been contested by Lebanon, which disputes an area of about 300 square miles along the countries' unsettled maritime border. The Administration has sought to mediate the maritime dispute between Israel and Lebanon.", "Since the Tamar find, Israel's electricity energy mix has begun to shift from oil to natural gas-fired power plants.", "Gas-fired plants emit less carbon than oil-fired plants, and continuing to convert oil plants could help Israel meet long-term carbon emissions goals. The development of gas infrastructure in Cyprus could also help the country transition from oil to gas-fired power generation.", "Gas-fired plants emit less carbon than oil-fired plants, and continuing to convert oil plants could help Israel meet long-term carbon emissions goals. The development of gas infrastructure in Cyprus could also help the country transition from oil to gas-fired power generation. A similar shift could also occur in Lebanon should gas be discovered and related infrastructure developed. Lebanon currently uses no natural gas.", "Israel now has the potential to become a gas exporter. There are a number of potential buyers for Israeli gas. Egypt, currently facing an energy crisis, will need to import gas to cover domestic demand in the near future.", "Jordan is another possible destination for Israeli gas. Repeated attacks on Egypt's Arab Gas Pipeline have decreased Jordan's energy security and increased the need for it to find alternate, reliable sources of gas.", "Finally, recent progress on improving diplomatic relations has opened the possibility of Israeli gas exports to Turkey.", "These exports could either be shipped by the construction of a direct pipeline or by liquefied natural gas (LNG) tankers crossing the Mediterranean." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 0, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "Background", "Native American Veteran Demographics", "VA and IHS Structure and Benefits", "VA and IHS Collaboration through Memorandums of Understanding", "VA and IHS Tribal Consultation Policies", "Best Practices and Internal Control Standards for Interagency Collaboration and Performance Monitoring", "VA and IHS Have Developed Mechanisms to Implement and Monitor the MOU, but Metrics to Monitor Performance Do Not Adequately Measure Progress toward MOU Goals", "VA and IHS Have Defined Common Goals and Created Mechanisms to Implement the MOU", "Joint Implementation Task Force", "VA and IHS Performance Metrics Do Not Adequately Measure Progress on the MOU Goals", "VA and IHS Lack Effective Processes to Overcome the Challenges of Consulting with a Large Number of Diverse, Sovereign Tribes", "VA and IHS Face Challenges Implementing the MOU Related to the Large Number of Diverse, Sovereign Tribes", "VA and IHS Processes in Place to Overcome the Complexities Associated with Consulting with Tribes Do Not Always Ensure Effective Consultation", "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": [ "", "While Native American veterans are geographically dispersed throughout the United States, the West and South regions contain the majority of the Native American veteran population, according to Census data. Some Native American veterans are members of the 566 federally recognized tribes that are distinct, independent political communities that possess certain powers of self-government, which we refer to as tribal sovereignty. Specifically, federally recognized tribes have government-to-government relationships with the United States, and are eligible for certain funding and services provided by the United States. In addition, some Native American veterans are members of the more than 400 Indian groups that are not recognized by the federal government (which we refer to in this report as non–federally recognized tribes). Many—but not all—Native American veterans are dually eligible for health care services in VA and IHS. For example, a veteran who is a member of a non–federally recognized tribe may be eligible for VA health care services, but would not be eligible for IHS health care services.", "VA is charged with providing health care services to the nation’s veterans, and estimates that it will serve 6.3 million patients in fiscal year 2013. VA’s fiscal year 2012 budget for medical care was approximately $54 billion. The department provides health care services at VA-operated Veterans who facilities and through agreements with non-VA providers.served in the active military, naval or air service and who were discharged or released under conditions other than dishonorable are generally eligible for VA health care.\nIHS is charged with providing health care to the approximately 2.1 million eligible Native Americans. IHS’s fiscal year 2012 budget for medical care was approximately $3.9 billion. Similarly to VA, IHS provides health care services at IHS-operated facilities through direct care and pays for services from external providers through contract health services. In addition to IHS-operated facilities, some federally recognized tribes choose to operate their own health care facilities, which receive funding from IHS. Like their IHS-operated counterparts, tribally operated facilities provide direct care services and pay for contract health services. IHS also provides funding through grants and contracts to nonprofit urban Native American organizations through the Urban Indian Health program in order to provide health care services to Native Americans living in urban areas.", "In 2003, VA and IHS signed an MOU to facilitate collaborative efforts in serving Native American veterans eligible for health care in both systems. In 2010, the agencies developed a more detailed MOU to further these efforts. The 2010 MOU contains provisions related to several areas of collaboration, including actions related to the following: Joint contracts and purchasing agreements: Development of standard, preapproved language for inclusion of one agency into contracts and purchasing agreements developed by the other agency; and processes to share information about sharing opportunities in early planning stages.\nSharing staff: Establishment of joint credentialing and privileging, sharing specialty services, and arranging for temporary assignment of IHS Public Health Service commissioned officers to VA.\nElectronic Health Record (EHR) access: Establishment of standard mechanisms for VA providers to access records in IHS and tribally operated facilities, and vice versa, for patients receiving care in both systems.\nReimbursement: Development of payment and reimbursement policies and mechanisms to support care delivered to dually eligible Native American veterans.", "Executive Order 13175, issued on November 6, 2000, required federal agencies to establish regular and meaningful consultation and collaboration with Indian tribe officials in the development of federal policies that have tribal implications. IHS issued a tribal consultation policy in 2006 to formalize the requirement to seek consultation and participation by Indian tribes in policy development and program activities. According to the policy, IHS will consult with Indian tribes to the extent practicable and permitted by law before any action is taken that will significantly affect Indian tribes. In November 2009, a Presidential Memorandum directed federal agencies to develop plans, after consultation with Indian tribes and tribal officials, for implementing the policies and directives of Executive Order 13175. VA’s plan included development of a tribal consultation policy, which the agency released in February 2011. VA’s tribal consultation policy asserts that VA will establish meaningful consultation to develop, improve, or maintain partnerships with tribal communities. The policy states that consultation should be conducted before actions are taken but acknowledges there may not always be “sufficient time or resources to fully consult” on an issue.", "In past work we have reported on key practices to enhance and sustain interagency collaboration including agreeing on roles and responsibilities; establishing compatible policies, procedures, and other means to operate across agency boundaries; and developing mechanisms to monitor, evaluate, and report on results.\nAdditionally, our past work has identified a range of mechanisms that the federal government uses to lead and implement interagency collaboration. We found that regardless of the mechanisms used, there are key actions the government can take, including (1) having clear goals; (2) ensuring relevant participants are included in collaboration; and (3) specifying the resources—human, information, technology, physical, and financial—needed to initiate or sustain the collaboration. We have also found in past work on leading public-sector organizations and agency strategic planning that it is important to (1) define clear missions and desired outcomes; (2) use performance measures that are tangible, measurable, and clearly related to goals to gauge progress; and (3) use performance information as a basis for decision making. Finally, internal control standards emphasize the importance of effective external communications that occur with groups that can have a serious effect on programs, projects, operations, and other activities, including budgeting and financing.", "VA and IHS have documented common goals in their MOU, created 12 workgroups that are tasked with developing strategies to address the goals of the MOU, and created a Joint Implementation Task Force to coordinate tasks, develop implementation policy, and develop performance metrics and timelines—actions that are consistent with those we have found enhance and sustain agency collaboration. However, most of the performance metrics developed by VA and IHS to monitor the implementation of the MOU need to be more clearly related to the goals of the MOU in order to allow the agencies to gauge progress toward MOU goals.", "Consistent with our past work on practices that can enhance and sustain collaboration, VA and IHS have defined common goals for implementing the MOU and developed specific strategies the agencies plan to take to achieve them. Table 1 summarizes the five goals in the 2010 MOU and selected strategies for implementing them.\nVA and IHS have created two mechanisms to implement the MOU— workgroups and a Joint Implementation Task Force. We have reported that MOUs are most effective when they are regularly updated and monitored, actions that can be achieved by workgroups and task forces.\nVA and IHS created 12 workgroups tasked with responsibility for implementing and developing strategies to address the goals of the MOU, such as interoperability of health information technology; developing payment and reimbursement agreements; and sharing of care processes, programs, and services. Each workgroup includes members from VA and IHS, a step that can foster mutual trust across diverse agency cultures and facilitate frequent communication across agencies to enhance shared understanding of collaboration goals, according to our previous work on interagency collaboration. According to VA and IHS officials, most of the workgroup members volunteered to serve on the workgroups and were self-selected, and VA officials told us that they have consulted with tribes on how to increase tribal participation in the workgroups. The agencies also told us that some workgroup members were asked to participate because of their subject-matter expertise.\nGoals established by each workgroup appear to be aligned with MOU goals. Specifically, all eight of the workgroups we interviewed described goals that were consistent with the MOU goals. workgroup we interviewed and provides a crosswalk between workgroup goals and the corresponding MOU goal or strategy.\nWe did not interview 4 workgroups because they did not directly relate to our objectives: (1) Services and Benefits; (2) New Technologies; (3) Cultural Competency and Awareness; and (4) Emergency and Disaster Preparedness.", "VA and IHS created the Joint Implementation Task Force to oversee the overall implementation of the MOU. This task force comprises officials from both agencies including from the Office of the Secretary of Veterans Affairs, the IHS Chief Medical Officer, and the director of VA’s Office of Tribal Government Relations, and is scheduled to meet quarterly. It develops implementation policy and procedures for policy-related issues identified by the workgroups; creates performance metrics and timelines, evaluates progress; and compiles an annual report on progress in MOU implementation. Creating a mechanism, such as a task force, intended not only to address issues arising from potential incompatibility of standards and policies across agencies but also to monitor, evaluate, and report on MOU results, can help to facilitate collaboration, according to our previous work on interagency collaboration.", "The process developed by the Joint Implementation Task Force to monitor the implementation of the MOU includes obtaining data on three performance metrics; however, two of the three metrics do not allow the agencies to measure progress toward the MOU’s goals. Our previous work has found that successful performance metrics should be tangible and measureable, clearly aligned with specific goals, and demonstrate the degree to which desired results are achieved. Although all three of the performance metrics are tangible and measurable, only one is also clearly aligned with a specific goal and defined in a manner that would allow the agencies to adequately measure the degree to which desired results are achieved. The other two metrics are inadequate because their connection to a specific goal is not clear and they lack qualitative measures that would allow the agencies to measure the degree to which desired results are achieved. For example, one MOU goal is to increase access to and improve quality of health care services, but none of the metrics mention any targets specifically linked to increased access or improved quality of care. Another goal is to establish effective partnerships and sharing agreements among the agencies and the tribes in support of Native American veterans. Although one of the metrics appears to be related to this goal, in that it is focused on measuring the number of outreach activities that are a result of partnerships, it lacks measures to determine how well the outreach activities are meeting the goal of establishing effective partnerships or other potential goals to which the outreach may contribute, such as facilitating communication among VA, IHS, veterans, and tribally operated facilities. The metrics would therefore not enable VA and IHS to determine how well these specific goals are being achieved. Table 3 describes the performance metrics and performance measures and our evaluation of them.\nUsing these metrics, the agencies have issued MOU progress reports, but the metrics included in the reports generally are not clearly tied specifically to the goals of the MOU, nor do they allow the agencies to determine how well MOU goals have been achieved. Leading public- sector organizations have found that metrics that are clearly linked to goals and allow determination of how well goals are achieved are key steps to becoming more results-oriented. For example:\nAccording to the agencies’ fiscal year 2011-2012 metrics report,Metric 1 (programs increased or enhanced as a result of the MOU), more than 15 programs were enhanced or increased as the result of the MOU, and 440 events and activities occurred that increased or enhanced the programs. The report then provides examples of programs that have been enhanced, such as a care coordination program in which a registered nurse “works with Indian Health, Tribal Programs, and other agencies and hospitals through direct meetings at various facilities to ensure communication and improved care.” However, the report does not always describe information that would allow the agencies to determine how well each activity contributes to meeting MOU goals. For instance, in the description of an enhanced care coordination program noted above, the report does not indicate how the agencies determined that communication has improved among participants. Absent this information, it is not clear how the agencies could draw conclusions about whether improved communication has actually been facilitated and therefore how well the activity contributed to meeting the MOU goal of promoting patient- centered collaboration and facilitating communication.\nAccording to the metrics report, for Metric 2 (outreach activities increased or enhanced as a result of MOU partnerships), eight types of activities were increased or enhanced. However, the report lists only seven types of outreach and does not include enough information to determine how well the outreach contributes to meeting MOU goals. For example, one outreach activity cited in the report, “Outreach to promote implementation of new technologies,” includes the activity “VA Office of Telehealth Services (OTS) Coordinator participated in Web-ex sessions with IHS on use of technology to improve patient care.” Although not stated in the report, this activity appears to help implement the MOU strategy of enhancing access through the development and implementation of new models of care using new technologies, including telehealth, related to the MOU goals of promoting patient-centered care and increasing access to care. However, while outreach activities are measurable and tangible, and might help to achieve goals of the MOU, the report does not state how the agencies will determine whether the sessions actually were effective in improving patient care or increasing access, information that is necessary to allow the agencies to tell how well the activity helps achieve the MOU goals.\nFor each metric, the agencies report whether the activities “met the purpose of the MOU,” “met the intent of the MOU,” and whether the “level of VA-IHS-Tribal participation” was poor, fair, good, or excellent. While determining whether the agencies’ activities meet the purpose and intent of the MOU is a critical step, and obtaining tribal participation is consistent with MOU goals, the report does not describe how these determinations were made. Agency officials told us that these determinations were made subjectively by each workgroup while keeping in mind the goals and strategies in the MOU.\nThe weaknesses we found in these performance metrics could limit the ability of VA and IHS managers to gauge progress and make decisions about whether to expand or modify programs or activities, because the agencies will not have information on how well programs are supporting MOU goals. VA and IHS officials told us that they developed these performance metrics because the initial performance metrics, drafted by the workgroups themselves and other VA and IHS staff, varied in quality. The three metrics and measures were intended to provide some simple, measurable ways for workgroups to report on their progress. However, they also acknowledged that there were weaknesses in the measures and told us that refining these performance metrics is a priority. According to the officials, they plan to revise workgroup metrics by April 2013 and on a continuous basis going forward. In doing so, they plan to consult subject-matter experts and existing VA and IHS performance metrics, for example, prevention of hospital admissions in home-based primary care programs.", "Mainly because of the large number of diverse tribal communities and tribal sovereignty, VA and IHS face unique challenges associated with coordinating and communicating to implement the MOU. VA and IHS have processes in place for consulting with tribes, but these measures fall short in several respects and do not ensure such consultation is effective.", "VA and IHS officials told us the large number (566) of federally recognized tribes and differing customs and policy-making structures present logistical challenges in widespread implementation of the MOU within tribal communities. For instance, according to some VA officials, in some tribes as a matter of protocol, an agency must be invited on tribal lands or be sponsored by a council member in order to address a tribal council. Such a policy could add administrative processes that might delay implementation and require greater sensitivity from agency officials, adding to the challenge of consulting with tribes. As another example, the title or position of the tribal person designated to make decisions regarding health care may differ from tribe to tribe, complicating the decision-making process among VA, IHS, and tribes. VA officials told us in some tribes, for example, a tribal leader may have several roles, only one of which is making decisions on health care, whereas in other tribes there may be a tribal health director whom the tribal leader has designated to manage health care in the tribal community. Potentially, these differences can affect the speed and degree at which collective decisions can be made.\nIn addition, VA and IHS officials noted that tribal sovereignty further adds to the logistical complexity of the efforts of the agencies to implement the MOU. Tribal sovereignty includes the inherent right to govern and protect the health, safety, and welfare of tribal members. Indian tribes have a legal and political government-to-government relationship with the federal government, meaning federal agencies interact with tribes as governments, not as special interest groups or individuals. VA and IHS officials told us that because of tribal sovereignty, tribally operated facilities may choose whether or not to participate in a particular opportunity for collaboration related to the MOU, which makes it challenging to achieve some of the goals of the MOU. VA and IHS can inform tribes of an opportunity but cannot require them to participate. For example: In order to meet the MOU goal to establish standard mechanisms for access to electronic health record (EHR) information for shared patients, VA and IHS have coordinated to adapt their information technology systems to allow them both to participate in the eHealth Exchange, a national effort led by the Department of Health and Human Services for sharing EHR information. However, EHR workgroup members told us that some tribally operated facilities have opted to use an off-the-shelf product in place of the IHS system, which the workgroup members do not have the resources to support.\nIn another instance, as a part of their efforts to meet the MOU goal to establish effective partnerships and sharing agreements, VA and IHS are working to implement VA’s Consolidated Mail Outpatient Pharmacy (CMOP) throughout IHS. Workgroup members assigned to these activities said they plan to implement the program in all IHS- operated facilities by spring 2013 but cannot require tribally operated facilities to participate. Some smaller tribal communities with more limited postal access are not interested in using the CMOP program, according to the workgroup members.", "VA and IHS communicate MOU-related information with the tribes through written correspondence, in-person meetings, and other steps, as is consistent with internal controls calling for effective external communications with groups that can have a serious effect on programs and other activities; however, according to tribal stakeholders we interviewed, these methods for consultation have not always met the needs of the tribal communities, and the agencies have acknowledged that effective consultation has been challenging.\nVA and IHS send written correspondence (known as “Dear Tribal Leader” letters) regarding the MOU to tribal communities. However, the agencies have acknowledged that because of the large and diverse nature of the tribes, they have struggled to reach the tribal member designated to make health care decisions with information about the MOU. Both VA officials and members of tribal communities told us that, because tribal leaders are not always the tribal person designated to make decisions regarding health care, the “Dear Tribal Leader” letters may not always make their way to tribal members designated to take action on health care matters. VA officials told us that their formal consultation is conducted with tribal leaders. However, these officials also noted that, in addition to the letters sent to tribal leaders, they have a network of contacts within each tribe that includes, among others, tribal health directors, and this network receives concurrent notice of communication with tribal leaders via conference calls, listservs, and newsletters. IHS officials said sometimes, in addition to the tribal leader, they may also send letters to, or otherwise communicate directly with, tribal health program directors if they know of them. However, they also noted they do not maintain a specific record— such as a listserv—of tribal health program directors. Without reaching the tribal members responsible for decision-making on healthcare matters, VA and IHS may not always be effectively communicating with tribes about the status of the MOU and its related activities nor be obtaining tribal feedback that is critical with respect to implementation of the MOU.\nLikewise, seven tribal stakeholders we spoke with noted similar concerns regarding the “Dear Tribal Leader” letters as VA and IHS. For example, one tribal stakeholder said letters should go to a specific person, such as a tribal health director, to ensure that the information is seen by the right people in a timely manner. It may take the tribes time to pass along letters sent only to tribal leaders to the tribal health director or other appropriate people, by which point any deadlines included in the correspondence could be missed. Once the information has reached the tribal leader, tribes bear the responsibility to ensure it is passed on to the appropriate audience in a timely manner.\nAnother specific concern tribal stakeholders that we spoke with expressed relating to written correspondence was that the agencies sometimes use the letters to simply inform them of steps the agencies have taken without consulting the tribes, as called for by the agencies’ tribal consultation policies. For example, some tribal stakeholders said VA and IHS did not include them in the original development of the 2010 MOU, even though the goals and activities in the MOU could directly affect them. According to 10 of the tribal stakeholders we spoke with, tribes should have been included in developing the MOU, which addresses proposed plans, policies, and programmatic actions that may affect tribes. For example, the MOU seeks to improve delivery of health care by developing and implementing new models of care using new technologies, including telehealth services such as telepsychiatry. Instead, the agencies solicited tribal comments after the agencies had signed the MOU. According to two tribal stakeholders, the agencies were not responsive to the comments provided on the MOU. One stakeholder said their comments were not acknowledged upon receipt nor did IHS ever follow up on the issues raised by their comments. The stakeholder suggested IHS designate a point person to track feedback and ensure follow-up. VA and IHS officials told us that they did not hold tribal consultation meetings before the signing of the MOU because they viewed the MOU as an agency-to-agency agreement rather than as an agreement between the agencies and the various tribes.\nVA and IHS officials said they hold quarterly meetings with tribal communities and also attend events, such as conferences held by Native American interest organizations. Three tribal stakeholders told us that when the agencies have held consultation meetings, the meetings are not interactive enough—stating that agency officials speak for the majority of the time—and that VA does not provide enough information prior to these meetings. These tribal stakeholders said providing information ahead of time could allow tribes to better prepare for meetings, discuss issues as a tribe beforehand, and determine which tribal members should attend. If tribal officials with the authority and desire to work with VA and IHS do not receive needed information on opportunities because of an ineffective consultation process, local facility leadership may not have readily available access to information necessary to examine which collaborative opportunities are present, and thus VA and IHS may be hindered in their efforts to coordinate health care for Native American veterans.\nVA and IHS are undertaking other efforts designed to enhance consultation with tribes. These include the following steps: In January 2011, VA established the Office of Tribal Government Relations (OTGR) to serve as the point of contact for tribes. According to VA officials, this office conducted four consultation meetings in 2012 and employed five field staff to help manage communication with tribal communities and to work with IHS on local MOU implementation efforts.\nIn February 2011, VA released the agency’s tribal consultation policy. VA officials said they are developing a report that will explain the process for evaluating comments from tribes and making decisions based on them. The officials expect the report to be released to the public in the spring of 2013.\nThe agencies have made more local efforts to communicate with tribes, which have led to some success. For example, agency officials and tribal stakeholders noted that the workgroup assigned to implement MOU activities in Alaska used successful methods for working with tribes. The Alaska workgroup told us they cultivated a relationship with an Alaskan tribal health organization in order to get advice on the appropriate customs for consulting with individual tribes there. In addition, the workgroup said they scheduled consultation meetings in conjunction with other meetings, which would limit the amount of travel tribal community members would need to undertake. VA employees also took cultural awareness training, and VA officials visited Alaska to demonstrate the agency’s dedication to providing care to Native American veterans, which, according to the workgroup, led to buy-in from tribal communities. VA and Alaskan tribes have signed 26 reimbursement agreements.\nSome tribal stakeholders that we spoke with have acknowledged the steps taken by the agencies thus far as positive but in some cases expressed concerns regarding tribal consultation. In the case of the tribes working with the Alaska workgroup, one stakeholder praised VA’s efforts to work with tribal health organizations to communicate with tribes. In another example, two tribal stakeholders said they approved of OTGR’s establishment as an office dedicated to Native American veterans’ issues. However, four tribal stakeholders expressed concerns that, despite the creation of OTGR, VA still has not always been effective in its efforts to consult with tribes or be responsive to tribal input provided during consultation. For example, one stakeholder questioned whether consultation was done with every tribe and described VA’s consultation process as sporadic. This stakeholder’s concern implies that VA’s outreach efforts may not be systematically reaching all tribal communities. However, VA officials told us that, in addition to issuing notices in the Federal Register and Dear Tribal Leader letters, they have a systematic process of hosting training summits for tribes and scheduling regular conference calls and presentations to tribal leadership. In another instance, one tribal community member said OTGR lacks—and thus cannot disperse to tribes—the technical knowledge necessary for tribes to partner with VA on activities such as negotiating reimbursement agreements. VA officials noted that OTGR staff may not always be technical experts on a given topic but said they are able to identify those experts and play a key role in linking tribes with them.", "Coordination between VA and IHS is essential to ensuring that high- quality health care is provided to dually eligible Native American veterans. While the 2010 MOU includes common goals that should facilitate agency coordination, and the agencies have created workgroups tasked to implement the MOU, we found that a critical mechanism for monitoring the implementation of the MOU, the agreement’s performance metrics, has weaknesses. Specifically, the inadequacies we found in performance metrics could limit the agencies’ ability to measure progress towards MOU goals and ultimately make decisions about programs or activities.\nOvercoming the challenges related to working with a large number of diverse, sovereign tribes is also essential to successfully achieving the goals of the MOU. Although steps have been taken to consult with tribes regarding the MOU and related activities, consultation has not always been effective in assuring that the people designated to make health care decisions in each tribe are reached and tribes are included in planning and implementation efforts. Ineffective consultation with tribal communities could delay or limit potential VA, IHS, and tribal community partnerships to achieve the goals of the MOU and could hinder agency efforts to gain support for MOU activities and address the health care needs of Native American veterans.", "To ensure the health care needs of Native American veterans are addressed most efficiently and effectively, we recommend that the Secretary of Veterans Affairs and Secretary of Health and Human Services take the following two actions:\nAs the agencies move forward with revising the MOU’s performance metrics and measures, ensure that the revised metrics and measures allow decision makers to gauge whether achievement of the metrics and measures supports attainment of MOU goals.\nDevelop processes to better ensure that consultation with tribes is effective, including the following:\nA process to identify the appropriate tribal members with whom to communicate MOU-related information, which should include methods for keeping such identification up-to-date.\nA process to clearly outline and communicate to tribal communities the agencies’ response to tribal input, including any changes in policies and programs or other effects that result from incorporating tribal input.\nA process to establish timelines for releasing information to tribal communities to ensure they have enough time to review and provide input or, in the case of meetings, determine the appropriate tribal member to attend the event.", "We provided draft copies of this report to VA and the Department of Health and Human Services for review. Both agencies concurred with our recommendations. In addition, VA provided us with comments on the draft report, which we have reprinted in appendix I, as well as general and technical comments, which were incorporated in the draft as appropriate.\nWe are sending copies of this report to appropriate congressional committees; the Secretary of Veterans Affairs; the Secretary of Health and Human Services; and other interested parties. In addition, the report is available at no charge on the GAO Web site at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or williamsonr@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, Gerardine Brennan, Assistant Director; Jennie Apter; Lori Fritz; Hannah Marston Minter; and Lisa Motley made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 3, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "", "h2_full", "h2_full", "", "", "h0_full h3_full", "h0_full", "", "h0_full", "h3_title h1_full", "h1_full", "h3_full h1_full", "h0_full h1_full", "h2_full", "", "", "", "", "" ] }

{ "question": [ "What steps have VA and IHS taken to address the goals of the MOU?", "What are the shortcomings of the VA and IHS mechanisms to implement their MOU?", "How have the VA and IHS measured their progress toward the MOU's goals?", "To what extent have these metrics been effective?", "What are the potential risks of using inadequate metrics?", "Why do VA and IHS face challenges in consulting with tribes to implement the MOU?", "Why does the nature of tribal governance cause particular complexity?", "How do VA and IHS consult with tribes on MOU-related activities?", "To what extent are these processes effective?", "What are some examples of ineffective communication, according to tribal stakeholders?", "What are some steps that VA and IHS have taken to address these concerns?", "What populations are eligible for healthcare services from both VA and IHS?", "What was the purpose of the MOU for VA and IHS?", "What was GAO's role in this review process?", "What does this report examine?", "How did GAO conduct this work?", "What role did tribal stakeholders play in the report?" ], "summary": [ "VA and IHS have defined common goals for implementing the MOU and developed strategies to achieve them. They have also created two mechanisms to implement the MOU--12 workgroups with members from both agencies to address the goals of the MOU, and a Joint Implementation Task Force, comprised of VA and IHS officials, to oversee the MOU's implementation.", "The Department of Veterans Affairs (VA) and the Indian Health Service (IHS) have developed mechanisms to implement and monitor their memorandum of understanding (MOU); however, the performance metrics developed to assess its implementation do not adequately measure progress made toward its goals. These steps are consistent with practices that GAO has found enhance and sustain agency collaboration.", "The agencies have also developed three metrics aimed at measuring progress toward the MOU's goals.", "However, two of the three metrics are inadequate because their connection to any specific MOU goal is not clear and, while they include quantitative measures that tally the number of programs and activities increased or enhanced as a result of the MOU, they lack qualitative measures that would allow the agencies to assess the degree to which the desired results are achieved.", "The weaknesses in these metrics could limit the ability of VA and IHS managers to gauge progress and make decisions about whether to expand or modify their programs and activities.", "VA and IHS face unique challenges associated with consulting with a large number of diverse, sovereign tribes to implement the MOU, and lack fully effective processes to overcome these complexities. VA and IHS officials told us the large number (566 federally recognized tribes) and differing customs and policy-making structures present logistical challenges in widespread implementation of the MOU within tribal communities.", "They also told us that tribal sovereignty--tribes' inherent right to govern and protect the health, safety, and welfare of tribal members--adds further complexity because tribes may choose whether or not to participate in MOU-related activities.", "Consistent with internal controls, VA and IHS have processes in place to consult with tribes on MOU-related activities through written correspondence and in-person meetings.", "However, according to tribal stakeholders GAO spoke with, these processes are often ineffective and have not always met the needs of the tribes, and the agencies have acknowledged that effective consultation has been challenging.", "For example, one tribal community expressed concern that agency correspondence is not always timely because it is sent to tribal leaders who are sometimes not the tribal members designated to take action on health care matters. Similarly, some tribal stakeholders told GAO that the agencies have not been responsive to tribal input and that sometimes they simply inform tribes of steps they have taken without consulting them.", "VA and IHS have taken steps to improve consultation with tribes. For example, VA has established an Office of Tribal Government Relations, through which it is developing relationships with tribal leaders and other tribal stakeholders. Additionally, in Alaska, VA has been consulting with a tribal health organization for insight on reaching tribes. However, given the concerns raised by the tribal stakeholders GAO spoke with, further efforts may be needed to enhance tribal consultation to implement and achieve the goals of the MOU.", "Native Americans who have served in the military may be eligible for health care services from both VA and IHS.", "To enhance health care access and the quality of care provided to Native American veterans, in 2010, these two agencies renewed and revised an MOU designed to improve their coordination and resource sharing related to serving these veterans.", "GAO was asked to examine how the agencies have implemented the MOU.", "This report examines: (1) the extent to which the agencies have established mechanisms through which the MOU can be implemented and monitored; and (2) key challenges the agencies face in implementing the MOU and the progress made in overcoming them.", "To conduct this work, GAO interviewed VA and IHS officials and reviewed agency documents and reports.", "GAO also obtained perspectives of tribal communities through attendance at two tribal conferences; interviews with tribal leaders and other tribal members, including veterans; and interviews with other stakeholders, such as health policy experts and consultants." ], "parent_pair_index": [ -1, 0, 0, 2, 3, -1, 0, -1, 2, 3, 3, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Combatant Command Responsibilities", "Combatant Command Structure", "Military Service Supporting Responsibilities", "Other Combatant Command Funding", "Resources Devoted to the Functional Combatant Commands Have Grown Considerably over the Last Decade", "Authorized Military and Civilian Positions Have Grown at the Functional Combatant Commands", "Authorized Military and Civilian Positions Have Grown at the Service Component Commands", "Trends in Contractor Full-Time Equivalents Not Identifiable Due to Data Variations across the Commands", "Costs to Support Headquarters Operations Have Grown for Combatant and Service Component Commands", "DOD’s Headquarters Reductions Do Not Include All Command Resources, Thus Affecting DOD’s Ability to Achieve Significant Cost Savings", "DOD’s Planned Reductions to Headquarters Budgets Are Based on Self- Reported and Potentially Inconsistent Data", "Some Costs and Authorized Positions Are Not Included in DOD’s Planned Headquarters Reductions", "Absent a Clear Starting Point, Savings Will Be Difficult to Track", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Headquarters Locations of the Functional Combatant Commands, Their Subordinate Unified Commands, and Their Service Component Commands", "Appendix III: Resources at U.S. Special Operations Command and Its Service Component Commands (Part 1 of 6)", "SOCOM’s Authorized Military and Civilian Positions, Fiscal Years 2004 through 2013", "SOCOM’s Number of Authorized Military and Civilian Positions, Fiscal Years 2004 through 2013", "SOCOM’s Service Component Commands’ Authorized Military and Civilian Positions, Fiscal Years 2002 through 2013", "SOCOM’s Service Component Commands’ Authorized Military and Civilian Positions, Fiscal Year 2013", "Fiscal Year 2013 Authorized Military and Civilian Positions by Directorate, Subordinate Command, and Component Command U.S. Special Operations Command Headquarters Directorates", "Subordinate Unified Command Total Direct Reporting Units", "U.S. Special Operations Command Grand Total", "Fiscal Year 2013 Authorized Military and Civilian Positions by Directorate, Subordinate Command, and Component Command Service Component Commands", "Service Component Command Grand Total", "Appendix IV: Resources at U.S. Strategic Command and Its Service Component Commands (Part 1 of 6)", "STRATCOM’s Authorized Military and Civilian Positions, Fiscal Years 2001 through 2013", "STRATCOM’s Number of Authorized Military and Civilian Positions, Fiscal Years 2001 through 2013", "STRATCOM’s Service Component Commands’ Authorized Military and Civilian Positions, Fiscal Years 2002 through 2013", "STRATCOM’s Service Component Commands’ Authorized Military and Civilian Positions, Fiscal Year 2013", "Fiscal Year 2013 Authorized Military and Civilian Positions by Directorate, Subordinate Command, and Component Command U.S. Strategic Command Headquarters Directorates", "Headquarters Directorates Total Subunified Command", "U.S. Strategic Command Grand Total", "Fiscal Year 2013 Authorized Military and Civilian Positions by Directorate, Subordinate Command, and Component Command Service Component Commands", "Service Component Command Grand Total", "Appendix V: Resources at U.S. Transportation Command and Its Service Component Commands (Part 1 of 4)", "TRANSCOM’s Authorized Military and Civilian Positions, Fiscal Years 2001 through 2013", "TRANSCOM’s Number of Authorized Military and Civilian Positions, Fiscal Years 2001 through 2013", "TRANSCOM’s Service Component Commands’ Authorized Military and Civilian Positions, Fiscal Years 2002 through 2013", "TRANSCOM’s Service Component Commands’ Authorized Military and Civilian Positions, Fiscal Year 2013", "Fiscal Year 2013 Authorized Military and Civilian Positions by Directorate, Subordinate Command, and Component Command U.S. Transportation Command Headquarters Directorates", "U.S. Transportation Command Grand Total Service Component Commands", "Service Component Commands Grand Total", "Appendix VII: Functional Combatant Command Organizational Structure Descriptions", "Appendix VIII: Comments from the Department of Defense", "Appendix IX: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "DOD’s Unified Command Plan sets forth basic guidance to all combatant commanders and establishes the missions, responsibilities, and areas of geographic responsibility among all the combatant commands. There are currently nine combatant commands—six geographic and three functional. The six geographic combatant commands have responsibilities for accomplishing military operations in defined areas of operation and have a distinct regional military focus. The three functional combatant commands operate worldwide across geographic boundaries and provide unique capabilities to the geographic combatant commands and the military services. In addition, each combatant command is supported by multiple service component commands that help provide and coordinate service-specific forces, such as units, detachments, organizations, and installations, to help fulfill the combatant commands’ current and future operational requirements. Figure 1 is a map of the headquarters locations of the functional combatant commands, to include their subordinate unified commands and their respective service component commands.", "Unless otherwise directed by the President or the Secretary of Defense, the combatant commanders organize the structure of their commands as they deem necessary to carry out assigned missions. The commands’ structure may include a principal staff officer; personal staff to the commander; a special staff group for technical, administrative, or tactical advice; and other staff groups that are responsible for managing personnel, ensuring the availability of intelligence, directing operations, coordinating logistics, preparing long-range or future plans, and integrating communications systems. The commands may also have liaisons or representatives from other DOD agencies and U.S. government organizations integrated into their staffs to help enhance the commands’ effectiveness in accomplishing their missions. While the commands generally conform to these organizational principles, there may be variations in a command’s structure based on its unique mission areas and responsibilities.\nJoint Publication 1, Doctrine for the Armed Forces of the United States. permanent authorized positions for military, civilian, and other personnel responsible for managing the day-to-day operations of the command.", "Title 10 of the U.S. Code assigns the Secretaries of the military departments responsibility for a variety of tasks specific to their respective forces, to include organizing, equipping, and training tasks. In addition to these service-specific tasks, Title 10 of the U.S. Code also assigns the Secretaries of the military departments responsibility for assisting the combatant commands, to include responsibility for assigning all forces under their jurisdiction to the combatant commands to perform missions assigned to those commands and responsibility for carrying out functions to fulfill current and future operational requirements of the combatant commands.\nIn addition to service-specific tasks, DOD Directive 5100.03, Support of the Headquarters of Combatant and Subordinate Unified Commands, states that the military departments—as combatant command support agents—are responsible for programming, budgeting, and funding the administrative and logistical support of the headquarters of the combatant commands and subordinate unified commands. On an annual basis, each of the three military departments assess needs and develop a request for funding as part of their respective operation and maintenance budget justification to meet this requirement to support the combatant commands and subordinate unified commands. The directive assigns each military department responsibility for specific combatant commands and subordinate unified commands. As the combatant command support agent for the three functional combatant commands, the Air Force is responsible for allocating funding to combatant commands’ mission As areas, including the costs for civilian salaries, awards, and travel.such, the operating costs of these commands are generally subsumed within the Air Force’s budget and funded through operation and maintenance appropriations. Table 1 provides a listing of the functional combatant commands, their subordinate unified commands, and the military departments that support them.", "Some of the functional combatant commands also receive funding through appropriations other than operation and maintenance. Specifically, Title 10 of the U.S. Code gives the Commander, Special Operations Command, the authority to prepare and submit to the Secretary of Defense program recommendations and budget proposals for special operations forces and for other forces assigned to SOCOM through a separate major force program category. In addition, funding for TRANSCOM’s costs to support headquarters operations comes primarily from the Air Force’s Transportation Working Capital Fund, which is part of the Air Force Working Capital Fund. Unlike the other combatant commands, TRANSCOM is operated in a fee-for-service manner and charges its customers for transportation services. TRANSCOM and its service component commands bill the customers for services rendered, customers transfer funds into the Transportation Working Capital Fund to pay the bill, and TRANSCOM and its service component commands receive payment from the Transportation Working Capital Fund. Officials noted that one component of these transportation costs is overhead, to include pay for civilian personnel, material and supplies, equipment, travel, and facility operations.", "", "Our analysis shows that the functional combatant commands’ number of authorized positions has substantially increased since fiscal year 2004 primarily due to added missions and responsibilities. Taken together, the authorized number of military and civilian positions for the three functional combatant commands almost doubled from 5,731 in fiscal year 2004 to 10,515 in fiscal year 2013.\nAll three functional combatant commands’ number of authorized positions grew. SOCOM’s authorized military and civilian positions more than doubled from 1,885 in fiscal year 2004 to 4,093 in fiscal year 2013. According to SOCOM officials, an increase in authorized positions at the Special Operations Research, Development, and Acquisition Center and the Joint Special Operations Command contributed to the growth at the command. TRANSCOM’s number of authorized military and civilian positions more than doubled from 863 in fiscal year 2004 to 1,956 in fiscal year 2013. According to TRANSCOM officials, the realignment of the Defense Courier Service from Air Mobility Command to TRANSCOM and the Joint Enabling Capabilities Command from the Joint Staff to TRANSCOM were the primary contributors to the increase in authorized positions at the command. STRATCOM’s authorized military and civilian positions increased by 50 percent from 2,983 in fiscal year 2004 to 4,466 in fiscal year 2013. During this period, the creation of new organizations at STRATCOM to fill additional mission requirements, including Joint Functional Component Commands (Integrated Missile Defense; Intelligence, Surveillance, and Reconnaissance; Global Strike; and Space), two Centers (U.S. Strategic Command Center for Combating Weapons of Mass Destruction and the Joint Warfare Analysis Center), and a subordinate unified command (United States Cyber Command), were the primary contributors to the increase in authorized positions at the command. Figure 2 shows the number of authorized military and civilian positions at the functional combatant commands.\nAs with our findings in our May 2013 report on the geographic combatant commands, we found that, over time, the functional combatant commands have become more reliant on civilian personnel to meet their mission needs.civilian positions at the functional combatant commands almost tripled— from about 1,900 in fiscal year 2004 to about 5,200 in fiscal year 2013. According to DOD officials, the increase in authorized civilian positions is the result of attempts to rebalance workload and become a cost-efficient workforce, namely by converting positions filled by military personnel or in-sourcing services performed by contractors to civilian positions, and adding civilians in specific functional areas, such as intelligence and Specifically, we found that the number of authorized cyber, to support warfighter needs.authorized civilian positions at the functional combatant commands increased from about one-third of authorized positions in 2001 to about half in 2013. However, the functional combatant commands also increased the number of military personnel to support the headquarters. This is reflected in our analysis, which shows that from fiscal years 2004 through 2013 the number of authorized military positions also increased, by about 40 percent, from 3,850 to more than 5,300. Figure 3 shows changes in the functional combatant commands’ number of authorized military and civilian positions from fiscal years 2004 through 2013.", "Our analysis of data provided by the service component commands of the functional combatant commands showed that the service component command positions also increased, although not as much as in the functional combatant commands that they support. Specifically, total authorized military and civilian positions for the service component commands increased from about 6,675 in fiscal year 2002 to about 7,815 in fiscal year 2013. Changes in the authorized military and civilian positions at STRATCOM’s and SOCOM’s service component commands, as well as the establishment of new commands, drove the overall increase in total authorized positions, while the service component commands supporting TRANSCOM reduced their total authorized positions over the period. Among the military services, the Air Force’s service component commands saw the greatest increase in authorized positions, accounting for more than two thirds of the total increase in authorized military and civilian positions. This increase is primarily attributable to the establishment of Air Force Global Strike Command—a service component command to STRATCOM—which was activated in fiscal year 2009 to develop and provide combat-ready forces for nuclear deterrence and global strike operations, and is responsible for the nation’s intercontinental ballistic missile wings. The creation of Air Force Global Strike Command added over 330 additional military positions in fiscal year 2010. Figure 4 shows the increase in authorized positions at the service component commands that we reviewed.\nWe found that the service component commands’ authorized military and civilian mix has changed slightly since fiscal year 2002. In fiscal year 2002 the mix was 55 percent civilian and 45 percent military, and in fiscal year 2013 the mix was about 60 percent civilian and 40 percent military.", "The availability of data on contractor full-time equivalents varied across the combatant commands, and thus trends in full-time equivalents were DOD officials stated the department generally tracks not identifiable.and reports expenditures for contract services, and that the combatant commands were not required to maintain historical data on the number of contractor personnel. As a result, we found that the combatant commands had taken varied steps to collect data on contractor full-time equivalents. We also found that the data on the number of personnel performing contract services at the service component commands varied or were unavailable, and thus trends could not be identified. We found that some service component commands do not maintain data on the number of personnel performing contract services, and others used different methods to track these personnel, for instance counting the number of contractors on hand or the number of identification badges issued.\nIn recent years, Congress has enacted legislation to help improve DOD’s ability to manage its acquisition of services; to make more strategic decisions about the right workforce mix of military, civilian, and contractor personnel; and to better align resource needs through the budget process to achieve that mix. For example, Section 2330a of Title 10 of the U.S. Code requires DOD to annually compile and review an inventory of activities performed by contractors pursuant to contracts for services. Moreover, our work over the past decade on DOD’s contracting activities has noted the need for DOD to obtain better data on its contracted services and personnel to enable it to make more-informed management decisions, ensure department-wide goals and objectives are achieved, and have the resources to achieve desired outcomes. In response to our past work, DOD has outlined its approach to document contractor full- time equivalents and collect personnel data from contractors in DOD’s inventory of contract services. However, DOD does not expect to fully collect contractor personnel data until fiscal year 2016.\nSecretary of Defense, Combatant Command (COCOM) Civilian and Contractor Manpower Management. for these services in the fiscal year 2010 President’s Budget Request. Furthermore, the National Defense Authorization Act for Fiscal Year 2014 extends these limits into fiscal year 2014.", "Total costs to support headquarters operations at the three functional combatant commands we reviewed increased substantially from fiscal years 2001 to 2013. Our analysis of data provided by the commands shows that the costs to support headquarters operations—including costs for civilian pay, contract services, travel, and equipment —increased more than fourfold in constant fiscal year 2013 dollars, from about $296 million in fiscal year 2001 to more than $1.236 billion in fiscal year 2013. A primary driver for the growth in costs has been the increase in SOCOM’s costs to support headquarters operations, which increased more than sixfold, from about $75 million in fiscal year 2001 to almost $467 million in fiscal year 2013. Costs increased across SOCOM headquarters and subordinate organizations, to include the Special Operations Research, Development and Acquisition Center, the theater special operations commands, and the Joint Special Operations Also, STRATCOM’s costs to support headquarters Command.operations almost quadrupled, from about $164 million in fiscal year 2001 to almost $624 million in fiscal year 2013. This increase in STRATCOM’s costs was largely driven by the costs to establish and operate several new subordinate organizations—Joint Functional Component Commands and U.S. Cyber Command—which reflect new missions and responsibilities assigned to STRATCOM over time. TRANSCOM’s costs to support headquarters operations more than doubled, from about $56 million in fiscal year 2001 to $145 million in fiscal year 2013. Growth in civilian pay and purchased services and equipment drove the increases in TRANSCOM’s costs to support headquarters operations. In addition, the transfer of the Joint Enabling Capabilities Command from the Joint Staff in fiscal year 2012 added tens of millions of dollars to TRANSCOM’s headquarters support costs. Figure 5 shows the overall change in the costs to support headquarters operations at the three functional combatant commands that we reviewed for fiscal years 2001 and 2013.\nTotal costs in constant fiscal year 2013 dollars to support headquarters operations increased slightly at the service component commands we reviewed, from about $614 million in fiscal year 2008 to about $657 million in fiscal year 2013.component commands saw the greatest increase in costs to support headquarters operations, primarily due to the establishment of Air Force Global Strike Command, which first reported costs in fiscal year 2010. Air Force costs were also driven by growth in costs for civilian pay associated with Air Force Space Command. In addition, SOCOM’s service component commands also experienced cost increases from fiscal years 2008 through 2013, primarily due to increases in costs for civilian pay. Conversely, TRANSCOM’s service component commands reduced their costs to support headquarters operations over the time period. Figure 6 shows the changes in the costs to support headquarters operations at the service component commands that we reviewed for fiscal years 2008 and 2013.", "In 2013, the Secretary of Defense set a target for reducing management headquarters budgets by 20 percent, but we found that DOD did not have an accurate accounting of the budgets and personnel associated with management headquarters to use as a starting point for reductions. Our work also found that management headquarters include about a quarter of the personnel at the commands—of the 10,500 authorized positions at the functional combatant commands, about 2,500 are considered to be management headquarters. As a result, about three-quarters of the authorized positions at the commands in our review are not included in the potential reductions. Moreover, without a clear and consistently applied starting point for reductions, it will be difficult for DOD to reliably track savings to management headquarters in the future.", "DOD relied on self-reported and potentially inconsistent data when implementing the Secretary of Defense’s planned headquarters reductions. In July 2013, the Deputy Secretary of Defense announced in a memorandum that the Secretary of Defense had directed reductions to DOD headquarters, to include the functional combatant commands, in an effort to streamline DOD’s management and eliminate lower-priority activities. The memorandum directed a 20 percent reduction to DOD components’ total management headquarters budgets for fiscal years 2014 through 2019, including costs for civilian personnel, contract services, facilities, information technology, and other costs that support headquarters functions. As outlined in budget documents, the targeted savings goal of 20 percent of headquarters operating budgets is to be realized by fiscal year 2019, with incremental savings each year beginning fiscal year 2015. DOD budget documents project the reductions will yield a total savings of about $5.3 billion over the period, with most savings coming in 2019.\nDOD began efforts to initiate reductions to headquarters during the development of the fiscal year 2015 President’s Budget. According to DOD officials, the department used the end of the 5-year defense plan within the fiscal year 2014 President’s Budget, or fiscal year 2018, as a point to base the targeted savings goal of 20 percent of headquarters budgets through fiscal year 2019, with costs adjusted for inflation. Officials told us that the parameters for these savings were established so the department could achieve already-planned savings from prior efficiencies. DOD officials noted that the Secretary of Defense provided general guidance as to what should be considered management headquarters for the commands to use when identifying their total headquarters budgets and directed commands to include only operation and maintenance funding. Because the department does not have complete and reliable information on the resources being devoted to management headquarters, officials noted that each individual component was asked to identify and self-report its management headquarters operating budget from which reductions would be based. DOD officials further noted that after the individual components determined what they considered their management headquarters budgets to be, officials from DOD’s Office of Cost Assessment and Program Evaluation reviewed the documentation to ensure it was reflective of the intent of the reductions.\nDOD focused its reductions on management headquarters, or major DOD headquarters activities, because, according to officials, doing so would ensure that the department saved as much money as possible for the warfighting elements. However, by relying on DOD components to self- report their total management headquarters budgets, DOD cannot ensure these self-reported budgets were captured consistently or reflect total headquarters costs among the commands. DOD officials reported that each of the combatant commands developed different approaches for identifying the population of resources on which to base reductions. Ultimately, officials determined that reductions would be based only on operation and maintenance funds.\nWe also found that the underlying data are often tracked in an inconsistent manner. During the course of our review, we found that the functional combatant commands and service component commands had different ways of capturing total costs to support headquarters operations. All of the commands included costs for categories like civilian compensation, and travel and transportation expenses. However, some commands included categories such as software for command-specific systems as well as command-specific equipment. Based on discussions with DOD officials, it is unclear whether the commands were consistent in their approaches for identifying and self-reporting the information they provided.", "Our analysis shows that not all costs and authorized positions are included in DOD’s planned headquarters reductions and that all of the functional combatant commands exclude most of their authorized staffs from management headquarters totals. While the trends we described earlier in this report include the entire commands, we gathered information directly from the commands to determine how much of their organizations they considered management headquarters. We found that less than a quarter of their personnel are designated as management headquarters. This designation is critical because the Deputy Secretary of Defense’s July 2013 memorandum directed a 20 percent reduction to DOD components’ total management headquarters budgets for fiscal years 2014 through 2019, including costs for civilian personnel, contract services, facilities, information technology, and other costs that support headquarters functions. In addition, the memorandum noted that organizations should strive for a goal of 20 percent reductions in authorized government civilian staff at the headquarters as well as a goal of 20 percent reductions in military personnel billets on management headquarters staffs.\nOn the basis of our analysis of data on authorized positions at the functional combatant commands and their service component commands, we found that the commands designate less than a quarter of the total authorized positions as part of their management headquarters functions. Specifically, about 2,500 of about 10,500 total authorized positions are accounted for in the functional commands’ management headquarters position totals. As a result, a 20 percent reduction to management headquarters could result in a relatively small cut to the total number of positions at the three functional combatant commands. Specifically, as figure 7 shows, a 20 percent reduction to management headquarters positions means that, combined, the functional combatant commands would have to eliminate about 500 positions, or less than 5 percent of the overall authorized positions at the commands.\nCompared to the functional combatant commands, the service component commands have a larger percentage of authorized positions included in their management headquarters totals. Based on our analysis of data on authorized positions at the service component commands, about 6,000 of about 7,800 total authorized positions are accounted for in the management headquarters position totals (77 percent). As such, a 20 percent reduction to management headquarters positions means that, combined, the service component commands would have to eliminate about 1,200 positions, or about 15 percent of the overall authorized positions at the commands. This reduction is larger than the 5 percent reduction that would be required at the functional combatant commands if the reductions are based on management headquarters totals, as DOD calculated them.\nWe further analyzed data provided by the individual functional combatant commands to determine what they included in their management headquarters totals. The proportion of personnel considered to be in management headquarters positions at the three functional combatant commands ranged from 20 to 28 percent of their overall personnel based on their 2013 authorized positions. DOD officials explained that the positions that are not accounted for in management headquarters positions perform more operationally focused tasks and functions. For example, STRATCOM officials stated that positions within the command’s Joint Functional Component Commands for Global Strike; Intelligence, Surveillance, and Reconnaissance; Integrated Missile Defense; and Space are not included in the command’s management headquarters totals because the positions within these components and the missions they perform are operational in nature. Similarly, TRANSCOM officials told us that because the Joint Enabling Capabilities Command is a deployable operational command component, all authorized positions within this component are excluded from the command’s management headquarters totals. Moreover, officials at each of the functional combatant commands told us that some authorized positions within their headquarters—such as those within the intelligence and operations directorates—are not considered management headquarters positions because these positions perform operational tasks and functions.\nExamples of the positions within the individual commands that are included in management headquarters and those that are not are as follows:\nAbout 20 percent of SOCOM’s reported total authorized positions, or about 800 of 4,100 authorized positions, are included in the command’s management headquarters position totals. According to officials, positions not included in management headquarters functions include 267 authorized positions in the Special Operations Research, Development, and Acquisition Center; the entirety of the Joint Special Operations Command headquarters; and certain positions within command directorates such as intelligence and operations. For example, only 1 of the 473 authorized military and civilian positions in the intelligence directorate is included in the command’s management headquarters position totals.\nAbout 28 percent of STRATCOM’s reported total authorized positions, or about 1,200 of 4,500 total positions, are included in the command’s management headquarters position totals. According to officials, positions not counted as part of the command’s management headquarters totals include 1,544 authorized positions in the command’s Joint Functional Component Commands; 918 authorized positions at U.S. Cyber Command; and 64 authorized positions in the command’s J9 Mission Assessment and Analysis Directorate.\nAbout 24 percent of TRANSCOM’s reported total authorized positions, or about 500 of 2,000 positions, are included in the command’s management headquarters position totals. According to officials, positions that are excluded from this total include about 260 authorized positions that are part of the Defense Courier Service, among others.\nFigure 8 shows the number of authorized positions within the functional combatant commands in fiscal year 2013 included in management headquarters totals and the number not included.\nWhile the functional combatant commands have components and associated positions that are more operational in nature, we found that each of these operational components have personnel that perform management headquarters functions, such as conducting planning, budgeting, and developing policies. For example, STRATCOM officials noted that the Joint Functional Component Commands have resource- management personnel that manage the component commands’ funding, which is a headquarters function, as defined in DOD Instruction 5100.73, Major DOD Headquarters Activities. However, STRATCOM excludes these personnel from its management headquarters totals because, according to STRATCOM officials, the headquarters directorates at these component commands are relatively small and personnel rely heavily on STRATCOM for support in these functional areas. Moreover, a majority of the positions in SOCOM’s research, development, and acquisition center, which manages and supports the development, acquisition, and fielding of critical items for special operations forces, are not included in the command’s management headquarters totals even though these personnel perform headquarters-specific functions as defined in DOD Instruction 5100.73, Major DOD Headquarters Activities.", "DOD’s reduction initiatives targeted management headquarters, and the department reported a savings estimate from these reductions in its fiscal year 2015 budget submission, but because the department did not have a reliable way to determine the resources being devoted to such headquarters as a starting point, actual savings will be difficult to track. Specifically, DOD officials acknowledged the limitations of management headquarters data, stating that they did not have an operationally clear definition and good data about what constituted management headquarters, and agreed that this made it difficult to establish a starting point for reductions. However, the department does not have any plans to reevaluate the baseline on which the reductions are based, in part because it does not have an alternative source for complete and reliable data. Moreover, DOD reported in its fiscal year 2015 budget submission that reductions to management headquarters staffs will result in a savings of $5.3 billion through fiscal year 2019 in comparison to DOD’s overall expected $2.7 trillion budget over those fiscal years. The department based this total on incremental savings from reductions being realized each year from fiscal years 2015 through 2019. However, this represents a savings of about 2/10 of 1 percent. If DOD’s headquarters reductions do not have a clearly defined and consistently applied starting point on which to target savings—and reductions are only focused on what the commands have self-reported as management headquarters activities— then the department may not be able to track its savings to management headquarters or assure that reductions are achieved as intended.\nAccounting for management headquarters is a long-standing challenge for DOD that has created problems before in tracking savings. In October 1997, in the wake of the mid-1990s military drawdown, we found that total personnel and costs of defense headquarters were significantly higher than were being reported. At the time, we found that about three-fourths of subordinate organizations excluded from the management headquarters accounting were actually performing management or management support functions and that such accounting masked the true size of DOD’s headquarters organizations. In March 2012, we concluded that DOD’s data on its headquarters personnel lacked completeness and reliability necessary for use in making efficiency assessments and decisions. We recommended that the Secretary of Defense revise DOD Instruction 5100.73, Major DOD Headquarters Activities, to include all headquarters organizations; specify how contractors performing headquarters functions will be identified and included in headquarters reporting; clarify how components are to compile the information needed for headquarters-reporting requirements; and establish time frames for implementing actions to improve tracking and reporting of headquarters resources. DOD generally concurred with the findings and recommendations in that report and is taking steps to address the recommendations. For example, DOD has begun the process of updating DOD Instruction 5100.73, Major DOD Headquarters Activities, to include all major DOD headquarters activity organizations. However, the department has not yet taken actions to fully address our recommendations. In April 2003, we testified on the importance of periodically reexamining whether current programs and activities remain relevant, appropriate, and effective in an agency’s ability to deliver on its mission and noted that restructuring efforts must be focused on clear goals. Moreover, key questions that agencies should consider when evaluating organizational consolidation note that the key to any consolidation initiative is the identification of and agreement on specific goals, with the goals of the consolidation being evaluated against a realistic assessment of how the consolidation can achieve them. We further noted that any consolidation initiatives must be grounded in accurate and reliable data.\nMoreover, unless these issues are addressed, the department may be unable to convince external stakeholders, such as Congress, that its actions will address overhead in a meaningful way. Section 904 of the National Defense Authorization Act for Fiscal Year 2014 requires that DOD develop and submit a plan for streamlining management headquarters, to include the combatant commands, by June 2014.plan is to include a description of the planned changes or reductions in staffing and services and the estimated cumulative savings to be achieved from fiscal years 2015 through 2024. According to officials, DOD has not yet decided how it plans to track its management headquarters reductions and report to Congress to satisfy this statutory requirement. Without establishing a starting point for reductions that includes all headquarters personnel and resources within these commands, it is unclear how the department will provide reliable information to Congress. Moreover, since the universe of resources that DOD has identified for headquarters reductions is relatively small compared to the overall size of the functional combatant commands, unless the department reevaluates its decision to base reductions on management headquarters, it may not ultimately realize significant savings.", "As it faces a potentially extended period of fiscal constraints, DOD has concluded that reducing the resources it devotes to headquarters is a reasonable area to achieve cost savings. However, by focusing the reductions on management headquarters budgets and personnel—which tend to be inconsistently defined and often represent a small portion of the overall headquarters—in the way it has, the department is, in effect, shielding much of the resources it directs to headquarters organizations like those of the functional combatant commands. Unless the department reevaluates its decision to focus reductions on management headquarters and sets a clearly defined and consistently applied starting point from which to base budgetary and staff reductions at headquarters organizations and track them, DOD is likely to face difficulties ensuring that its actions result in significant overhead savings. As the department continues to identify efficiencies in its operations and potential reductions in overhead, accurately identifying the universe of resources that DOD dedicates to headquarters and using that as a starting point for reductions would help DOD ensure it achieves savings. Finally, managing headquarters resources is a long-standing challenge at DOD. We have previously recommended that DOD improve the accounting of management headquarters functions and develop a process to periodically revalidate the size and structure of the combatant commands.\nWe believe that these recommendations apply to the functional combatant commands in this review, and are still valid, and thus are making no new recommendations on these issues.", "In order to improve the management of DOD’s headquarters-reduction efforts, we recommend that the Secretary of Defense take the following three actions: 1. Reevaluate the decision to focus reductions on management headquarters to ensure the department’s efforts ultimately result in meaningful savings. 2. Set a clearly defined and consistently applied starting point as a baseline for the reductions. 3. Track reductions against the baselines in order to provide reliable accounting of savings and reporting to Congress.", "We provided a draft of this report to DOD for review and comment. In written comments on a draft of this report, DOD partially concurred with the first recommendation and concurred with the second and third recommendations. DOD’s comments are summarized below and reprinted in their entirety in appendix VIII.\nDOD partially concurred with the first recommendation that the Secretary of Defense reevaluate the decision to focus reductions on management headquarters to ensure the department’s efforts ultimately result in meaningful savings. DOD stated that this department-wide recommendation would garner greater savings. However, DOD officials raised concerns that the recommendation seemed to be outside the scope of the review, which focused on the functional combatant commands, and with our distinction between management headquarters and below-the-line organizations and the functions that personnel in these positions perform. We agree that the recommendation has implications beyond the functional combatant commands. While our review was focused on the functional combatant commands, the issue we identified is not limited to these commands. The findings related to the three functional combatant commands illustrate a fundamental challenge facing the department in its efforts to reduce headquarters overhead. As discussed in this report, we have previously reported on problems with the way that DOD accounts for management headquarters across the department. As part of this review, we found that DOD did not have an accurate accounting of the budgets and personnel associated with management headquarters to use as a starting point for reductions. Given the longstanding issues with accounting for management headquarters, we believe the recommendation that the Secretary reevaluate the decision to focus the department’s reduction efforts on management headquarters is appropriate.\nThe department also stated in its letter that while the Secretary of Defense’s reductions were focused on management headquarters, the military services were allowed to reduce below-the-line organizations— those not designated as management headquarters—which includes elements of the combatant commands. According to DOD, these reductions will range from 3 percent up to 15 percent depending on the military service. We recognize that the military services plan to implement reductions that may result in savings at some non-management headquarters organizations across the department. However, the department’s response did not delineate how these reductions were determined, how they were applied by the military services, or how much the actions would ultimately save the department. Further, in discussions, DOD officials raised concerns about our distinction between management headquarters and below-the-line organizations and the functions that personnel in these positions perform. As noted in the report, we understand the distinctions as defined in guidance between management headquarters and below-the-line organizations, or those not considered to be part of an organization’s management headquarters. However, our analysis focused on the extent to which the functional combatant commands reported that personnel were performing management functions, and we noted that this data was self-reported and potentially inconsistent. The intent of the recommendation was to focus on positions not included in the commands’ assessment of management headquarters positions, but in response to DOD’s concern, we modified the recommendation to clarify that the goal of ensuring cost savings was related to the assessment of personnel performing management functions versus the definition of people included in management headquarters totals.\nIn its comments, the department also questioned the use of Joint Table of Distribution data from DOD’s Electronic Joint Manpower and Personnel System versus the Future Years Defense Program data in DOD’s Defense Resources Data Warehouse for this study. We attempted to use the data warehouse as part of our prior work examining the resources devoted to the geographic combatant commands in May 2013; however, after querying the database, Joint Staff officials explained that the data it yielded were unreliable. Therefore, the officials suggested that we obtain the authorized position and costs to support headquarters operations data directly from the combatant commands and service component commands. DOD noted in its comments that the data trends may be skewed since the Joint Table of Distribution presents a point-in-time look at on-hand personnel. For this review, we focused on authorized positions as documented on the combatant command’s Joint Tables of Distribution rather than focusing on personnel on hand because data on authorized positions provided the most accurate and repeatable data to identify trends. Moreover, the Chairman of the Joint Chiefs of Staff Instruction 1001.01A, Joint Manpower and Personnel Program, notes that Joint Tables of Distribution are documented in the Joint Staff’s Electronic Joint Manpower and Personnel System which is DOD’s system of record to document the unified combatant commands’ organizational structure and track the manpower and personnel required to meet the combatant commands’ assigned missions. The instruction also states that manpower authorizations on the Joint Table of Distribution should be compared with the Future Years Defense Program and any disconnects must be resolved. Finally, in January 2012, the Vice Director of the Joint Staff issued a memo identifying its Electronic Joint Manpower and Personnel System as the authoritative data source for DOD and for congressional inquiries of joint personnel, stating that the system must accurately reflect the manpower and personnel allocated to joint organizations, such as the combatant commands, to provide senior leaders with the necessary data to support decision making in a fiscally constrained environment. Therefore, we maintain that the use of authorized military and civilian positions from the combatant command’s Joint Tables of Distribution, as documented in DOD’s Electronic Joint Manpower and Personnel System, was appropriate for our review of the resources devoted to the functional combatant commands.\nDOD concurred with the second and third recommendations that the Secretary of Defense: set a clearly defined and consistently applied starting point as a baseline for the reductions, and track reductions against the baselines in order to provide reliable accounting of savings and reporting to Congress. In its response, DOD recommended the use of the Future Years Defense Program data to set the baseline going forward and stated that it was enhancing data elements within DOD’s Resource Data Warehouse to better identify management headquarters resources to facilitate tracking and reporting across the department. We agree that enhancements to the data elements will increase DOD’s capability to track and report management headquarters resources across the department and, thus, the Future Years Defense Program data could be used to set baselines and track future reductions. These enhancements, if implemented, would address the intent of the recommendations.\nDOD also provided what it considered significant points of fact. However, we considered these were technical comments, which we incorporated as appropriate.\nWe are sending a copy of this report to the appropriate congressional committees, the Secretary of Defense, the Chairman of the Joint Chiefs of Staff, and the Secretaries of the military departments. In addition, this 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) 512-3489 or pendletonj@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 IX.", "We conducted this work in response to a mandate from the House Armed Services Committee to review the personnel and resources of the functional combatant commands. This report (1) identifies any trends in resources devoted to the functional combatant commands and their service component commands for fiscal years 2001 through 2013 to meet their assigned missions and responsibilities, and (2) evaluates the extent to which the Department of Defense’s (DOD) directed reductions to headquarters, like the functional combatant commands and supporting service component commands, could result in cost savings for the department.\nTo conduct this work and address our objectives, we identified sources of information within DOD that would provide data on the resources devoted to the functional combatant commands—U.S. Special Operations Command (SOCOM), U.S. Strategic Command (STRATCOM), and U.S. Transportation Command (TRANSCOM)—to include their subordinate unified commands and their corresponding service components commands.\nTo identify trends in the resources devoted to DOD’s functional combatant commands, including their subordinate unified commands and their service component commands, we obtained and analyzed data on available authorized military and civilian positions, and operation and maintenance obligations, from each of the commands and their corresponding service component commands from fiscal years 2001 through 2013. We focused our review on authorized positions, as these reflect the approved, funded manpower requirements at each of the functional combatant commands. To provide insight into the number of personnel assigned to each command, we obtained data on actual assigned personnel for fiscal year 2013. We also obtained and analyzed available data on contractors assigned to the commands, but based on the availability of data, we were not able to identify trends in contractors assigned to the individual commands. Our review also focused on operation and maintenance obligations—because these obligations reflect the primary costs to support headquarters operations of the combatant commands, their subordinate unified commands and other activities, and corresponding service component commands—including the costs for civilian personnel, contract services, travel, and equipment, among others. We included funds provided to TRANSCOM through the Transportation Working Capital Fund and to SOCOM through the command’s special operations–specific appropriations that provides funding for necessary special operations forces’ unique capabilities and items since these funds most appropriately reflect the primary mission and headquarters support for the commands. Our review excluded obligations of operation and maintenance funding for DOD’s overseas contingency operations not part of DOD’s base budget. Unless otherwise noted, we reported all costs in this report in constant fiscal year 2013 dollars. Since historical data were unavailable in some cases, we limited our review of the combatant commands authorized positions to fiscal years 2004 through 2013, and authorized military and civilian positions at the service component commands to fiscal years 2002 through 2013. Using available data, we provided an analysis of trends in operation and maintenance obligations at the combatant commands for fiscal years 2001 through 2013, but since historical data were unavailable in some cases for the service component commands, we limited our analysis of trends to fiscal years 2008 through 2013. We obtained data on actual assigned personnel for fiscal year 2013. To assess the reliability of the data, we interviewed DOD officials and analyzed relevant manpower and financial-management documentation to ensure that the authorized positions and data on operation and maintenance obligations that the commands provided were tied to mission and headquarters support. We also incorporated data-reliability questions into our data-collection instruments and compared the multiple data sets received from DOD components against each other to ensure that there was consistency in the data that the commands provided. We determined the data were sufficiently reliable for our purposes.\nTo determine the extent to which DOD’s directed reductions to headquarters, like the functional combatant commands and supporting service component commands, will result in cost savings for the department, we obtained and reviewed guidance and documentation on DOD’s and the services’ planned headquarters reductions, such as the department-issued memorandum outlining the reductions and various DOD budget-related data and documents. We then examined whether this information addressed some key questions we had developed for an agency to consider when evaluating proposals to consolidate management functions. We developed these key questions by reviewing our reports on specific consolidation initiatives that have been undertaken, complementing this with information gathered through a review of the relevant literature on public-sector consolidations produced by academic institutions, professional associations, think tanks, news outlets, and various other organizations. In addition, as illustrative examples for this prior work, we reviewed selected consolidation initiatives at the federal agency level and interviewed a number of individuals selected for their expertise in public management and government reform. We obtained data on the total authorized positions at the functional combatant commands for fiscal year 2013 as well as the number of positions deemed by the command to be performing headquarters functions and included in DOD’s planned reductions. To assess the reliability of the data, we interviewed DOD officials, analyzed relevant manpower documentation, incorporated data-reliability questions into our data-collection instruments, and compared the multiple data sets received from DOD components against each other to ensure that there was consistency in the data that the commands provided. We determined the data were sufficiently reliable for our purposes. We also interviewed officials at the functional combatant commands, some of their respective subordinate unified commands, and the service component commands to discuss specific headquarters positions and organizations that will be affected by DOD’s planned reductions in the commands and their service components.\nWe interviewed officials or, where appropriate, obtained documentation from the organizations listed below:\nManpower and Personnel Directorate\nStrategic Plans and Policy Directorate Department of the Air Force\nOffice of the Secretary of the Air Force, Manpower and Personnel\nAssistant Secretary of the Army for Financial Management and Comptroller, Army Budget Office\nU.S. Army Force Management Support Agency\nHeadquarters, U.S. Marine Corps Unified Combatant Commands and Subordinate Unified Commands\nMarine Corps Forces U.S. Strategic Command\nU.S. Army Space and Missile Defense Command / Army Forces Joint Functional Component Command for Integrated Missile Defense\nAir Force Global Strike Command\nAir Force Space Command\nU.S. Special Operations Command\nU.S. Army Special Operations Command\nAir Force Special Operations Command\nNaval Special Warfare Command\nU.S. Marine Corps Forces Special Operations Command\nSpecial Operations Command Central\nSurface Deployment and Distribution Command We conducted this performance audit from May 2013 to June 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.", "This appendix contains information in noninteractive format presented in figure 1.", "U.S. SPECIAL OPERATIONS COMMAND (SOCOM)\nMission: Provides special operations forces to defend the United States and its interests, and synchronizes planning of and operations against global terrorist networks.\nHeadquarters: MacDill Air Force Base, Florida Responsibility: Daily planning for and execution of SOCOM’s mission is performed by the command headquarters, three subordinate unified commands—Joint Special Operations Command, Special Operations Command–North, and Special Operations Command–Joint Capabilities—and two direct reporting units—Special Operations Joint Task Force and a Regional Special Operations Forces Coordination Center. SOCOM is also supported by four service component commands, which are the U.S. Army Special Operations Command; the Naval Special Warfare Command; the Air Force Special Operations Command; and the Marine Corps Special Operations Command.\nInteractivity instructions: Click on the combatant command name to see more information.\nSee appendix VII for the noninteractive, printer-friendly version.", "", "5% Theater Special Operations Command (23)\n15% Joint Special Operations Command (71)\n80% SOCOM Headquarters (373)", "", "34% Air Force Special Operations Command (710)\n12% Air Force Special Operations Command (29.4)\n7% Marine Corps Special Operations Command (16.2) 14% Naval Special Warfare Command (33.2)\n67% Army Special Operations Command (159.7)\n14% Marine Corps Special Operations Command (304)", "", "", "", "", "", "U.S. STRATEGIC COMMAND (STRATCOM)\nMission: STRATCOM conducts global operations in coordination with other combatant commands, military services, and appropriate U.S. government agencies to deter and detect strategic attacks against the United States and its allies.\nHeadquarters: Offutt Air Force Base, Nebraska Responsibility: Daily planning and execution for STRATCOM’s mission is performed by one subunified command—U.S. Cyber Command—and seven component commands—Joint Functional Component Command-Global Strike; Joint Functional Component Command-Space; Joint Functional Component Command-Integrated Missile Defense; Joint Functional Component Command-Intelligence, Surveillance, and Reconnaissance; the STRATCOM Center for Combating Weapons of Mass Destruction, the Standing Joint Force Headquarters for Elimination, and the Joint Warfare Analysis Center. STRATCOM is also supported by four service component commands, including Air Force Global Strike Command, Air Force Space Command, Army Space and Missile Defense Command / U.S. Army Forces Strategic Command, and Marine Corps Forces U.S. Strategic Command.\nInteractivity instructions: Click on the combatant command name to see more information.\nSee appendix VII for the noninteractive, printer-friendly version.", "", "29% Cyber Command (180.9)\n44% STRATCOM Headquarters (275.0)\n24% Component Commands (167.5)", "", "28% Air Force Global Strike Command (991)\n22% Army Forces Strategic Command (28.5)\n1% Marine Corps Forces, Strategic Command (0.45)\n31% Air Force Global Strike Command (40.6)\n38% Air Force Space Command (1,363)\n47% Air Force Space Command (60.1)", "", "", "", "", "", "U.S. TRANSPORTATION COMMAND (TRANSCOM)\nMission: TRANSCOM provides air, land, and sea transportation for the Department of Defense (DOD) in time of peace and war, with a primary focus on wartime readiness.\nHeadquarters: Scott Air Force Base, Illinois Responsibility: TRANSCOM provides air, land, and sea transportation for DOD and is the manager of the DOD Transportation System, which relies on military and commercial resources to support DOD’s transportation needs. The command, among other responsibilities, provides commercial air, land, and sea transportation; terminal management; aerial refueling to support the global deployment, employment, sustainment, and redeployment of U.S. forces; and is responsible for movement of DOD medical patients. TRANSCOM has one subordinate command—the Joint Enabling Capabilities Command. TRANSCOM works with three component commands to accomplish its joint mission: Air Mobility Command, Military Sealift Command, and Surface Deployment and Distribution Command.\nInteractivity instructions: Click on the combatant command name to see more information.\nSee appendix VII for the noninteractive, printer-friendly version.", "", "27% Joint Enabling Capabilities Command (38.9)\n73% TRANSCOM Headquarters (106.3)", "", "54% Air Mobility Command (1,145)\n36% Surface Deployment and Distribution Command (104.7)\n39% Air Mobility Command (112.0)\n25% Military Sealift Command (72.1)", "", "", "", "This appendix contains information in noninteractive format presented in the organizational charts in appendixes III, IV, and V.", "", "", "", "In addition to the contact named above, key contributors to this report include Richard K. Geiger (Assistant Director), Tracy Barnes, Robert B. Brown, Tobin J. McMurdie, Carol D. Petersen, Michael Silver, Amie Steele, Erik Wilkins-McKee, and Kristy Williams." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 2, 3, 1, 2, 2, 2, 2, 2, 3, 3, 2, 3, 1, 2, 2, 2, 2, 2, 3, 3, 1, 1, 1, 2, 2 ], "alignment": [ "h1_title", "h1_full", "", "", "", "", "", "", "", "", "h0_title", "h0_full", "h0_full", "h0_full", "h2_full", "h2_full", "h0_full h2_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "Why did DOD initiate reductions to headquarters resources?", "What might negatively affect DOD's ability to cut costs in their headquarters operations?", "What was the outcome of GAO's report regarding these cost-saving measures?", "In what ways did GAO find that DOD's data led to inaccurate conclusions?", "What is DOD's response to this assessment of their faulty data measures?", "As such, what is GAO's recommendation regarding data collection?", "What are the risks if DOD does not establish better data practices?", "What are the federal requirements for DOD's streamlining process?", "What is the nature of DOD's functional combatant commands?", "Why was GAO asked to review these commands?", "What does GAO's report contain?", "What are GAO's three recommendations to DOD regarding data collection practices?", "What was DOD's response to these recommendations?", "What is GAO's position regarding DOD's response to the first recommendation?" ], "summary": [ "In 2013, DOD directed reductions to management headquarters resources in an effort to streamline the department's management.", "DOD's directed reductions to headquarters do not include all resources at the commands, which may affect DOD's ability to achieve significant savings in headquarters operations.", "However, GAO found that the department did not have a clear or accurate accounting of the resources being devoted to management headquarters to use as a starting point to track reductions.", "Officials noted that DOD relied on data self-reported by the commands, and GAO found that these data were potentially inconsistent and did not include the totality of headquarters resources. Specifically, GAO found that less than a quarter of the positions at the functional combatant commands are considered to be management headquarters even though many positions appear to be performing management headquarters functions such as planning, budgeting, and developing policies. As such, more than three quarters of the headquarters positions at the functional combatant commands are potentially excluded from DOD's directed reductions.", "However, the department does not have any plans to reevaluate the baseline on which the reductions are based, in part because it does not have an alternative source for complete and reliable data.", "GAO has also concluded that restructuring efforts must be focused on clear goals and consolidation initiatives grounded in accurate and reliable data.", "Unless DOD reevaluates its decision to focus reductions to management headquarters and establishes a clearly defined and consistently applied starting point on which to base reductions, the department will be unable to track and reliably report its headquarters reductions and ultimately may not realize significant savings.", "Section 904 of the National Defense Authorization Act for Fiscal Year 2014 requires that DOD develop and submit a plan for streamlining management headquarters by June 2014.", "DOD operates three functional combatant commands, which provide special operations, strategic forces, and transportation.", "GAO was mandated to review personnel and resources of these commands in light of plans announced by DOD to reduce headquarters.", "This report (1) identifies the trends in resources devoted to the functional combatant commands and their service component commands and (2) evaluates the extent to which DOD's reductions to headquarters could result in cost savings.", "GAO recommends that DOD (1) reevaluate the decision to focus reductions on management headquarters to ensure meaningful savings, (2) set a clearly defined and consistently applied starting point as a baseline for the reductions, and (3) track reductions against the baselines in order to provide reliable accounting of savings and reporting to Congress.", "DOD partially concurred with the first recommendation, questioning, in part, the recommendation's scope, and concurred with the second and third recommendations.", "GAO continues to believe the first recommendation is valid, as discussed in the report." ], "parent_pair_index": [ -1, 0, 0, 2, 3, 4, 5, 0, -1, 0, 1, -1, 0, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 3, 3, 0, 0, 0, 4, 4, 4 ] }

{ "title": [ "Background", "DOD Has a Process for Implementing Acquisition-Related NDAA Provisions, but Does Not Clearly Communicate Implementation Status to Stakeholders", "DOD Implements Acquisition-Related NDAA Provisions in DFARS and by Other Methods", "DOD Reviews NDAAs to Identify Provisions That Might Require DFARS Revisions or Other Actions", "The Way the DARS Publicly Communicates Actions Makes It Difficult to Link to NDAA Provisions", "DOD Has Taken Action to Address Acquisition-Related Provisions in NDAAs from Fiscal Years 2010-2018, and Time Taken to Implement Averaged Less Than 1 Year", "DARS Staff Identified and Addressed 180 Acquisition-Related NDAA Provisions", "DARS Staff Implemented 112 Provisions within 1 Year of NDAA Enactment, on Average", "Conclusions", "Recommendation 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 Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The Defense Acquisition Regulations Council is responsible for developing fully coordinated recommendations for revisions to the DFARS, which supplements the Federal Acquisition Regulation. The Federal Acquisition Regulation provides executive agencies with uniform acquisition policies and procedures for acquiring products and services, and is prepared and issued through the coordination of the Defense Acquisition Regulations Council and Civilian Agency Acquisition Council. The DFARS contains additional requirements of law, DOD-wide policies, delegations of Federal Acquisition Regulation authorities, deviations from Federal Acquisition Regulation requirements, and policies or procedures that have a significant effect beyond the internal operating procedures of DOD, or a significant cost or administrative impact on contractors or offerors. The DFARS is designed to be read in conjunction with the primary set of rules in the Federal Acquisition Regulation. Stakeholders in the acquisition process include executive agencies’ program and contracting officials, members of Congress and congressional staff, industry and contractors, and members of the public.\nSpecifically, the Defense Acquisition Regulations Council generally makes implementation recommendations to DOD, such as when publication of rules to amend the DFARS is appropriate. DARS staff then implements the Council’s recommendations. The Defense Acquisition Regulations Council is composed of the Chair who is also the DARS Director, Deputy Chair who is also the DARS Deputy Director, and one policy and one legal representative from each of the following DOD components:\nDefense Contract Management Agency, and\nDefense Logistics Agency.\nDFARS changes can originate from different sources, including legislation, recommendations from DOD’s Office of the Inspector General, our recommendations, court decisions, executive orders, or policy changes within DOD. DFARS changes that originate from legislation, including NDAAs, are given the highest priority, according to DARS officials.\nDARS staff has other related responsibilities, including working with civilian agencies in activities connected with promulgating the Federal Acquisition Regulation.", "DOD has a rulemaking process to change the DFARS that includes implementing acquisition-related NDAA provisions through regulatory changes or other methods. The DARS staff is responsible for facilitating the process of making these changes in the DFARS. The staff first reviews draft legislation that may affect acquisition regulations before Congress enacts the NDAA. After the NDAA is enacted, DARS staff then identifies which provisions require action. The DARS staff coordinates across the department and provides for public notice of implementation actions when required. However, there is no publicly-available summary reporting of the status of the regulatory changes or other implementation methods linked to specific NDAA provisions. Congress and industry representatives therefore cannot clearly see the status of pending regulatory changes pertaining to acquisition issues addressed in the NDAA.", "DOD’s acquisition rulemaking procedures are governed by statute, which generally requires agencies to issue a proposed rule for each rulemaking and provide not less than a 30-day public comment period following publication of the proposed rule in the Federal Register. These requirements only apply to those DFARS rules that are related to the expenditure of appropriated funds and have either a significant effect beyond the agency’s internal operating procedures or a significant cost or administrative impact on contractors or offerors. However, the requirements may be waived if “urgent and compelling” circumstances make compliance with the requirements impracticable. In those instances, DOD issues an interim rule rather than a proposed rule. The interim rule is effective on a temporary basis if DOD provides at least a 30-day public comment period after publishing the interim rule in the Federal Register. DOD then may issue a final rule after considering any comments received. As a part of the rulemaking process, the Office of Information and Regulatory Affairs reviews proposed and final regulations. The time period for its review is generally limited to 90 days. See figure 1 for an overview of the DARS’s process to change DFARS rules.\nDARS staff can implement the provisions by one or more methods, including the rulemaking process described above and other actions, such as: issuing DFARS class deviations, and changing DFARS Procedures, Guidance, and Information (PGI), a non-regulatory document that supplements the DFARS.", "Before annual NDAAs are enacted, DARS staff told us that they review proposed legislation and committee report language to stay abreast of provisions they may have to implement after NDAAs are enacted. DARS staff solicits input on which provisions may require implementation from DOD components and offices, such as the Defense Contract Management Agency, that have a stakeholder interest in many acquisition-related provisions.\nDARS staff tracks each of these potential changes in case files, which are referred to in this report as cases. DARS staff also can work with other federal agency offices to implement an acquisition-related NDAA provision through a Federal Acquisition Regulation rule change, interim rule change, or class deviation. In some instances, a provision may specify that DOD take other actions, such as holding a public meeting to obtain interested parties’ opinions on an acquisition topic.\nUpon review of the enacted NDAA, the Defense Acquisition Regulations Council or DARS staff sometimes decides that a provision should be implemented by another DOD office or in other defense acquisition guidance. For example, the DARS staff could determine that a provision only applies to one DOD component and does not require a DFARS change. In another example, DARS staff could determine that the initially identified provision should be implemented in acquisition guidance, such as DOD Instruction 5000.02. Further, sometimes DARS staff will change implementation methods after having selected one. For example, DARS staff may initially decide to implement a provision with a DFARS change, but upon conducting research to draft the rule change, it may find that the provision would be better implemented with a Federal Acquisition Regulation change.\nBased on our review of NDAAs from fiscal years 2010-2018, we identified 37 explicitly directive provisions—36 that directed DOD to either make or consider making an acquisition-related regulatory change, and one that directed DOD to issue acquisition-related guidance. DARS officials told us that when a provision directs a change or consideration of an acquisition-related regulatory change, the Defense Acquisition Regulations Council and DARS staff give it the highest priority. We confirmed that, in the Defense Acquisition Regulations Management Information System, this priority is reflected by identifying the NDAA as the source of the change in the synopsis field. We confirmed that the 36 provisions we identified had NDAA as the source of the change.", "DARS staff has different ways of communicating changes to the regulations and other implementation methods to the public. “Significant revisions” to the DFARS must be published in the Federal Register. DARS staff also publishes the progress of DFARS changes in case reports that are available on its website. Case reports provide a synopsis of each case, which can include the NDAA provision or other source of the case; describe cases combined to address more than one provision; or show multiple cases for a single provision.\nDARS staff also posts notices of DFARS class deviations and revisions to DFARS PGI on its website.\nDARS staff provides input for regulatory priorities through DOD’s publicly-available Unified Agenda. This includes all expected rule changes DOD-wide and a Regulatory Plan that identifies the most significant regulatory actions DOD expects to issue within the next 12 months.\nIt is difficult, however, for interested parties, such as Congress and industry groups, to determine if a provision has been implemented using only this publicly-available information. This is due, in part, to the fact that provisions can be implemented through one or multiple methods, and DARS actions can be reflected in more than one case. For example, if an interested party, such as a federal contractor, expects to see a change to the DFARS based on how an NDAA provision is worded, but the DARS staff implements the provision with a class deviation, the interested party may not realize that the provision has been implemented by another method. In addition, DARS staff may consider a provision as implemented with an action such as a class deviation even if a subsequent case to change the DFARS is opened later.\nWe, too, found it difficult to determine the implementation status of acquisition-related NDAA provisions using only publicly-available reports and information. DARS staff was able to create a report for us that showed implementation status by provision. But we were able to determine and verify the implementation status of these provisions only after using a combination of the DARS internal reports, publicly-available reports and information, and data we had requested from the Defense Acquisition Regulations Management Information System database.\nDFARS and Federal Acquisition Regulation open and closed case reports provide general information on a case, such as the topic and case number. The reports also provide the status of the case. For example, a report may say: “Defense Acquisition Regulations Council director tasked team to draft proposed DFARS rule.” However, the case reports do not provide information on when a regulatory change may be expected. This information can help companies plan for future business opportunities and devise the means to ensure compliance with regulations. See figure 2 for an overview of NDAA provision implementation methods and the mechanisms DOD uses to report status information.\nStandards for Internal Control in the Federal Government states that management should externally communicate quality information to achieve the entity’s objectives. Specifically, available information should address the expectations of both internal and external users. DARS staff regularly publishes public status updates on cases, rule changes, and PGI changes. However, there is no readily available mechanism for external stakeholders, such as Congress and industry representatives, to determine the implementation status of any particular legislative provision. This is because the status updates published by the DARS staff do not provide the complete implementation status listed by specific legislative provisions. Without communicating the implementation status of legislative provisions, Congress lacks information for oversight of acquisition reforms, and federal contractors lack visibility into how and when changes will occur. For example, the House Armed Services Committee expressed its oversight interest in a provision passed in 2013 that was not implemented in the DFARS until 2018. Additional information on the status of the DFARS change may have been helpful to the committee’s oversight activities. In another example, industry expressed concern about the status of a regulation implementing a fiscal year 2017 NDAA provision related to the lowest price technically acceptable (LPTA) source selection process in order to plan for responding to solicitations following implementation of the rule.", "DARS staff identified 180 NDAA provisions from fiscal years 2010-2018 that potentially required an acquisition-related regulatory change or another action. DARS staff and other DOD entities have taken some type of action to address all these provisions. Our analysis showed that 112 of the provisions had been implemented. The timeframe for implementation was, on average, just under 1 year. Some implementation efforts took longer than a year for a variety of reasons, such as reconciling multiple years of NDAA requirements or dealing with highly complex topics. The remaining legislative provisions are either in the process of being implemented or DARS staff determined that a regulatory change was not needed. DARS staff prioritized those provisions that expressly directed DOD to change or consider an acquisition-related regulatory change. DARS documentation showed that some of the implementation deadlines in statute were shorter than the time periods that DARS generally allows for the rulemaking process, including public comment and outside agency review.", "Following its process, DARS staff identified 180 NDAA provisions from fiscal years 2010-2018 that potentially required an acquisition-related regulatory change or another implementation action. We found that DARS staff and, in a few instances, other DOD entities have taken action to address all of those provisions. See figure 3 for the implementation status of all 180 provisions distributed by NDAA fiscal year.", "We found that DARS officials opened cases within 30 days of NDAA enactment, on average, for the acquisition-related NDAA provisions from fiscal years 2010-2018. For the 112 of 180 provisions that have been implemented, DOD completed the first implementation actions on average within 1 year. DARS staff frequently used a combination of methods to implement provisions, such as using an interim DFARS rule followed by a final rule. When two or more implementation actions are taken, DARS officials generally consider the first action as the action that implements the provision. If a class deviation, interim DFARS rule, or PGI is issued to address an NDAA provision, the DARS staff considers it implemented even if additional actions—such as issuing a final DFARS rule—are still being pursued. We used the same approach for our analyses for determining the implementation status of provisions and time taken to complete implementation. See table 1 below for the average time to complete the first action to implement the 112 NDAA provisions.\nFigure 4 shows the distribution of time taken to implement all 112 NDAA provisions.\nSome implementation efforts took longer than a year for a variety of reasons. Publishing an interim DFARS rule generally took less than a year, while publishing a final DFARS rule change took closer to 2 years on average. In the selected DFARS cases studied, we found examples where DOD had to reconcile multiple years of NDAA requirements or manage complex topics, which we have similarly reported on as reasons that influence the time needed to issue regulations in past work.\nReconciling Multiple Years of NDAA Requirements: Congress directed DOD to revise the DFARS to reflect updated requirements related to procuring commercial items in section 851 of the fiscal year 2016 NDAA. Congress included a deadline of 180 days from the NDAA enactment, but the DFARS update was not completed until nearly 800 days after enactment. Our review of DARS case files showed that the DARS staff prioritized implementing the provision, but decided to address a related NDAA provision from 2013 through a single DFARS rule change. In this instance, multiple NDAAs included provisions the DARS staff viewed as closely related. As a result, developing language that reconciled the requirements for all of these provisions took additional time and effort. DARS officials told us that they came close to publishing a commercial items rule earlier, but started over because subsequent NDAA provisions included requirements related to commercial items.\nManaging Complex Topics: Congress directed DOD to revise the DFARS regarding the use of the LPTA source selection process in section 813 of the NDAA for fiscal year 2017. Congress included a deadline of 120 days from enactment in the provision, which DARS staff was unable to meet due to the complexity of the issue and additional requirements added by a subsequent NDAA. Following enactment of the 2017 NDAA, DARS staff developed a proposed rule that would have implemented relevant NDAA sections in under a year. However, prior to publishing that rule, the NDAA for fiscal year 2018 was enacted and contained added LPTA requirements. After the 2018 NDAA was enacted, DARS staff combined all of its related LPTA cases into a new DFARS case and made adjustments to the proposed rule it had been developing. The DARS staff responsible for updating the previous proposed rule requested five extensions from DARS leadership between January and March 2018 to update documentation to address the fiscal year 2018 provisions and prepare additional analyses. After months of coordination and reviews, DARS staff published a proposed rule in December 2018 with a 60-day comment period. Sixteen formal submissions were received by the February 2019 deadline. The DARS staff is currently reviewing those comments and drafting a final rule, which must still go through multiple reviews before it can be published in the Federal Register.\nCongress directed DOD to consider revising the DFARS regarding an extension of contractor conflict of interest limitations in section 829 of the NDAA for fiscal year 2013. This provision has been in the process of implementation due to a determination that this rule should be informed by a pending Federal Acquisition Regulation change. In this instance, Federal Acquisition Regulation principals opened a case to implement the provision in the Federal Acquisition Regulation 7 months after NDAA enactment, and DARS officials agreed to draft the rule change that would implement the provision. DARS staff published a proposed rule in the Federal Register for public comment approximately 8 months later. However, DARS staff informed us that a few weeks after the public comment period, Federal Acquisition Regulation officials directed them to suspend its activities until a separate, related Federal Acquisition Regulation rule on “closely associated with inherently governmental functions” was finalized. However in August of 2018, section 829 of the NDAA for fiscal year 2013 was repealed by section 812(b)(4) of the NDAA for fiscal year 2019.\nWe identified 36 provisions, a subset of the 180, that expressly directed DOD to make or consider making an acquisition-related regulatory change, as well as one provision that directed DOD to issue guidance. DARS staff implemented 22 of the 37 provisions in about 13 months on average. Of the 37 provisions, 32 had statutory deadlines, ranging from 30 to 365 days after enactment. The DARS documentation showed that the DARS staff prioritized these NDAA provisions by noting the deadlines, but generally did not implement them by the deadline. We found that:\nDARS staff met the deadlines in eight of 32 instances. In those eight instances, the actions completed were relatively simple, and DARS staff determined that a public comment period was not required. For example, DARS staff changed the DFARS to implement section 801 of the fiscal year 2018 NDAA—which required DOD to revise the DFARS to include three specific statements about DOD acquisitions— in 143 days, ahead of Congress’s 180-day deadline.\nFour provisions had deadlines for implementation of 60 days or less.\nFor example, sections 841 and 842 in the fiscal year 2012 NDAA called for changes to be made to the DFARS within 30 days. The short deadlines allowed for fewer days than DARS staff allocate for public comment (minimum of 30 days, by law) and outside agency review (no more than 90 days, by executive order). Deadlines that did not allow for these activities as well as time to draft language were typically not met.", "DARS is responsible for developing and maintaining DOD acquisition regulations, which may include implementing acquisition-related NDAA provisions. The DARS staff has internal tools to track, manage, and communicate the status of DFARS changes, including implementation of NDAA provisions. However, DOD’s DFARS change process does not have a reporting mechanism to clearly communicate to Congress, industry, and other interested parties the status of regulatory or other changes linked to specific NDAA provisions. Without a mechanism to better communicate DOD’s actions to implement NDAA provisions, stakeholders potentially affected by reforms may be unaware of what and when changes may be implemented. Given the actions and length of time that it may take to implement provisions and see a change reflected in the DFARS or elsewhere, stakeholders would benefit from knowing the status of DOD’s actions before implementation has been completed in order to, for example, prepare for compliance.", "We are making the following recommendation to the Secretary of Defense to ensure that the Director of the Defense Acquisition Regulations System: Develop a mechanism to better communicate to all stakeholders the implementation status of acquisition-related NDAA provisions, particularly those provisions that direct a change or consideration of a change to the DFARS. (Recommendation 1)", "We provided a draft of this report to DOD for comment. DOD concurred with our recommendation to develop a mechanism to better communicate to all stakeholders the implementation status of acquisition-related NDAA provisions. The department said it will develop a matrix reflecting the implementation status of acquisition-related NDAA provisions and post the matrix on the Defense Pricing and Contracting public website. DOD’s written comments on the report are reprinted in appendix II. DOD also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the Acting Secretary of Defense; the Under Secretary of Defense for Acquisition and Sustainment; the Secretaries of the Air Force, Army, and Navy; the Director, Defense Acquisition Regulations System; appropriate congressional committees; and other interested parties. This report will also be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions concerning this report, please contact me at (202) 512-4841 or by e-mail at woodsw@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 III.", "A House Armed Services Committee report related to the National Defense Authorization Act (NDAA) for Fiscal Year 2019 included a provision for us to review the Department of Defense’s (DOD) process for revising the Defense Federal Acquisition Regulation Supplement (DFARS), among other things. This report (1) determines how DOD implements acquisition-related NDAA provisions and communicates implementation status, and (2) identifies the status of DOD’s efforts to implement acquisition-related NDAA provisions from fiscal years 2010- 2018.\nTo determine how DOD implements acquisition-related NDAA provisions, we reviewed DOD documents and supplemented our work with interviews with relevant DOD officials. Specifically, we reviewed the DFARS Operating Guide, January 2015; presentation on the Defense Acquisition Regulations System Rulemaking Process, DFARS open and closed cases reports, Federal Acquisition Regulation open and closed cases reports; decision matrices from the Defense Acquisition Regulations System (DARS), which document decisions on implementing NDAA provisions from fiscal years 2010-2018; and other applicable reports and information on provisions and cases from the DARS staff and the Defense Acquisition Regulations Council. We also referenced our past reports on DFARS rulemaking; U.S. Code on Publication of proposed regulations; the Federal Acquisition Regulation Operating Guide, July 2015; Federal Register notices related to DOD rulemaking; and the news listing on the DARS website. We adopted the DARS use of the term “implementation,” which includes both regulatory action as well as other actions, such as public meetings or a report.\nWe interviewed DOD officials that are involved in the DFARS rulemaking process. Specifically, we interviewed members of the Defense Acquisition Regulations Council and DARS staff, including the Chair and Deputy Chair, the Regulatory Control Officer that prepares rules for submission to the Office of Information and Regulatory Affairs within the Office of Management and Budget, and DFARS case managers. We also interviewed officials from the DOD components—Air Force, Army, Navy, Defense Contract Management Agency, and Defense Logistics Agency.\nWe interviewed industry representatives from the Aerospace Industries Association, National Defense Industrial Association, and the Professional Services Council.\nWe compared the DARS process with the Standards for Internal Control in the Federal Government. Specifically, we reviewed DOD’s public reports of its implementation actions with internal control principle 15: “management should externally communicate the necessary quality information to achieve the entity’s objectives.” Stakeholders in the acquisition process include executive agencies’ program and contracting officials, members of Congress, congressional staff, industry, contractors, and members of the public.\nThe DARS staff provided a complete data extract of Defense Acquisition Regulations Management Information System as of October 31, 2018, to document the acquisition-related NDAA provisions that DARS staff identified as potentially requiring implementation. The Defense Acquisition Regulations Management Information System is the DARS database to track the status of individual cases that are associated with DARS rulemaking actions. We analyzed the data extract to identify which Title VIII provisions that the DARS identified for implementation from NDAAs from fiscal years 2010-2018, and to identify the cases related to those provisions. We focused on Title VIII—Acquisition Policy, Acquisition Management, and Related Matters—of the NDAAs, which contain acquisition-related provisions. We queried the data extract to identify cases with notes indicating NDAA provisions from fiscal years 2010-2018 as the source of change in the database synopsis field. We found 180 acquisition-related provisions from Title VIII of the NDAAs from fiscal years 2010-2018 that the DARS staff had identified for implementation. For these 180 provisions, we determined the number and types of cases by year, duration of cases, and duration of select steps for cases. We verified the validity of provisions and cases that were not in both the DARS reports that DARS staff manually produced and the Defense Acquisition Regulations Management Information System data with DARS officials as of April 19, 2019.\nTo identify the implementation status of acquisition-related NDAA provisions from fiscal years 2010-2018, we further analyzed data from the Defense Acquisition Regulations Management Information System and DARS reports. For the actions associated with the 180 provisions, we analyzed the status history of each case, associated status dates for cases, and closed status indicators. We also reviewed DARS reports, such as the internal stats charts with case duration and closure metrics that DARS officials told us they manually verify. We reviewed a report that the DARS staff manually produced for us that showed actions and cases by provision for the NDAAs from fiscal years 2010-2018.\nWe independently analyzed the NDAAs from fiscal years 2010-2018 and determined 36 provisions in Title VIII that expressly directed DOD to make or consider making an acquisition-related regulatory change, as well as one provision that directed DOD to issue guidance. We identified these provisions using a keyword search of individual and combined terms and criteria, such as “regulation, defense, and acquisition regulation.” To better understand the Defense Acquisition Regulations Council’s recommendations and DARS implementation process, we selected 12 provisions that directed DOD to make or consider an acquisition-related regulatory change for case studies. The case study selection criteria included the year of the NDAA from which the provision originated for a mix of older and newer provisions and time duration for a mix of shorter and longer cases related to implement the provisions.\nWe used DARS reports and our analysis of the Defense Acquisition Regulations Management Information System data to determine the year and time duration. Since the DFARS Case Standard Timeline is 52 weeks, we selected provisions with cases that were both more and less than 52 weeks. We also selected provisions with cases that were open and closed. We created a data collection instrument for the case studies that captured information, such as which provisions were associated with the case, to standardize our data collection process. For the 12 provisions, we reviewed the associated case files that are generally a record of the implementation process and the Defense Acquisition Regulations Council’s recommendations, and the decisions made by the DARS staff. We also reviewed available publication folders associated with the cases that generally document input and decisions from other agencies, such as the Office of Management Budget’s Office of Information and Regulatory Affairs. Finally, we used the information in the files to verify the information in Defense Acquisition Regulations Management Information System for those specific cases.\nWe found the Defense Acquisition Regulations Management Information System data and information in the files that we reviewed to be sufficiently reliable for purposes of reporting on how the DARS staff implemented NDAA provisions and the time duration to do so.\nWe conducted this performance audit from August 2018 to July 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.", "", "", "", "In addition to the contact named above, Penny Berrier, Assistant Director; James Kim; Holly Williams; Beth Reed Fritts; Gail-Lynn Michel; Emily Bond; Lori Fields; Matthew T. Crosby; Lorraine Ettaro; and Tim Bober made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full", "h0_full h1_full", "h0_full", "h0_full", "h1_full", "h2_title", "h2_full", "h2_full", "h1_full", "", "h0_full", "h3_full", "", "", "", "" ] }

{ "question": [ "For what is the staff of the Defense Acquisition Regulations System responsible?", "What is the process by which the staff of the Defense Acquisition Regulations System work?", "How can DOD respond to these recommendations?", "How does DOD communicate to Congress, industry, and other stakeholders the status of regulatory changes?", "In what ways can interested parties learn the implementation status of an acquistion-related NCAA provision?", "What is the source of this difficulty?", "What is the result of this communication breakdown?", "Why is communication regarding regulatory changes important?", "How have federal control standards emphasized the importance of external communication?", "According to DAO, how many acquisition-related provisions has DOD addressed since 2010?", "What is the timeline from enactment to implementation?", "Why do some actions take such a long time?", "How did GAO conduct its review of DOD?", "How did GAO select certain provisions as case studies?" ], "summary": [ "The staff of the Defense Acquisition Regulations System are responsible for making changes in the Defense Federal Acquisition Regulation Supplement (DFARS)—the Department of Defense's (DOD) regulation augmenting the Federal Acquisition Regulation, which guides government purchases of products and services.", "They begin their process by first tracking legislation that may affect acquisition regulations before Congress enacts the National Defense Authorization Act (NDAA). After enactment, they identify which provisions to implement through regulatory changes and which to implement through other means.", "In certain circumstances, rather than change the DFARS, DOD can issue a class deviation, which allows its buying organizations to temporarily diverge from the acquisition regulations. The figure below shows the primary means DOD uses to implement NDAA provisions, and the mechanisms DOD uses to make information on the status of any changes available to the public and others.", "DOD does not have a mechanism to clearly communicate to Congress, industry, and other interested parties the status of regulatory or other changes based on NDAA provisions.", "Using only publicly-available reports and information, it is difficult for an interested party to find the implementation status of any given acquisition-related NDAA provision.", "This is because no single DOD source communicates the status of regulatory or other changes in a manner that links the changes to specific NDAA provisions.", "As a result, interested parties are not always aware of what provisions have been implemented and when.", "This information is important for congressional oversight and to industry for planning and compliance purposes.", "Federal internal control standards state that management should address the communication expectations of external users.", "GAO found that DOD has taken action to address 180 acquisition-related provisions since 2010.", "On average, implementation was completed within 1 year from enactment. Some complicated provisions took more than 2 years to implement.", "For example, a fiscal year 2016 NDAA provision, directing a regulatory change for commercial item procurements, took more than 2 years to implement because DOD was reconciling a prior year's related but different NDAA commercial ite\tm provision into one DFARS change.", "To conduct this work, GAO reviewed DOD documents and interviewed DOD officials regarding the process for implementing acquisition-related NDAA provisions. GAO also analyzed DOD's data and reports on the implementation status of provisions enacted in NDAAs for fiscal years 2010 through 2018.", "GAO selected 12 of these provisions as case studies based on factors such as year enacted and time taken for implementation to obtain a mix of older and newer provisions, and shorter and longer implementation timeframes." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 1, 1, 0, 4, -1, 0, 1, -1, 0 ], "summary_paragraph_index": [ 3, 3, 3, 5, 5, 5, 5, 5, 5, 6, 6, 6, 2, 2 ] }

{ "title": [ "", "Introduction", "Discretionary Spending Budget Enforcement", "FY2016 Discretionary Spending Limits", "FY2016 Statutory Discretionary Spending Limits", "Levels of Discretionary Spending Proposed in the President's Budget Submission", "Levels of Discretionary Spending Assumed by the FY2016 Budget Resolution", "\"Current Law\" Discretionary Spending Limits Established by the Bipartisan Budget Act of 2015 (BBA 2015)", "FY2016 Budget Resolution", "Regular Appropriations", "House Action", "Committee", "Floor", "Senate Action", "Committee", "Floor", "Continuing Resolutions", "H.J.Res. 61", "H.R. 719 (P.L. 114-53)" ], "paragraphs": [ "", "Congress uses an annual appropriations process to provide discretionary spending for federal government agencies. The responsibility for drafting legislation to provide for such spending is currently divided among 12 appropriations subcommittees in each chamber, each of which is tasked with reporting a regular appropriations bill to cover all programs under its jurisdiction. (The titles of these 12 bills, which correspond to their respective subcommittees, are listed in Table 1 at the end of this section.) The timetable associated with the annual appropriations process requires the enactment of all regular appropriations bills prior to the beginning of the fiscal year (October 1). If regular appropriations are not enacted by that deadline, one or more continuing resolutions (CRs) may be enacted to provide interim funding authority until all regular appropriations bills are completed or the fiscal year ends. During the fiscal year, supplemental appropriations may also be enacted to provide funds in addition to those in regular appropriations acts or CRs.\nAmounts provided in appropriations acts are subject to limits, both procedural and statutory, which are enforced through mechanisms such as points of order and sequestration. Disagreement over the appropriate level of discretionary spending—as well as its distribution between defense and nondefense activities—significantly affected the focus of the FY2016 appropriations process. While the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) revised the statutory discretionary spending limits to allow higher spending in FY2014 and FY2015, that agreement did not alter the calculation for the FY2016 limits. As a consequence, the FY2016 limits were generally less than 1% higher than both the FY2014 and FY2015 limits. In the FY2016 budget submission, the President proposed raising both the defense and nondefense limits. The congressional budget resolution ( S.Con.Res. 11 ) took a different approach in that it assumed FY2016 discretionary spending at the level allowed by the limits at that time but also allowed additional spending (largely in the defense category) that was effectively not subject to the statutory spending limits. This additional spending was proposed at a higher level than the amount requested by the President. This disagreement as to the level of discretionary spending was ultimately resolved through the enactment of the Bipartisan Budget Act of 2015 on November 2, 2015 (BBA 2015; H.R. 1314 ; P.L. 114-74 ). The BBA 2015 raised both the defense and nondefense statutory discretionary spending limits for FY2016 and FY2017 and specified an expected level for the \"Overseas Contingency Operations/Global War on Terrorism\" (OCO/GWOT) spending adjustment for each of those fiscal years. The enactment of annual appropriations subject to those limits has yet to occur.\nConsideration of FY2016 regular appropriations bills in the House began on April 15, 2015, with subcommittee approval of the Energy-Water ( H.R. 2028 ) and Military Construction-VA ( H.R. 2029 ) appropriations bills. Since that time, all 12 regular appropriations bills have been reported from committee, and six of those have passed the House. About a month after committee action began in the House, the Senate began its consideration of FY2016 appropriations measures with the subcommittee approval of the Energy-Water and Military Construction-VA appropriations bills, on May 19. The Senate Appropriations Committee subsequently reported all 12 regular appropriations bills. On June 18, the Senate rejected a motion to invoke cloture on the motion to proceed to the Department of Defense appropriations bill ( H.R. 2685 ). Since that time, the Senate voted not to invoke cloture on motions to proceed to the Defense, Military Construction-VA, and Energy-Water appropriations bills. However, on November 5, the Senate agreed to proceed to consider the Military Construction-VA appropriations bill and passed that bill on November 10. The Senate proceeded to consider the Transportation-HUD appropriations bill ( H.R. 2577 ) on November 18 but has not completed that consideration as of the date of this report.\nBecause none of the FY2016 regular appropriations bills became law by the start of the fiscal year, a CR was enacted to provide continuing appropriations until December 11 ( H.R. 719 ; P.L. 114-53 ). (Prior to the final consideration and enactment of H.R. 719 , Senate legislative action related to FY2016 continuing appropriations occurred on a different legislative vehicle, H.J.Res. 61 .)\nThis report provides background and analysis of congressional action related to the FY2016 appropriations process. The first section discusses the status of discretionary budget enforcement for FY2016, including the statutory spending limits and allocations associated with the congressional budget resolution. The second section provides information on the consideration of regular appropriations bills. Further information with regard to the FY2016 regular appropriations bills is provided in the various CRS reports that analyze and compare the components of the President's budget submission and the relevant congressional appropriations proposals.\nThis report will be updated periodically during the FY2016 appropriations process.\nFor information on the current status of FY2016 appropriations measures, see the CRS Appropriations Status Table: FY2016, at http://www.crs.gov/Pages/AppropriationsStatusTable.aspx .", "The framework for budget enforcement of discretionary spending under the congressional budget process has both statutory and procedural elements. The statutory elements are the discretionary spending limits derived from the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The procedural elements are primarily associated with the budget resolution. It limits both the total spending under the jurisdiction of the Appropriations Committee, as well as spending under the jurisdiction of each appropriations subcommittee.\nIn addition, pursuant to Section 251(b) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), certain spending is effectively exempt from these statutory and procedural spending limits because the limits are adjusted upward to accommodate that spending. Such spending includes budget authority specifically designated as emergency requirements, OCO/GWOT, disaster relief, and particular amounts of budget authority for certain program integrity initiatives. Since the enactment of the BCA in 2011, the vast majority of adjustments pursuant to Section 251(b) have been for budget authority designated as OCO/GWOT. Such adjustments have allowed for additional budget authority (largely in the defense category) for expenses associated with overseas operations, such as those in Iraq and Afghanistan, as well as other related purposes.", "The FY2016 appropriations process, as noted earlier, has been affected by disagreement over the appropriate level of discretionary spending, as well as its distribution between defense and nondefense activities. The BCA established statutory spending limits for FY2016. However, the President proposed revisions to those limits in his FY2016 budget request. In addition, the FY2016 budget resolution establishes certain procedurally enforceable limits on discretionary spending that are related to the levels of the BCA limits. Table 2 displays the initial BCA limits, the revised BCA limits, and proposed limits for FY2016, compared to the limits that were in effect for FY2014 and FY2015. It also displays the current law defense and nondefense spending levels that were ultimately established through the enactment of the BBA 2015.", "The BCA imposes separate limits on defense and nondefense discretionary spending for each of the fiscal years from FY2012 through FY2021. The defense category includes all discretionary spending under budget function 050 (defense); the nondefense category includes discretionary spending in the other budget functions. In order to require additional budgetary savings, the BCA included procedures to lower the level of the initial spending limits for each fiscal year. The Office of Management and Budget (OMB) calculates the amount by which each initial limit for the upcoming fiscal year is to be lowered, and announces the amount of the lowered limits in a \"preview report\" at the same time that the President's budget is submitted.\nIf discretionary spending is enacted in excess of a statutory limit, the BCA requires the level of spending to be brought into conformance through \"sequestration,\" which involves largely across-the-board cuts to non-exempt spending in the category of the limit that was breached (i.e., defense or nondefense). Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2016 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2015 congressional session adjourns sine die. For any FY2016 discretionary spending that becomes law after the session ends, the OMB evaluation and any enforcement of the limits would occur 15 days after enactment.\nThe BBEDCA also provides specific preconditions for adjusting the statutory limits to accommodate OCO/GWOT-designated spending. Such spending must be designated by Congress on an account-by-account basis, and also be subsequently designated by the President, in order for the relevant statutory limit to be adjusted. If the President were not to designate such funds as OCO/GWOT, the limit would not be adjusted to accommodate that additional spending. This could cause enacted spending to be higher than the limit and trigger a sequestration to enforce it. In recent years, appropriations acts that carried OCO/GWOT spending have generally included a provision stipulating that each amount in that act designated by Congress for OCO/GWOT \"shall be available only if the President subsequently so designates all such amounts.... \"\nTable 2 displays the FY2014 and FY2015 limits and OCO/GWOT enacted spending, the FY2016 initial and revised levels for the limits, and various FY2016 proposed levels for the limits and OCO/GWOT spending. The total of the limits is also listed. Pursuant to Section 251A of the BBEDCA, the initial BCA limit on defense spending for FY2016 was reduced by $53.909 billion to the revised level of $523.091 billion. The initial limit on FY2016 nondefense spending was reduced by $36.509 billion to $493.491 billion. Recall that the reduced level of these limits was increase of less than 1% above both the FY2014 and FY2015 limits.", "The President's budget submission proposes that both the defense and nondefense limits for FY2016 be raised by similar amounts (as listed in Table 2 ). Under this proposal, the defense limit would be increased by $37.909 billion ($16 billion less than the initial BCA defense limit). The nondefense limit would be increased by $36.509 billion (equal to the level of the initial BCA nondefense limit). The budget submission also contains a number of other proposed changes to both spending and revenue that are intended to \"offset\" the proposed increases to the limits. The requested amount of OCO/GWOT spending is $57.996 billion—a decrease of $15.686 billion from the FY2015 enacted levels.", "The FY2016 congressional budget resolution ( S.Con.Res. 11 ) assumes different levels of discretionary spending than those proposed by the President's budget submission (as listed in Table 2 ). The levels of defense and nondefense discretionary spending subject to the limits that are identified in the joint explanatory statement accompanying the budget resolution are identical to the revised BCA levels. However, the budget resolution also includes certain procedural contingencies for the consideration of legislation that could alter the statutory discretionary spending limits. For example, Section 4302 would allow for Senate consideration of legislation \"relating to enhanced funding for national security or domestic discretionary programs\" provided it does not increase the deficit during the period covered by the budget resolution. The amount of OCO/GWOT spending assumed under the budget resolution is $96.287 billion—an increase of $22.595 billion over FY2015 enacted levels and an increase of $38.291 billion over the President's request.", "The BBA 2015 raised both the defense and nondefense discretionary spending limits for FY2016 (as listed in Table 2 ). The reduced limits were increased by a total of $50 billion, equally divided between the defense and nondefense limit. This law also specified an expected level for the FY2016 OCO/GWOT spending adjustment of $14.8 billion for function 150 (international affairs) and $58.7 billion for function 050 (defense), for a total of $73,693.", "The procedural elements of budget enforcement generally stem from requirements under the Congressional Budget Act of 1974 (CBA) that are associated with the adoption of an annual budget resolution. Through this CBA process, the Appropriations Committee in each chamber receives a procedural limit on the total amount of discretionary budget authority for the upcoming fiscal year, referred to as a \"302(a) allocation.\" The House and Senate Appropriations Committees subsequently divide this allocation among their 12 subcommittees. These divisions to each subcommittee are referred to as \"302(b) suballocations.\" The 302(b) suballocations restrict the amount of budget authority available to each subcommittee for the agencies, projects, and activities under their jurisdictions, and effectively act as caps on each of the 12 regular appropriations bills. The Appropriations Committee may revise the 302(b) suballocations at any time by issuing a new suballocation report. Both the 302(a) and 302(b) limits may be enforced on the floor through points of order.\nFinal action of the FY2016 budget resolution occurred on May 5, 2015 ( S.Con.Res. 11 ). The joint explanatory statement associated with the budget resolution provides 302(a) allocations for the House and Senate Appropriations Committees that are consistent with the revised BCA levels for the statutory discretionary spending limits (see Table 2 ). Those 302(a) allocations also included a separate allocation for OCO/GWOT spending of $96.287 billion. The most recently reported 302(b) suballocations of discretionary spending for the House and Senate Appropriations subcommittees are listed in Table 3 . This table also includes a comparison of the distribution of OCO/GWOT-designated budget authority among those subcommittees, which is in addition to amounts that are subject to the limits. The initial House 302(b) suballocations were reported on April 29, 2015, and subsequently revised on May 18 and July 10. The initial Senate suballocations were reported about three weeks after the initial House allocations, on May 21, 2015. The Senate Appropriations Committee later revised these suballocations on June 10, June 24, July 8, and July 16. These Senate suballocations were further revised on November 5 and November 18 after the enactment of the BBA 2015. Additional revisions to both the House and Senate suballocations may occur to reflect the increases to the defense and nondefense limits established by the BBA 2015.", "The House and Senate provide annual appropriations in 12 regular appropriations bills. Each of these bills may be considered and enacted separately, but it is also possible for two or more of them to be combined into an omnibus vehicle for consideration and enactment. Alternatively, if some of these bills are not enacted, annual funding for the projects and activities therein may be provided through a full-year CR.\nAs of the date of this report, the House Appropriations Committee has reported all 12 regular appropriations bills for FY2016 (see Table 4 ). Six of these bills have been passed by the House (see Table 5 ). The Senate Appropriations Committee has also reported all 12 of the FY2016 regular appropriations bills (see Table 6 ). The Senate passed one of these—Military Construction-VA (see Table 7 )—and also proceeded to consider the Transportation-HUD appropriations bill ( H.R. 2577 ). It has not completed that consideration as of the date of this report. (In addition, the Senate has voted not to invoke cloture on motions to proceed to consider two other regular bills—Defense and Energy-Water.)", "", "Table 4 lists the regular appropriations bills that have received subcommittee or full committee action, along with the associated date of subcommittee approval, date reported to the House (if applicable), and the report number.\nThe first regular appropriations bills to be approved in subcommittee and reported by the full committee were Energy-Water ( H.R. 2028 ) and Military Construction-VA ( H.R. 2029 ). Both were reported to the House on April 24, 2015. Two other measures received some form of committee consideration during the month of April—Legislative Branch ( H.R. 2250 ) and Transportation-HUD ( H.R. 2577 ). Both of these measures, however, were not reported until the month of May. A fifth regular appropriations bill—Commerce-Justice-Science ( H.R. 2578 )—was reported by the committee at the end of May.\nThree appropriations measures were reported by the committee during the month of June—Department of Defense ( H.R. 2685 ), State-Foreign Operations ( H.R. 2772 ), and Interior ( H.R. 2822 ). Two additional bills—Financial Services ( H.R. 2995 ) and Labor-HHS-Education ( H.R. 3020 )—were ordered reported. (These two bills were reported to the House during the month of July.) Finally, the Agriculture appropriations bill was approved in subcommittee, bringing the total number of FY2016 bills that the House Appropriations Committee had acted on to 11.\nDuring the month of July, the House Appropriations Committee concluded its consideration of regular appropriations bills for FY2016 by reporting out the Agriculture ( H.R. 3049 ) and Homeland Security ( H.R. 3128 ) bills.", "Table 5 identifies the six regular appropriations bills that have been passed by the House on initial consideration, along with the date consideration was initiated, the date consideration was concluded, and the vote on final passage.\nThe first FY2016 regular appropriations bills considered on the House floor were Military Construction-VA ( H.R. 2029 ) and Energy-Water ( H.R. 2028 ). The consideration of both of these measures was initiated on April 29, 2015, pursuant to modified open rules ( H.Res. 223 ), which generally limited debate of each amendment to 10 minutes. A total of 104 amendments were offered during the consideration of these two bills, of which 58 were adopted. The House passed the measures later that same week.\nThe Legislative Branch appropriations bill ( H.R. 2250 ) was considered on the House floor on May 19. A structured rule, as is traditional for Legislative Branch bills, limited consideration to three specified amendments. Two of these amendments were subsequently adopted. The House passed the measure on the same day that consideration began.\nDuring the first two weeks in June, the House considered and passed three appropriations measures. All three of these were considered under the terms of modified open rules. Floor consideration of the Commerce-Justice-Science bill ( H.R. 2578 ) began on June 2, and the House passed the measure on June 3. Later that same day, the House began to consider the Transportation-HUD bill ( H.R. 2577 ) but did not pass it until the following week, on June 9. The House initiated consideration of the DOD bill on June 10 and passed it the next day. A total of 233 amendments were offered to those three measures during that two-week period, of which 124 were adopted.\nThe House began considering the Interior bill ( H.R. 2822 ) on June 25 but did not finish amending the bill prior to the Fourth of July district work period. The House resumed consideration of the measure on July 7 but halted consideration the following day. Prior to when consideration was halted, the House had adopted 57 amendments of the 116 that had been offered.\nNo further floor consideration of regular appropriations bills has occurred as of the date of this report.", "", "Table 6 lists the regular appropriations bills that have received subcommittee or full committee action along with the date of subcommittee approval, date reported to the Senate (if applicable), and the report number.\nThe Senate Appropriations Committee began consideration of the FY2016 regular appropriations bills in the same order as the House, acting first on the Energy-Water ( H.R. 2028 ) and Military Construction-VA ( H.R. 2029 ) bills. Both were reported to the Senate on May 21, 2015.\nSeven additional bills were reported by the committee during the month of June—Department of Defense ( H.R. 2685 ), Legislative Branch ( H.R. 2250 ), Commerce-Justice-Science ( H.R. 2578 ), Homeland Security ( S. 1619 ), Interior ( S. 1645 ), Labor-HHS-Education ( S. 1695 ), and Transportation-HUD ( H.R. 2577 ).\nDuring the month of July, the committee completed its consideration of FY2016 regular appropriations by reporting the State-Foreign Operations ( S. 1725 ), Agriculture ( S. 1800 ), and Financial Services ( S. 1910 ) appropriations bills.", "Table 7 identifies the one regular appropriations bill that the Senate passed on initial consideration, along with the date consideration was initiated, the date consideration was concluded, and the vote on final passage.\nThe Senate first attempted to initiate floor consideration of the Military Construction-VA appropriations bill ( H.R. 2029 ) on September 30. On that date, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. The following day, the Senate voted not to invoke cloture on the motion to proceed by a vote of 50-44. After the BBA 2015 was enacted, the Senate agreed to proceed to consider the measure, by a vote of 93-0, on November 5, 2015. (An amendment in the nature of a substitute was offered and constituted the base text for consideration of the measure.) During the floor consideration, a total of 17 amendments were offered to that substitute amendment, of which 16 were adopted. The measure passed the Senate by a vote of 93-0 on November 10, 2015.\nIn addition to the Military Construction-VA appropriations bill, the Senate has also considered the Transportation-HUD appropriations bill. On November 16, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. The following day, that cloture motion was withdrawn. Instead, the measure was laid before the Senate by unanimous consent on November 18. (An amendment in the nature of a substitute was offered and constituted the base text for consideration of the measure.) As of the date of this report, of the four amendments that had been offered to that substitute amendment, three had been adopted and one had not yet been disposed of. Cloture was filed on the substitute amendment and the bill itself the same day that the Senate began consideration of the measure, but both of those motions were later withdrawn by unanimous consent on November 19. No further consideration has occurred as of the date of this report.\nThe Senate has also addressed whether to proceed to consider two other FY2016 regular appropriations bills:\n1. Department of Defense ( H.R. 2685 ). On June 16, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. Two days later, on June 18, the Senate failed to invoke cloture on the motion to proceed by a vote of 50-45. On September 22, the Senate reconsidered the vote by which cloture on the motion to proceed was not invoked and again failed to invoke cloture by a vote of 54-42. About five weeks later, on November 3, the motion to proceed to the measure was made again the Senate, and cloture was filed on that motion. On November 5, cloture was not invoked on the motion to proceed by a vote of 51-44. 2. Energy-Water ( H.R. 2028 ). On October 6, a motion to proceed to the measure was made in the Senate, and cloture was filed on that motion. On October 8, the Senate failed to invoke cloture on the motion to proceed by a vote of 49-47.\nNo further Senate floor action has occurred with regard to these or any other regular appropriations measures as of the date of this report.", "Because none of the FY2016 regular appropriations bills was expected to be enacted by the beginning of the fiscal year, a CR ( H.R. 719 ; P.L. 114-53 ) was enacted on September 30, 2015. This CR generally extended funding at last year's levels, with a small across-the-board reduction and certain enumerated exceptions, through December 11, 2015.\nFor further information with regard to the funding and other authorities provided by the continuing appropriations in H.R. 719 , see CRS Report R44214, Overview of the FY2016 Continuing Resolution (H.R. 719) , by [author name scrubbed].\nPrior to the consideration and enactment of H.R. 719 , Senate legislative action related to FY2016 continuing appropriations occurred on a different legislative vehicle, H.J.Res. 61 . Congressional action on both of these vehicles is summarized chronologically in this section of the report.", "On September 22, Senate Majority Leader Mitch McConnell offered an amendment in the nature of a substitute ( S.Amdt. 2669 ) to H.J.Res. 61 that would provide temporary FY2016 continuing appropriations through December 11, 2015, and also contained provisions that would limit the ability of Planned Parenthood to receive federal funds unless certain conditions were met. This amendment was offered to an unrelated measure that was pending before the Senate (Hire More Heroes Act of 2015; H.J.Res. 61 ). On September 24, the Senate failed to invoke cloture on that amendment to H.J.Res. 61 by a vote of 47-52. No further Senate action occurred with regard to that amendment.", "After the Senate rejected cloture on the Senate amendment to H.J.Res. 61 on September 24, Majority Leader McConnell made a motion that proposed a Senate amendment ( S.Amdt. 2689 ) to a different, unrelated measure pending before the Senate (TSA Office of Inspection Accountability Act of 2015, H.R. 719 ) and filed cloture on that motion. More formally, the majority leader offered a motion to concur with an amendment ( S.Amdt. 2689 ) to a House amendment to a Senate amendment to H.R. 719 . As was the case for the initial CR amendment he offered to H.J.Res. 61 , this new Senate amendment contained temporary FY2016 continuing appropriations through December 11. However, this amendment did not include the Planned Parenthood–related provisions that were carried in the initial CR amendment offered to H.J.Res. 61 . On September 28, the Senate invoked cloture on a motion to concur with S.Amdt. 2689 by a vote of 77-19. On September 30, the Senate adopted that motion to concur by a vote of 78-20. By a vote of 277-151, the House concurred in that Senate action later in the day, and H.R. 719 was signed into law that evening ( P.L. 114-53 ).\nThe 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 total amount of annualized budget authority for regular appropriations in the CR that is subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $1,016.582 billion.\nAlthough the total spending in the CR that is subject to the FY2016 statutory limits is equal to the total of those limits, the CR is estimated to comply with the defense limit, but it exceeds the nondefense limit. CBO estimates defense spending in the CR to total $520.385 billion, which is about $2.7 billion below the defense limit. Nondefense spending, however, is estimated to total $496.197 billion, which is about $2.7 billion above the nondefense limit. As was previously mentioned, however, the earliest that the statutory discretionary spending limits could be enforced is 15 days after the end of the congressional session. This date is likely to occur after the expiration of the CR on December 11, 2015.\nWhen CBO estimated the budgetary effects of the CR and included spending that is effectively not subject to the statutory discretionary spending limits—because it was designated or otherwise provided as OCO/GWOT, continuing disability reviews and redeterminations, health care fraud and abuse control, disaster relief, and emergency requirements—the total amount of annualized budget authority in the CR is $1,099.962 billion." ], "depth": [ 0, 1, 1, 2, 3, 3, 3, 3, 2, 1, 2, 3, 3, 2, 3, 3, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h1_title", "h1_title", "h1_full", "", "", "h1_full", "h0_full h1_full", "h2_full", "h2_title", "h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "Under the congressional budget process, what are the sources of discretionary spending budget enforcement?", "What is the function of discretionary spending limits and budget enforcement?", "What kinds of spending are not subject to these limits?", "What is one factor that has affected the focus of the appropriations process?", "What kind of allocation for the Appropriations Committees did the FY2016 budget provide?", "What kinds of supplements did this budget resolution provide?", "What new discretionary spending levels did the Bipartisan Budget Act of 2015 include?", "What regular appropriations bills for FY2015 have the House and Senate Appropriations Committees reported?", "What bills has the House passed?", "What bills has the Senate passed?" ], "summary": [ "For all types of appropriations measures, discretionary spending budget enforcement under the congressional budget process has two primary sources. The first is the discretionary spending limits that are derived from the Budget Control Act of 2011 (P.L. 112-25). The second source of budget enforcement is associated with the budget resolution.", "It imposes limits on both the total spending under the jurisdiction of the Appropriations Committees (referred to as a \"302(a) allocation\") as well as spending under the jurisdiction of each of the Appropriations subcommittees (referred to as \"302(b) suballocations\").", "Certain spending is effectively not subject to these statutory and procedural limits, such as spending which is designated as \"Overseas Contingency Operations/Global War on Terrorism\" (OCO/GWOT) and \"disaster relief.\"", "Disagreement over the appropriate level of discretionary spending—as well as its distribution between defense and nondefense activities—has significantly affected the focus of the FY2016 appropriations process.", "The FY2016 budget resolution (S.Con.Res. 11) that was adopted by Congress provided a 302(a) allocation for the Appropriations Committees that was consistent with the statutory discretionary spending limits set in the Budget Control Act.", "However, the budget resolution also allowed for those funds to be supplemented by additional OCO/GWOT spending at a higher level than the amount requested by the President.", "On November 2, new levels for discretionary spending were established through the enactment of the Bipartisan Budget Act of 2015 (BBA 2015; H.R. 1314; P.L. 114-74). The BBA 2015 raises both the defense and nondefense statutory discretionary spending limits for FY2016 and FY2017 and specifies an expected level for the OCO/GWOT spending adjustment for each of those fiscal years.", "As of the date of this report, both the House and Senate Appropriations Committees have reported all 12 regular appropriations bills for FY2016.", "The House has passed six of these—Energy-Water (H.R. 2028); Military Construction-VA (H.R. 2029); Legislative Branch (H.R. 2250); Commerce-Justice-Science (H.R. 2578); Transportation-HUD (H.R. 2577); and Defense (H.R. 2685).", "The Senate has passed one regular appropriations bill—Military Construction-VA." ], "parent_pair_index": [ -1, 0, 1, -1, -1, 1, -1, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Background", "Performance Pay", "Performance Awards", "Performance-Related Personnel Actions", "VA’s Performance Pay Policy Has Gaps in Information Needed to Administer Performance Pay", "VA’s Policy Allows Discretion in the Establishment of Performance Pay Goals, but Lacks an Overarching Purpose That the Goals Should Support", "VA’s Policy Is Unclear about Documenting Certain Requirements and Silent about Documenting Performance Pay Decisions for Providers Who Had Performance- Related Personnel Actions", "VHA’s Oversight Is Inadequate to Ensure Compliance with Performance Pay and Award Requirements", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Performance-Related Personnel Actions and Performance Pay Amounts", "Appendix II: Comments from the Department of Veterans Affairs", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Most VA providers—including full- and part-time providers—are eligible for performance pay, but they may choose not to participate. Performance pay is given annually in a lump sum and may not exceed the lesser amount of $15,000 or 7.5 percent of a provider’s combined base and market pay, under the statute that defines the elements of provider pay. However, according to VHA officials, VA headquarters and each network and medical center have discretion to set a lower annual cap for their providers, and the amounts awarded may also depend on VA’s budget. Under the statute, performance pay is given on the basis of a provider’s achievement of specific goals and performance objectives, referred to in this report as goals. According to policy, performance pay goals can be established by medical center and network officials. As a result, the goals may be the same for all providers in the network, at a particular medical center, or within a particular specialty, or they may vary by individual provider. The amount of performance pay depends on the extent to which it is determined that a provider met his or her performance pay goals. Performance pay goals may include, for example, achieving a specific patient panel size, and are required by VA policy to be established within 90 days of the beginning of each fiscal year. VA’s performance pay policy requires medical centers to use form 10-0432 for each provider to document the goals and the provider’s achievement of them. When completed, the form is given to the medical centers’ respective human resources offices, which process the performance pay.", "Most providers are eligible for performance awards, although these awards are not required. The awards are lump-sum payments that are made annually and are based on providers’ annual performance reviews. VA policy requires that all providers—including full- and part-time providers—who have worked at VA medical centers receive annual performance reviews. For nonsupervisory providers, the reviews consist of a standard set of measures, including clinical, educational, and administrative competence; research and development; and personal qualities, such as dependability. A provider can receive an overall rating of unsatisfactory, low satisfactory, satisfactory, high satisfactory, or outstanding on an annual performance review. Service chiefs and chiefs of staff at VA medical centers, and providers at headquarters and networks who are in supervisory positions, also receive annual performance reviews based on measures outlined in VHA’s managerial performance plan. For nonsupervisory providers, the policy specifies that performance award amounts should not exceed $7,500. However, as with performance pay, VA headquarters, networks, and medical centers have discretion to determine the level of performance that would merit an award and the award amount within the $7,500 limit. For example, one medical center may grant performance awards to all providers who receive an overall performance rating of satisfactory or higher, while another medical center may only grant performance awards for an overall rating of outstanding, or not give them at all.", "VA policy states that VA medical centers may take actions, such as major adverse and disciplinary actions, against providers to address and correct deficiencies related to providers’ clinical performance. These actions range in severity from admonishment to termination of employment. In addition, VHA also has the option of taking privileging action—that is, reducing, revoking, denying, or failing to renew a provider’s clinical privileges—against medical center providers to address performance deficiencies.\nMedical centers have discretion in determining the type of action appropriate for each provider’s performance issue. Performance- related personnel actions may serve as an indication that the provider has not delivered high-quality, safe health care.", "", "VA’s performance pay policy gives VA’s 21 networks and 152 medical centers discretion in the establishment of performance pay goals for providers. The policy, issued in 2005 and revised in 2008, states that providers who meet established goals should receive performance pay. However, the policy does not provide an overarching purpose that the goals should support. VA’s Under Secretary for Health at the time the performance pay law was being considered stated in a congressional hearing that this pay would recognize providers’ achievements in quality, productivity, and support of the overall goals of the department. The Senate committee report and statements by members of Congress at the time the bill was passed provided that performance pay would recognize outstanding contributions to the medical center, to the care of veterans, or to the practice of medicine or dentistry, and it would motivate providers and ensure quality of care through the achievement of specific goals or objectives set for providers in advance.responsible for writing the performance pay policy also told us that the In addition, VA officials purpose of performance pay is to improve health care outcomes and quality; however, these goals are not documented in the policy.\nOfficials at the four medical centers we visited differed in their views of what constituted appropriate goals for performance pay. The following are examples of the factors these officials thought should be considered when establishing performance pay goals. According to these officials, the goals should be objective and measurable, measure only clinical achievements, recognize performance that is above and beyond expectations, or be measured at the individual provider level to ensure that the provider has direct control over the achievement of the goals.\nAs a result of these differing views, our review of the goals established for a mental health provider at each of four medical centers we visited found similarities as well as differences in the fiscal year 2011 goals. For example, one medical center used clinical goals exclusively, while others used a combination of goal types, such as clinical, patient satisfaction, and research.\nTable 1 includes examples of the types of goals established for a mental health provider at each of the four medical centers we visited.\nVHA officials told us that they have not formally reviewed the various goals that have been established by individual medical centers and networks to determine the purpose or purposes these goals support. In 2009, the Principal Deputy Under Secretary for Health asked that a group be convened to solicit and compile performance pay goals in order to review the types of goals being developed for each physician specialty and dental service across VA’s health care system. VHA officials told us at the time of our review that they had not yet done this, but planned to begin compiling and discussing a list of useful goals sometime in 2013. Because VHA has not reviewed the goals that have been set across medical centers and networks, it cannot have reasonable assurance that the goals established make a clear link between performance pay and providers’ performance. This condition is inconsistent with federal standards for internal control activities, which includes management of human capital.\nOf the eight providers who were the subject of performance-related personnel actions in fiscal year 2010 or 2011 at the four medical centers visited, three providers were not eligible for performance pay during the same fiscal year. Two of the three providers were not eligible because they were terminated or resigned before the end of the fiscal year, and the third was not eligible because the provider was placed on indefinite suspension without pay and was not practicing as of the end of the fiscal year. $7,663 in performance pay, 67 percent of the amount for which the provider was eligible.\nAnother provider was reprimanded for refusing to see assigned patients waiting in the emergency department because the provider believed that patients had been triaged inappropriately. As a result, wait times increased. Documentation provided by the medical center indicated that, of the 98 patients who were triaged to the emergency department that day, 15 patients waited for over 6 hours to be seen and 9 patients left without being seen. That same fiscal year, this provider received $7,500 out of a maximum of $15,000 in performance pay. Specifically, this provider had 13 performance pay goals, which included becoming a member of a committee, attending staff meetings, and ensuring that all provider notes were signed in accordance with medical center policy. The provider met 1 of the 13 goals, which was assigned a weight of 50 percent. This goal was not specific to the individual provider, but instead was based on the achievements of all emergency department providers; it included meeting performance measures, such as maintaining productivity despite reduced resources, and adhering to the medical center policy for length of stay for patients in the emergency room. Since the medical center determined that the emergency department providers, which included this provider, met this goal, the provider received 50 percent of the maximum amount of performance pay. The service chief told us that his preference would have been to deny performance pay to this provider altogether, but he was told that the provider was entitled to the pay.\nIn contrast to the performance pay policy, VA’s performance award policy clearly states the purpose of these awards—specifically, that they are to recognize sustained performance of providers beyond normal job requirements as reflected in the provider’s most recent performance rating. VA policy also lists the measures supervisors are to use to determine the performance rating for providers in nonsupervisory positions, such as clinical competence.", "VA’s performance pay policy is unclear about how to document compliance with two requirements—the goal-setting discussion between the supervisor and provider and the approval of the performance pay amount. For the documentation of goal-setting discussions, the policy states that supervisors are to discuss established goals with individual providers within 90 days of the beginning of the fiscal year, but it does not specify how medical centers are to demonstrate compliance with this requirement. VA’s policy specifies that form 10-0432 is to be used for documenting performance pay. The form has space at the top for listing the goals that a provider must meet to receive performance pay. The form includes a signature and date box for the supervisor and for the provider, respectively. (See fig. 1, section A.) The VA officials who wrote the policy, and VHA officials who are responsible for helping medical centers implement it, told us they expect that provider and supervisor signatures on the top of the form would indicate that goals have been discussed and the date would indicate when this discussion took place. The officials told us that this date is to verify that the 90-day requirement was met, but they have not documented or provided this guidance to the medical centers.\nBecause the policy does not specify how compliance with the 90-day requirement should be documented, one of the four medical centers we visited did not interpret the policy the way VA and VHA officials did, and therefore, did not document compliance with the 90-day requirement when administering performance pay. Officials responsible for processing the performance pay form at this medical center told us that VA does not have a requirement for documenting compliance with the 90-day requirement and they do not believe form 10-0432 should be used for this purpose. At this medical center, we found that none of the forms we reviewed were signed by the supervisor and provider within 90 days of the beginning of the fiscal year, and instead all the forms were signed after the end of the fiscal year. Officials from the other three medical centers said that the form should be signed by the provider and supervisor within 90 days, or as soon as possible after the beginning of the fiscal year to indicate that the goals have been communicated. However, our review of the documentation from these three medical centers indicates that their forms were not always signed within 90 days.\nFor the second documentation requirement, the policy states that the performance pay amount must be approved and that performance payments for the fiscal year must be disbursed no later than March 31 of the following fiscal year, but does not state that the approving official must sign form 10-0432 by that date. VA’s policy also states that the supervisor should forward form 10-0432 to the designated approving official for action. The bottom of form 10-0432 includes a signature and date box for an approving official, who is to sign and date the form. (See fig. 1, section B.) VA and VHA officials told us they expect that medical centers will not disburse performance pay, which they are required to do by March 31 or earlier, unless the approving official’s signature and date are on the form. However, VA’s policy does not state that the approving official’s signature must be dated before March 31.\nBecause the policy does not specify when the approving official should sign the form 10-0432, officials at the four medical centers had not all interpreted and implemented the policy the way VA and VHA officials did, and the medical centers differed in how they documented approval when administering performance pay. For example, one medical center official who became responsible for processing these forms in 2011 told us that he does not look for the approving official’s signature to be dated by March 31. At this medical center, all of the fiscal year 2011 forms 10-0432 we reviewed were signed by the approving official after March 31, which indicates that the payments were made after the required disbursement date or that payments were made before they were approved. For fiscal year 2010, when a different official at this medical center was responsible for processing the performance pay forms, we found that nearly all of the forms were signed by the approving official by March 31. At the other three medical centers, we found that some forms were signed by the approving officials after March 31 or not at all, even though officials at these medical centers told us they strive to meet this date.\nFurther, VA’s policy lacks a requirement for documenting whether performance-related personnel actions had an impact on providers’ achievement of performance pay goals, and as a result, how these actions affected performance pay decisions, such as reducing or denying this pay. Some VHA headquarters officials we interviewed said that situations involving providers who had a performance-related personnel action would need to be reviewed case by case to determine if the action had an impact on whether the provider met established goals, since not all performance-related personnel actions would merit reducing or denying a provider’s performance pay. These officials told us they expected medical center officials to document their review of these actions when determining whether to give performance pay to these providers. However, these expectations are not explicit in VA’s performance pay policy. The documents provided by the four medical centers for five providers who had performance-related personnel actions did not include documentation that the actions were considered. Some medical center officials told us that they did not consider the performance- related personnel actions when making performance pay determinations, while others told us that they did but that they did not document it.\nWithout a performance pay policy that clearly specifies how to document decisions or compliance with requirements, VHA does not have reasonable assurance that documentation includes all necessary information, a condition that is inconsistent with federal standards for internal control activities. In addition, medical centers will likely continue to vary in their interpretation of the policy for documenting goal-setting within 90 days of the beginning of the fiscal year, and subsequent approval of performance pay and the extent to which they document compliance with it. As a result, VHA does not have reasonable assurance that medical centers are complying with requirements.without documentation of whether performance-related personnel actions affected performance pay decisions, VHA lacks information about how these decisions were made and whether these decisions appropriately reflected providers’ performance.", "VHA does not provide adequate oversight to ensure that its medical centers are in compliance and remain in compliance with performance pay and award requirements. VHA’s Workforce Management and Consulting Office conducts annual Consult, Assist, Review, Develop, and Sustain (CARDS) reviews, which are consultative reviews that were initiated in 2011 to assist medical centers in complying with human resources requirements, including performance award requirements.According to VHA officials, the results of these reviews are provided to the medical centers. However, these reviews have limitations and, as a result, do not always ensure that medical centers comply and remain in compliance with human resources requirements.\nThe five CARDS reviewers take turns in the lead CARDS reviewer role on a yearly basis. This individual was the lead CARDS reviewer during our review, and as such can speak for all of the reviewers. centers. CARDS reviews use a standard list of elements to review other human resources requirements, including performance awards.\nIn addition, the CARDS reviewers do not have the authority to require medical centers to resolve compliance problems they identify, and VHA has not formally assigned responsibility to an organizational component with the knowledge and expertise of human resources issues to do this, a condition that is inconsistent with internal control standards for control environment. currently indicate that network human resources managers, who typically accompany CARDS reviewers on reviews, are to follow up with medical centers’ human resources offices to ensure identified problems are resolved. However, this reviewer said CARDS reviewers do not have the authority to require that this follow-up be done. Further, network human resources managers lack the authority to require medical center human resources managers to correct identified problems because medical center directors, not network human resources managers, typically have oversight authority over medical center human resources managers, according to VHA officials. Figure 2 shows the organization of VHA offices that are involved in performance pay and awards for providers at medical centers.\nGAO/AIMD-00-21.3.1. network director reports directly to the Deputy Under Secretary for Health for Operations and Management.\nGenerally, the applicable network human resources official attends the CARDS review.\nAs a result of the limitations with CARDS reviews—the lack of a standard list of performance pay elements, as well as the lack of an organizational component assigned to follow up on noncompliance and ensure it is corrected—VHA is unable to ensure that medical centers correct the problems found by the reviews and that problems do not recur, a condition that is inconsistent with internal control standards for monitoring. We found that two of the four VA medical centers we visited did not always correct problems identified through CARDS reviews. For example, a May 2011 CARDS review of one of these two medical centers found that the medical center did not conduct a formal evaluation of its awards program, as required. A CARDS review of this same medical center about a year later found the identical problem. An October 2011 CARDS review of the second medical center found that the facility was not using the required form 4659 for performance awards, and we found that the same medical center did not use form 4659 for performance awards in fiscal years 2010 and 2011. We also found that another medical center was not using form 4659 for performance awards in fiscal years 2010 and 2011. Additionally, we found other instances of noncompliance at two of the four medical centers. For example, we found that one of the medical centers we visited used form 4659 for performance awards, but was unable to provide the form for two of the five providers who received awards in fiscal year 2011. Further, we found that another medical center was unable to provide the required form 10- 0432 for performance pay for six of the providers we reviewed in fiscal years 2010 or 2011. Also, for the providers’ forms that were available in fiscal year 2010, two forms did not indicate whether the goals were met to justify the performance pay amounts, as required by VA policy.", "Part of VHA’s responsibility for administering performance pay and awards is ensuring that providers understand the link between this compensation and their performance, according to federal internal control standards. However, VA’s performance pay policy does not state a purpose for this pay, and VHA, which administers this pay, has not reviewed the performance pay goals that have been established across VA medical centers and networks. Without stating a purpose for the pay and reviewing the goals, VHA cannot determine the purposes these goals support, and the relationship between performance pay and providers’ performance is unclear. All of the providers we reviewed who were eligible for performance pay in fiscal year 2010 or 2011 received this pay, including providers who had performance-related personnel actions taken against them. Because VA’s policy is silent on documenting whether performance-related personnel actions affected performance pay, none of the medical centers provided documentation that these actions were considered in making performance pay decisions. As a result, VHA lacks information about how these decisions were made and whether these decisions reflect providers’ performance. Moreover, because VA’s policy does not specify how compliance should be documented for certain performance pay requirements, such as discussion of goals and approval of amounts, VHA cannot ensure consistent compliance across its medical centers.\nIn addition, oversight of medical centers’ management of performance pay and awards is not adequate for VHA to have reasonable assurance that medical centers fully comply with requirements. VHA has not assigned responsibility to an organizational component to follow up on identified problems at medical centers, including problems identified during CARDS reviews, to ensure that they are corrected and remain corrected. Oversight that does not ensure that identified problems are resolved and remain so is inconsistent with federal standards for internal control, and may allow compliance problems to persist or worsen.", "To clarify VA’s performance pay policy, we recommend that the Secretary of Veterans Affairs direct the Assistant Secretary for Human Resources and Administration to take the following four actions to specify in policy: the overarching purpose of performance pay; how medical centers should document that supervisors have discussed performance pay goals with providers within the first 90 days of the fiscal year; that medical centers should document approval of performance pay amounts and that the approval occurred before the required March 31 disbursement date; and how medical center officials should document whether performance- related personnel actions had an impact on providers’ achievement of performance pay goals, and as a result, affected performance pay decisions.\nTo ensure that performance pay goals are consistent with the overarching purpose that VA specifies for this pay, we recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health to review existing performance pay goals across VA’s health care system.\nTo strengthen oversight of medical centers’ compliance with VA policy requirements for performance pay and awards, we recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health to take the following two actions: ensure medical centers are in compliance with the requirements in the performance pay and award policies and assign responsibility to a VHA organizational component with the knowledge and expertise to ensure correction of medical centers’ noncompliance with VA’s performance pay and award policy requirements, including problems identified during CARDS reviews, and ensure that medical centers maintain compliance with these requirements.", "VA provided written comments on a draft of this report, which we have reprinted in appendix II.conclusions and recommendations.\nIn its comments, VA generally agreed with our In response to our recommendations to clarify the performance pay policy, VA stated that it concurred with three of them and concurred in principle with the fourth. Regarding the overarching purpose of performance pay, VA stated that it will coordinate with VHA to develop a policy change that will clearly articulate the purpose of performance pay, which is to ensure and improve the quality of care through the achievement of specific goals and objectives. In response to our recommendations that VA specify how medical centers should document the goal-setting discussion between the supervisor and provider, and the approval of the performance pay amount, VA stated that it would revise the performance pay policy to include more detailed instructions for documenting compliance with these two requirements. In addition, VA said it would revise form 10-0432 to include sections for documenting compliance with these two requirements.\nVA stated that it agreed in principle with our recommendation that medical centers should document whether performance-related personnel actions had an impact on providers’ achievement of performance pay goals, and affected performance pay decisions. VA agreed that medical center officials should consider whether a performance-related personnel action had an impact on the provider’s achievement of the goals and objectives associated with performance pay, but stated that it is inappropriate to require the documentation of the decision on form 10-0432. We appreciate VA’s commitment to clarify in policy that medical center officials should consider performance-related personnel actions when making performance pay decisions. We support VA’s flexibility as to where to document these considerations, which is why we did not specify in our recommendation that form 10-0432 should be used for this purpose. However, we continue to believe that if such considerations are not documented, VHA lacks information about how these decisions were made and whether these decisions appropriately reflected providers’ performance, which is inconsistent with federal internal control standards for documentation.\nTo address our recommendation that the Under Secretary for Health review the existing performance pay goals across VA’s health care system to ensure that performance pay goals are consistent with the purpose specified in policy, VA stated that the Under Secretary for Health directed a committee on February 11, 2013, to conduct a review of policies and controls associated with the administration of performance pay, including evaluating challenges associated with establishing performance pay goals, inconsistent application of performance pay, and the overall perceived value of performance pay. In June 2013, the Under Secretary for Health directed a new task force to build upon the work of that committee and make recommendations for ensuring a consistent and system-wide process for setting and evaluating performance pay goals and granting performance pay, including making recommendations for reviewing and setting uniform performance pay goals across the system that are aligned to help VHA achieve its goals.\nTo address our recommendations to strengthen oversight of medical centers’ compliance with VA policy requirements for performance pay and awards, VA stated that the Under Secretary for Health established in May 2013 a task force to develop and provide guidance and methodology for performance pay. In addition, VA stated that VHA’s Office of the Deputy Under Secretary for Health for Operations and Management will assign responsibility to the network directors, in coordination with the network human resources managers, network chief medical officers, medical center directors, medical center chiefs of staff, and medical center human resources managers, for monitoring and enforcing VA’s performance pay and award policies, and communicate that responsibility in a memorandum. Additionally, the Office of the Deputy Under Secretary for Health for Operations and Management will communicate in a memorandum to the network directors and human resources managers that they should monitor and track CARDS reviews and coordinate with the medical center directors and human resources managers to ensure proper corrective actions are taken for compliance.\nVA also provided a general comment that it considered our definition of performance-related personnel actions, defined in footnote 5 of the report, to be too broad. Specifically, VA stated that performance actions are taken when an employee lacks the skill and ability to perform assigned duties, and that in such situations providers are given assistance and an opportunity period to perform at an acceptable level of competence. VA also stated that if the provider fails to perform at an acceptable level during this period, the resulting performance action will be either a reduction of privileges or termination. However, VA’s policy on employee/management relations states that disciplinary actions—which include admonishments and reprimands—and major adverse actions— which include suspension, transfer, reduction in grade, and reduction in basic pay, in addition to termination—can be taken to address performance or conduct. In addition, VA stated that four of the five scenarios listed in appendix I of the report were conduct actions, not performance actions. As stated in footnote 5 of the report, we created the term performance-related personnel actions to include any action taken to address clinical performance—that is, an action that medical centers’ documentation indicated was related to patient safety or quality. Documentation provided by the medical centers for each of the five cases listed in appendix I clearly stated that the actions that were taken against the providers were related to patient safety or quality.\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 Veterans Affairs, interested congressional committees, and others. 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 draperd@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 III.", "Appendix I: Performance-Related Personnel Actions and Performance Pay Amounts A reprimand is an official letter of censure to a provider for deficiencies in competence. Reprimands can also be issued for acts of misconduct. A reprimand is a more severe disciplinary action than an admonishment, which is an official letter of censure to a provider for minor deficiencies in competence or conduct.\nVA officials did not provide documentation of the letter of alternative discipline but indicated that it was probably a reprimand. We included this case in our sample based on documentation provided by the medical center, which indicated that the action was closed in fiscal year 2010.", "", "", "", "In addition to the contact named above, Mary Ann Curran, Assistant Director; Elizabeth Conklin; Kaitlin McConnell; Elizabeth T. Morrison; Lisa Motley; and Christina Castillo Serna made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title", "h2_full", "h2_full", "", "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h2_full", "h0_full h1_full", "h2_full", "", "h2_full", "", "", "", "", "" ] }

{ "question": [ "What does the VA's performance pay policy do?", "What areas does the pay policy cover?", "How effective is the performance pay policy?", "What are the gaps between the policy's understood purpose and its written policy?", "What are the shortcomings of the policy's goals?", "What did GAO find in its review of the pay policy with regards to recipients?", "What shortcomings in the policy did GAO discover?", "What is the difference between performance pay and performance award?", "What does VA policy list in terms of performance ratings?", "What do VHA consultative reviews do?", "Why is VHA oversight inadequate?", "What are limits on VHA's authority?", "What is one result of this inadequacy?", "What has GAO found in analyzing this inadequacy?", "What is the role of VHA?", "What is the disconnect between VHA's quality of care and its performance-based awards?", "What kinds of performance pay did VHA grant in FY 2011?", "What was GAO asked to review regarding VHA?", "What does GAO's review assess?", "How did GAO conduct this review?" ], "summary": [ "The performance pay policy gives VA's 152 medical centers and 21 networks discretion in setting the goals providers must achieve to receive this pay, but does not specify an overarching purpose the goals are to support.", "Among the four medical centers GAO visited, performance pay goals covered a range of areas, including clinical, research, teaching, patient satisfaction, and administration.", "The Department of Veterans Affairs' (VA) performance pay policy has gaps in information needed to appropriately administer this type of pay.", "VA officials responsible for writing the policy told us that the purpose of performance pay is to improve health care outcomes and quality, but this is not specified in the policy.", "Moreover, the Veterans Health Administration (VHA) has not reviewed the goals set by medical centers and networks and therefore does not have reasonable assurance that the goals make a clear link between performance pay and providers' performance.", "At these medical centers, all providers GAO reviewed who were eligible for performance pay received it, including all five providers who had an action taken against them related to clinical performance in the same year the pay was given.", "The related provider performance issues included failing to read mammograms and other complex images competently, practicing without a current license, and leaving residents unsupervised during surgery. Moreover, VA's policy is unclear about how to document certain decisions related to performance pay. For example, the policy does not provide clear guidance on what to document regarding whether a provider's performance-related action should result in the reduction or denial of the provider's performance pay.", "In contrast to the performance pay policy, VA's performance award policy clearly states the purpose of these awards-- specifically, that they are to recognize sustained performance of providers beyond normal job requirements as reflected in the provider's most recent performance rating.", "VA policy also lists the measures, such as clinical competence, that providers' supervisors are to use to determine these providers' performance rating.", "VHA's annual consultative reviews, initiated in 2011, help medical centers comply with human resources requirements, including performance award requirements. Recently, these reviews began to also include performance pay requirements, but do not yet include a standard list of performance pay elements to review, which would be needed to ensure consistency of reviews across medical centers.", "VHA's oversight is inadequate to ensure that medical centers comply with performance pay and award requirements.", "Further, reviewers do not have the authority to require medical centers to resolve compliance problems they identify, and VHA has not formally assigned specific organizational responsibility to ensure medical centers resolve identified problems.", "As a result, VHA is unable to ensure that reviews consistently identify problems, and that these problems are corrected and do not recur.", "GAO found that two of the four medical centers visited did not always correct problems identified through these reviews. For example, a May 2011 review of one of these two medical centers found that the medical center did not conduct a formal evaluation of its performance award program, as required. A review of the same medical center about a year later found the identical problem.", "VHA administers VA's health care system and strives to provide high-quality, safe care to veterans.", "Concerns continue about the quality of care VHA delivers, but many physicians and dentists, referred to as providers, receive performance-based pay and awards.", "In fiscal year 2011, about 80 percent of VHA's nearly 22,500 providers received approximately $150 million in performance pay, and about 20 percent received more than $10 million in performance awards.", "GAO was asked to review VHA's performance pay and award systems.", "This report examines (1) whether VA's performance pay and award policies ensure appropriate administration of this compensation and (2) VHA's oversight of medical centers' compliance with policy requirements.", "GAO reviewed documents and interviewed VA and VHA officials about the administration of performance pay and awards and VHA's oversight of the related policy requirements; analyzed data from a random sample of about 25 providers selected primarily from primary care, surgery, psychiatry, and dentistry at each of four medical centers GAO visited that had at least one provider who was the subject of an action related to clinical performance." ], "parent_pair_index": [ -1, 0, 0, 0, 0, 0, 5, 0, -1, -1, -1, 2, 2, 2, -1, 0, 1, 0, 3, 4 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Background", "EPA's June 2012 Proposed Changes to the PM NAAQS", "Comparison of the June 2012 PM2.5 Annual Standard with Previous Promulgated and Proposed Alternative PM Standards", "Review Process Leading up to the June 2012 Proposed PM NAAQS", "Implementing the Proposed Revised PM2.5 NAAQS", "NAAQS Designation Process", "June 2012 Proposed PM2.5 Annual NAAQS Potential Area Designations", "State Implementation Plans (SIPs)", "National Regulations", "Potential Impacts of More Stringent PM Standards", "Reaction to the Proposed PM NAAQS", "Congressional Activity", "Conclusions" ], "paragraphs": [ "", "The Environmental Protection Agency (EPA) Administrator signed a proposal to strengthen the National Ambient Air Quality Standard (NAAQS) for particulate matter (PM) on June 14, 2012, intended to address potential health effects (including chronic respiratory disease and premature mortality) associated with short- and long-term exposure to particulate matter. The date of the proposal was per a June 6, 2012, order issued by the U.S. Court of Appeals for the District of Columbia Circuit in response to petitions filed by advocacy groups and 11 states. EPA's most recent statutorily required review and proposal has generated controversy and national debate among stakeholders, health and environmental advocacy groups, and states, as well as oversight in Congress, as did the previous changes leading up to the existing PM NAAQS promulgated October 2006, and those established in 1997.\nThe proposed rule subsequently published in the Federal Register June 29, 2012, started a nine-week public comment period through August 31, 2012. EPA also held two public hearings for the proposal on July 17, 2012, in Philadelphia, PA, and July 19, 2012, in Sacramento, CA. Per the D.C. Circuit decision and as agreed to in a September 4, 2012, consent decree, EPA is to finalize its decision regarding the PM NAAQS by December 14, 2012.\nThe June 2012 PM NAAQS proposal is the culmination of EPA's statutorily required review of the NAAQS under the Clean Air Act (CAA) based on studies available through mid-2009 and recommendations of EPA staff and a scientific advisory panel (Clean Air Scientific Advisory Committee, or CASAC ) established by the CAA. The agency initiated the review not long after the 2006 promulgation of the PM NAAQS. EPA staff reassessed scientific studies considered in setting the 2006 PM NAAQS revisions, reviewed and analyzed extensive subsequent research, and considered public comments and recommendations of the CASAC. Based on the scientific evidence considered, EPA Administrator Lisa P. Jackson signed the proposal that would tighten the current standard primarily by lowering the annual health-based (\"primary\") standard for fine particles smaller than 2.5 microns (PM 2.5 ). The proposal includes options for new secondary standards to address visibility impacts in urban areas associated with PM 2.5 , but would not modify the standards for inhalable coarse particles smaller than 10 microns or PM 10 . Because some farming and livestock practices contribute to particulate matter emissions, the agricultural community and some Members have maintained a particular interest in EPA's consideration of PM 10 and the potential impacts on agricultural operations.\nAs per statutory scheduling requirements under the CAA, the final designation of areas (primarily counties) as nonattainment for any revised PM standards would not be determined until the end of 2014, and states would have until at least 2020 to achieve compliance. In its Regulatory Impact Analysis (RIA) accompanying the proposed rule assessing the costs and benefits of proposed revisions to the PM NAAQS, EPA estimated that strengthening the PM 2. 5 annual standard would add further similar health benefits anticipated with the promulgation of the 2006 PM NAAQS. Others have suggested that potential health benefits of tightening the PM NAAQS might be higher than EPA's estimates. On the other hand, tighter standards could impose additional compliance requirements on communities, states, industry, and others, at what some stakeholders and Members contend will be a substantial economic cost. EPA expects that requirements and emission reductions associated with existing and recently promulgated federal regulations under the CAA will significantly allay impacts of complying with the proposed revised PM standards, and anticipates that virtually all counties will meet the standards as proposed in 2020.\nSeveral recent and pending EPA regulations implementing the various pollution control statutes enacted by Congress have garnered vigorous oversight during the 112 th Congress. Members have expressed concerns, in hearings, through bipartisan letters commenting on proposed regulations, and through introduced legislation that would delay, limit, or prevent certain EPA actions. Particular attention is being paid to the CAA, under which EPA has moved forward with the first federal controls on emissions of greenhouse gases and also addressed emissions of conventional pollutants from a number of industries. Because of health and cost implications, NAAQS decisions historically have been the source of significant concern to some in Congress. The evolution and development of the PM NAAQS, in particular, have been the subject of extensive oversight. During the 112 th Congress, some Members expressed concerns in hearings, letters to the administrator, and proposed legislation in anticipation of potential changes to the PM NAAQS, and the June 2012 proposal is expected to generate further oversight.\nThis CRS report summarizes EPA's June 2012 proposed changes to the PM NAAQS and includes comparisons with previous (1997) and current (2006) promulgated and proposed standards. Key actions leading up to the June 2012 proposal, and potential issues and concerns associated with the proposal to strengthen the PM 2.5 annual standard, are also highlighted. For more information regarding issues and implementation of the current PM 2.5 NAAQS promulgated in 2006, see CRS Report RL34762, The National Ambient Air Quality Standards (NAAQS) for Particulate Matter (PM): EPA's 2006 Revisions and Associated Issues , by [author name scrubbed], and CRS Report R40096, 2006 National Ambient Air Quality Standards (NAAQS) for Fine Particulate Matter (PM2.5): Designating Nonattainment Areas , by [author name scrubbed].", "Particulate matter is one of six principal pollutants, commonly referred to as \"criteria pollutants,\" for which EPA has promulgated NAAQS under the CAA. The others are ozone (O 3 , a key measure of smog), nitrogen dioxide (NO 2 , or, inclusively, nitrogen oxides, NOx), sulfur oxides (SOx, or, specifically, SO 2 ), carbon monoxide (CO), and lead (Pb).\nPM 2.5 can be emitted directly from vehicles, smokestacks, and fires but can also form in reactions in the atmosphere from gaseous precursors, including sulfur oxides, nitrogen oxides, and volatile organics occurring naturally or as emissions typically associated with gasoline and diesel engine exhaust, and from utility and other industrial processes. PM 10 (or coarse PM) is an indicator used in the NAAQS to provide protection from slightly larger (in the range of 2.5 to 10 microns or thoracic coarse particles), but still inhalable particles that penetrate into the trachea, bronchi, and deep lungs. These particles are generally associated with dust from paved and unpaved roads, certain industrial processes and agriculture, construction and demolition operations (including mining), and biomass burning.\nEstablishing NAAQS does not directly limit emissions; rather, it represents the EPA Administrator's formal judgment regarding the level of ambient pollution that will protect public health with an \" adequate margin of safety .\" Under Sections 108-109 of the CAA, Congress mandated that EPA set national ambient (outdoor) air quality standards for pollutants whose emissions \"may reasonably be anticipated to endanger public health (primary standards) or welfare (secondary standards)\" and \"the presence of which in the ambient air results from numerous or diverse mobile or stationary sources.\" The process for setting and revising NAAQS consists of the statutory steps incorporated in the CAA over a series of amendments. Several other steps have also been added by the EPA, by executive orders, and by subsequent regulatory reform enactments by the Congress.\nSection 109(d)(1)) of the CAA requires EPA to review the criteria that serve as the basis for the NAAQS for each covered pollutant every five years, to either reaffirm or modify previously established NAAQS. EPA has revised the PM NAAQS three times, in 1987, 1997, and most recently, October 2006, to ensure that the standards continue to provide adequate protection for public health and welfare.\nA February 24, 2009, decision by the U.S. Court of Appeals for the District of Columbia Circuit had remanded elements of EPA's decisions as promulgated in October 2006, in particular the decision not to tighten the primary annual NAAQS for PM 2.5 , to the agency for further consideration but did not vacate the revised standard nor set a specific timeline. The decision was in response to petitions filed in the D.C. Circuit by 13 states, industry, agriculture, business, and environmental and public health advocacy groups, challenging certain aspects of EPA's revisions for both PM 2.5 and PM 10 . The D.C. Circuit granted the petitions in part with regard to the PM 2.5 annual standard and the secondary standards for PM 2.5 and PM 10 (including visibility impairment), denying other challenges.\nConcerned with delays in EPA's schedule for proposing revisions to the 2006 PM NAAQS, the American Lung Association and the National Parks Conservation Association, and nine states separately filed petitions with the D.C. Circuit in November 2011 urging the court to order EPA's immediate compliance with the February 2009 remand. Subsequently, in February 2012 the two organizations sued EPA in the D.C. Circuit for failing to fulfill their statutory duty to review the October 2006 PM NAAQS within five years, and a coalition of 11 states filed a similar suit with the U.S. District Court Southern District of New York. In response, the D.C. Circuit initially directed EPA to complete its review of the PM NAAQS by June 7, 2012, and following a motion filed by the agency, amended the deadline to June 14, 2012.\nPromulgation of revised PM NAAQS will initiate a series of statutorily required actions, starting with EPA/States coordinated effort to designate areas (counties or portions of counties) with respect to attainment or nonattainment of any new primary standards three years following the effective date of published final revisions. Within three years of EPA's final designations of areas, states are required to submit plans (state implementations plans or SIPs) outlining how they will achieve or maintain compliance with the revised primary PM NAAQS. The CAA is not specific with respect to dates regarding when states must meet secondary PM standards. Relevant milestones are determined by EPA and states through the implementation planning process.", "EPA's 1997 revisions to the PM NAAQS revised the standards focused on particles smaller than 10 microns (PM 10 or coarse particles) established in 1987, and introduced standards for \"fine\" particles smaller than 2.5 microns (PM 2.5 ) for the first time. The current primary (health protection) PM NAAQS as revised in 2006 include an annual and a daily (24-hour) limit for PM 2.5 , but only a daily limit for PM 10 . To attain the PM 2.5 annual standard, the three-year average of the weighted annual arithmetic mean PM 2.5 concentration at each monitor within an area must not exceed the maximum limit set by the agency. The 24-hour standards are a concentration-based percentile form, indicating the percent of the time that a monitoring station can exceed the standard. For instance, a 98 th percentile 24-hour standard indicates that a monitoring station can exceed the standard 2% of the time during the year. For PM 2.5 and PM 10 , the secondary NAAQS, which are set at a level \"requisite to protect the public welfare,\" are the same as the primary standards.\nAs proposed June 2012, the PM 2.5 and PM 10 standards and other implementation changes would be as follows:\nPrimary (Public Health) PM Standards\nPM 2.5 : strengthen the annual standard, which currently is 15 micrograms per cubic meter (µg/m 3 ), by setting a new limit of 12 µg/m 3 or 13 µg/m 3 ; retain the daily (24-hour) standard at 35 µg/m 3 based on the current three-year average of the 98 th percentile of 24-hour PM 2.5 concentrations as established in 2006. PM 10 : retain the current daily standard of no more than one exceedance of concentrations of 150 µg/m 3 per year on average over three years; there is no current annual standard for PM 10 (the previous annual maximum concentration standard of 50 µg/m 3 was eliminated by EPA in 2006).\nSecondary (Welfare) PM Standards\nPM 2.5 and PM 10 : secondary (welfare) NAAQS would be the same as the primary standards, the same correlations as the 2006 PM NAAQS, with the exception of visibility impairment associated with PM 2.5 . PM 2.5 Visibility Impairment : add a distinct secondary standard defined in terms of a PM 2.5 visibility index based on speciated PM 2.5 mass concentrations and relative humidity data to calculate light extinction on a deciview (dv) scale similar the current Regional Haze Program. Specifically, set a 24-hour averaging time of 30 or 28 deciviews (dv) based on a 90 th percentile form over three years. EPA is also seeking comment on alternative levels (down to 25 dv) and averaging times (e.g., 4 hours).\nImplementation Changes\nMonitoring : update several aspects of monitoring regulations including requiring relocating a small number of PM 2.5 monitors to be collocated with measurements of other criteria pollutants (e.g., nitrogen dioxide (NO 2 ) and carbon monoxide (CO)) near-roadway monitoring so to ensure these monitors are at one location in each urban area with a population of 1 million or more, and operational by January 1, 2015. Use data from existing Chemical Speciation Network or the EPA/National Park Service IMPROVE monitoring network to determine whether an area meets the proposed secondary visibility index standard PM 2.5 . No changes to PM 10 monitoring. Air Quality Index (AQI) : update the AQI (EPA's color-coded tool for informing the public how clean or polluted the air is and associated measures for reducing risks of exposure) for PM 2.5 by changing the upper end range for \"Good\" category (an index value of 50) on the overall scale (0 to 500 based on conversion of PM 2.5 concentrations) to the level of the proposed revised annual PM 2.5 standard. EPA would also set the 100 value of the index scale (\"Moderate\") at the level of the current 24-hour PM 2.5 standard, which is 35 µg/m, 3 and the AQI of 150 (\"Unhealthy Sensitive Groups\") would be set at 55 µg/m. 3 The current upper end for the \"Hazardous\" (500), \"Unhealthy\" (200) and \"Very Unhealthy\" (300) AQIs would be retained. Prevention of Significant Deterioration (PSD) : revise the PSD permitting program (rules) with respect to the proposed revised PM NAAQS so as not to \"unreasonably delay\" pending permits and establish a \"grandfather\" provision for permit applications if a draft permit or preliminary determination has been issued for public comment no later than the effective date of final revised PM NAAQS. This provision would not apply to NAAQS for other criteria pollutants and permits not meeting these criteria would have to demonstrate compliance with the revised standards once they are finalized.", "The final PM 2.5 daily standard established in 2006 was among the less stringent within the range of alternative levels recommended by EPA staff, and the annual standard is not as stringent as the standard recommended by the CASAC. The decision to retain the annual PM 2.5 standard was also less than recommended. Table 1 below shows the June 2012 proposed changes to the PM 2.5 annual standard in comparison to the annual and daily standards for 1997 and 2006 promulgated standards, and alternative levels recommended prior to the 2006 final revisions.", "The CAA as enacted, includes specific requirements for a multistage process to ensure the scientific integrity under which NAAQS are set, laying the groundwork for the Administrator's determination of the standard, and the procedural process for promulgating the standard. Primary NAAQS, as described in Section 109(b)(1), were to be \"ambient air quality standards the attainment and maintenance of which in the judgment of the Administrator, based on such criteria and allowing an adequate margin of safety, are requisite to protect the public health.\"\nBased on this premise, the CAA specifies the criterion to be used by the Administrator in deciding on the final standard, including preparation of a \"criteria document\" that summarizes scientific information assessed. The act also requires the establishment and role of an independent advisory committee (CASAC ) to review EPA's supporting scientific documents, and the timeline for completing specific actions. EPA administratively added the preparation of a \"staff paper\" that summarizes the criteria document and lays out policy options. In addition, Executive Order 12866 requires a Regulatory Impact Analysis (RIA), although the economic impact analysis is essentially only for informational purposes and cannot be directly considered as part of the decision in determining the NAAQS.\nBeginning June 2007 with its general call for information, EPA initiated the current PM NAAQS review, which culminated in assessments of the scientific research and risk analyses, and ultimately the April 2011 publication of the staff's final Policy Assessment for the Review of the Particulate Matter National Ambient Air Quality Standards (or PM Policy Assessment) . The staff paper presented the staff conclusions and recommendations on the elements of the PM standard based on evaluation of the policy implications of the scientific evidence contained in the criteria document and the results of quantitative analyses (e.g., air quality analyses, human health risk assessments, and visibility analyses) of that evidence. Table B -1 in Appendix B provides a chronological listing of EPA's supporting documents leading up to the June 2012 proposed PM NAAQS.\nSupplemental to public comments solicited in the Federal Register , the CASAC reviewed EPA's drafts and final documents supporting the science and policy behind the Administrator's decisions in the June 2012 PM NAAQS proposal. The CASAC conducted meetings and consultations, and submitted written overviews, providing their views of the validity and completeness of the agency's assessments and findings, and recommending improvements. CASAC's final product, its review of EPA's second external review draft of the \"PM Policy Assessment,\" was completed June 2010.\nTable B -2 in Appendix B provides a chronological summary of CASAC consultations and reviews of the supporting documents for the June 2012 proposal.\nUntil discontinued by the CASAC Chairman in 2005, CASAC historically had signed off in the form of a \"closure letter\" only when the panel of members was convinced that each document accurately reflected the status of the science. The CASAC closure letter was an indication that the majority of the CASAC panel members had generally reached consensus that the criteria documents and the staff paper provided an adequate scientific basis for regulatory decision-making. The discontinuance of the closure letter was the subject of considerable debate, particularly within the science community. EPA revised certain aspects (not including reinstating the closure letter) of the CASAC review process most recently in May 2009.\nThe April 2011 EPA staff paper concluded, and the CASAC panel concurred, that the scientific evidence supported modifying the PM 2.5 primary standard and considering options for revising the secondary standard for reducing visibility impairment associated with PM. Recognizing certain limitations of the data, a range of alternatives were presented for consideration by the Administrator for modifying the current PM NAAQS. These recommendations were the basis for the Administrator's decision, taking into account other factors including public comments received, for proposing to strengthen the annual PM 2.5 primary standard.\nThe staff paper included possible modifications to strengthen certain aspects of the PM 10 standard. However, staff and CASAC placed considerable emphasis on continuing uncertainties and lack of sufficient data to initiate relevant quantitative risk assessment to support such modifications to the standard. As presented in the June 2012 Federal Register , the Administrator provisionally concluded that the growing evidence continues to support the appropriateness of the existing primary 24-hour PM 10 standard's protection of short-term health effects, and proposed to retain the existing PM 10 standard.\nA perennial issue in conducting NAAQS reviews is whether the agency is basing its decisions on those studies that reflect the latest science. In reviewing thousands of studies, the agency staff ultimately need to establish a cut-off date, or be faced with the need for a continuous review. The current review is based on studies completed by mid-2009, but in the June 29, 2012, Federal Register notice the EPA indicated that it\nis aware that a number of new scientific studies on the health effects of PM have been published since the mid-2009 cutoff date for inclusion in the Integrated Science Assessment. As in the last PM NAAQS review, the EPA intends to conduct a provisional review and assessment of any significant new studies published since the close of the Integrated Science Assessment, including studies that may be submitted during the public comment period on this proposed rule in order to ensure that, before making a final decision, the Administrator is fully aware of the new science that has developed since 2009. In this provisional assessment, the EPA will examine these new studies in light of the literature evaluated in the Integrated Science Assessment. This provisional assessment and a summary of the key conclusions will be placed in the rulemaking docket.", "Promulgation of NAAQS sets in motion a process under which the states and EPA first identify geographic nonattainment areas, those areas failing to comply with the NAAQS based on monitoring and analysis of relevant air quality data. The CAA is specific with regard to the timelines for determining areas in noncompliance, submission of plans for achieving (or maintaining) compliance, and when noncompliant areas must achieve the established or revised NAAQS.\nWithin three years of issuance of a NAAQS, states are required to submit \"infrastructure\" plans demonstrating that they have the basic air quality management components necessary to implement the NAAQS. Following EPA's final designations of attainment and nonattainment areas, states (and tribes if they choose to do so) must submit their plans (State Implementation Plans, or SIPs) for how they will achieve and/or maintain attainment of the standards. These may include new or amended state regulations and new or modified permitting requirements.\nIf new, or revised, SIPs for attainment establish or revise a transportation-related emissions allowance (\"budget\"), or add or delete transportation control measures (TCMs), they will trigger \"conformity\" determinations. Transportation conformity is required by the CAA, Section 176(c) (42 U.S.C. 7506(c)), to prohibit federal funding and approval for highway and transit projects unless they are consistent with (\"conform to\") the air quality goals established by a SIP, and will not cause new air quality violations, worsen existing violations, or delay timely attainment of the national ambient air quality standards.\nAreas designated nonattainment for the NAAQS also are subject to new source review (NSR) requirements. Enacted as part of the 1977 CAA Amendments and modified in the 1990 CAA Amendments, NSR is designed to ensure that newly constructed facilities, or substantially modified existing facilities, do not result in violation of applicable air quality standards. NSR provisions outline permitting requirements both for construction of new major pollution sources and for modifications to existing major pollution sources. The specific NSR requirements for affected sources depend on whether the sources are subject to \"Prevention of Significant Deterioration\" (PSD) or nonattainment provisions. As discussed earlier (see \" EPA's June 2012 Proposed Changes to the PM NAAQS \"), the June 2012 PM NAAQS proposal would revise the PSD permitting program (rules) with respect to the proposed revised PM NAAQS so as not to \"unreasonably delay\" pending permits and establish a \"grandfather\" provision for permit applications if a draft permit or preliminary determination has been issued for public comment by the date the revised PM NAAQS go into effect.\nIn addition to requiring states to submit implementation plans, EPA acts to control NAAQS pollutants through national regulatory programs. These may be in the form of regulations of products and activities that might emit the pollutants (particularly fuels and combustion engines, such as automobiles and trucks) and in the form of emission standards for new stationary sources (e.g., utilities, refineries). EPA anticipates that recent CAA rules, including rules to reduce pollution from power plants, clean diesel rules for vehicles, and rules to reduce pollution from stationary diesel engines, would help states meet the proposed revised PM NAAQS.", "The NAAQS designation process is intended as a cooperative federal-state-tribal process in which states and tribes provide initial designation recommendations to EPA for consideration. In Section 107(d)(1)(A) (42 U.S.C. 7407), the statute states that the governor of each state shall submit a list to EPA of all areas in the state, \"designating as ... nonattainment, any area that does not meet ( or that contributes to ambient air quality in a nearby area that does not meet ) an air quality standard\" (emphasis added). Areas are identified as \"attainment/unclassified\" when they meet the standard or when the data are insufficient for determining compliance with the NAAQS.\nFollowing state and tribal recommended designation submissions, the EPA Administrator has discretion to make modifications, including to the area boundaries. As required by statute (Section 107(d)1(B)(ii)), the agency must notify the states and tribes regarding any modifications, allowing them sufficient opportunity to demonstrate why a proposed modification is inappropriate, but the final determination rests with EPA.\nMeasuring and analyzing air quality to determine where NAAQS are not being met is a key step in determining an area's designation. Attainment or nonattainment designations are made primarily on the basis of three years of federally referenced monitoring data. EPA began developing methods for monitoring fine particles at the time the PM 2.5 NAAQS were being finalized in 1997, and operation of the network of monitors for PM 2.5 was phased in from 1999 through 2000. The network of monitors and their locations have been modified over time. Most recently, in a separate action in conjunction with the October 2006 publication of the revised particulates NAAQS, EPA amended its national air quality monitoring requirements, including those for monitoring particle pollution. The amended monitoring requirements were intended to help federal, state, and local air quality agencies by adopting improvements in monitoring technology. EPA is proposing additional modifications to the PM NAAQS monitoring network as discussed earlier in this report.\nIn addition to air emission and air quality data, EPA considers a number of other relevant factors in designating nonattainment area, and recommends that states apply these factors in their determinations in conjunction with other technical guidance. Examples of these factors include population density and degree of urbanization (including commercial development), growth rates, traffic and commuting patterns, weather and transport patterns, and geography/topography. States and tribes may submit additional information on factors they believe are relevant for EPA to consider.\nNonattainment areas include those counties where pollutant concentrations exceed the standard as well as those that contribute to exceedance of the standard in adjoining counties. Entire metropolitan areas tend to be designated nonattainment, even if only one county in the area has readings worse than the standard. In addition to identifying whether monitored violations are occurring, states' or tribes' boundary recommendations for an area are to also show that violations are not occurring in those portions of the recommended area that have been excluded, and that they do not contain emission sources that contribute to the observed violations.", "The June 2012 proposal to tighten the PM 2.5 annual standard is expected to result in an increase in the number of areas (typically defined by counties or portions of counties) designated nonattainment. Similar to the strengthening of the PM 2.5 daily (24-hour) standard in 2006, the June 2012 proposed range of concentrations for the PM 2.5 annual standard is expected to affect primarily areas currently in nonattainment for the existing (2006) standards, but would also likely include a few counties that have not been previously designated as nonattainment. EPA would not require new nonattainment designations for PM 10 primary NAAQS since the June 2012 proposal would retain the existing (2006) standards.\nAssuming EPA promulgates final PM NAAQS revisions by December 14, 2012, as indicated earlier in this report, state and tribal area designation recommendations would be required under the CAA to be submitted to EPA by December 2013 (within one year of the final rule). The CAA requires EPA to make its final area designations within one year of the state and tribal recommendations, projected to be December 2014. EPA is required to notify states and tribes of its intended modifications to their recommendations 120 days (projected to be August 2014) prior to promulgating final designations which are expected to become effective sometime in early 2015.\nThe actual area designations of nonattainment are more than two years away and will be based on more current monitoring data (likely 2011-2013) and other factors. However, EPA identified counties with monitors that show concentrations of PM 2.5 that would exceed the proposed revised range of the primary annual standard of 12 µg/m 3 to 13 µg/m 3 based on 2008-2010 monitoring data. The map in Figure 1 below depicts these areas for the two proposed revised PM 2.5 annual standards. The areas are depicted in the map for illustration purposes as a rough approximation of the potential areas that may be designated nonattainment for the June 2012 proposed standards. The specific counties based on the 2008-2010 data are shown in Appendix C . The map below shows the overlap of those nonattainment areas for the existing (2006) PM 2.5 annual and/or daily (24-hour), as well as additional areas not previously designated nonattainment. Although a direct comparison of areas expected to be designated nonattainment for the June 2012 proposed PM 2.5 standards with those areas designated nonattainment for the existing (2006) PM NAAQS is not available, overlaying those counties with monitors based on 2008-2010 monitoring provides some indication of potential areas.\nThe 2006 revised PM NAAQS, which are currently being implemented, primarily affect urban areas. EPA published its final designations of 31 areas in 18 states, comprising 120 counties (89 counties and portions of 31 additional counties) for nonattainment of the revised 2006 24-hour PM 2.5 standard, on November 13, 2009. The designations, based on 2006 through 2008 air quality monitoring data, included a few counties that were designated nonattainment for PM 2.5 for the first time, but the majority of the counties identified overlapped with EPA's final nonattainment designations for the 1997 PM 2.5 NAAQS. It is important to note that most of the 1997 PM 2.5 nonattainment areas were only exceeding the annual standard; thus, tightening the 24-hour standard resulted in an increased number of areas being designated nonattainment based on exceedances of both the 24 - hour and the annual standard. The majority of the roughly 3,000 counties throughout the United States (including tribal lands) were designated attainment/unclassifiable, and are not required to impose additional emission control measures to reduce PM 2.5 .\nBased on anticipated reductions associated with several other existing national air pollution control regulations and programs (see discussion in \" National Regulations \" section), EPA predicted that only a few counties would not be in compliance with the proposed primary standards by 2020: two counties in California are projected to not meet the proposed annual standard of 13 µg/m; 3 an additional four counties in Alabama, Arizona, Michigan, and Montana would not meet the proposed option of 12 µg/m 3 for the annual standard.", "Under the CAA, within three years of issuance of a NAAQS, all states are required to submit \"infrastructure\" plans demonstrating that they have the basic air quality management components necessary to implement the NAAQS. Areas designated attainment/unclassifiable will not have to take steps to improve air quality, but under the statute they must take steps to prevent air quality from deteriorating to unhealthy levels. For those areas ultimately designated nonattainment, state, local, and tribal governments must outline detailed control requirements in plans demonstrating how they will meet the revised primary annual PM 2.5 NAAQS.\nThese plans, defined as state implementation plans and referred to as SIPs (TIPs for tribal implementation plans), must be submitted to EPA three years after the effective date of the agency's final designations. EPA projects final area designations will be effective early 2015 for the June 2012 proposed revisions, thus SIPs and TIPs would be required by early 2018. If states fail to develop an adequate implementation plan, EPA can impose one. Under the CAA, states are required to meet any established or revised PM 2.5 standard \"as expeditiously as practicable,\" but no later than five years from the effective date of designation—December 2020 according to EPA's timeline—unless an extension (up to five additional years) allowed under the CAA is granted.", "EPA anticipates that in many cases, stationary and mobile source controls and additional reductions currently being adopted to attain existing (2006) PM 2.5 standards in conjunction with expected emission reductions from implementing national regulations and strategies will help states meet the proposed standards. These national actions include the\nCross-State Air Pollution Rule (CSAPR); Mercury and Air Toxics Standards (MATS); Light-Duty Vehicle Tier 2 Rule; Heavy Duty Diesel Rule; Clean Air Nonroad Diesel Rule; Regional Haze Regulations and Guidelines for Best Available Retrofit Technology Determinations; NOx Emission Standard for New Commercial Aircraft Engines; Emissions Standards for Locomotives and Marine Compression-Ignition Engines; Emission Standards Ignition Engines, Control of Emissions for Nonroad Spark Ignition Engines and Equipment; Category 3 Oceangoing Vessels; Reciprocating Internal Combustion Engines (RICE) National Emissions Standards for Hazardous Air Pollutants (NESHAPS); and New Source Performance Standards and Emissions Guidelines for Hospital/Medical/Infectious Waste Incinerators Final Rule Amendments.\nStakeholders and some Members of Congress are skeptical about EPA's expectations with respect to the corollary benefits associated with some of these regulations, and raise concerns about pending efforts to delay some of the more recent programs and historical delays of others. Of particular concern are the Cross-State Air Pollution Rule (\"Cross-State Rule\" or CSAPR), which was to have gone into effect in 2012 but was stayed in December 2011, then vacated on August 21, 2012, by the D.C. Circuit Court of Appeals, and the Mercury and Air Toxics Standards (MATS), which EPA itself has stayed pending reconsideration. On October 5, 2012, the U.S. Department of Justice filed a petition seeking en banc rehearing of the D.C. Circuit's August 21, 2012, decision regarding the CSAPR. Other remanded rules include the hazardous air pollutant (\"MACT\") standards for boilers and cement kilns. EPA has delayed implementation of the boiler MACT rules for more than a year and a half while considering changes to the requirements. The agency has also extended the compliance deadline for the cement kiln MACT by two years.", "Estimates of health and welfare risk reductions and control strategies for areas potentially not in compliance provide some insights into potential impacts of the June 2012 proposed PM NAAQS. The Clean Air Act requires that NAAQS be set solely on the basis of public health and welfare protection, while costs and feasibility are generally taken into account in implementation of the NAAQS (a process that is primarily a state responsibility). As discussed previously, in setting and revising the NAAQS, the CAA directs the EPA Administrator to protect public health with an adequate margin of safety . This language has been interpreted, both by the agency and by the courts, as requiring standards be based on a review of the health impacts, without consideration of the costs, technological feasibility, or other non-health criteria.\nNevertheless, coinciding with the PM NAAQS proposed rule in the June 29, 2012, Federal Register , EPA released a regulatory impact analysis (RIA) assessing the costs and benefits of setting the standard at the proposed and other alternative levels, to meet its obligations under Executive Order 12866 and in compliance with guidance from the White House Office of Management and Budget. EPA emphasized that the RIA is for informational purposes and that the proposed decisions regarding revisions to the PM NAAQS presented in the June 2012 proposed rulemaking are not based on consideration of the analyses in the RIA in any way. Table 2 below presents a range of EPA's estimated economic costs, monetized benefits, and net benefits (subtracting total costs from the monetized benefits) associated with achieving the June 2012 proposal, and other alternatives considered.\nAs shown in the table, estimated benefits are expected to be at least 30 times greater than the costs of $69 million for the most stringent option included in the June 2012 proposal. EPA also notes that a full accounting of benefits would include additional environmental and societal benefits that were not quantified in the analysis. The basis for the benefits calculations are health and welfare impacts attributable to reductions in ambient concentration emissions of PM 2.5 resulting from a reasonable, but \"speculative,\" array of known state implementation emission control strategies selected by EPA for purposes of analysis. The analysis does not model the specific actions that each state will undertake or emerging technologies in implementing the alternative PM 2.5 NAAQS. EPA notes that mortality co-benefits represent a substantial proportion of total monetized benefits (over 98%).\nThe EPA estimated total costs under partial and full attainment of several alternative PM standards. The engineering costs generally include the costs of purchasing, installing, and operating the referenced control technologies. The technologies and control strategies selected for analysis are illustrative of one way in which nonattainment areas could meet a revised standard. EPA anticipates that in actual SIPS, state and local governments will consider programs that are best suited for local conditions as there are various options for potential control programs that would bring areas into attainment with alternative standards. EPA includes a detailed discussion of the limitations and uncertainties associated with the benefits assumptions and analyses.\nWhile recognizing the need to adequately protect against potential health concerns associated with PM, some Members and stakeholders are also apprehensive that EPA has underestimated potential costs and are concerned with the potential monetary consequences associated given the current economic environment. In particular, some stakeholders question the validity of EPA's reliance on the associated impacts of other national regulations in reducing the potential burdens. Critics are concerned that this results in underestimating the number of areas (counties) likely to be affected in terms of their ability to attain the proposed alternative PM NAAQS and the expected associated costs of necessary measures that will be required to in the form of SIPs.", "Prior to the EPA's June 2012 proposed rule to revise the PM NAAQS, stakeholders were providing evidence and arguments in letters, press releases, at public hearings and other forums for their preferred recommendations, and EPA received numerous comments during various stages of development of the criteria and policy documents. In general, business and industry opposed more stringent standards particularly in light of the current national and global economic environment; and public health and environmental advocacy groups advocated support for more stringent standards based on the continuing evidence of health effects from ongoing scientific research. As mentioned earlier, several states petitioned EPA, and subsequently filed suit in the D.C. Circuit Court urging timely completion of its review of the PM NAAQS in response to the February 2009 remand. Other state air quality regulators recognized the need to ensure adequate health protection from PM, but expressed concerns about the impacts of more stringent PM NAAQS on already strained state budgets.\nProponents of more stringent standards generally assert—\nthe PM 2.5 standards should be at least as stringent as the more stringent combined daily and annual levels recommended in the 2006 EPA staff paper, and those recommended by the CASAC; scientific evidence of adverse health effects is more compelling than when the standards were revised in 2006; more stringent standards ensure continued progress toward protection of public health with an adequate margin of safety as required by the CAA; welfare effects, particularly visibility, should be enhanced.\nCritics of more stringent PM NAAQS contend—\nmore stringent (and in some cases the existing) standards are not justified by the scientific evidence; the proposal does not take into account studies completed since the 2009 cut-off; requiring the same level of stringency for all fine particles without distinguishing sources is unfounded; costs and adverse impacts on regions and sectors of the economy are excessive; revising the standards could impede implementation of the existing (2006) PM NAAQS and the process of bringing areas into compliance, given the current status of this process; the benefits (and costs) associated with implementation of the 2006 PM NAAQS, as well as compliance with other relatively recent EPA air quality regulations, have not yet been realized, pointing out that based on EPA's trends data that annual and 24-hour measured PM national concentrations have declined 24% and 28% respectively from 2001 to 2010.\nEPA has responded to both sides by emphasizing that the agency's conclusions and Administrator's decisions are provisional in nature, and the agency is soliciting comment (60-day comment period from the date of publication in the Federal Register ) regarding its supporting analysis and a variety of alternative PM NAAQS. In addition to written comments, EPA will also compile information presented at the July 2012 public hearings held in Philadelphia and Sacramento. EPA also declared its intention to review and evaluate significant new studies developed and published since the close of the criteria document.", "Not long after EPA's release of its PM NAAQS proposal, the House Committee on Energy and Commerce Subcommittee on Energy and Power held a hearing on June 28, 2012, on the potential impacts of tightening the PM 2.5 NAAQS. The focus of the debate was the regulatory costs and burdens associated with the implementation of the revised standards, and potential impacts on economic growth, employment and consumers. Just prior to EPA's release of the proposal, several Members urged the Administrator to include retaining the PM 2.5 standard as an option for consideration in the agency's proposal.\nDuring the second session of the 111 th and during the first session of the 112 th Congress, some Members raised concerns in letters to the EPA Administrator and during oversight hearings, about EPA's staff draft reports, and CASAC recommendations leading up to the June 2012 proposal, and the potential impacts that tightening the PM 10 NAAQS standards could have on the agricultural industry. Many Members encouraged EPA to retain the current PM 10 NAAQS standards. A general provision was also included in FY2012 House-reported EPA appropriations language ( H.R. 2584 , Title IV, Section 454) that would have restricted the use of FY2012 appropriations \"to modify the national primary ambient air quality standard or the national secondary ambient air quality standard applicable to coarse particulate matter (generally referred to as \"PM 10 \").\" No comparable provision was retained in the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ), enacted December 23, 2011, which ultimately included EPA's FY2012 appropriation. Although EPA proposed to retain the PM 10 , some stakeholders and Members remain skeptical that the final revised NAAQS could be changed from the proposal. Congress continues to consider legislation that would delay EPA regulatory action with respect to revising the PM 10 NAAQS, including the House-passed Farm Dust Regulation Prevention Act of 2011 ( H.R. 1633 ), which awaits action in the Senate.\nNAAQS decisions have often been a source of significant concern to many in Congress. The evolution and development of the PM (and ozone) NAAQS, in particular, have been the subject of extensive oversight. For example, following promulgations of the 1997 NAAQS Congress held 28 days of hearings on the EPA rule. Congress enacted legislation specifying deadlines for implementation of the 1997 standard, funding for monitoring and research of potential health effects, and the coordination of the PM (and ozone) standard with other air quality regulations. During the 109 th Congress, hearings were held regarding implementation and review of the PM NAAQS leading up to promulgations of the 2006 PM NAAQS.\nBecause of the potential impacts PM NAAQS could have on both public health and the economy, EPA's current reassessment and June 2012 proposed modifications of these standards will likely be of continued interest to Congress.", "EPA's proposal to modify the existing PM NAAQS published June 29, 2012, following completion of its statutorily required review, has sparked interest and conflicting concerns among a diverse array of stakeholders, and in Congress. As evidenced by the history of the PM NAAQS, the level of scrutiny and oversight will likely increase as the agency proceeds toward its final decision regarding the PM NAAQS by December 2012. Because both the health and economic consequences of particulate matter standards are so potentially significant, the PM NAAQS are likely to remain a prominent issue of interest during the remainder of the 112 th Congress.\nWhile analyses indicate more stringent PM NAAQS could result in fewer adverse health effects for the general population and particularly sensitive populations such as children, asthmatics, and the elderly, as well as improved welfare effects, concerns remain with regard to the associated costs. In its assessment of the impacts of tightening the PM NAAQS as proposed, EPA expects few additional areas will be in nonattainment and require more stringent pollution controls to achieve compliance. Industry, some Members and some state representatives anticipate that the proposed tighter PM NAAQS will likely result in more areas classified as nonattainment and needing to implement new controls on particulate matter. Further, they are concerned that stricter standards may mean more costs for the transportation and industrial sectors, including utilities, refineries, and the trucking industry, impacted by particulate matter controls.\nThe EPA's review and establishment of the 1997 PM NAAQS was the subject of litigation and challenges, including a Supreme Court decision in 2001. EPA's 1997 promulgation of standards for both coarse and fine particulate matter prompted critics to charge EPA with over-regulation and spurred environmental groups to claim that EPA had not gone far enough. Not only was the science behind the PM NAAQS challenged, but EPA was also accused of unconstitutional behavior. More than 100 plaintiffs sued to overturn the standard. Although EPA's decision to issue the standards was upheld unanimously by the Supreme Court, for the most part, stakeholders on both sides of the issue continued to advocate their recommendations for more stringent and less stringent (in some cases no) PM standard. Several states and industry, agriculture, business, and environmental and public health advocacy groups petitioned the U.S. Court of Appeals for the District of Columbia Circuit, challenging certain aspects of EPA's revisions of the PM NAAQS as promulgated December 2006. A February 24, 2009, decision by the D.C. Circuit granted the petitions in part, denying other challenges, and remanded the standards to EPA for further consideration. The court did not specifically vacate the 2006 PM NAAQS and implementation is currently underway.\nThe final form of the current efforts to revise PM NAAQS may not be known for some time. EPA will likely receive considerable comments in response to the June 2012 proposal. It would not be surprising if interested stakeholders return to the courts or initiate challenges after the agency completes its review and promulgates final standards in December 2012, thus potentially furthering delays in designating nonattainment areas, and states' development and implementation of SIPs.\nAppendix A. Chronological Summary of Key Milestones Subsequent to the June 2012 PM NAAQS Proposal\nAs part of the D.C. Circuit's decision and a related Consent Agreement, EPA has agreed to issue final revised PM NAAQS by December 14, 2012. The timeline presented in Table A -1 below reflects the most recent projected milestone dates subsequent to the PM NAAQS proposed rule published June 29, 2012. These milestones are driven primarily by statutory requirements under the CAA, and are based on milestones identified in the June 29, 2012, Federal Register and accompanying EPA fact sheets. The CAA does not specify a timeframe with regard to when states must meet secondary PM standards; relevant milestones are determined by EPA and states through the implementation planning process.\nAppendix B. Supporting EPA Scientific and Policy Documents, and CASAC Review\nAppendix C. Comparison of Potential Nonattainment Areas for the June 2012 Proposed PM 2.5 Annual Standard with the Final Designations for the 2006 and 1997 PM 2.5 NAAQS" ], "depth": [ 0, 1, 1, 1, 2, 1, 1, 2, 3, 2, 2, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full", "h0_full h3_full", "h1_full", "", "h3_full h2_full", "h3_full h1_title", "h1_title", "h1_full", "h3_full", "", "h2_full", "", "h0_full", "h0_full" ] }

{ "question": [ "What was the EPA's 2012 response to the National Ambient Air Quality Standard?", "What prompted this response?", "How did EPA respond to these petitions?", "What have been the effects of the EPA's revision of NAAQS?", "What does the 2012 NAAQS proposal address?", "What is the justification for this proposal?", "What secondary standards does the NAAQS proposal address?", "How did EPA develop the June 2012 proposal?", "What did EPA find in their review of the secondary literature?", "What populations are most at risk for these health problems?", "What will be the effects of the revised NAAQS?", "How will states respond to these revised standards?", "How long does the process of state compliance take?", "Due to this extended process, what is the timeline for state compliance to the revised NAAQS?" ], "summary": [ "On June 29, 2012, the Environmental Protection Agency (EPA) published a proposal to revise the National Ambient Air Quality Standard (NAAQS) under the Clean Air Act (CAA) for particulate matter (PM), in response to a June 6, 2012, order issued by the U.S. Court of Appeals for the District of Columbia Circuit.", "Environmental and public health advocacy groups and 11 states had petitioned the agency, and subsequently filed suit in the D.C. Circuit alleging that EPA failed to perform its mandated duty to complete the review of the PM NAAQS within the statutory deadline.", "EPA has agreed to issue final revised PM NAAQS by December 14, 2012.", "EPA's review of the PM NAAQS has generated considerable debate and oversight in Congress.", "The June 2012 proposal would strengthen the existing (2006) annual health-based (\"primary\") standard for \"fine\" particulate matter 2.5 micrometers or less in diameter (or PM2.5), lowering the allowable average concentration of PM2.5 in the air from the current level of 15 micrograms per cubic meter (µg/m3), to a range of 12 to 13 µg/m.3. The existing 24-hour primary standard for PM2.5 that was reduced from 65 µg/m3 to 35 µg/m3 in 2006 would be retained, as would the existing standards for larger, but still inhalable \"coarse\" particles less than 10 micrometers in diameter or PM10.", "The annual PM2.5 NAAQS is set so as to address human health effects from chronic exposures to the pollutants.", "\"Secondary\" standards that provide protection against \"welfare\" (non-health) effects, such as ecological effects and material deterioration, would be identical to the primary standards the same as in 2006, but the June 2012 proposal included two options for a 24-hour PM2.5 standard to improve visibility.", "In developing the June 2012 proposal, EPA reviewed scientific studies available since the agency's previous review in 2006.", "EPA determined, and the independent scientific advisory committee mandated under the CAA (Clean Air Scientific Advisory Committee, or CASAC) concurred, that evidence continues to show associations between particulates in ambient air and numerous significant health problems, including aggravated asthma, chronic bronchitis, non-fatal heart attacks, and premature death.", "Populations shown to be most at risk include children, older adults, and those with heart and lung disease, and those of lower socioeconomic status.", "Final revised PM NAAQS will start a process that includes a determination of areas in each state that exceed the standard and must, therefore, reduce pollutant concentrations to achieve it.", "Following the determination of \"nonattainment\" areas (primarily counties) based on multiple years of monitoring data and other factors submitted by the states, state and local governments must develop (or revise) State Implementation Plans (SIPs) outlining measures to attain the standard. These often involve promulgation of new regulations by states, leading to the issuance of revised air permits.", "The process typically takes several years.", "Based on statutory scheduling requirements, designation of areas as nonattainment for any revised PM NAAQS would not be determined until the end of 2014, and states would have until at least 2020 to achieve compliance." ], "parent_pair_index": [ -1, 0, 1, 0, -1, 0, 0, -1, 0, 1, -1, 0, 1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Member and Public Expectations", "Roles of Members of Congress", "Representation", "Legislation", "Constituency Service", "Oversight and Investigation", "Advice and Consent (Senators Only)", "Congressional Leadership", "Personal Office Management", "Electoral and Political Activity", "Conclusion" ], "paragraphs": [ "", "The U.S. Constitution establishes qualifications for Representatives and Senators, but it is silent about the roles and duties of an individual Member of Congress. House and Senate rules require only that Members be present and vote on each question placed before their chamber. The job of a Member of Congress has been characterized as \"a license to persuade, connive, hatch ideas, propagandize, assail enemies, vote, build coalitions, shepherd legislation, and in general cut a figure in public affairs.\" Beyond voting requirements, there is no formal set of expectations or official explanation of what roles or duties are required, or what different Members might emphasize as they carry out their work. In the absence of such formal authorities, many of the responsibilities that Members of Congress have assumed over the years have evolved from the expectations of Members and their constituencies.\nToday, the roles and duties carried out by a Member of Congress are understood to include representation, legislation, and constituent service and education, as well as political and electoral activities. In a typical week, Members may oversee constituent services in the state or district, travel between their state or district to Washington, DC, to participate in committee activities, greet a local delegation from the home state, meet with lobbyists, supervise office staff, speak on the floor, conduct investigations, interact with the news media, and attend to various electoral duties, including fundraising, planning, or campaigning for election. Given that no precise definition exists for the role of a Member, upon election to Congress, each new Member is responsible for developing an approach to his or her job that serves a wide range of roles and responsibilities. One observer of Congress notes that the first job of a Member is to come\nto grips with the dimensions of [their] role and develop a personal approach to [their] tasks. Given the many challenges, the overall conclusion is readily apparent: the key to effectiveness in Congress is the ability to organize well within a framework of carefully selected priorities. It is not possible, however, to construct a grand master plan such that priorities and the time devoted to each will neatly mesh, for legislative life is subject to sudden and numerous complications.\nObservers note that after identifying and organizing priorities, a Member typically carries out some of the resulting duties personally, and delegates others to congressional staff who act on his or her behalf. The staff may work in the Member's individual office, on committees to which the Member is assigned, in offices connected to leadership posts the Member may hold, and in the separate political and reelection operations the Member may maintain. In this understanding, the Member sets broad policies to fulfill his or her duties, and the appropriate staff act to carry them out. The distribution of responsibility will vary according to the preferences and priorities of the Member at the center of the effort. Nevertheless, the work carried out by staff is typically attributed to the effort of the Member.\nMany scholars of Congress see these Member choices and delegation arrangements as dependent in part on their goals. Generally, these observers suggest that Members pursue three primary goals: gaining reelection, securing influence within Congress, and making good public policy. The relative priority a Member may assign to these goals can affect a wide range of choices regarding a congressional career, including (1) the emphasis given to different roles and duties; (2) activities in the Washington, DC, and district or state offices; (3) staffing choices in Member and committee offices; and (4) preference for committee assignments. It can also affect a Member's approaches to legislative work, constituent relations, media relations, party issues, and electoral activities. Given the dynamics of the congressional environment, the priorities that Members place on various roles may change as their seniority increases, or in response to changes in committee assignments, policy focus, district or state priorities, institutional leadership, or electoral pressures.", "As part of a broader evaluation of House administrative practices in the mid-1970s, the House Commission on Administrative Review surveyed Members of the House and asked them to describe the major jobs, duties, and functions that they believed they were expected to perform. At the same time, the commission hired the research firm Louis Harris and Associates to conduct a survey of the public to gauge its expectations of Congress and its Members.\nThe Member survey found that the three most frequently mentioned duties and activities were the drafting and introduction of legislation; helping constituents solve problems; and representing the interests of their districts and constituents. Other expectations included position taking and constituent education. Table 1 summarizes the responses received by role categories established by the commission.\nAccording to the public survey conducted by the commission, the most common expectations of Members were to represent the people and district according to the wishes of the majority; to solve problems in the district; and to keep in contact with the people in the district through regular visits and meetings in the district and polls or questionnaires. Other public expectations included regular attendance in legislative sessions and voting on legislation. Table 2 summarizes the most frequently mentioned responses to the public survey.\nDespite differences in point of view, both the Member and public survey results describe common interests in local representation, constituency services, legislative activity, and regular contact between the Member and the district. The differences between Member and public expectations may reflect the different perspectives on the work of a Member of Congress. Where Members are daily confronted with representational, legislative, and institutional duties, the public focuses on representational, legislative, and service responsibilities, apparently without recognizing a broader underlying institutional, procedural, and operational framework in which Members of Congress operate. Some observers suggest that this narrow public focus is in part a reflection of the attention the public gives, or does not give, to political matters in general.\nCommon Member and public interest in local representation, constituency service issues, legislative activity, and regular contact between the Member and the constituency may partially explain how individual Members of Congress receive broad public satisfaction or approval of their performance while Congress as an institution, where Members engage the procedural and operational barriers the public disdains, routinely trails the executive and judicial branches in public approval.", "The responses to the Member and public surveys suggest that the roles and duties of a Member of Congress can be identified in part as an outgrowth of congressional and public expectations. These congressional roles may be described by focusing on some of the underlying tasks typically required to carry them out. Because some of the duties are complex, and some of the underlying tasks often overlap, some of the roles may overlap. The roles described below are derived from\ncongressional duties mentioned in the Constitution; responses to the House surveys of Members and the general public; and scholarly studies.", "Broadly, a system of representative government assumes that the will of the people is consulted and accommodated when making public policies that affect them. Consequently, representational activity is present in all of the roles of a Member of Congress. Representational activity is seen in the legislative process, constituent service, oversight, and investigation duties that Members carry out. In Congress, Members are elected to represent the interests of the people in their congressional district or state. In addition, they represent regional and national interests in matters which might come before Congress.\nOn the local level, Members of the House represent congressional districts of populations ranging approximately from 527,000 (Rhode Island's two congressional districts) to 994,000 (Montana's single district) constituents. Senators represent states that range in population from 568,000 (Wyoming) to more than 37.7 million (California). In the nation's capital, Members serve as advocates for the views and needs of their constituents as well as stewards of national interests. Representational work may involve legislative activity, such as analyzing the provisions of proposed legislation for their potential impact on the area represented, or constituent service activity, such as assisting individuals, local governments, and organizations in obtaining federal grants and benefits.\nStyles of representation differ. Some Members might view themselves as responding to instructions from their constituents—sometimes called the \"delegate\" style. Others might prefer to act upon their own initiative and rely upon their own judgment—sometimes called the \"trustee\" style. In practice, when considering new legislation or the effects of implementing existing law, the opinion of their constituency often may be uppermost in a Member's mind. Constituent views, however, may vary in intensity from issue to issue, or fall on several sides of an issue, and the Member would typically take into account opinions from other sources as well. Consequently, most Members typically balance or reconcile these competing viewpoints with their own judgment when casting their votes, providing constituent service, or conducting oversight.\nAnother facet of representation involves presenting a view of government activity to constituents and the broader American public. Members of Congress regularly draw attention to policy issues and federal government activities in order to educate constituents and other citizens and to encourage more robust citizen participation in public affairs. This educational function is typically performed through newsletters and special mailings sent to residents in the district or state, or through a variety of media outlets, which may include a Member website, and appearances and interviews on local television and radio programs.", "In developing and debating legislative proposals, Members may take different approaches to learn how best to represent the interests of their district or state, together with the interests of the nation. This may require identifying local, national, and international issues or problems which need legislative action, and proposing or supporting legislation which addresses them. Throughout the legislative process, Members of Congress routinely attend committee hearings and briefings, hold meetings and conversations with executive branch officials and with lobbyists representing various interested groups, and have discussions with congressional colleagues. In addition, many Members receive staff briefings based on a broad range of sources, including congressional support agencies, local and national media outlets, specialized policy-oriented literature, and background material on legislative issues, among others.\nAn important venue for congressional activities is the committee, through which much of the work of Congress is organized. Committees typically are the first place in which legislative policy proposals receive substantive consideration. Members of Congress are assigned to a number of committees and subcommittees simultaneously, and are expected to develop issue expertise in the policy areas that come before these panels. Typically, each Senator is assigned to three committees and at least eight subcommittees. With the exception of Members who serve on committees that their party has designated as exclusive, each Representative is typically assigned to two standing committees and four subcommittees. Committee members usually participate in hearings to question witnesses; engage in markup sessions to draft, amend, and refine the text of legislation; and vote on whether to send specific measures to the floor of their chamber. Members also testify before other congressional committees on matters of interest to their district or state, or on matters in which the Member has developed expertise. In addition to these duties, Senate committee membership involves review of executive and judicial nominations and may include consideration of treaties.\nSome Members, generally those with more seniority, also participate in conference committees. Conference committees are convened to work out differences when the House and Senate pass different versions of the same bill. Members of conference committees participate in the final resolution of policy disputes, legislative-executive bargaining, and significant policy decisions.\nMembers generally participate in floor debate most fully when measures of importance to their home district or state are involved, or when matters reported from their legislative committees are under consideration. Floor activity might include preparing statements, conducting research to defend or deter provisions of a bill, and offering amendments. It may also mean debating other Members, in an effort to persuade the undecided, and engaging in extensive informal political negotiations to advance legislative goals.", "The constituency service role is closely related to the representative and educational roles of a Member of Congress. Frequently, when constituents or local firms or organizations need assistance from the federal government, they contact their Representative or Senators. Members then act as representatives, ombudsmen, or facilitators, and sometimes as advocates, in discussions with the federal government. The constituency service role may be highly varied, and involve several activities, provided to individual constituents, including\noutreach, in which Members introduce themselves and inform constituents of the services typically provided; gathering information on federal programs; casework, in which congressional staff members provide assistance in obtaining federal benefits or in solving constituents' problems with agencies; providing nominations to United States service academies; and arranging visits or tours to the Capitol or other Washington, DC, venues.\nAssistance on behalf of firms and organizations may involve providing letters and other communication in support of grant or other applications for federal benefits. The constituency service role also allows a Member the opportunity to see how government programs are working, and what problems may need to be addressed through formal oversight or legislation.", "In addition to its legislative responsibilities, Congress is responsible for seeing that the laws are administered according to congressional intent. While some Members receive feedback on the success of public policies through constituency service and the experiences of constituents who seek casework assistance, most of the oversight and investigation duties of Members are carried out through committees. Committees and Members can review the actions taken and regulations formulated by departments and agencies through hearings, studies, and informal communication with agencies and those affected by a program or policy.\nOversight and investigation can take several forms. In addition to casework activity, the process of authorizing and appropriating funds for executive branch departments and agencies in committee hearings also affords Members and committees the opportunity to review the adequacy of those agencies' organization, operations, and programs. Investigatory hearings are often conducted in response to an emerging crisis or scandal. At various points in the oversight and investigative process of Congress, individual Members can participate in the proceedings, for example, by questioning executive branch leaders, or reporting the experiences constituents have had with particular programs or agencies.", "The Constitution places upon the Senate, but not the House, the responsibility for confirming nominations of individuals for appointive federal office, federal judicial nominations, and to ratify treaties negotiated by the executive branch with foreign nations. Individual Senators typically participate in hearings to determine the suitability of candidates nominated for executive office and the adequacy of the provisions of treaties. Senators may also participate in the floor debate on these matters.", "Some Members of Congress hold leadership positions within their chamber. Leadership responsibilities include leading negotiations within the party to formulate party positions on legislative issues, mediating political conflicts among Members of the same party, persuading Members to join in voting coalitions, keeping count as voting blocs form, participating in decisions to set the legislative agenda for the chamber, and negotiating agreements on when to schedule, and how to consider, specific bills on the floor. Representatives and Senators may also hold the position of chairman or ranking minority Member on a committee or subcommittee, and have responsibility, or participate in the process of, scheduling of that committee's business and selecting the issues that will compose the committee or subcommittee's agenda. Some Representatives and Senators also participate in a leadership capacity in their respective party caucus or conferences.\nLeadership duties may be carried out both by Members who hold formal leadership positions and those who do not. Issues on which individual Members have recently taken informal leadership roles include campaign finance reform, planning for the continuity of Congress, and lobbying and ethics reform.", "Members of Congress are supported by a personal office in which staff perform legislative research, prepare materials for the Member to study, provide constituency service, manage constituency correspondence, handle media relations, and perform administrative and clerical functions. Staff and office facilities are provided through funds appropriated annually, and allocated to Members according to the procedures of each chamber. The precise duties and tasks carried out in a Member office will vary with the Member's personal preferences, which are typically informed by seniority, committee assignment, policy focus, district or state priorities, institutional leadership, and electoral considerations.\nEach Member is allocated public funds to maintain office payroll and expense accounts, and typically supervises work carried out in Washington, DC, and state or district offices. Every Representative is authorized to have up to 18 full-time and 4 half-time positions to assist them in their duties. In the Senate, the number of authorized staff varies according to the population of the state a Senator represents.", "An integral part of the work of Members of Congress, their reelection plans, is separate from their official congressional duties. For those Members of Congress running for reelection, activities may include organizing and maintaining a personal campaign staff, campaigning, and raising funds for reelection or election to another office. Members may also be significant political leaders of their party, as public spokespersons, and as fund raisers for themselves and other congressional candidates. At the state or district level, they may also aid and influence the candidacies of state and local government officials. In addition, some Members also hold leadership posts within their national political parties, such as serving on their party's congressional campaign committee. House and Senate rules mandate that with very limited exceptions, political and campaign activities must be conducted outside of federal facilities, including congressional offices.", "With no formal or definitive requirements, each Member of Congress is free to define his or her own job and set his or her own priorities. Although elements of each of the roles described can be found among the duties performed by any Senator or Representative, the degree to which each is carried out differs among Members as they pursue the common goals of seeking reelection, building influence in Congress, and making good public policy. Each Member may also emphasize different duties during different stages of his or her career as other conditions of the Member's situation change. For example, some may focus on outreach, constituent service, and other state or district activity. Others may focus on developing influence in their chamber by developing policy expertise or advancing specific legislation. No Member, however, is likely to focus on any one role or duty at the exclusion of another, because the extent to which a Member successfully manages all of those roles is the basis on which his or her constituents may judge the Member's success." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "h0_full h1_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What are the duties of a member of Congress?", "What formal requirements guide this work?", "Without formal authorities, how do congressional responsibilities evolve?", "On what kinds of responsibilities do newly elected congresspeople typically focus?", "What determines their priorities?" ], "summary": [ "The duties carried out by a Member of Congress are understood to include representation, legislation, and constituent service and education, as well as political and electoral activities. The expectations and duties of a Member of Congress are extensive, encompassing several roles that could be full-time jobs by themselves.", "Despite the acceptance of these roles and other activities as facets of the Member's job, there is no formal set of requirements or official explanation of what roles might be played as Members carry out the duties of their offices.", "In the absence of formal authorities, many of the responsibilities that Members of Congress have assumed over the years have evolved from the expectations of Members and their constituents.", "Upon election to Congress, Members typically develop approaches to their jobs that serve a wide range of roles and responsibilities.", "Given the dynamic nature of the congressional experience, priorities placed on various Member roles tend to shift in response to changes in seniority, committee assignment, policy focus, district or state priorities, institutional leadership, and electoral pressures. In response, the roles and specific duties a Member carries out are often highlighted or de-emphasized accordingly." ], "parent_pair_index": [ -1, 0, 1, -1, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1 ] }

{ "title": [ "Background", "CMS Applied the Revised Enrollment Screening Process to over 2.4 Million New Applications and Existing Records, and Estimated Avoiding $2.4 Billion in Medicare Payments to Ineligible Providers and Suppliers", "CMS Denied or Rejected over 23,000 New Applications and Deactivated or Revoked over 703,000 Existing Enrollment Records", "CMS Estimates It Avoided $2.4 Billion in Medicare Payments to Ineligible Providers and Suppliers from Enrollment Screening Process, Among Other Benefits", "CMS Modified Elements of the Revised Enrollment Screening Process and Plans to Implement Further Modifications in the Future", "CMS Monitors Elements of Its Screening Process but Monitoring Is Limited by a Lack of Objectives and Performance Measures", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Scope and Methodology for the Provider Enrollment, Chain and Ownership System Data Analysis", "Appendix II: Examples of Operational Modifications to Revalidation", "Appendix III: Comments from the Department of Health and Human Services", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "To become eligible to bill for services provided to Medicare beneficiaries, prospective Medicare providers and suppliers apply to the program by completing an online enrollment application in PECOS or by submitting a paper enrollment application that is manually entered into PECOS. Application information, such as name, address, specialty area, licensure, and accreditation, is used to create the provider’s or supplier’s enrollment record in PECOS. An individual provider or supplier may have more than one enrollment record; for example, a provider may have one enrollment record for a practice in one state and another enrollment record for a practice in another state.\nCMS places all provider and supplier types into risk categories—limited, moderate, or high—based on CMS’s assessments of the potential risk of fraud, waste, and abuse each provider and supplier type poses to Medicare program integrity. CMS also designates specific screening activities for each risk category. See table 1 for the types of Medicare providers and suppliers assigned to each enrollment screening risk category.\nUnder contract to CMS, MACs screen providers and suppliers in all risk categories to verify that they meet Medicare eligibility requirements, such as having current federal or state licenses or accreditation. Medicare regulations require that site visits be conducted for all high- and moderate-risk providers and suppliers. Those conducting the site visits determine whether the reported practice locations are operational and meet requirements such as specified hours of operation. In addition to these site visits, high-risk providers and suppliers also are subject to a fingerprint-based criminal background check. In the course of this screening, MACs may request additional information from the prospective provider or supplier. Upon completion of screening, the MAC reaches a decision to approve eligible providers and suppliers, deny ineligible providers and suppliers, or reject incomplete applications. Figure 1 shows the enrollment process, including the screening conducted for each risk category.\nOnce enrolled, to remain eligible to bill Medicare providers and suppliers must continue to meet CMS’s enrollment requirements, and they must report to CMS any changes to their enrollment information, including final adverse actions taken against them, such as a suspension or licensure revocation by a state licensing authority. In addition, providers and suppliers periodically are required to resubmit enrollment information to the MAC to update their enrollment records. The MAC revalidates the provider’s or supplier’s enrollment record using the enrollment screening process, to determine whether the provider or supplier remains eligible to bill Medicare. Upon completing the revalidation process, the MAC reaches a decision to approve providers and suppliers that remain eligible; deactivate billing privileges for providers and suppliers that have not responded to a request to resubmit enrollment information or have not submitted all required information—privileges that may be reactivated upon submission of a new enrollment application or recertifying that current enrollment information is correct; or revoke billing privileges for providers and suppliers determined ineligible.\nProviders and suppliers must submit updated information for their enrollment records for revalidation every 5 years, with the exception of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers, which must submit their information every 3 years. CMS initiated the first program-wide revalidation effort for all providers and suppliers enrolled in Medicare prior to March 25, 2011, by mailing notices to providers and suppliers in three phases, from September 2011 through March 2015, as shown in figure 2.\nEach notice sent by the MAC asks the provider or supplier to submit a newly completed enrollment application for revalidation, which the MAC then screens using the enrollment screening process to verify the information provided and determine whether the provider or supplier remains eligible to bill Medicare. A provider or supplier must respond by the due date or may request an extension to submit an application. If the provider or supplier does not respond within the allowed time, the provider or supplier is to be placed on a payment hold and is not to receive Medicare payment for services billed until a complete enrollment application has been submitted and approved by the MAC. Figure 3 illustrates the process MACs use to revalidate existing providers and suppliers.", "", "According to our analysis of PECOS data, CMS applied its revised enrollment screening process to over 2.4 million unique new applications and existing enrollment records from March 25, 2011, through December 31, 2015. As a result, CMS took action to deny or reject new applications and to deactivate or revoke existing enrollment records that did not meet the revised screening requirements.\nCMS’s screening of new enrollment applications resulted in actions against more than 23,000 new enrollment applications—CMS denied over 6,000 applications for ineligible providers and suppliers and rejected over 17,000 incomplete applications during the time period we reviewed. According to our analysis, the denials and rejections were disproportionately for providers and suppliers in the moderate- and high- risk categories. The most commonly recorded reason for a denial was because Medicare provider or supplier type requirements were not met (over 42 percent of total denials). Officials from a MAC said this may occur, for example, if a provider does not hold a certification required for that provider type. See table 2 for the most commonly recorded reasons in PECOS for denial by risk category.\nThe most commonly recorded reason in PECOS for a rejected enrollment application was a deleted enrollment application (about 25 percent of total rejections), which officials from a MAC said may occur when an enrollment application has been entered into PECOS in error, either by a provider or supplier, or by the MAC. See table 3 for the most commonly recorded reasons in PECOS for rejection by risk category.\nDenied and rejected enrollment applications were relatively more common for moderate- and high-risk providers and suppliers and less common for limited-risk providers and suppliers. According to our analysis, while moderate- and high-risk providers and suppliers accounted for less than 10 percent of all new enrollment application decisions during the time period we reviewed, they accounted for over 30 percent of denials and over 22 percent of rejections. The disproportionate deactivations and rejections could be the result of the additional screening for moderate- and high-risk applicants or the underlying greater risk that these moderate- and high-risk providers and suppliers posed to Medicare.\nCMS’s screening of existing enrollment records resulted in actions against more than 703,000 provider and supplier enrollment records— CMS deactivated over 660,000 and revoked over 43,000 throughout this period. Providers and suppliers lose their ability to bill Medicare when CMS either deactivates or revokes their enrollment record. Providers and suppliers in the limited-risk category accounted for about 90 percent of deactivations and 84 percent of revocations. Enrollment records of limited-risk providers and suppliers represented about 90 percent of the 1.9 million approved enrollment records as of December 31, 2015.\nThe reasons for deactivations and revocations varied, according to our analysis. Many were the result of enrollment screening conducted during CMS’s first revalidation cycle. For example, the most commonly recorded reason in PECOS for deactivations was not responding to a revalidation request (about 47 percent overall). See table 4 for the most commonly recorded reasons in PECOS for deactivation by risk category.\nThe most commonly recorded reason overall for revocations was not being professionally licensed (over 61 percent), but the most commonly recorded reasons differed between the limited-risk category and the moderate- and high-risk categories. See table 5 for the most commonly recorded reasons in PECOS for revocation by risk category.\nAccording to our analysis of PECOS data, there were about 500,000 more approved enrollment records nearly 5 years after CMS began applying its revised enrollment screening process. When the revised enrollment screening process took effect on March 25, 2011, there were about 1.4 million approved enrollment records in PECOS, which increased by more than 30 percent to about 1.9 million approved enrollment records by December 31, 2015. During roughly the same time frame, the number of Medicare beneficiaries increased by more than 13 percent, from 48.7 million in 2011 to 55.3 million in 2015.", "CMS estimates the revised enrollment screening process avoided $2.4 billion in Medicare payments to ineligible providers and suppliers from March 2011 to May 2015, and CMS and MAC officials report additional benefits. According to CMS officials, the estimate is based on Medicare payments providers and suppliers with revoked enrollment records would have received had they not been revoked. To make its estimate, CMS used the provider’s or supplier’s past billing history and a formula it has developed for estimating Medicare payments avoided from other Medicare program integrity efforts. In addition to Medicare payments avoided, CMS and MAC officials report other benefits from the revised enrollment screening process, including the following:\nMore accurate and complete data in PECOS. For example, the MACs deactivated providers and suppliers that were no longer billing Medicare, and created new PECOS enrollment records during the first program-wide revalidation effort for providers and suppliers that were in the Medicare claims system but not in PECOS.\nProviders and suppliers more knowledgeable about their responsibilities to keep enrollment information up to date. MAC officials said providers and suppliers are now more frequently providing them with changes of information, which according to CMS and MAC officials may result in fewer deactivated enrollment records during the second program-wide revalidation effort that began in March 2016.\nIdentified provider and supplier enrollment records that needed increased scrutiny. CMS reported in September 2016 that it identified about 1,700 such cases and raised the provider’s or supplier’s risk category from limited or moderate risk to high risk.\nWhile CMS and MAC officials reported benefits from the revised enrollment screening process, they also reported challenges. For example, MAC officials said that there were challenges revalidating enrollment information for providers and suppliers with multiple billing locations during the first program-wide revalidation effort, which led to deactivations of some otherwise eligible providers and suppliers. According to officials at one MAC we interviewed, this could have occurred, for example, if the provider’s or supplier’s address information in PECOS was not accurate and a revalidation letter was not sent to each billing location or if the revalidation notice did not reach the correct office personnel handling the requests for enrollment information for revalidation.\nWe and the HHS Office of the Inspector General have also found some issues with PECOS data since the revised process took effect. In June 2015, we reported that a review of PECOS data as of early 2013 found that an estimated 23,400 of 105,234 practice location addresses in PECOS were potentially ineligible, for example because they were vacant addresses. CMS concurred with our recommendations to incorporate flags into its software to help identify potentially questionable practice location addresses and to collect additional license information. In January 2016, CMS replaced the current PECOS address verification software used during the enrollment screening process for new applications with software that, according to CMS, will better detect potentially ineligible addresses. In April 2016, the HHS Office of the Inspector General reported that PECOS did not contain the reasons for enrollment application submissions—for example, whether a new enrollment application or an application submitted in response to a revalidation request—for 54,903 of 479,115 applications submitted from March 25, 2012, through March 24, 2013. The reason for submission determines the screening level for certain providers and suppliers—for example, newly enrolling home health agencies are screened in the high- risk category while home health agencies being revalidated are screened in the moderate-risk category—and therefore some providers and suppliers may not have received appropriate screening. CMS concurred with the HHS Office of the Inspector General’s recommendations.", "Since 2011, CMS has modified some of the methods it uses to screen providers and suppliers trying to enroll or maintain eligibility to bill Medicare. For example, CMS officials said that screening modifications include the addition of a licensure continuous monitoring report, beginning in November 2013, and a criminal continuous monitoring report, beginning July 2015. CMS officials stated that the MACs now use these reports to help ensure that providers and suppliers continue to meet CMS’s enrollment requirements after they have been enrolled. The MACs do so by identifying those providers and suppliers that no longer meet licensure requirements or that now have certain criminal convictions, and deactivating or revoking their enrollment records. Before implementing the reports, MACs did not receive routine reporting to use for checking licensure and criminal convictions of enrolled providers and suppliers, and CMS officials said they did not know whether the MACs were conducting such reviews regularly. CMS officials reported the agency made these screening modifications in part to meet PPACA requirements for provider and supplier enrollment. Table 6 includes examples of modifications CMS has made to methods used to screen providers and suppliers under the revised enrollment screening process put into effect in 2011.\nCMS has also made a number of operational modifications to the enrollment screening process used to revalidate existing providers and suppliers since 2011. These modifications include some that CMS officials said are intended to encourage providers to be more responsive to revalidation requests, such as establishing revalidation due dates that are posted online 6 months in advance and eliminating automatic approvals of provider and supplier requests for deadline extensions. Others are modifications that help the MACs better manage and streamline their operations, CMS officials said, such as eliminating the requirement for MACs to send CMS bi-monthly revalidation data, as MAC officials told us that CMS can pull that data directly from PECOS. CMS also began giving the MACs the lists of providers to contact for revalidation further in advance of the required mailing date than CMS did during the first program-wide revalidation cycle. CMS officials said these changes resulted from work groups that included CMS and MAC officials that were set up to identify and plan operational modifications to improve and streamline revalidation. See appendix II for examples of operational modifications CMS has made to the enrollment screening process used to revalidate existing providers and suppliers.\nCMS plans to implement additional modifications using a detailed work plan, but has not yet determined these modifications. In March 2016, CMS officials said they plan to continue to work with the MACs to generate modifications as in the past, allowing each of the four MAC work groups, which according to CMS officials include CMS points-of-contact, to keep track of its own notes and individually manage its activities as it works to generate ideas and proposals for modifications that each work group then submits to CMS for consideration. While CMS did not use a detailed work plan to make operational modifications to the enrollment screening process in preparation for the second program-wide revalidation effort, CMS officials said that the agency intends to develop a detailed work plan for the modifications they select for implementation, but have not yet set a time frame for developing such a plan. CMS officials stated that they have not yet determined future modifications and are waiting to see the results of the previous modifications before modifying the enrollment process further.", "CMS monitoring includes reviewing certain results of enrollment screening, examining the efficiency of the enrollment screening process, and evaluating the performance of contractors.\nCMS officials said that the agency reviews, at least monthly, information such as the number of deactivations and revocations, including the reasons for deactivations and revocations, the number of deactivations and revocations that result from fingerprint checks and site visits, and the number of provider and supplier revocations that are overturned upon appeal.\nCMS and MAC officials said they meet periodically to examine operational efficiency. For example, CMS officials met with the MACs to examine the efficiency of the first program-wide revalidation effort and reviewed operations to identify potential efficiency improvements. According to CMS and MAC officials, those meetings resulted in changes to operations, such as CMS giving MACs the lists of providers to contact for revalidation further in advance of the required mailing date. CMS and MAC officials said they convened work groups based on those meetings and are continuing to use those work groups to identify future operational modifications, as we noted earlier in this report.\nWe found that CMS also annually evaluates contractor performance by comparing performance against specific measures for the MACs and other contractors that assist with enrollment screening, such as the site visit contractor. For example, CMS developed the Performance Assessment Program for the MACs, which includes three evaluative reviews—the Quality Control Plan review, the Quality Assurance Surveillance Plan review, and the Award Fee Plan review. The Quality Assurance Surveillance Plan review includes, and the Award Fee Plan review may include, contractor performance measures for provider enrollment. The contractor performance measures relate to MAC processing of provider enrollment applications and are designed to assess elements such as timeliness and accuracy.\nDespite these efforts, we found that CMS’s monitoring of enrollment screening, including screening conducted as part of revalidation, lacks objectives and performance measures for assessing progress toward achieving its goals. In November 2015, CMS officials stated that the goals for the enrollment screening process are to (1) place providers and suppliers into proper risk categories and (2) effectively screen the providers in each category. According to CMS officials, the agency also set goals for its revalidation effort to (1) implement provisions of PPACA, (2) keep provider and supplier information up to date, (3) reduce improper payments, and (4) ensure program integrity. However, CMS officials said they have not established objectives and performance measures to use in monitoring progress toward achieving these goals. Federal internal control standards specify that management should define objectives in specific and measurable terms, establish appropriate performance measures for the defined objectives, and conduct ongoing monitoring so that progress toward achieving desired goals can be assessed. In addition, leading practices call for performance measures to monitor and gauge results.\nIn March 2016, CMS officials said that the agency does not plan to develop any objectives or performance measures for enrollment screening, including screening conducted as part of revalidation, which is contrary to federal internal control standards and leading practices for managing programs. Performance measures focus on whether a program has achieved measurable standards. They allow agencies to monitor and report program accomplishments on an ongoing basis. CMS officials stated that while they want to assess the screening process, they are uncertain of what performance measures to establish in part because they are concerned that some measures would be inappropriate. For example, CMS officials stated that while they review the number of deactivations and revocations, it would not be appropriate to have targets for deactivating or revoking a predetermined number of providers or suppliers. This is consistent with our previous work in which CMS officials stated that setting such targets could create incentives that could potentially jeopardize the quality of contractors’ work. We also previously reported that it is important that agencies avoid the appearance of striving to achieve certain numerical quotas regardless of quality.\nHowever, without developing objectives and performance measures to use in ongoing monitoring, the agency will be unable to measure the progress it has made toward achieving its goals for the screening process and for revalidating provider and supplier enrollment information. We have previously reported that performance measurement gives managers crucial information to identify gaps in program performance and plan any needed improvements. While there may be challenges in developing such objectives and performance measures, there are opportunities to do so that would allow CMS to better monitor the enrollment screening process without setting specific targets for the number of deactivations or revocations. For example, CMS could focus on developing objectives and performance measures related to its goals for enrollment screening, such as keeping enrollment information up to date. CMS officials have said that since the revised screening process took effect, providers and suppliers are more aware of their responsibilities to keep information up to date, and MAC officials have stated that providers and suppliers are more frequently providing MACs with changes of information. According to CMS officials, this may result in fewer deactivated enrollment records during the second program-wide revalidation effort. CMS officials said they regularly review the number of deactivated enrollment records, and the agency has information on the reasons for deactivation. Some of those reasons may be associated with failing to keep information up to date, such as nonresponse to requests for updated enrollment information. However, CMS has no objectives and performance measures for the reasons for deactivation to use in measuring progress toward its goal of keeping enrollment information up to date.", "Effective provider and supplier enrollment screening is critical to ensuring program integrity and preventing improper payments. With its revised enrollment screening process, CMS has implemented a preventive risk- based strategy for achieving program integrity where increased scrutiny and greater resources are dedicated to providers and suppliers that present a higher potential risk of fraud, waste, and abuse. CMS has subsequently modified some elements and conducted monitoring of the process. However, CMS has not taken certain important steps that could help ensure the effectiveness of these actions. As CMS considers future modifications to the enrollment screening process and undertakes its second program-wide revalidation effort, opportunities exist to address limitations in its current monitoring of the process. By establishing specific objectives and performance measures for the enrollment screening process and periodically assessing the progress, the agency could better ensure the effectiveness of the screening process as a means of maintaining program integrity and limiting improper payments in Medicare.", "To improve the efficiency and effectiveness of the agency’s enrollment screening process, we recommend that the Administrator of CMS establish objectives and performance measures for assessing progress toward achieving its goals.", "We provided a draft of this report to HHS for comment, and its comments are reprinted in appendix III. HHS also provided technical comments, which we incorporated as appropriate.\nIn commenting on this report, HHS agreed with our recommendation. HHS stated that it will review the goals of the enrollment screening process and determine if there are appropriate objectives and performance measures for the program that the agency can establish.\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 Administrator of the Centers for Medicare & Medicaid 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 kingk@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 IV.", "To examine the results of the revised enrollment screening process put into place in 2011, we analyzed data from provider and supplier enrollment records in the Provider Enrollment, Chain and Ownership System (PECOS), the Centers for Medicare & Medicaid Services’ (CMS) centralized database for Medicare enrollment information. We analyzed PECOS data from March 25, 2011 (the date the new screening process went into effect) through December 31, 2015 (the most current data available at the time of our analysis) to determine (1) the number enrollment records and enrollment applications to which CMS applied the revised screening process, (2) the number of approved, denied, and rejected new enrollment applications, (3) the number of deactivated or revoked existing enrollment records, and (4) the number of enrollment records associated with providers and suppliers eligible to bill Medicare. We did not independently verify the accuracy of the PECOS data; however, we checked the PECOS data for obvious errors and omissions, compared analysis results to CMS publicly reported information on screening process outcomes, and interviewed CMS officials to resolve any identified discrepancies. On the basis of this review, we determined that the PECOS data were sufficiently reliable for the purposes of this report, and we accounted for any limitation in these data during our analyses, such as removing certain outcomes from our analysis of initial enrollment applications and removing enrollment records that did not have a risk category assigned in PECOS from our analysis of the percentages of deactivated and revoked enrollment records in each risk category.\nTo determine the number of enrollment records and enrollment applications to which CMS applied the revised enrollment screening process during the time period we reviewed, we analyzed PECOS data to identify which one of three distinct groups each enrollment record belonged. Specifically, we identified (1) the number of new enrollment application decisions made, (2) the number of enrollment records with a change in enrollment status, for example, from approved to deactivated, and (3) the number of approved enrollment records as of March 25, 2011, that did not have an enrollment status change during the time period. Each enrollment record could only fall in to a single group and we excluded from our analysis deactivated or revoked enrollment records that did not have an enrollment status change during the time period since CMS would not have applied the enrollment screening process to these enrollment records.\nTo determine the number of approved, denied, and rejected new enrollment applications during the time period we reviewed, we analyzed PECOS data to calculate the number of enrollment applications by outcome. For the denied and rejected new enrollment applications, we analyzed the PECOS recorded reasons for the denial or rejection and calculated the number of denials and rejections by recorded reason and by provider and supplier risk category during that time period. CMS officials reported that there could be multiple reasons for a denial or rejection, but due to PECOS system limitations, the Medicare Administrative Contractors (MAC) responsible for enrolling providers and suppliers can only record one reason. In addition, the reason codes that can be recorded in PECOS changed during the time frame covered by our analysis.\nTo determine the number of existing enrollment records deactivated or revoked during the time period we reviewed, we analyzed PECOS data to identify enrollment record statuses that changed to deactivated or revoked during the time period. We identified both the total number of status changes, as well as the number of unique enrollment records deactivated or revoked. The total number of deactivations or revocations is greater than the number of unique enrollment records deactivated or revoked because a provider’s or supplier’s enrollment record could have been deactivated or revoked more than once during that time. For enrollment records with deactivated or revoked statuses, we analyzed the PECOS recorded reason for the deactivation or revocation and calculated the number of deactivations and revocations by recorded reason and by provider and supplier risk category during that time period. As with new enrollment application decisions, the reason codes that can be recorded in PECOS for existing enrollment records changed during the time period of our analysis.\nTo determine the number of enrollment records associated with providers and suppliers eligible to bill Medicare during the time period we reviewed, we analyzed PECOS data to calculate the total number of approved enrollment records on March 25, 2011, and on December 31, 2015.", "The Centers for Medicare & Medicaid Services (CMS) has made operational modifications to revalidation since 2011. For example, in September 2014, CMS modified its guidelines so that the Medicare Administrative Contractors (MAC) need not obtain data missing from a provider’s or supplier’s application elsewhere if the information is disclosed in another place on the application or in the supporting documentation in the enrollment application submitted for revalidation. In addition, CMS made several modifications in preparation for the second program-wide enrollment record revalidation effort which began March 2016. Table 7 provides examples of these operational modifications, as described in CMS instructions to the MACs.", "", "", "Kathleen M. King, (202) 512-7114 or kingk@gao.gov.", "In addition to the contact named above, Karen Doran (Assistant Director), Peter Mangano (Analyst-in-Charge), Cathy Hamann, Colbie Holderness, Sylvia Diaz Jones, and Daniel Ries made key contributions to this report. Also contributing were Muriel Brown, Christine Davis, and Jennifer Whitworth." ], "depth": [ 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "", "", "", "h0_full h2_full", "h1_full", "h2_full", "", "", "h3_full h2_full", "", "", "", "", "" ] }

{ "question": [ "How has the CMS revised their screening process?", "How were automatic approvals changed?", "How will CMS further change their process?", "Why have they decided to wait to continue modifying?", "What is lacking in CMS monitoring of their screening process?", "Why is the CMS having a hard time assessing their screening process?", "How can they still manage to have a successful assessment?", "How could they specifically address enrollment data in their assessment?", "What do the Federal internal control standards say on assesments?", "How does this relate to the CMS's dilemma?", "How is Medicare integrity ensured?", "How does the Patient Protection and Affordable Care Act impact the CMS?", "How did the CMS follow these provisions?", "How is this process used?", "How did the CMS begin to verify their Medicare enrollees?", "How was this later continued?", "What was the GAO asked to review?", "What will they examine to do this?", "What data will the GAO review?" ], "summary": [ "Since 2011, CMS has implemented some modifications to the revised screening process and made operational modifications to its revalidation efforts.", "For example, CMS eliminated automatic approvals of provider and supplier requests to extend the deadline for submitting enrollment information for revalidation.", "CMS officials stated that they plan to implement further modifications, but have not yet identified these future modifications.", "CMS officials said that they are waiting to see the results of the previous modifications before modifying the enrollment process further.", "CMS has set goals and conducted monitoring of the enrollment screening process, but those monitoring activities lack objectives and performance measures for assessing progress toward those goals.", "CMS officials said they want to assess the screening process but they are uncertain of what objectives and performance measures to establish, in part because they are concerned that some measures would be inappropriate.", "While there may be challenges in developing objectives and performance measures, there are opportunities to do so that would allow CMS to better monitor the enrollment screening process without setting specific targets that could create inappropriate incentives for contractors.", "For example, CMS could focus on developing objectives and performance measures related to its goals for enrollment screening, such as keeping enrollment information up to date.", "Federal internal control standards and leading practices specify defining objectives and establishing performance measures so that an agency can monitor progress toward achieving desired goals.", "Without objectives and performance measures to use in ongoing monitoring, CMS will be unable to measure the progress it has made toward achieving its goals.", "An effective provider and supplier enrollment process is a cornerstone of ensuring Medicare program integrity and limiting improper payments.", "The Patient Protection and Affordable Care Act contained provisions designed to strengthen CMS's enrollment screening process.", "In response, CMS implemented a revised screening process on March 25, 2011, that assigned all providers and suppliers to one of three risk categories—limited, moderate, or high—and based screening on the level of potential risk of fraud, waste, and abuse they present.", "The process is used to screen prospective, and revalidate enrolled, providers and suppliers.", "In September 2011, CMS began its first large scale revalidation effort to verify all enrolled providers' and suppliers' information and determine whether they remain eligible to bill Medicare.", "As of March 2016, it had begun its second large scale revalidation effort.", "GAO was asked to examine the revised enrollment screening process.", "GAO examined 1) the results of the 2011 revised screening process, 2) CMS's implemented or planned modifications to the process, and 3) CMS's monitoring of the revised process.", "GAO examined enrollment data from March 25, 2011, through December 31, 2015, reviewed CMS policies and procedures, and interviewed CMS and Medicare contractor officials." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, 1, 2, -1, 4, -1, -1, 1, 2, -1, 4, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "TARP Programs and Implementation", "Most Nonmortgage- Related Programs Continue to Wind Down", "Institutions’ Financial Strength and the Outcomes of Auctions Will Help Determine When Remaining Participants Exit CPP", "The Financial Strength of CDCI Participants Will Affect When Treasury Terminates the Program", "Competing Goals and Market Conditions Have Affected Treasury’s Exit from GM and Ally", "Treasury Sold Its Remaining AIG Shares", "Treasury Expects Lifetime Income from Term Asset- backed Securities Loan Facility (TALF) and Plans to Exit the Program by 2015", "The Investment Periods for PPIP Funds Have Terminated, and All PPIF Funds Have Begun Unwinding", "Mortgage Programs Remain Active, and Oversight Has Shown Both Challenges and Improvements", "TARP-Funded Mortgage Programs Continue to Assist Homeowners, but Much of the Funding Remains Unspent", "Treasury Has Identified Both Implementation Challenges and Improvements in Processes Aimed at Enhancing Borrower Assistance", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Treasury’s Termination of the TARP Small Business Administration 7(a) Securities Purchase Program", "Appendix III: Treasury’s Office of Financial Stability Staffing and Use of Private Sector Contracting", "Office of Financial Stability Staffing", "Contracts and Other Agreements Supporting TARP Administration and Operations", "Managing Potential Conflicts of Interest", "Appendix IV: Comments from the Department of the Treasury", "Appendix V: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "When EESA was enacted on October 3, 2008, the U.S. financial system was facing a severe crisis that rippled throughout the global economy, moving from the U.S. housing market to an array of financial assets and interbank lending. The crisis restricted access to credit and made the financing on which businesses and individuals depended increasingly difficult to obtain. Further tightening of credit exacerbated a global economic slowdown. During the crisis, Congress, the President, federal regulators, and others undertook a number of steps to facilitate financial intermediation by banks and the securities markets. In addition to Treasury’s efforts, policy interventions were led by the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation. While the banking crisis in the United States no longer presents the same level of systemic concerns as it did in 2008, the financial system continues to face vulnerabilities, including lagging investor confidence, financial concerns about European banks and countries, and generally weak economic growth globally.", "The passage of EESA resulted in a variety of programs supported with TARP funding. (See table 1.) Treasury estimates several of the programs over their lifetimes will provide income to the government while others will incur a cost. Each program that remained active through September 30, 2012, will be addressed in this report.\nMany TARP programs have been winding down, and some have ended.Treasury has stated that when deciding to sell assets and exit TARP programs, it strives to: protect taxpayer investment and maximize overall investment returns within competing constraints, and promote the stability of financial markets and the economy by preventing disruptions to the financial system; bolster markets’ confidence in order to encourage private capital dispose of investments as soon as practicable.\nWhile Treasury has identified these goals for the exit process for many programs, we and others have noted that these goals, at times, can conflict. For example, we previously reported that deciding to unwind some of its assistance to General Motors (GM) by participating in an initial public offering (IPO) presented Treasury with a conflict between maximizing taxpayer returns and exiting as soon as practicable. Holding its shares longer could have meant realizing greater gains for the taxpayer but only if the stock appreciated in value. By participating in GM’s November 2010 IPO, Treasury tried to fulfill both goals, selling almost half of its shares at an early opportunity. Treasury officials stated that although they strove to balance these competing goals, they had no strict formula for doing so. Rather, they ultimately relied on the best available information in deciding when to start exiting this program.\nMoreover, in some cases Treasury’s ability to exercise control over the timing of its exit from TARP programs is limited. For example, Treasury has limited control over its exit from the Public-Private Investment Program (PPIP), because the program’s exit depends on when each public-private investment fund (PPIF) decides to sell its investments. Treasury continues to face this tension in its goals with a number of TARP programs. Figure 1 provides an overview of key dates for TARP implementation and the unwinding of some programs. In addition, appendix III provides information on Treasury’s administration of the TARP programs, including an update on the staffing challenges we have previously reported and Treasury’s reliance on the private sector to assist with TARP administration and operations.", "Most nonmortgage-programs continue to wind down, but the status and potential ending date of each nonmortgage-related TARP program varies. Key information includes, the estimated date, if known, that the program will end or stop acquiring new assets and no longer receive funding;\nTreasury’s estimated date for exiting the program or selling the assets it acquired while the program was open; outstanding assets, as applicable, as of September 30, 2012;the lifetime estimated costs (or income) for each program as calculated by Treasury.", "While repayments and income from CPP investments have exceeded the original outlays, the financial strength of participating institutions and the outcome of future securities auctions will help determine when the remaining institutions exit the program. As we have reported, Treasury disbursed $204.9 billion to 707 financial institutions nationwide from October 2008 through December 2009. As of September 30, 2012, Treasury had received $219.5 billion in repayments and income from its CPP investments, exceeding the amount originally disbursed by $14.6 billion (see fig. 2). The repayment and income amount included $193.2 billion in repayments of original CPP investments, as well as $11.8 billion in dividends, interest, and fees; $7.7 billion in warrant income; and $6.9 billion in net proceeds in excess of costs. After accounting for write-offs and realized losses on sales totaling $3.0 billion, CPP had $8.7 billion in outstanding investments as of September 30, 2012. Treasury estimates lifetime income of $14.9 billion for CPP as of September 30, 2012.\nOver half (417) of the 707 institutions that originally participated in CPP had exited the program as of September 30, 2012. Of the 417 institutions that have exited CPP, about 42 percent, or 175 institutions, exited by repaying their investments. Another 40 percent, or 165 institutions, exited CPP by exchanging their securities under other federal programs: 28 through TARP’s Community Development Capital Initiative (CDCI) and 137 through the non-TARP Small Business Lending Fund (SBLF) (see fig. 3). Of the remaining 18 percent of CPP recipients that exited the program, 56 had their securities sold by Treasury, 18 went into bankruptcy or receivership, and 3 merged with another institution.\nAs of September 30, 2012, much of the $8.7 billion in outstanding investments was concentrated in a relatively small number of institutions. The largest single outstanding investment was $967.9 million, and the top three outstanding investments totaled $2.3 billion—27 percent of the amount outstanding. The top 25 remaining CPP investments accounted for $5.4 billion, or 63 percent of the outstanding amount. In addition, while 290 of the original 707 institutions remained in CPP, their $8.7 billion in outstanding investments accounted for just 4 percent of what Treasury originally disbursed.\nHowever, the number of institutions that have missed payments has been rising. The cumulative number of financial institutions that had missed at least one scheduled dividend or interest payment by the end of the month in which the payments were due rose from 219 as of August 31, 2011, to 242 as of August 31, 2012. These 242 institutions represent over one- third of the 707 institutions that participated in CPP and account for a cumulative total of 1,631 missed payments. As of August 31, 2012, 208 institutions had missed three or more payments and 142 had missed six or more. The total amount of missed dividend and interest payments was $376 million, although some of these payments were later made prior to the end of the reporting month. On a quarterly basis, the number of institutions missing dividend or interest payments due on their CPP investments increased steadily from 8 in February 2009 to 150 in August 2012, or about half of the institutions still in the program (see fig. 4). This increase occurred despite the reduced program participation, so the proportion of those missing scheduled payments has risen accordingly.\nThe number of institutions missing payments has stabilized in recent quarters, but most of the institutions with missed payments had missed them repeatedly. In particular, 133 of the 150 institutions that missed payments in August 2012 had also missed payments in each of the previous three quarters. Moreover, these 150 institutions had missed an average of 7.3 additional previous payments, while 4 had never missed a previous payment. Institutions can elect whether to pay dividends and may choose not to pay for a variety of reasons, including decisions that they or their federal and state regulators make to conserve cash and maintain (or increase) capital levels. Institutions are required to pay dividends only if they declare dividends, although unpaid cumulative dividends generally accrue and the institution must pay them before making payments to other types of shareholders, such as holders of common stock.\nIn May 2012, Treasury announced a strategy to wind down its remaining investments. The strategy includes three options that the department says will protect taxpayer interests, promote financial stability, and preserve the strength of the nation’s community banks. These options include allowing banks to repurchase or restructure their investments or selling Treasury-held stock through public auctions. In considering these options, Treasury will need to balance the goals of protecting taxpayer- supported investments while expeditiously unwinding the program. Treasury officials said that they would continue to evaluate the CPP exit strategy, but added that they expected to continue using these options for the foreseeable future.\nThe first option allows banks, with the approval of their regulators, to repurchase from Treasury their preferred shares in full. Treasury points out that this strategy has been used since 2009 and is one it expects some banks to continue to use through late 2013. Under this option, Treasury’s ability to exit the program largely depends on the ability of institutions to repay their investments. Institutions will have to demonstrate that they are financially strong enough to repay the CPP investments in order to receive regulatory approval to exit the program. Dividend rates will increase from 5 percent to 9 percent for remaining institutions beginning in late 2013, a development that may prompt institutions to repay their investments. If broader interest rates are low, especially approaching the dividend reset, banks could have further incentive to redeem their preferred shares.\nA second option allows banks to restructure their investments, usually in connection with a merger or a plan to raise new capital. With this option, Treasury receives cash or other securities that generally can be sold more easily than preferred stock. Treasury officials said that, as of early October 2012, approximately 28 restructurings had occurred. The officials expected a limited number of restructurings to continue, but added that because Treasury’s investments were sometimes sold at a discount during restructuring, they would approve the sales only if the terms represented the best deal for taxpayers.\nUnder the third option, Treasury may sell its preferred stock through public auctions. Treasury conducted the first such auction of CPP investments in March 2012 and reported that it generated strong investor interest. As of September 30, 2012, Treasury had conducted six auctions resulting in the sale of 40 investments with total net proceeds of about $1.3 billion. Treasury also reported that this option can be beneficial for community banks that do not have easy access to the capital markets, because it could attract new, private capital to replace the temporary TARP support. Treasury expects this option to continue to be part of its effort to wind down CPP. Thus far, Treasury has sold investments individually, but noted that it might combine other investments, particularly smaller ones, into pools. Whether Treasury sells stock individually or in pools, the outcome of this option will depend largely on investor demand for these securities.", "Treasury disbursed $570 million to its 84 CDCI participants and completed funding the program in September 2010 (see fig. 5). As we previously reported, CDCI is structured much like CPP, in that it has provided capital to financial institutions by purchasing equity and subordinated debt from them. No additional funds are available through the program, as CDCI’s funding authority expired in September 2010. As of September 2012, Treasury expects CDCI will cost approximately $200 million over its lifetime, less than half of the $570 million obligated to the program. Officials stated that CDCI will have a lifetime cost, while CPP is estimated to result in lifetime income, in part because CDCI provides a lower dividend rate that increases the net financing cost to Treasury. Also, unlike CPP, the program does not require warrants from participating institutions that would have helped offset Treasury’s costs. As of September 30, 2012, two CDCI participants have repaid Treasury $2.85 million, and Treasury has received $22 million in dividend payments from CDCI participants.\nAs with CPP, Treasury must continue to monitor the performance of CDCI participants because their financial strength will affect their ability to repay Treasury. According to Treasury officials, Treasury will continue to hold its CDCI investments and has not made any disposition decisions about the program. However, they said that when Treasury decides to exit the CDCI program, it will need tools in place similar to those used by CPP institutions to exit the CPP program. As of September 30, 2012, 5 of the 84 CDCI participants had missed at least one dividend or interest payment, and 2 of the participants had paid accrued and unpaid dividends after missing the initial scheduled payment date(s), according to Treasury. While the continuing weak economy could negatively affect distressed communities and the CDFIs that serve them, the program’s low dividend rates may help participants remain current on payments.\nWhen Treasury will exit CDCI is unknown, but the dividend rate that program participants pay increases in 2018. However, Treasury officials noted that the program was intended to be long term and said that they believed the program was meeting its objective by providing long-term, low-cost capital. CDCI institutions have an opportunity to keep CDCI capital in their communities, which are usually moderate and low income, for a longer time. Treasury officials indicated that, as with CPP investments, Treasury’s current practice was to hold CDCI investments but that this strategy could change, and Treasury could opt to sell its CDCI shares.", "Since investing roughly $80 billion in the automotive industry, as of September 30, 2012, Treasury had received more than $40 billion in proceeds. Nevertheless, Treasury still held substantial investments in GM and Ally Financial, which included 32 percent of GM’s common stock, 74 percent of Ally Financial’s common stock, and $5.9 billion of Ally Financial’s mandatory convertible preferred stock (see fig. 6).\nTreasury officials told us that they continued to monitor GM’s financial condition as well as overall market and economic conditions as they developed a divestment strategy for GM. In general, GM’s financial condition has improved since the IPO, but the company continued to address challenges with its European operations. Specifically, GM’s net income rose 43 percent—from about $6.5 billion in 2010 to about $9.3 billion in 2011, with the company achieving 11 straight quarters of profitability since its formation in July 2009. However, the company saw a decline in net income in 2012—from about $8.5 billion in the first three quarters of 2011 to about $5.1 billion in the first three quarters of 2012. GM officials reported this decline was largely due to increased losses in the company’s European Operations, a region where the automotive industry as a whole struggles. The company continues to post losses in Europe, with vehicle sales declining 7.4 percent between the first three quarters of 2011 and the first three quarters of 2012. In contrast, GM’s North American sales increased 3.2 percent over 2011 levels for that same time period. The company has reported taking actions to help restructure its European operations and expects financial results to improve.\nThe company has also recently made a number of other changes in an effort to improve its financial condition and flexibility. In June 2012, in an effort to de-risk its pension plans and further strengthen its balance sheet, GM announced that it would provide certain U.S. salaried retirees with a continued monthly payment administered and paid by The Prudential Insurance Company of America and others with a voluntary lump-sum payment option, which it estimated would reduce its salaried pension obligation by about $29 billion. In November 2012 GM announced plans for its captive financing subsidiary, GM Financial, to acquire Ally Financial, Inc.’s International Operations in 14 countries, which the company expects to drive higher vehicle sales in China, Mexico, Europe and Latin America. Also in November 2012, GM secured a new $11 billion revolving to help improve GM Financial’s financial flexibility.\nIn December 2012, two years after the GM IPO, Treasury announced that it would sell 200 million or 40 percent of its remaining shares in the company, and intends to sell the other remaining 300.1 million shares through a pre-arranged written trading plan within the next 12 to 15 months, subject to market conditions. In May 2011, we reported that GM’s share price would have to increase dramatically from current levels to an average of more than $54 for Treasury to fully recoup its investment. Because the December 2012 sale price of $27.50 per share is considerably less than the breakeven level, GM’s shares will now have to increase to roughly $72 per share, or more than double the average 2012 share price, for Treasury to fully recoup its investment (see fig. 7).\nIn addition to its outstanding investments in GM, Treasury remains heavily invested in Ally Financial. According to Treasury officials, the department continues to explore all potential options for divesting its interest in Ally Financial, including public and private options such as a possible IPO or selling its equity in a private transaction. However, since we last reported on Ally Financial the company has undergone a number of changes that could affect the timing of Treasury’s exit. For instance, on May 14, 2012, Ally Financial’s mortgage subsidiary Residential Capital, LLC, and certain of its subsidiaries, filed for Chapter 11 bankruptcy. The company is also in the process of selling its international business, which includes auto finance, insurance, and banking and deposit operations in Canada, Mexico, Europe, the United Kingdom, China, and South America. According to Ally Financial, contracts for each of these countries have been signed, and deal closings are expected to occur in stages throughout the first half of 2013. Ally Financial reported that these actions would improve the financial viability of the company and increase the likelihood of repaying Treasury. Ally’s net income for the first three quarters of 2012 has declined from the same period in 2011— decreasing from a positive $49 million in 2011 to a loss of $204 million in 2012. This loss is primarily attributable to charges related to the Residential Capital, LLC, bankruptcy filing in the second quarter of 2012.\nThe challenges facing Ally Financial and reductions in the share prices of common stock holdings in GM highlight how market conditions contribute to the risks associated with AIFP and the variability of lifetime cost estimates. The projected lifetime cost of AIFP has increased since 2010 and as of September 30, 2012, was estimated at $24.3 billion—about $700 million more than in September 2011 and almost $10 billion more than in September 2010. According to Treasury officials, Treasury continues to balance its goals of exiting as soon as practicable and maximizing taxpayer returns.", "On December 11, 2012, Treasury announced that it agreed to sell all of its remaining shares of AIG common stock, and on December 14, 2012, announced that it had received payment from its final sale of AIG stock, bringing to an end the government’s assistance to the company. Prior to TARP, in September 2008 AIG received assistance in the form of a loan from the Federal Reserve Bank of New York (FRBNY). In exchange, AIG provided shares of preferred stock to the AIG Credit Facility Trust that FRBNY created. These preferred shares were converted to common stock and then transferred to the Treasury. In addition to this and other non-TARP support, Treasury provided assistance to AIG in November 2008 through TARP by purchasing preferred shares that were also later converted to common stock. In late January 2011, following the recapitalization of AIG, Treasury owned 1.655 billion common shares in AIG (1.092 billion TARP and 0.563 billion non-TARP) and a $20.3 billion preferred interest in two special purpose vehicle subsidiaries of AIG.\nIn May 2011, Treasury began to sell its AIG shares. Since then and through six offerings, Treasury has sold all of its shares of AIG common stock, both TARP and non-TARP shares. The shares it sold in May 2011 and March 2012 to the public brought $29 per share; the shares it sold in May and August of 2012 to the public brought $30.50 per share; and the shares it sold in September and December 2012 to the public brought $32.50 per share. The share price, on a weighted average basis, was $31.18, exceeding Treasury’s break-even price of $28.73 per share on an overall cost basis for both the TARP and non-TARP shares. At an average price of $31.18 per share, the returns include about $34 billion on the 1.092 billion TARP shares and $17.6 billion on the 563 million non- TARP shares—totaling over $51.6 billion in proceeds. (See table 2.) While it has sold its remaining AIG common shares, Treasury continues to hold warrants to purchase approximately 2.7 million shares of AIG common stock.\nTreasury received approximately $72.8 billion of proceeds and cancelled $2 billion of its commitment, undrawn, on the AIG investments, exceeding the $69.8 billion total Treasury commitment to assist AIG by approximately $5 billion. As of December 2012, the total reflected the $54.3 billion generated on Treasury’s common stock sales and AIG repaid $20.3 billion on the preferred interests in two special purpose vehicle subsidiaries of AIG. In addition, Treasury said that it received $930 million in interest and participation rights on the special purpose vehicle investments. Treasury’s returns from selling common stock have been in addition to those realized by the returns of other assistance to AIG. With AIG’s final repayment of all FRBNY assistance to the company in 2012, FRBNY had realized returns in the form of interest, dividends, and fees in excess of the assistance it provided AIG through a revolving credit facility and several special purpose vehicles.\nAs of September 30, 2012, prior to the December 2012 sale of AIG shares. Treasury lowered its expected lifetime cost from $24.3 billion to $15.3 billion for its TARP shares and increased its expected income from $12.8 billion to $17.6 billion for its non-TARP shares, changing what was an expected net estimated cost of $11.5 billion to a net expected gain of $2.3 billion for assistance to AIG.", "The Federal Reserve established TALF in an effort to reopen the securitization markets and improve access to credit for consumers and businesses. As of September 30, 2012, Treasury is committed to contributing as much as $1.4 billion to provide credit protection to FRBNY for TALF loans should borrowers fail to repay and surrender the asset- backed securities (ABS) or commercial mortgage-backed securities (CMBS) pledged as collateral. To date, Treasury has disbursed $100 million for start-up costs related to the FRBNY-established TALF special- purpose vehicle, TALF LLC (see fig. 8). TALF LLC receives a portion of the interest income earned on TALF loans (known as excess interest under the program) that can be used to purchase any borrower- surrendered collateral from FRBNY.\nFRBNY stopped issuing new TALF loans in 2010.report that FRBNY TALF loan balances, which were $29.7 billion in September 2010, had fallen to $11.3 billion as of September 30, 2011, and to $1.5 billion as of September 26, 2012. Agency officials also indicated that all TALF loans were current and that borrowers continued to pay down their loans.\nTreasury officials Excess interest in TALF LLC grew by more than 30 percent between October 2010 and September 2011, rising from $523 million to $685.6 million. Over the next year (September 2011 to September 2012), it grew to $754.2 million. If the balance of excess interest in TALF LLC exceeds the value of any surrendered collateral, Treasury may not need to disburse any additional funds for the program and could instead realize lifetime income because it will receive 90 percent of funds remaining in TALF LLC after all obligations are repaid and the program ends. Further, the equity that borrowers hold in TALF collateral has grown since TALF loans were first issued. As of September 30, 2012, Treasury estimated that TALF would result in a lifetime income of approximately $517 million. Treasury officials told us in September 2012 that they did not have any particular concerns about the CMBS market that would have an effect on current TALF holdings, and that prices remained strong throughout 2012. Despite these positive trends, the officials told us that FRBNY and Treasury staff will continue to monitor market conditions and credit rating agency actions that could affect TALF assets. As we have previously reported, market value fluctuations could affect future results.\nTreasury expects to exit TALF by 2015, although it does not have complete control over its exit because its role in TALF is secondary to that of the Federal Reserve. Treasury models loan repayments using TALF loan terms and data provided by the Federal Reserve and projects repayment schedules, collateral cash flows, prepayments, and performance loss rates. Based on these analyses, Treasury expects that the last TALF loan will be paid in 2015. No borrowers have surrendered TALF collateral to date, and all loans are current. However, should TALF LLC be required to purchase and manage TALF assets, Treasury could be involved in TALF beyond 2015, as TALF assets may have maturity dates that extend beyond the loan maturity dates.", "Treasury created PPIP, partnering with private funds, to purchase troubled mortgage-related assets from financial institutions. Treasury provided the PPIFs with equity and loan commitments of approximately $7.4 billion and $14.7 billion, respectively, but disbursed a total of $18.6 billion. PPIFs have finished their 3-year investment period, which started at each fund’s inception date. There were nine PPIFs established through PPIP, the first of which was liquidated in the first quarter of 2010 and the last terminated in December 2012. PPIFs with terminated investment periods can no longer draw money from Treasury or make new investments under this authority, and Treasury has not granted approval for any new draws under the PPIP program. With the investment periods ended, PPIFs must begin unwinding their positions and completely divest within 5 years, although Treasury can decide to extend this period for up to 2 additional years for each PPIF. According to Treasury, the PPIF liquidated in the first quarter of 2010 yielded Treasury a profit of $20.1 million on its $156.3 million equity investments and the PPIF whose investment period ended in September 2011 returned all of its equity proceeds to Treasury and fully wound down its fund. Three additional PPIFs have returned 100 percent of Treasury and private investors’ equity investments in the fund with equity gains and fully repaid Treasury’s debt. According to Treasury, these three funds have a small amount of capital remaining to unwind their operations. The investment periods for the remaining PPIFs have subsequently ended and thus have begun to unwind.\nAccording to Treasury, as of September 30, 2012, PPIFs had accessed about 86 percent of the equity and debt available through Treasury and private investors, and had repaid Treasury a total of $6.7 billion in debt financing. In addition, since September 30, 2012, Treasury has received around $5.5 billion of payments under PPIP. As of September 30, 2012, Treasury estimates that PPIP will ultimately result in lifetime income of about $2.4 billion (see fig. 9). As of November 5, 2012, the four PPIFs that have sold all of their remaining investments and returned substantially all of the proceeds have generated more than $1.4 billion in realized gains and income on Treasury’s equity and warrant investments. However, according to Treasury, the ultimate results will depend on a variety of factors, including when PPIFs choose to divest and the performance of the assets they hold.\nTreasury officials said that their role while PPIFs were in their investment periods was to follow the progress of each PPIF’s investment strategy and the risks and target returns of the portfolios. In this role, Treasury staff and contractors monitored compliance with PPIP terms. With the end of the PPIFs’ investment periods, Treasury officials said that Treasury would focus on the strategies PPIFs used to maintain and ultimately divest themselves of their portfolios. Also, Treasury officials said that the contractors hired to provide investment fund consulting and analysis of PPIF portfolios would continue to provide such services in this postinvestment period.\nCurrent PPIP terms stipulate an exit by 2017.found in some other TARP programs, Treasury officials do not face the same consideration of competing goals in exiting the program because the terms of the program dictate when the PPIFs must wind down. However, Treasury officials noted that PPIFs can liquidate at any time before the exit date. Officials also noted that the program was designed to discourage firms from keeping their investments outstanding longer than needed by the PPIF fund managers after the investment period expired, at which time PPIFs would no longer have access to debt financing from Treasury, unless permitted by provisions within the loan agreement and approved by Treasury. Now that the investment periods have terminated, PPIFs must pay down their Treasury loans and make distributions to their partners as the PPIFs receive proceeds from RMBS and CMBS payments and dispositions. Officials noted that this program structure created an incentive for PPIFs to sell their assets promptly once their access to Treasury ended. The officials also said that they were not concerned about any effects of PPIPs’ eventual winding down on markets, as the 5-year period for unwinding would likely mitigate them.", "To help meet EESA’s goals of preventing avoidable foreclosures and preserving homeownership, Treasury allocated $45.6 billion in TARP funds to three mortgage programs:\nMaking Home Affordable (MHA), which has several components, including the Home Affordable Modification Program (HAMP);\nHousing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (Hardest Hit Fund or HHF); and\nDepartment of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) Refinance of Borrowers in Negative Equity Positions (FHA Short Refinance or FHASR).\nThe bulk of the funds allocated to TARP programs to help distressed borrowers avoid foreclosure—$40.1 billion—had not yet been disbursed as of September 30, 2012. The estimated lifetime cost for the mortgage programs is $45.6 billion. Unlike for the programs discussed previously, Treasury will continue to disburse TARP funds under the mortgage programs for several more years. Specifically, homeowners have until December 31, 2013, to apply for assistance under MHA programs, and Treasury will continue to pay incentives for up to 5 years after the last permanent modification begins. Treasury’s obligation under FHASR will continue until September 2020. Unlike TARP expenditures under some other programs, such as those that provided capital infusions to banks, expenditures under these programs are generally direct outlays of funds with no provision for repayment.", "The centerpiece of Treasury’s MHA program is HAMP, which seeks to help eligible borrowers facing financial distress avoid foreclosure by reducing their monthly first-lien mortgage payments to more affordable levels. Treasury announced HAMP (now called HAMP Tier 1) on February 18, 2009. Generally, HAMP Tier 1 is available to qualified borrowers who occupy their properties as their primary residences and whose first-lien mortgage payment is more than 31 percent of their monthly gross income. Treasury shares with mortgage holders or investors the cost of lowering borrowers’ monthly payments to 31 percent of monthly income for a 5-year period. In an effort to reach more borrowers, Treasury established HAMP Tier 2, which servicers began implementing in June 2012. HAMP Tier 2 is available for either owner- occupied or rental properties, and borrowers’ monthly mortgage payments prior to modification do not have to exceed a specified threshold. Treasury also provides incentive payments for modifications under HAMP Tier 1 and HAMP Tier 2 to servicers and investors, and to borrowers under HAMP Tier 1.\nTreasury originally announced that up to 3 million to 4 million borrowers However, Treasury reported that through would be helped under HAMP. September 2012 only about 1.1 million permanent modifications had been started.experienced a significant decline, as shown in figure 10. Since June 1, 2010, when Treasury began requiring all servicers to perform full income Monthly activity peaked during the early part of 2010 and has verification to determine a borrower’s eligibility for HAMP before offering a trial modification, the monthly number of new trial modifications reported by servicers has remained below 40,000. Monthly trial modification starts during September 2012 were the lowest reported since the initial roll-out of the program in 2009. Treasury has not yet published data on the number of trial periods or permanent modifications started under HAMP Tier 2, according to Treasury officials.\nIn addition to HAMP, Treasury has implemented a number of additional MHA components that use TARP funds to augment or complement the HAMP first-lien modification program:\nHome Affordable Foreclosure Alternatives Program. The Home Affordable Foreclosure Alternatives Program offers assistance to homeowners looking to exit their homes through a short sale or deed- in-lieu of foreclosure. Treasury offers incentives to eligible homeowners, servicers, and investors under the program. Through September 2012, servicers reported completing about 74,000 short sales and 1,900 deeds-in-lieu under the program.\nHome Price Decline Protection Incentives. This program provides investors with additional incentives to modify loans under HAMP on properties located in areas where home prices have recently declined and where investors are concerned that price declines may persist. Through September 2012, Treasury had paid about $269 million to investors in program incentives to support the HAMP modification of more than 154,000 loans.\nPrincipal Reduction Alternative (PRA). PRA requires servicers to evaluate the benefit of principal reduction for mortgages that have a loan-to-value ratio of 115 percent or more and that are not owned or guaranteed by Fannie Mae or Freddie Mac. Servicers are required to evaluate homeowners for PRA when evaluating them for a HAMP first-lien modification but are not required to actually reduce principal as part of the modification. Through September 2012, servicers reported having started about 78,000 permanent modifications with principal reductions under PRA.\nSecond Lien Modification Program. The Second Lien Modification Program provides additional assistance to homeowners receiving a HAMP first-lien permanent modification who have an eligible second lien with participating servicers. When a borrower’s first lien is modified under HAMP, participating program servicers must offer to modify the borrower’s eligible second lien according to a defined protocol. This assistance can result in a modification or even full or partial extinguishment of the second lien. On February 16, 2012, Treasury doubled the amount of incentives provided on second-lien modifications that included principal reduction and became effective on or after June 1, 2012. Through September 2012, servicers reported starting about 97,000 second-lien modifications, of which about 24,000 fully extinguished the second lien.\nGovernment-insured or guaranteed loans (FHA-HAMP and RD- HAMP). FHA and the Department of Agriculture’s Rural Housing Service (RHS) have implemented modification programs similar to HAMP Tier 1 for FHA-insured and RHS-guaranteed first-lien mortgage loans. Each of these programs results in loan modifications that provide borrowers with an affordable monthly mortgage payment equal to 31 percent of the homeowners’ monthly gross income and requires borrowers to complete a trial payment plan before permanent modification. If a modified FHA-insured or RHS-guaranteed mortgage loan meets Treasury’s eligibility criteria, the borrower and servicer can receive TARP-funded incentive payments from Treasury. Treasury reported that there were nearly 9,100 permanent modifications started that received Treasury FHA-HAMP incentives through September 2012. According to Treasury officials, servicers had reported only 11 modifications that qualified for Rural Development (RD)-HAMP incentives as of September 30, 2012.\nTreasury/FHA Second Lien Program (FHA2LP). Under this program, Treasury provides incentive payments to servicers and investors if they partially or fully extinguish second liens associated with an FHA Short Refinance. Servicers can receive a one-time payment of $500 for each second lien extinguished under the program, and investors are eligible for incentive payments based on the amount of principal extinguished. According to Treasury, no second liens had been extinguished and no incentive payments made under the Treasury/FHA Second Lien Program as of September 30, 2012.\nTreasury obligated $29.9 billion to MHA, of which nearly $4.0 billion had been disbursed as of September 2012 (see fig. 11). Treasury estimated that an additional $6.5 billion could be spent on incentives for HAMP modifications and other MHA interventions that were already in effect as of September 2012, assuming none of these modifications default. After combining these potential incentive payments with incentives already paid, Treasury estimated that $19.4 billion of the $29.9 billion remain available for future modifications and other interventions.\nIn addition to the MHA program, Treasury has allocated $7.6 billion in TARP funds for HHF, which seeks to help homeowners in 18 states hit hardest by unemployment and house price declines (Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee) plus the District of Columbia. States were chosen because they had experienced steep home price declines, high levels of unemployment in the economic downturn, or both. According to Treasury, each state housing agency gathered public input to implement programs designed to meet the distinct challenges homeowners in their state were facing. As a result, HHF programs vary across states, but services offered often include mortgage payment assistance for unemployed homeowners and reinstatement assistance to cover arrearages (e.g., one-time payment to bring a borrower’s delinquent mortgage current). Treasury reported that it had disbursed approximately $1.5 billion to the states for the HHF program as of September 2012. States reported having spent about $742 million through September 2012 to help more than 77,000 homeowners since the program began, and $199 million on administrative expenses.\nTreasury has also allocated $8.1 billion in TARP funds to the FHA Short Refinance program to enable homeowners whose mortgages exceed the value of their homes to refinance into more affordable mortgages. This opportunity allows borrowers who are current on their mortgage—or if they are delinquent, who successfully complete a trial period—to qualify for an FHA Short Refinance loan if the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent. Treasury entered into a letter of credit facility with Citibank in order to fund up to $8 billion of any losses associated with providing FHA Short Refinance loans. Treasury’s commitment extends until September 2020, and to the extent that FHA experiences losses on those refinanced mortgage loans, Treasury will pay claims up to the predetermined percentage after FHA has paid its portion of the claim. Treasury will also pay a fee to the issuer of the letter of credit based on the amount of funds drawn against the letter of credit and any unused amount. The terms of the agreement cap the fee at $117 million. As of September 30, 2012, FHA had insured 1,774 loans with a total face value of $307 million under the refinance program. As of September 30, 2012, Treasury had paid about $7.2 million in fees to Citibank, which issued the letter of credit. Treasury also placed $50 million in a reserve account to cover any future loss claims on these loans, although no funds have been disbursed for loss claim payments.", "Through its monitoring of processes put in place to improve servicers’ communication with borrowers and resolution of disputes, Treasury has identified some implementation challenges but has also found improvements in performance. One process, which Treasury announced in May 2011, requires large servicers participating in HAMP to identify a “relationship manager” to serve as the borrower’s single point of contact throughout the delinquency or imminent default resolution process, effective September 1, 2011. By implementing this requirement, called the single point of contact requirement, Treasury was seeking to enhance communications between servicers and borrowers during the delinquency resolution process.point of contact requirement, Treasury adopted compliance review procedures to determine whether servicers (1) had established a single point of contact in accordance with MHA requirements, (2) were monitoring assignments and activities to verify that they were in accordance with internal policies and MHA guidance, and (3) had created To monitor servicers’ implementation of the single written notices of assignments or changes and sent accurate, timely information on them to borrowers. Following the effective date of Treasury’s requirement, Treasury’s compliance agent, MHA-C, used these procedures to assess servicers’ implementation of the single point of contact requirement during dedicated compliance reviews, according to Treasury.\nThese initial reviews revealed some initial challenges with implementing the requirement, including delays in assigning relationship managers to borrowers and poor communication of assignments and reassignments. Servicers’ performance was reflected in the qualitative measures of internal controls included in the servicer assessments that Treasury publishes quarterly, according to Treasury. The reviews also identified areas in which the servicers differed in their implementation of the requirements, such as the precise timing of the assignment of relationship managers. Treasury officials said that servicers have many options for appropriately implementing the requirement, given the flexibility provided in its guidance, and noted that servicers were making progress in addressing the issues identified in the initial compliance reviews. However, Treasury officials also stated that they were considering whether to issue additional guidance to clarify the requirements and to help ensure greater consistency across servicers.\nTreasury put in place another process aimed at enhancing borrower assistance: a case escalation process for resolving borrower inquiries and disputes. In June 2010, we reported that it was unclear whether the process that Treasury had established for resolving concerns about HAMP eligibility determinations was effective. The escalation process in place at that time lacked standard requirements for complaint tracking, and Treasury had not clearly communicated the availability of the escalation process through the HOPE Hotline to the borrower. In November 2010, Treasury announced requirements for servicers to adopt a standard process for resolving certain borrower MHA disputes—called escalated cases—effective February 1, 2011. Treasury now requires that servicers have procedures and personnel in place to provide timely and appropriate responses to escalated cases. Escalated cases include but are not limited to: allegations that the servicer did not assess the borrower for the applicable MHA program(s) according to program guidelines; inquiries regarding inappropriate program denials or the content of a nonapproval notice; and disputes or inquiries about the initiation or continuance of a foreclosure action in violation of program guidelines.\nIn addition, MHA Help and the HAMP Solution Center (collectively referred to as the MHA support centers) can refer escalated cases to the servicer on behalf of either borrowers or third parties assisting borrowers. MHA Help, which is a team of specialists dedicated exclusively to working with borrowers and servicers to resolve escalated MHA cases, receives cases from borrowers who call the HOPE Hotline. A third party, such as a housing counselor, may escalate a case through the HAMP Solution Center.\nIn its capacity as the MHA program administrator, Fannie Mae staffs the HAMP Solution Center and oversees vendors that staff MHA Help and the HOPE Hotline, according to Treasury. In order to resolve a case escalated through these support centers, the servicer must obtain the concurrence of the center that escalated the case with the proposed resolution. If the case cannot be resolved at the support center, it is forwarded to Treasury, which works with the servicer to resolve the issue Treasury has adopted procedures to monitor the performance of servicers and borrower support centers in resolving escalated cases. Treasury currently publicly reports on one servicer performance measure related to escalations: the average number of days required to resolve escalated cases involving loans not owned or guaranteed by Fannie Mae or Freddie Mac. Treasury established a target of 30 calendar days or fewer (including processing time by the support center). In the most recent two quarters for which data were available (the second and third quarters of 2012), the nine largest MHA servicers achieved that target. In the two prior quarters, one of these servicers did not achieve the target.\nIn addition to reporting on the timeliness of the escalation process, Treasury conducts other reviews to monitor the program administrator’s management of its vendors and the outcomes of the process. The program administrator prepares weekly and monthly performance reports for the HOPE Hotline and the MHA support centers. These reports include case escalation information for the larger MHA servicers.\nTreasury officials in the Office of Financial Agents and the Homeownership Preservation Office review these reports with the program administrator and, as necessary, its vendors. In addition, Treasury reviews a sample of escalated case files monthly to ensure that staff at the support centers are providing the services Treasury expects of them. Staff from the Homeownership Preservation Office score the files— five from each support center—on seven criteria that indicate whether: the resolution template was properly completed; the full course of the resolution could be easily identified and understood; the case was resolved according to the escalation case process;\nMHA policy and guidance were appropriately applied; engagement with the servicer led to timely closure of the case; reasonable efforts had been made to reach the requestor and resolve the inquiry; and the support center representative demonstrated homeowner advocacy.\nTreasury began scoring escalated case files in January 2012, and according to documents Treasury provided to us, the support centers’ scores improved substantially between January 2012 and June 2012. Treasury officials said that they had provided training for staff of the support centers to serve as advocates for homeowners and had provided additional training for this purpose. The most notable improvement in the support centers’ scores was in the area of demonstrating homeowner advocacy. Treasury’s continued attention to resolutions of escalated cases and the performance of the support centers and servicers is instrumental in helping to ensure that eligible borrowers receive appropriate assistance.", "We provided a draft of this report to Treasury for its review and comment. In its written comments, reproduced in appendix IV, Treasury generally concurred with our findings. We also provided relevant portions of the draft report to Ally Financial and General Motors to verify the factual information they provided about their companies and business trends. Treasury, Ally Financial, and General Motors provided technical comments that we have incorporated as appropriate.\nWe are sending copies of this report to the Financial Stability Oversight Board, Special Inspector General for TARP, interested congressional committees and members, and Treasury. The report also is 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 A. Nicole Clowers at (202) 512-8678 or clowersa@gao.gov for questions about non-mortgage-related TARP programs, or Mathew Scire at (202) 512-8678 or sciremj@gao.gov for questions about mortgage-related TARP programs. 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 V.", "The objectives in this report were to examine the condition and status of (1) nonmortgage-related Troubled Asset Relief Programs (TARP) programs and (2) TARP mortgage programs, including Treasury’s efforts to ensure that servicers are implementing two new requirements.\nTo assess the condition and status of all the nonmortgage-related programs initiated under the TARP, we collected and analyzed data about program utilization and assets held, as applicable, focusing primarily on financial information that we had audited in the Office of Financial Stability’s (OFS) financial statements, as of September 30, 2012. In some instances we provided more recent, unaudited financial information. The financial information includes the types of assets held in the program, obligations that represent the highest amount ever obligated for a program (to provide historical information on total obligations), disbursements, and income. We also provide information on program start dates, defining them based on the start of the first activity under a program, and we provide program end dates, based on official announcements or program terms from the Department of the Treasury (Treasury). Finally, we provide approximate program exit dates—either estimated by Treasury or actual if the exit already occurred—that reflect the time when a program will no longer hold assets that need to be managed. We also used OFS cost estimates for TARP that we audited as part of the financial statement audit. In addition, we tested OFS’s internal controls over financial reporting as they relate to our annual audit of OFS’s financial statements. The financial information used in this report is sufficiently reliable to assess the condition and status of TARP programs based on the results of our audits of fiscal years 2009, 2010, 2011, and 2012 financial statements for TARP.\nFurther, we reviewed Treasury documentation such as program terms, press releases, and reports on TARP programs and costs. Also, we interviewed OFS program officials to determine the current status of each TARP program, the role of TARP staff while most programs continue to unwind, and to update what is known about exit considerations for TARP programs. Other TARP officials we interviewed included those responsible for financial reporting. Additionally, in reporting on these programs and their exit considerations we leveraged our previous TARP reports and publications from the Special Inspector General for TARP, as appropriate. In addition, we did the following:\nFor the Capital Purchase Program, we used OFS’s reports to describe the status of the program, including the amount of investments outstanding, the number of institutions that had exited the program, and the amount of dividends paid. In addition, we reviewed Treasury’s press releases on the program and interviewed officials from Treasury.\nFor the Community Development Capital Initiative, we interviewed program officials to determine what exit concerns Treasury has for the program.\nTo update the status of the Automotive Industry Financing Program and Treasury’s plans for managing its investment in the companies, we leveraged our past work and reviewed information on Treasury’s plans for overseeing its remaining financial interests in General Motors (GM) and Ally Financial, including Treasury reports. To obtain information on the current financial condition of the companies, we reviewed information on GM’s and Ally Financial’s finances and operations, including financial statements and industry analysts’ reports. We also interviewed officials from Treasury.\nTo update the status of the American International Group, Inc. (AIG)\nInvestment Program (formerly the Systemically Significant Failing Institutions Program), we reviewed relevant documents from Treasury and other parties. For the AIG Investment Program, these documents included Emergency Economic Stabilization Act of 2008 (EESA) monthly 105(a) reports provided periodically to Congress by Treasury, public information made available by the Federal Reserve Bank of New York, and other relevant documentation such as AIG’s financial disclosures and Treasury’s press releases. We also interviewed officials from Treasury.\nFor the Term Asset-Backed Securities Loan Facility (TALF), we reviewed program terms and requested data from Treasury about loan prepayments and TALF LLC activity. Additionally, we interviewed OFS officials about their role in the program as it continues to unwind.\nTo update the status of the Public-Private Investment Program, we analyzed program quarterly reports, term sheets, and other documentation related to the public-private investment funds. We also interviewed OFS staff responsible for the program to determine the status of the program while it remains in active investment status.\nTo obtain the final status for Small Business Administration (SBA) 7(a)\nSecurities Purchase Program that Treasury exited and for which Treasury no longer holds assets that it must manage, we reviewed Treasury’s recent reports and leveraged our past work.\nTo assess the status of TARP-funded mortgage programs and Treasury’s efforts to ensure servicers are implementing the Making Home Affordable (MHA) single point of contact and resolution of escalated cases requirements, we reviewed Treasury reports, guidance, and documentation and interviewed Treasury officials. Specifically, to determine the status of Treasury’s TARP-funded housing programs, we obtained and reviewed Treasury’s published reports on the programs and servicer performance, as well as guidelines and related updates issued by Treasury for each of the programs. In addition, we obtained information from and interviewed Treasury officials about the status of the TARP-funded mortgage programs, including the actions Treasury had taken to address our prior recommendations. To assess the status of Treasury’s efforts to ensure servicers are implementing the MHA single point of contact requirement, we reviewed Treasury’s compliance review procedures and review findings related to single point of contact for several of the largest MHA servicers. To assess Treasury’s oversight of the escalated case resolution process, we obtained documentation from Treasury of its process for monitoring the MHA borrower support centers—MHA Help and the Home Affordable Modification Program (HAMP) Solution Center—and reviewed monthly performance reports. We also interviewed Treasury officials about their oversight of the single point of contact requirement and case escalation process.\nWe conducted this performance audit from September 2012 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.", "The SBA 7(a) Securities Purchase Program was launched as part of TARP to help facilitate the recovery of the secondary market for small business loans. Under this program, Treasury purchased securities that comprised the guaranteed portion of SBA 7(a) loans.\nThese loans finance a wide range of small business needs, including working capital, machinery, equipment, furniture, and fixtures. Treasury originally invested $367 million in 31 SBA 7(a) securities between March and September 2010. These securities comprised more than 1,000 loans from 17 different industries, including retail, food services, manufacturing, scientific and technical services, health care, and educational services. Since Treasury began its purchases, the SBA 7(a) market has recovered with new SBA 7(a) loan volumes returning to precrisis levels.\nTreasury sold its eight remaining securities in the portfolio for approximately $63.2 million in proceeds on January 24, 2012. That sale marked the wind down of this TARP program. In total, Treasury recovered $376 million through sales ($334 million) and principal and interest payments ($42 million) over the life of the SBA 7(a) Securities Purchase Program. After considering Treasury’s cost of financing, the SBA 7(a) Securities Purchase Program resulted in an income of approximately $4 million to taxpayers on Treasury’s original investment of $367 million (see fig. 12).", "", "As we noted in our 2012 annual TARP report, Treasury has addressed several staffing challenges that we had previously identified, and the overall staffing numbers, which began to decline in 2011, continued to decrease through September 30, 2012 (see fig. 13). Treasury’s Office of Financial Stability (OFS) used employees (including term employees) and detailees from other Treasury offices and other federal agencies to meet its workload requirements.\nOFS’s overall staffing numbers declined from 198 in 2011 to 163 in 2012, but staffing levels within individual OFS offices have fluctuated according to the resources needed. Many OFS staff were not replaced because their skill sets were no longer needed; for example, many staff in the Chief Investment Office were not replaced as the investment programs wound down.\nAccording to Treasury officials, Treasury evaluates departing staff on a case-by-case basis to determine whether a vacancy needs to be filled and whether present staff can cover the departing staff’s responsibilities, and only one new staff person was added in 2012. In addition, OFS officials stated that OFS had detailed some of its staff to other Treasury programs, as Treasury had exited several programs and no longer had assets to manage for them and many of the other TARP programs were winding down. Treasury officials continue to anticipate that staffing levels in OFS offices will decrease over time, and some staff have moved or may relocate to other parts of Treasury or other federal agencies.\nTreasury also has addressed several turnover-related staffing issues. We previously reported that a number of staff from the OFS leadership team departed in 2010 and 2011, and in 2013 the terms of two other leadership team members are scheduled to expire. As we previously reported, OFS addressed this leadership challenge by replacing the Assistant Secretary of Financial Stability with OFS’s former Chief Counsel in 2011 and replacing departing OFS leaders with existing OFS staff members (generally to term positions). We also reported that OFS had been addressing other staffing issues, including implementation of its staffing plan.", "Since TARP was established, Treasury has relied on the private sector to assist OFS with TARP administration and operations. Treasury engages with private sector firms through financial agency agreements, contracts, and blanket purchase agreements. According to OFS procedures, financial agency agreements are used for services that cannot be provided with existing Treasury or contractor resources. Specifically, Treasury has relied on financial agents for asset management, transaction structuring, disposition services, custodial services, and administration and compliance support for the TARP housing assistance programs. In addition, Treasury uses TARP contracts for a variety of legal, investment consulting, accounting, and other services and supplies.\nThrough September 30, 2012, Treasury had awarded 19 financial agency agreements, 13 of which remained active, and awarded or used 131 contracts and blanket purchase agreements, of which about 40 percent remained active. As shown in table 3, the obligated value of the financial agency agreements and contracts totaled more than $900 million, with most of the funding going for financial agency agreements. The increase in obligations since 2010 is largely due to Treasury’s reliance on financial agents to support the oversight of TARP assets and the continued implementation of the housing programs over the last couple of years. Also, 3 of its financial agency agreements for transaction structuring and disposition services remained active.\nThe vast majority of the financial agency agreement obligations shown above (approximately $525 million) are for Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), which provide administrative and compliance services, respectively, for the TARP housing programs. The two largest contracts are $35 million with PricewaterhouseCoopers, LLP for internal control services and $17 million with Cadwalader, Wickersham & Taft, LLP for legal services. Treasury also has encouraged small and minority- and women-owned businesses to pursue opportunities for TARP contracts and financial agency agreements. The majority of these businesses participating in TARP are subcontractors.", "Treasury has taken a number of actions since 2008, in part in response to recommendations we made, to establish a structured system to manage potential conflicts of interest involving its contractors and financial agents. The system is based on a regulation Treasury issued in interim form in 2009 and final form in 2011 that prohibits retained entities from engaging in activities that create organizational or personal conflicts of interest without a waiver or mitigation under a Treasury-approved plan. The regulation sets forth standards to address actual and potential conflicts that may arise, establishes responsibilities for contractors and financial agents in preventing conflicts from occurring, and outlines Treasury’s process for reviewing and addressing conflicts.\nTreasury has developed and implemented a multifaceted process to manage and oversee potential conflicts of interest that is managed by OFS’s Office of the Chief Compliance Officer. The process includes reviewing proposed contracts and financial agency agreements, approving contractor and financial agent mitigation plans, responding to conflict-of-interest inquiries from contractors and financial agents, verifying that contractors and financial agents are regularly certifying that they are preventing or properly mitigating actual or potential conflicts of interest, and preparing feedback reports that provide a snapshot of how each contractor and financial agent is performing with respect to conflict- of-interest requirements. In addition, because the monitoring of conflicts of interest is based to some degree on self-reported information that contractors and financial agents submit, Treasury began conducting onsite design and compliance reviews in 2011. These reviews are designed to evaluate the effectiveness of contractors’ and financial agents’ internal controls and procedures for identifying and addressing conflicts of interest.", "", "", "", "In addition to the contacts named above, Dan Garcia-Diaz; Gary Engel; and William T. Woods (lead directors); Marcia Carlsen; Lynda Downing; Harry Medina; Joseph O’Neill; John Oppenheim; Raymond Sendejas; and Karen Tremba (lead assistant directors); Donald Brown; Emily Chalmers; Rachel DeMarcus; Sarah Farkas; John Forrester; Christopher Forys; Jackie Hamilton; Heather Krause; Risto Laboski; Aaron Livernois; John Lord; Marc Molino; Dragan Matic; and Erin Schoening have made significant contributions to this report.", "Treasury Continues to Implement Its Oversight System for Addressing TARP Conflicts of Interest. GAO-12-984R. Washington, D.C.: September 18, 2012.\nTroubled Asset Relief Program: Further Actions Needed to Enhance Assessments and Transparency of Housing Programs. GAO-12-783. Washington, D.C.: July 19, 2012.\nForeclosure Mitigation: Agencies Could Improve Effectiveness of Federal Efforts with Additional Data Collection and Analysis. GAO-12-296. Washington, D.C.: June 28, 2012.\nTroubled Asset Relief Program: Government’s Exposure to AIG Lessens as Equity Investments Are Sold. GAO-12-574. Washington, D.C.: May 7, 2012.\nCapital Purchase Program: Revenues Have Exceeded Investments, but Concerns about Outstanding Investments Remain. GAO-12-301. Washington, D.C.: March 8, 2012.\nManagement Report: Improvements Are Needed in Internal Control over Financial Reporting for the Troubled Asset Relief Program. GAO-12-415R. Washington, D.C.: February 13, 2012.\nTroubled Asset Relief Program: As Treasury Continues to Exit Programs, Opportunities to Enhance Communication on Costs Exist. GAO-12-229. Washington, D.C.: January 9, 2012 Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal Years 2011 and 2010 Financial Statements. GAO-12-169. Washington, D.C.: November 10, 2011.\nTroubled Asset Relief Program: Status of GAO Recommendations to Treasury. GAO-11-906R. Washington, D.C.: September 16, 2011.\nTroubled Asset Relief Program: The Government’s Exposure to AIG Following the Company’s Recapitalization. GAO-11-716. Washington, D.C.: July 28, 2011.\nTroubled Asset Relief Program: Results of Housing Counselors Survey on Borrowers’ Experiences with the Home Affordable Modification Program. GAO-11-367R. Washington, D.C.: May 26, 2011.\nTroubled Asset Relief Program: Survey of Housing Counselors about the Home Affordable Modification Program, an E-supplement to GAO-11-367R. GAO-11-368SP. Washington, D.C.: May 26, 2011.\nTARP: Treasury’s Exit from GM and Chrysler Highlights Competing Goals, and Results of Support to Auto Communities Are Unclear. GAO-11-471. Washington, D.C.: May 10, 2011.\nManagement Report: Improvements Are Needed in Internal Control Over Financial Reporting for the Troubled Asset Relief Program. GAO-11-434R. Washington, D.C.: April 18, 2011.\nTroubled Asset Relief Program: Status of Programs and Implementation of GAO Recommendations. GAO-11-476T. Washington, D.C.: March 17, 2011.\nTroubled Asset Relief Program: Treasury Continues to Face Implementation Challenges and Data Weaknesses in Its Making Home Affordable Program. GAO-11-288. Washington, D.C.: March 17, 2011.\nTroubled Asset Relief Program: Actions Needed by Treasury to Address Challenges in Implementing Making Home Affordable Programs. GAO-11-338T. Washington, D.C.: March 2, 2011.\nTroubled Asset Relief Program: Third Quarter 2010 Update of Government Assistance Provided to AIG and Description of Recent Execution of Recapitalization Plan. GAO-11-46. Washington, D.C.: January 20, 2011.\nTroubled Asset Relief Program: Status of Programs and Implementation of GAO Recommendations. GAO-11-74. Washington, D.C.: January 12, 2011.\nFinancial Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal Years 2010 and 2009 Financial Statements. GAO-11-174. Washington, D.C.: November 15, 2010.\nTroubled Asset Relief Program: Opportunities Exist to Apply Lessons Learned from the Capital Purchase Program to Similarly Designed Programs and to Improve the Repayment Process. GAO-11-47. Washington, D.C.: October 4, 2010.\nTroubled Asset Relief Program: Bank Stress Test Offers Lessons as Regulators Take Further Actions to Strengthen Supervisory Oversight. GAO-10-861. Washington, D.C.: September 29, 2010.\nFinancial Assistance: Ongoing Challenges and Guiding Principles Related to Government Assistance for Private Sector Companies. GAO-10-719. Washington, D.C.: August 3, 2010.\nTroubled Asset Relief Program: Continued Attention Needed to Ensure the Transparency and Accountability of Ongoing Programs. GAO-10-933T. Washington, D.C.: July 21, 2010.\nManagement Report: Improvements are Needed in Internal Control Over Financial Reporting for the Troubled Asset Relief Program. GAO-10-743R. Washington, D.C.: June 30, 2010.\nTroubled Asset Relief Program: Treasury’s Framework for Deciding to Extend TARP Was Sufficient, but Could be Strengthened for Future Decisions. GAO-10-531. Washington, D.C.: June 30, 2010.\nTroubled Asset Relief Program: Further Actions Needed to Fully and Equitably Implement Foreclosure Mitigation Programs. GAO-10-634. Washington, D.C.: June 24, 2010.\nDebt Management: Treasury Was Able to Fund Economic Stabilization and Recovery Expenditures in a Short Period of Time, but Debt Management Challenges Remain. GAO-10-498. Washington, D.C.: May 18, 2010.\nTroubled Asset Relief Program: Update of Government Assistance Provided to AIG. GAO-10-475. Washington, D.C.: April 27, 2010.\nTroubled Asset Relief Program: Automaker Pension Funding and Multiple Federal Roles Pose Challenges for the Future. GAO-10-492. Washington, D.C.: April 6, 2010.\nTroubled Asset Relief Program: Home Affordable Modification Program Continues to Face Implementation Challenges. GAO-10-556T. Washington, D.C.: March 25, 2010.\nTroubled Asset Relief Program: Treasury Needs to Strengthen Its Decision-Making Process on the Term Asset-Backed Securities Loan Facility. GAO-10-25. Washington, D.C.: February 5, 2010.\nTroubled Asset Relief Program: The U.S. Government Role as Shareholder in AIG, Citigroup, Chrysler, and General Motors and Preliminary Views on its Investment Management Activities. GAO-10-325T. Washington, D.C.: December 16, 2009.\nFinancial Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal Year 2009 Financial Statements. GAO-10-301. Washington, D.C.: December 9, 2009.\nTroubled Asset Relief Program: Continued Stewardship Needed as Treasury Develops Strategies for Monitoring and Divesting Financial Interests in Chrysler and GM. GAO-10-151. Washington, D.C.: November 2, 2009.\nTroubled Asset Relief Program: Capital Purchase Program Transactions for October 28, 2008, through September 25, 2009, and Information on Financial Agency Agreements, Contracts, Blanket Purchase Agreements, and Interagency Agreements Awarded as of September 18, 2009. GAO-10-24SP. Washington, D.C.: October 8, 2009.\nTroubled Asset Relief Program: One Year Later, Actions Are Needed to Address Remaining Transparency and Accountability Challenges. GAO-10-16. Washington, D.C.: October 8, 2009.\nDebt Management: Treasury Inflation Protected Securities Should Play a Heightened Role in Addressing Debt Management Challenges. GAO-09-932. Washington, D.C.: September 29, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-1048T. Washington, D.C.: September 24, 2009.\nTroubled Asset Relief Program: Status of Government Assistance Provided to AIG. GAO-09-975. Washington, D.C.: September 21, 2009.\nTroubled Asset Relief Program: Treasury Actions Needed to Make the Home Affordable Modification Program More Transparent and Accountable. GAO-09-837. Washington, D.C.: July 23, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-920T. Washington, D.C.: July 22, 2009.\nTroubled Asset Relief Program: Status of Participants’ Dividend Payments and Repurchases of Preferred Stock and Warrants. GAO-09-889T. Washington, D.C.: July 9, 2009.\nTroubled Asset Relief Program: Capital Purchase Program Transactions for October 28, 2008, through May 29, 2009, and Information on Financial Agency Agreements, Contracts, Blanket Purchase Agreements, and Interagency Agreements Awarded as of June 1, 2009. GAO-09-707SP. Washington, D.C.: June 17, 2009.\nTroubled Asset Relief Program: June 2009 Status of Efforts to Address Transparency and Accountability Issues. GAO-09-658. Washington, D.C.: June 17, 2009.\nAuto Industry: Summary of Government Efforts and Automakers’ Restructuring to Date. GAO-09-553. Washington, D.C.: April 23, 2009.\nTroubled Asset Relief Program: March 2009 Status of Efforts to Address Transparency and Accountability Issues. GAO-09-504. Washington, D.C.: March 31, 2009.\nTroubled Asset Relief Program: Capital Purchase Program Transactions for the Period October 28, 2008 through March 20, 2009 and Information on Financial Agency Agreements, Contracts, and Blanket Purchase Agreements Awarded as of March 13, 2009. GAO-09-522SP. Washington, D.C.: March 31, 2009.\nTroubled Asset Relief Program: March 2009 Status of Efforts to Address Transparency and Accountability Issues. GAO-09-539T. Washington, D.C.: March 31, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-484T. Washington, D.C.: March 19, 2009.\nFederal Financial Assistance: Preliminary Observations on Assistance Provided to AIG. GAO-09-490T. Washington, D.C.: March 18, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-474T. Washington, D.C.: March 11, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-417T. Washington, D.C.: February 24, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-359T. Washington, D.C.: February 5, 2009.\nTroubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. GAO-09-296. Washington, D.C.: January 30, 2009.\nTroubled Asset Relief Program: Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency. GAO-09-266T. Washington, D.C.: December 10, 2008.\nAuto Industry: A Framework for Considering Federal Financial Assistance. GAO-09-247T. Washington, D.C.: December 5, 2008.\nAuto Industry: A Framework for Considering Federal Financial Assistance. GAO-09-242T. Washington, D.C.: December 4, 2008.\nTroubled Asset Relief Program: Status of Efforts to Address Defaults and Foreclosures on Home Mortgages. GAO-09-231T. Washington, D.C.: December 4, 2008.\nTroubled Asset Relief Program: Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency. GAO-09-161. Washington, D.C.: December 2, 2008." ], "depth": [ 1, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title", "h0_full", "h0_title", "", "h0_full", "", "", "", "", "h0_full h1_full", "", "h1_full", "", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "h2_full" ] }

{ "question": [ "What assets did the Treasury manage in 2012?", "How was the Treasury dropping these nonmortgage-related TARPs?", "How will the Treasury continue this process?", "Why is the Treasury dropping these programs?", "How do nonmortgage-related TARP programs and TARP-funded mortgage programs compare?", "How has Treasury funded TARP?", "What is the main function of the MHA?", "How has this program been regulated by the Treasury?", "How did the GAO evaluate Treasury reviews?", "What happened regarding a Treasury oversight?", "What is the Emergency Economic Stabilization Act of 2008?", "How did this report affect the GAO?", "What does this report cover?", "What information did the GAO review for this report?" ], "summary": [ "As of September 30, 2012, the Department of the Treasury (Treasury) was managing assets totaling $63.2 billion in nonmortgage-related Troubled Asset Relief Programs (TARP).", "As of this date, Treasury had exited 4 of the 10 nonmortgage-related programs, and in December 2012 Treasury announced the exit from a fifth program--the American International Group (AIG) Investment Program.", "Exactly when Treasury will exit the remaining five programs remains uncertain.", "Treasury has identified several factors that will affect its decisions.", "Unlike the nonmortgage-related TARP programs, TARP-funded mortgage programs, which focus on mitigating foreclosures, are ongoing, and Treasury's oversight of new requirements designed to improve servicers' interactions with borrowers showed both challenges and improvements.", "Treasury allocated $45.6 billion in TARP funds to three programs, including Making Home Affordable (MHA), but more than $40 billion of the funding has not yet been disbursed, and the programs have not reached the expected number of borrowers.", "The centerpiece of MHA is the Home Affordable Modification Program, which has provided about 1.1 million permanent modifications to borrowers.", "To help ensure that homeowners receive appropriate assistance from servicers under this and other MHA programs, since September 2011 Treasury has required servicers to identify a \"relationship manager\" to serve as the homeowner's single point of contact throughout a delinquency or imminent default resolution process.", "GAO found that Treasury's initial reviews of servicers' implementation of this requirement had identified some inconsistencies.", "However, oversight of a second requirement designed to improve the resolution of borrower inquiries and disputes (escalated cases) showed that the nine largest servicers had met the performance target. Treasury officials said that the MHA program administrator, Fannie Mae, handled oversight of the escalation process and the vendors who supported in keeping with Treasury's guidelines.", "The Emergency Economic Stabilization Act of 2008 authorized Treasury to create TARP, a $700 billion program designed to restore liquidity and stability to the financial system and to preserve homeownership by assisting borrowers struggling to make their mortgage payments.", "The act also required that GAO report every 60 days on TARP activities in the financial and mortgage sectors.", "This report examines the condition and status of (1) nonmortgage-related TARP programs and (2) TARP-funded mortgage programs and Treasury's efforts to better ensure that servicers are implementing as intended two new requirements designed to improve interactions with borrowers (the MHA single point of contact and resolution of escalated cases requirements).", "To do this work, GAO analyzed audited financial data for various TARP programs; reviewed documentation such as program terms and agency reports on TARP programs; and interviewed Office of Financial Stability officials." ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, -1, 2, -1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 7, 7, 7, 7, 7, 7, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Rail Safety and PTC", "Signal Systems", "Rail-Related Fatalities", "Train Incidents and PTC Legislation", "The Basics of PTC", "Implementation", "Overseas Experience", "Cost and Benefits", "Safety Benefits from PTC-Preventable Incidents", "Policy Issues", "Interoperability", "Avoiding Barriers to Market Entry", "PTC Requirements Within Passenger Terminals" ], "paragraphs": [ "", "Following several high-profile train incidents, Congress passed the Rail Safety Improvement Act of 2008 (RSIA08; P.L. 110-432 ), which mandated positive train control (PTC) on many passenger and freight railroads by December 31, 2015. The law does not describe PTC in technical terms, but defines it as a risk mitigation system that could prevent train incidents by automatically stopping trains when a collision or derailment is imminent.\nAfter freight and commuter railroads raised concerns about their ability to meet the 2015 deadline, Congress extended the deadline by three years to December 31, 2018, or up to two years beyond that for certain qualifying railroads ( P.L. 114-73 ). As of July 2018, it appears that all railroads will seek qualification for extending the deadline.\nWhile PTC promises benefits in terms of safety, its implementation entails substantial costs and presents a variety of other policy-related issues. These include the interoperability of individual railroads' systems, access to sufficient radio spectrum to support PTC, the possibility that PTC could be a barrier to market entry, and the suitability of PTC to passenger terminal environments.", "The United States railroad network comprises both freight and passenger operations. The seven largest operators by revenue, known as the Class I freight railroads, own about two-thirds of the nation's 140,810 miles of trackage (see Figure 1 ). These companies include BNSF, Union Pacific (UP), Norfolk Southern (NS), Kansas City Southern (KCS), Canadian Pacific (CP), Canadian National (CN), and CSX Transportation (CSXT). Most of the remaining trackage is controlled by Class II or regional freight railroads; Class III or short-line railroads; state and local government agencies; and Amtrak, the federally owned passenger operator.\nIn many situations, both passenger and freight railroad companies operate over track owned by other railroads. This may occur under orders issued by the federal Surface Transportation Board or under voluntary agreements between carriers. Amtrak also has the right to operate trains using its own equipment over freight lines.\nThe majority of freight railroad lines have a single track with passing sidings at various locations to allow trains to pass. Trains may operate in either direction along a track. High-volume corridors may have multiple tracks that typically operate in a single direction to increase both operating capacity and safety.", "For safety purposes, train dispatchers and signals along the track provide the engineer with the authority to travel on a certain track segment to prevent collision with other trains. Some long stretches of track in remote areas use only one main line without any signalization. This is called \"dark territory,\" comprising about 40% of the North American rail network. In this case, railroads rely on communications with dispatchers to provide authority. Dispatchers are also responsible for assigning priority when more than one train requires use of a particular segment of track.\nOn signaled track, track is separated into blocks by trackside or overhead signals that indicate to an engineer whether the train can proceed (and at what speed) or must stop before it enters the next block. Given the long stopping distance required by trains, a prior signal actually informs the engineer about the indication on the next signal. This system is called automatic block signal (ABS), and is generally the most sophisticated signal system used by freight railroads where PTC has not been installed. Since 1947, it has been required for freight trains traveling 50 or more miles per hour (mph) and passenger trains traveling 60 mph or more. Railroads have different operating rules regarding how and under what circumstances the conductor must call out signals to the engineer.\nIntercity and commuter passenger trains often incorporate additional features in their signal systems. A \"cab signal\" system relays external signal information to control displays inside the engineer's cab via an electric current that travels along the rails and is picked up by a receiver on the locomotive. The cab signal is helpful when fog, sun, or track curvature hinders or delays visual sighting of wayside signals. It also increases track utilization, as the engineer can adjust train speed in between signals. An \"automatic train stop\" (ATS) or an \"automatic train control\" (ATC) system can override the engineer's control of a train if a wayside signal indication is not acknowledged by the engineer. These devices are installed along the tracks, and trip a train's brakes when an engineer fails to respond to a wayside signal. Cab signals, ATS, and ATC were developed beginning in the early 1900s, and have been required by federal regulations since 1947 for passenger trains traveling over 79 mph (see text box).", "Most rail-related fatalities are caused by pedestrians trespassing on railroad tracks or motor vehicles being hit at grade crossings. Train derailments and collisions, which PTC is designed to prevent, cause relatively few fatalities. Over a 10-year period ending in February 2016, there were 7,695 rail-related fatalities: 58% were due to trespassing (4,458 fatalities), 37% occurred at grade-crossings (2,838 fatalities), 2% were railroad workers (181 fatalities), and 1% were railroad passengers (75 fatalities). Only a portion of these passenger deaths were due to train derailments or collisions.\nAlthough preventing grade-crossing incidents is not specifically addressed in the PTC mandate of RSIA08, this could be achieved technically within the PTC framework by installing sensors at crossings that would engage the brakes of an oncoming train if a crossing gate is not working properly or if a vehicle is detected on the tracks. While this may require further investment on the part of the railroads and may not be implementable by the deadline, it may offer more significant gains in terms of safety than train collision prevention alone. Once PTC is implemented, Congress has requested the FRA to study the effectiveness of PTC technology in preventing grade-crossing incidents.", "While most railroad incidents are minor, several high-profile incidents led Congress to mandate PTC. In 2005, a train carrying chlorine gas was improperly diverted onto a side track by a manual switch left in the wrong position. Another train was parked on the side track. As a result of the collision, chlorine gas was released from one derailed car, killing nine people and forcing the evacuation of 5,400 people within a mile radius of the incident for two weeks. This incident occurred in dark territory. It was among the factors leading to introduction of the Federal Railroad Safety Improvement Act of 2007 ( H.R. 2095 , S. 1889 ) in the 110 th Congress, which would have mandated implementation of PTC in specific circumstances.\nIn 2008, the head-on collision of a Metrolink commuter train and a Union Pacific freight train in Chatsworth, CA, led to 25 fatalities and over 100 injuries. That crash occurred on a section of track on which no cab signal, ATS, or ATC system was installed, leaving the commuter train engineer completely dependent on his sightings of the wayside signals. Reportedly, the cost of also equipping freight locomotives with automatic signaling technology was one reason a new system had not been installed. The cause of the accident was determined to be negligence by the commuter train engineer—it is believed he missed a red signal while texting. PTC was specifically identified by the NTSB as a technology that could have prevented Chatsworth and other similar incidents by providing a safeguard against human error.\nThe Chatsworth accident on September 12, 2008, expedited the legislative process, and the bill mandating PTC was signed into law October 16, 2008, as the Railroad Safety Improvement Act of 2008 (RSIA08). RSIA08 requires \"each Class I railroad carrier and each entity providing regularly scheduled intercity or commuter rail passenger transportation\" to implement PTC on all segments or routes of railroad tracks that (a) carry frequent passenger or commuter service, or (b) carry more than 5 million gross tons of freight per year and also are used for transporting toxic-by-inhalation hazardous materials (TIH). At the time the law was signed, this mandate covered approximately 70,000 miles of railroad track.\nDuring the FRA rulemaking process, it became apparent that rail companies could change the routes of trains carrying TIH to avoid the PTC requirement on some track segments. A Senate bill was introduced to forgo mandatory PTC implementation on lines that will not be transporting passengers or hazardous materials by the end of 2015. This was estimated to eliminate the PTC mandate on 10,000 of the 70,000 track-miles initially covered. The bill was not enacted, but the FRA approved such a change in its amended final rule, effective July 13, 2012. The American Short Line and Regional Railroad Association proposed several changes to the FRA final rule, including eliminating the PTC requirement for trains traveling less than 20 miles on PTC-required track and extending the deadline for Class II and III railroads to employ PTC-equipped locomotives until 2020. The FRA approved these changes in an amended final rule.\nIn the 112 th Congress, bills to delay the PTC implementation deadline were considered in both houses of Congress. As approved by the Senate, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; S. 1813 ) would have allowed the U.S. Department of Transportation (DOT) to extend the December 31, 2015, deadline for any railroad in one-year increments until December 31, 2018, if it deemed full implementation infeasible and if the railroad had made a good-faith effort to comply. The bill would have allowed use of Railroad Rehabilitation and Improvement Financing (RRIF) for PTC implementation. The American Energy and Infrastructure Jobs Act of 2012 ( H.R. 7 ), which was adopted by the House Transportation and Infrastructure Committee but was not approved by the House of Representatives, would have extended the deadline for PTC implementation to December 31, 2020, and would have allowed railroads to adjust TIH routes until 2020 to reduce the extent of track affected by the PTC mandate. The bill also would have allowed railroads to implement alternative strategies on track that does not transport passengers where the \"alternative risk reduction strategy that would reduce the risk of release of poison- or toxic-by-inhalation hazardous materials to the same extent the risk of a release of poison- or toxic-by-inhalation hazardous materials would be reduced if positive train control were installed on those tracks.\" While the provision would have allowed flexibility on the part of the railroads, alternative safety measures might interfere with the goal of interoperability and could raise costs for smaller railroads that might need to conform to multiple safety systems. The final version of the 2012 surface transportation bill, signed by President Obama on July 6, 2012, as P.L. 112-141 , did not change existing law concerning PTC.\nThe derailment of a Metro-North commuter train in the Bronx, NY, on December 1, 2013, renewed calls for PTC implementation. Four passengers died and 60 to 70 passengers were injured in this derailment. The train traveled at 82 mph over a straight section of track with a 70-mph speed limit, but then derailed as it entered a curve with a 30-mph speed limit. According to one report, although this section of Metro-North's network was equipped with a cab signal/ATS/ATC system, Metro-North's version of this system was designed to prevent collisions with other trains, and did not restrict speeds when no other trains posed a danger (as was the case with the derailed train). In other words, the backup safety signal system was designed strictly to ensure train separation and did not include a speed control element. Other commuter railroads (New Jersey Transit and Southeastern Pennsylvania Transportation Authority, for example), as well as Amtrak on the Northeast Corridor, had a system that would have restricted train speed in this instance. The FRA ordered Metro-North to add speed control to its signal system and to station a second crew member with train control duties at certain locations until it did so.\nThe commuter rail incidents at Chatsworth, CA, and the Bronx, NY, revealed significant disparities among signal system capabilities deployed by commuter operators. While these two incidents intensified calls for PTC installation, neither railroad had fully deployed long-standing signal technology that could also reduce the risk of collisions and derailment.\nOn May 12, 2015, an Amtrak train derailed at a curve in Philadelphia, killing eight passengers. The train was travelling at 106 mph, while the curve had a speed limit of 50 mph. The NTSB's May 2016 report determined that the engineer had been distracted by dispatch calls about a nearby train being hit by projectiles and likely thought the train had traveled beyond the curve, where the speed limit is 110 mph. The NTSB noted that PTC would have prevented this incident. Amtrak had not installed automatic train control technology on this portion of track based on a risk analysis. It has since installed PTC on all segments of the Northeast Corridor that it owns, including the segment on which this incident occurred.\nAt an NTSB forum on PTC held February 27, 2013, BNSF Railroad, Amtrak, the Alaska Railroad, and Metrolink Commuter Railroad were identified by an FRA official as the only railroads that were perhaps on schedule to meet the December 31, 2015, deadline. One topic of discussion at the forum regarded the allowances the FRA was making in implementing PTC because of the deadline. The complexity of testing the numerous subsystems, spectrum availability in urban areas, and \"back office\" software interoperability were some of the difficulties that the railroads identified.\nThe Positive Train Control Enforcement and Implementation Act of 2015 ( P.L. 114-73 ), enacted October 29, 2015, extended the deadline for PTC implementation from December 31, 2015, to December 31, 2018. The three-year extension was thought necessary after most freight railroads and commuter railroads stated that they would not be able to meet the 2015 deadline. Congress also allowed the 2018 deadline to be extended up to another two years, provided that a railroad's modified implementation schedule was approved by the FRA and it had installed all the necessary PTC hardware and acquired the necessary radio spectrum by December 31, 2018. Two accidents resulting in passenger fatalities, the December 18, 2017, derailment of an Amtrak passenger train near DuPont, WA, on track owned by the regional transit agency, and the February 4, 2018, crash between an Amtrak train and a stationary freight train on South Carolina track owned by CSX Corp., occurred in locations where PTC installation was in progress but the system was not yet operational.", "PTC is defined in federal law as a \"system designed to prevent train-to-train collisions, over-speed derailments, incursions into established work zone limits, and the movement of a train through a switch left in the wrong position.\" The federal government has imposed no specific technical requirements, allowing railroads to adopt whatever PTC systems seem best suited to their particular needs. However, all PTC systems share certain characteristics, including use of radio communication to provide in-cab signals to the train engineer and the ability for the dispatcher to stop a train in an emergency.\nMost U.S. railroads currently are implementing what is referred to as an \"overlay-type\" system, in which the sensors, signals, and transponders are installed over existing track. The network operating center sends one-way communication in the form of speed restrictions and moving authorities to a train as it passes over a transponder embedded in the track. This information requires integration with existing signals, switches, sensors, and other wayside infrastructure. The network operating office does not track real-time train location, but rather receives notice whenever a train passes the wayside infrastructure. Figure 2 illustrates PTC hardware and communication pathways in an overlay-type system architecture.\nCommunication between wayside infrastructure, transponders, and trains is delivered through analog radio signal. Wireless communication options that provide greater data transfer capability, such as Wi-Fi, are not currently practical. Equipment on the train receives information from transponders to alert the train operator to current and upcoming signals, movements, and work zones. The train has equipment capable of superseding train engineer authority, so that the PTC system can slow or stop the train to prevent incident in the event of human error.\nA more expansive variant of an overlay-type system is communications-based train control (CBTC). CBTC is a more sophisticated computer-aided dispatching framework which requires train information to be sent to a central location, which then disseminates the information to all entities in the network. In this architecture, Global Positioning System (GPS) is used to track train location and speed, with other instrumentation providing location and speed coverage when the GPS cannot locate a signal. These additional components provide greater precision as well as system redundancy in the event of failure. Similarly, GPS and radio communication similar to cell phone technology can be used to identify work zone locations along specific lengths of track. CBTC is based on digital rather than analog technology, facilitating interoperability among systems used by different railroads.\nWith CBTC, central control automatically tracks the movements of all the trains in the network, sends speed restrictions and movement authorities to individual trains, and checks for potential derailment and collisions (see Figure 3 ). The system uses location and speed information to determine headway distance and the necessary braking distance required to prevent potential incidents. Braking distance can be several miles for large freight trains and is dependent on factors such as train speed, reaction time, wheel-rail friction, brakes wear, track conditions, track grading, mass, and mass distribution of the train. All these variables are processed with a complex braking algorithm designed to ensure an emergency stop prior to a collision without excessive speed restriction leading to inefficient operation.\nThe greater capability of CBTC makes it suitable for very high speed passenger lines, and CBTC is being instituted on some European rail lines for that reason. It has also been adopted by New York City Transit and the Southeastern Pennsylvania Transportation Authority. CBTC also has the potential to allow for driverless trains. However, the system requires seamless communication coverage along the entirety of PTC-equipped track, as temporary communication loss can pose safety risks. The need for constant communication also requires significant investment in either radio towers or fixed transponders. These requirements raise the capital cost, making CBTC more expensive than an overlay-type system.\nThe CBTC system potentially offers greater business benefits to railroad operators than an overlay-type system. For example, the real-time, two-way communication of train locations combined with speed restrictions and moving authorities can lead to more efficient scheduling, increased capacity, and fuel savings. Nonetheless, U.S. railroads appear to have concluded that the advantages of communication-based train control are not worth the additional cost of installing it at the present time.\nIt is important to note that both overlay-type systems and CBTC systems are designed principally to reduce collisions between trains. The systems do not address intrusion into railroad right-of-way. Currently, there is no requirement that they be capable of detecting and notifying trains about crossing-gate failures, vehicles blocking tracks, or trespassers. However, such capabilities could be incorporated into PTC systems in the future.", "Based on progress reports submitted by railroads to the FRA, the FRA surmises that only four railroads (BNSF and Union Pacific, and the Los Angeles and Philadelphia area commuter railroads) will likely have fully installed the necessary PTC equipment by the end of 2018, but even these railroads would likely need an extension because other railroads operating over their lines would not be fully PTC-compliant. As of June 30, 2018 (latest data available), PTC was operating on 66% of the freight route miles required to have PTC and 2% of the passenger network. PTC was installed and operable on 93% of the freight locomotives and 73% of the passenger locomotives. Among the larger commuter railroads, the FRA deemed that Caltrain, Maryland Area Regional Commuter, and New Jersey Transit were at risk of not qualifying for a deadline extension because these railroads had installed less than 90% of the PTC hardware required (as of June 30, 2018).\nMost of the current PTC projects rely on fixed transponders in conjunction with GPS with one-way information communication to the trains to fulfill the baseline PTC requirements. Only a few systems involve two-way communication with real-time information and computer-aided dispatch. The smaller railroad companies and commuter lines, in most cases, are relying on the Class I railroads to implement PTC before investing in their own systems due to the high risk and the cost of developing their own systems.\nIn the United States, precursors to full PTC capability were developed voluntarily prior to the 2008 mandate. Development of radio-based CBTC systems and coordinated wayside systems used to locate and communicate with trains began in 1983. Although systems developed by the Association of American Railroads and Burlington Northern Railroad achieved technical success, both systems were functional only in fully signalized territory and were deemed not economically viable to deploy on a nationwide scale.\nIn 1991, Amtrak adopted an automatic train control (ATC) system along the tracks it owns in the Northeast Corridor. That system, as discussed above, repeated signalization in the cab and required the train engineer to acknowledge and enforce the speed limit given by the signals to reduce human error. That system was later upgraded with the Advanced Civil Speed Enforcement System, using transponders to send signals to trains and to enforce speed restrictions and stop orders. Amtrak began transitioning to radio-based communication in 2009 to incorporate work zone safety measures required by RSIA08.\nIn 1999, CSX Transportation began development of a PTC system that uses GPS combined with fixed infrastructure at switching points to provide exact track location information, specifically on parallel lines. This method is particularly useful to improve safety on long stretches of non-signalized track. CSXT is now modifying this architecture to meet the full requirements of PTC. BNSF, Union Pacific, Norfolk Southern, and Chicago's Metra commuter line are planning implementation of similar systems. Norfolk Southern's system is expected to provide for computer-aided dispatch over small segments of track.", "Passenger train incidents overseas with train control systems already installed may provide lessons for implementation of PTC in the United States. After a deadly commuter train derailment in Japan in 2005, an audit found that the maximum speed calibrated on many curves to trigger the automatic train control system had been set too high to prevent derailments. After 40 passengers were killed in a train collision in China in 2011, it was discovered that its train control system had not been sufficiently tested. Investigations following an overspeed incident in Spain in 2013 that killed 79 passengers found that the train control system had been turned off on a second set of locomotives because it was not functioning properly. Similarly, the train control system had been turned off on a German commuter locomotive so that it could make up time, which is believed to have contributed to its collision with another train in February 2016.", "In 2009, the FRA estimated the total capital cost of wayside, on-board, radio, and office equipment necessary for full PTC deployment on all affected railroads to be in excess of $10 billion. It projected annual maintenance costs of $850 million. In recent years, fixed-capital investment by U.S. railroads has been around $15 billion annually, of which about $10 billion has been for structures and $5 billion for equipment. The estimated capital cost of meeting the PTC mandate is thus almost equal to the railroads' total capital spending in a single year.\nThe four largest railroad companies account for almost all of the estimated 60,000 miles of Class I track that fall under the PTC mandate. In 2017, CSX estimated its cost of installing PTC to be $2.4 billion, of which $1.8 billion had been expended through 2016, while as of 2018 Union Pacific estimated its total cost for PTC to be $2.9 billion, of which $2.3 billion had been spent by the end of 2016.\nSmaller freight companies often share track with the Class I railroads. While this presents interoperability challenges, there is opportunity to use the PTC type approvals from the larger companies' development efforts to save cost. This is also the case with shared passenger rail in the Northeast Corridor. Despite this advantage, the infrastructure cost alone for just two of the five largest transit agencies operating on the corridor, Metro-North in the New York area and the Southeastern Pennsylvania Transportation Authority in the Philadelphia area, has been estimated at $350 million and $100 million, respectively. As the FRA has stated (see text box), the expense of PTC could constrain commuter rail development, diverting commuters to less safe forms of transportation.\nCommuter railroads' cost for installing PTC is likely to be borne primarily by state or local governments. However, the federal government has provided assistance. This includes a $967 million RRIF loan to the Metro-North and Long Island commuter railroads for PTC implementation, $382 million in combined RRIF/Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to the Massachusetts Bay Transportation Authority, $199 million in FY2017 in the FAST Act ( P.L. 114-94 , §3028), and $250 million in grants provided in the Consolidated Railroad Infrastructure and Safety Improvement (CRISI) program (funding is not restricted to just commuter railroads). In March 2018, the DOT Inspector General issued a report reviewing how railroads had spent federal funding provided for PTC implementation.\nSome shippers believe that since the majority of the investment in PTC will come directly from the railroad companies, these costs will likely be passed to customers. They expect price increases due to the cost of PTC implementation, especially if the rail companies are unable to realize business benefits from the new systems. The Chlorine Institute, a trade organization representing the chlorine industry, expects the railroad companies to raise costs disproportionately for shipments of toxic-by-inhalation hazardous materials (TIH), as concern about the safety of TIH transport is perceived as a source of the PTC mandate.", "Based on analysis of past PTC-preventable incidents, the FRA estimated in 2009 that $90 million in annual safety benefits will be realized after full implementation of PTC. Safety benefits are calculated by estimating the cost of incidents that are likely to be prevented by PTC, including fatalities and injuries, equipment damage, track damage, off-track damage, hazardous material cleanup, evacuations, wreck cleanup, loss of freight, and freight delay. According to a 1999 FRA estimate, between 1987 and 1997 an annual average of 7 fatalities, 22 injuries, $20 million in property damages, and evacuations of 150 people due to potential hazardous material release could have been prevented by PTC.\nAlthough many serious incidents due to error by train engineers or dispatchers could be prevented by PTC, PTC is expected to prevent less than 2% of the approximately 2,000 railroad collisions and derailments that occur annually. The majority of these 2,000 incidents occur in rail yards and are generally less severe than PTC-preventable incidents.\nWhile the costs and safety benefits are projected with some confidence, there is disagreement regarding the potential business and social benefits of PTC. This makes a full cost-benefit analysis of PTC-related issues difficult. Business and social benefits are expected to come from increased railroad efficiency, reductions in logistical costs, and diversion of freight from truck to rail. However, these benefits are predicated on the functionality of full computer-based train control and not PTC alone. Computer-aided dispatch has the potential to increase capacity and reduce fuel consumption. This can reduce railroad operating costs, lead to faster, less expensive delivery, and induce demand from truck freight. This then may lead to social benefits such as reductions in fuel consumption and truck accidents.\nThe FRA projects $4 billion in potential annual business benefits a decade after full PTC implementation. The overlay system without CBTC capability currently planned by the railroads is expected to offer little or no business benefit to the railroads. A possible exception is the role PTC could have in discussions about the appropriate size of train crews. The Class I freight railroads generally run trains with two-person crews, but PTC might facilitate one-person crews. However, the FRA has recently proposed a rule requiring two-person crews. The social benefits of the overlay system are likely to come largely from the anticipated reduction in incidents.", "", "The freight rail transportation network has two primary components: the track and the freight service. In some cases, the service is provided by the same company that owns the track. However, since shippers' needs do not correspond to railroads' track ownership, freight operators trade trackage or haulage rights and share revenue from the shipper. FRA regulations require that railroads' PTC systems be interoperable so that any train operating on PTC-equipped track can communicate with the host railroad's PTC system.\nPrior to RSIA08, several railroad companies were developing communication-based train control independently for their own business reasons, and were not concerned about interoperability. The federal mandate has required changes in these plans in the interest of interoperability. UP, CSXT, and NS have received FRA \"type approvals\" for Interoperable Electronic Train Management Systems (I-ETMS) in which the PTC system itself is approved for development. This makes it likely that the systems installed by these railroads will be highly compatible. BNSF, which has a precursor ETMS system in place, has type approval for that system, which is to be updated to I-ETMS when software becomes available.\nInteroperability issues pertain to passenger service as well. In the Northeast Corridor, Amtrak operates on Amtrak-owned track and track owned by regional transit authorities and vice versa. Amtrak began PTC development prior to RSIA08 and has provided the PTC standard and type approval for transit authorities utilizing the corridor. The freight companies and Amtrak are now working to ensure interoperability between their respective systems.\nIn Europe, achieving interoperability in train control systems has been a decades-long challenge among the different national railroad passenger networks attempting to cross borders.", "There are several ways the PTC mandate could be used as a barrier to market entry for the railroads. First, installing track will now be more expensive due to the need to incorporate PTC wayside equipment, which is expected to add approximately $50,000 per mile to the $1 million to $3 million per mile cost of installing new rail lines. On-board PTC equipment is expected to cost around $55,000 per locomotive, which represents only a minor increase in the cost of a new $2 million locomotive but is substantial compared to the $75,000 cost of used locomotives operated by some short line railroads. A passenger rail operator providing or proposing service over freight-owned track that otherwise would not be required to install PTC may require the passenger railroad to pay for the cost of installing PTC on the freight locomotives also. In addition to capital costs, operating and maintenance costs will increase as well. This could be a barrier to both railroad expansion and startup services.\nAnother barrier to market entry could arise from the need for interoperability and spectrum compatibility. Hypothetically, if two rail networks have different PTC systems because they do not currently share track or services, it may be cost prohibitive to implement a new service over these two lines. Similarly, one company could upgrade or modify its PTC system, forcing further investment by other companies using its track. Also, if the radio spectrum licenses are owned by certain railroads or a consortium of railroads, they could dictate leasing prices to operate necessary PTC systems on that spectrum for a new railroad or service which is not part of the consortium. Control of spectrum and interoperability issues with PTC could be used as tools to prevent new services on existing lines or even using an interoperable spectrum on new lines.\nThe possibility that PTC could impede competition may be of particular concern for short line and regional railroads which operate on Class I track. Class I railroads have a legal obligation to accommodate short line railroads, but in some cases may be reluctant to allow short line trains on their networks. The president of the American Short Line and Regional Railroad Association issued the following testimony to the Surface Transportation Board:\nDifferential pricing of certain routes or products by class I carriers ... ha[s] eliminated marginal customers who may be a small railroad's only source of business on its line, effectively putting the small railroad out of business. Some small railroads who want to provide service to new customers meet resistance from connecting carriers whose marketing plans are inconsistent with the small railroad's proposed business.\nAt this point, concerns that PTC could create barriers to railroad competition are hypothetical, as no specific complaints are known to have been presented to the FRA or to the Surface Transportation Board, which oversees certain rail competition issues.", "The September 29, 2016, crash of a New Jersey Transit train beyond its end of line track bumper post in Hoboken, N.J., killing one commuter and injuring more than 100 others, raised discussion of PTC requirements within passenger terminals. The driver of this train apparently fell asleep momentarily as the train reached the end of the platform. Current FRA regulations allow an exception to PTC installation in passenger terminals under certain conditions, one of which is terminals with a maximum train speed of 20 mph. A February 2018 NTSB board meeting discussing this and a similar incident noted that PTC is not a technology well-suited to a terminal environment, due to the extremely short stopping distances and the inability for trains in tunnels to send and receive GPS signals. The NTSB recommended that the FRA examine other technologies under development that may be able to provide a backup speed check within terminals." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 1, 2, 1, 2, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_title h1_title", "", "h0_full", "h1_full", "h0_full h2_full", "h1_full", "", "h0_title h1_full", "h0_full", "", "", "", "" ] }

{ "question": [ "What is the Rail Safety Improvement Act of 2008 (RSIA08)?", "What is PTC?", "What is the goal of implementing PTC?", "What would PTC fail to do?", "How does the RSIA08 affect the PTC?", "What is the effect of this implementation?", "What is the progress of PTC use and implementation?", "How had the deadline been previously extended?", "How had railroads been on or off track to meet the new deadline?", "What does the PTC communicate?", "How does the system react to violations?", "What is the CBTC?", "Why is the system not being used in the US?" ], "summary": [ "The Rail Safety Improvement Act of 2008 (RSIA08) requires implementation of positive train control (PTC) on railroads which carry passengers or have high-volume freight traffic with toxic- or poisonous-by-inhalation hazardous materials.", "PTC is a communications and signaling system that has been identified by the National Transportation Safety Board (NTSB) as a technology capable of preventing incidents caused by train operator or dispatcher error.", "PTC is expected to reduce the number of incidents due to excessive speed, conflicting train movements, and engineer failure to obey wayside signals.", "It would not prevent incidents due to trespassing on railroads' right-of-way or at highway-rail grade crossings, where the vast majority of rail-related fatalities occur, and might not work well in some passenger terminal areas.", "Under RSIA08, PTC is required on about 60,000 miles of railroad track.", "The Federal Railroad Administration (FRA) estimates full PTC implementation will cost approximately $14 billion.", "Progress among railroads in installing and operating PTC is mixed: a few large freight and commuter railroads show substantial progress while many others show much less progress. Federal funding provided thus far includes about $2 billion in loans and grants, mostly for commuter lines.", "After freight and commuter railroads raised concerns about their ability to meet the December 31, 2015, deadline in RSIA08, Congress extended the deadline by three years to December 31, 2018, or up to two years beyond that for certain qualifying railroads (P.L. 114-73).", "A July 2018 FRA report indicates that possibly all railroads will seek to qualify for an extension beyond the December 31, 2018, deadline, mostly for completing testing of their PTC systems.", "PTC uses signals and sensors along the track to communicate train location, speed restrictions, and moving authority.", "If the locomotive is violating a speed restriction or moving authority, on-board equipment will automatically slow or stop the train.", "A more expansive version of PTC, called communications-based train control (CBTC), would bring additional safety benefits plus business benefits for railroad operators, such as increased capacity and reduced fuel consumption.", "However, CBTC is not currently being installed by any U.S. railroad, due to the additional cost and the challenge of meeting implementation deadlines." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, -1, 2, 3, -1, 0, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Brief Overview of Guidance Documents", "APA Rulemaking Requirements", "Procedures for Issuing Policy Statements", "Distinguishing Between Legislative Rules and Policy Statements", "Reviewability of Policy Statements", "Debate Concerning Potential Tension with Supreme Court Doctrine", "Judicial Deference to Agency Policy Statements", "Implications for Agencies and the Public" ], "paragraphs": [ "", "Agencies use guidance documents to set regulatory policy on a consistent basis. While \"legislative rules\" carry the force of law and are required to undergo the notice and comment procedures of the Administrative Procedure Act (APA), guidance documents are exempt from these constraints and can be issued more swiftly than legislative rules.\nAside from the benefit to an agency of establishing a centralized, intra-agency approach to enforcing particular statutes, guidance documents can notify the public as to an agency's interpretation of a particular law and inform regulated parties as to an agency's enforcement priorities. For example, the Department of Education has seemingly used guidance documents to implement Title IX more frequently than it has used legislative rules, a strategy that has faced recent scrutiny. The Department of Justice has issued guidance regarding its enforcement priorities with respect to marijuana possession laws, and the Department of the Treasury's Financial Crimes Enforcement Network has done so with respect to financial firms that seek to provide services to marijuana-related companies under the Bank Secrecy Act. Finally, in November 2014, the Department of Homeland Security issued an intragency memorandum to announce that it was expanding the Obama Administration's earlier Deferred Action for Childhood Arrivals (DACA) program and creating a new Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) program. These programs would, if implemented, permit certain aliens who have entered or remained in the United States in violation of federal immigration law to obtain relief from removal. The validity of these 2014 programs may be addressed by the Supreme Court, which is reviewing a decision by the U.S. Court of Appeals for the Fifth Circuit upholding a preliminary injunction barring their implementation.\nThe issuance of such guidance has not escaped criticism. Some have argued that agencies use guidance documents to effectively change the law or expand the scope of their delegated regulatory authorities.\nThis report examines one type of guidance document of particular recent prominence—agency policy statements. It explores judicial doctrine regarding the difference between legislative rules and statements of policy; discusses when such statements are judicially reviewable; analyzes when courts will grant deference to agency interpretations contained in guidance documents; and notes the relative costs and benefits of potential judicial and statutory rules regarding their use.", "", "Federal agencies are often permitted to issue rules to effectuate their congressionally delegated authorities. The APA imposes various procedural requirements when agencies do so. A rule, according to the APA, is \"an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency.\" If an agency's organic statute explicitly requires rulemaking to be \"on the record,\" then the APA's formal rulemaking procedures are required. Otherwise, the informal notice and comment rulemaking provisions of Section 553 of the APA apply. The most common process for issuing rules is under the latter category. Section 553 requires agencies issuing legislative rules, or rules made pursuant to congressionally delegated authority that carry the force and effect of law, to provide the public with notice of a proposed rulemaking and an opportunity to comment on the rule. It also requires agencies to publish the final rule in the Federal Register not less than 30 days before the effective date.\nThere are nonetheless several exceptions to Section 553's procedural requirements. While \"legislative\" or \"substantive\" rules that bind the public or an agency must comply with Section 553, \"interpretive rules\" and \"general statements of policy,\" often known as \"guidance documents,\" or \"nonlegislative rules,\" are exempt from these strictures.\nAgencies release a variety of documents that may not qualify as legislative rules that can, among other things, guide the actions of agency staff in the field, inform the public about how a particular statutory provision will be interpreted, or announce prospectively the enforcement priorities of the agency. Because individuals may bring suit in federal court challenging an agency's action as violating the APA's procedural provisions, parties may allege that an agency document should have gone through notice and comment procedures. Consequently, judicial review of challenges to a document released by an agency often turns on whether the agency statement is actually a legislative rule, or could more properly be described as an interpretive rule or general statement of policy.\nThe Attorney General's Manual on the APA offers a description of the nature of each tool:\nSubstantive Rules —rules, other than organization or procedural [rules], issued by an agency pursuant to statutory authority and which implement the statute.... Such rules have the force and effect of law....\nInterpretative rule —rules or statements issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers....\nGeneral Statements of Policy —statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.\nHowever, as this report will observe, while formulating a broad description of the difference between legislative rules and guidance documents is relatively easy, actually determining what constitutes a legislative rule in practice can prove quite difficult. Because of the attention paid to recent use of policy statements—and in the interest of space and clarity—the report leaves interpretive rules to the side and instead focuses on agency issuance and judicial review of policy statements. As such, the report examines the general framework often employed by courts when assessing whether an agency statement constitutes a legislative rule.", "Whereas an agency must comply with a variety of statutorily established procedural requirements in order to promulgate a legislative rule, federal law imposes few procedural requirements on the issuance of a policy statement. As previously noted, the APA explicitly states that the notice and comment requirements of Section 553 do not apply to \"policy statements\" and other nonlegislative rules. Nevertheless, an agency must take certain steps in issuing these statements. For example, the Freedom of Information Act (FOIA) amendments to the APA establish a publication requirement for policy statements that impact the general public. Under 5 U.S.C. §552(a)(1), an agency \"shall ... publish in the Federal Register for the guidance of the public—substantive rules of general applicability adopted as authorized by law, and statements of general policy or interpretations of general applicability formulated and adopted by the agency ...\" This provision must be read in conjunction with 5 U.S.C. §552(a)(2), which implicitly recognizes that not all policy statements are required to be published in the Federal Register by providing that an agency need only \"make available for public inspection and copying ... those statements of policy and interpretations which have been adopted by the agency and are not published in the Federal Register.\"\nThe line between \"statements of general policy\" that must be published under Section 552(a)(1) and \"statements of policy\" that do not need to be published under Section 552(a)(2) is \"notoriously difficult to draw.\" Indeed, one commentator has suggested that the line is in fact incapable of being drawn, \"except in vague terms.\" Perhaps due to the difficulty in determining into what category a given policy statement falls, the courts have only rarely addressed—at least in any substantial manner—the question of what types of policy statements require publication in the Federal Register . As a result, approaches to the publication question vary. Whereas some courts have focused on whether a policy statement affects \"substantive rights\" to determine if the publication requirement is triggered, other courts have focused on whether the policy statement is one of \"general applicability.\"\nAlthough exempt from the notice and comment procedures of Section 553, and possibly exempt from the publication requirements of Section 552, recent presidential administrations have placed additional, nonstatutory procedural requirements on the issuance of a limited subset of policy statements. The George W. Bush Administration imposed procedural requirements on the issuance of \"significant guidance documents\" through Executive Order 13422. That order required all agencies to provide the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA) with \"advance notification\" before issuing any \"significant guidance document,\" and further authorized the OIRA Administrator to require \"additional consultation\" before the agency was permitted to issue such a document.\nAlthough Executive Order 13422 was later withdrawn by President Obama, a 2007 Bush Administration OMB bulletin governing agency practices for issuing guidance documents remains in effect. The announcement, entitled \"Final Bulletin for Agency Good Guidance Practices,\" establishes \"standard elements\" for \"significant guidance documents\" and requires each agency to have in place written procedures for the approval of such documents by appropriate senior agency officials. Perhaps most significantly, the bulletin requires agencies to publish \" economically significant guidance documents\" in draft form in the Federal Register ; invite public comment on the draft, and make a \"response-to-comments\" document available on the agency's website.\nThus, although the APA does not require that agencies comply with notice and comment procedures when issuing policy statements, the executive branch has established a policy that requires agencies to engage in a similar process when issuing economically significant policy statements. Compliance with the process established by the OMB bulletin, however, is not subject to judicial review.\nFinally, some policy statements are also subject to the submission requirement and disapproval procedures of the Congressional Review Act (CRA). The CRA provides that before any \"rule\" may take effect, the agency must submit the rule to each house of Congress and the Comptroller General. The law further establishes expedited procedures by which Congress, through enactment of a joint resolution of disapproval, may invalidate the rule.\nAlthough policy statements are distinguishable from legislative rules for the purposes of the APA's notice and comment requirements, some policy statements may nonetheless be considered rules for the purposes of the CRA. The CRA adopts the definition of \"rule\" from Section 551 of the APA that is much broader than the category of rules subject to notice and comment rulemaking under Section 553, and one which may cover some policy statements. Under the CRA, a rule includes \"the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency.... \"\nThe expansive definition goes on, however, to expressly exclude \"any rule of particular applicability\"; \"any rule relating to agency management or personnel\"; or \"any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties .\"\nIt would appear that many policy statements could be characterized as an \"agency statement\" designed to \"implement or interpret\" agency policy or to describe agency \"practice.\" Any such policy statement that does not qualify for one of the CRA's exceptions may be considered a \"rule\" subject to the law's submission requirement and congressional disapproval mechanism.", "As mentioned above, while legislative rules must undergo notice and comment rulemaking procedures, agency statements of policy are exempt from these requirements. And because a party may bring suit in federal court challenging an agency's action as violating the APA's procedural provisions, an individual may argue that an agency document should have gone through notice and comment procedures. Judicial review of challenges to agency policy statements thus often turns on whether the agency document is actually a legislative rule. When making this determination, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), for example, has explained that \"[a]n agency action that purports to impose legally binding obligations or prohibitions on regulated parties ... is a legislative rule,\" while \"[a]n agency action that merely explains how the agency will enforce a statute or regulation ... is a general statement of policy.\" A legislative rule can serve as \"the basis for an enforcement action for violation\" of its requirements, but a policy statement, which is not legally binding, may not. When an agency seeks to apply the policy statement \"in a particular situation, it must be prepared to support the policy just as if the policy statement had never been issued.\" It merely articulates how an agency \"will exercise its broad enforcement discretion,\" serving as an \"announcement to the public of the policy which the agency hopes to implement in [the] future.\"\nHowever, while these analytical categories might seem relatively clear, distinguishing between the two in practice can be difficult. A relatively clear case would be when an agency attempts to bring an enforcement action based on the violation of a nonlegislative rule. Because nonlegislative rules cannot be legally binding, agencies may not rely on them to support an enforcement action. However, less distinguishable cases are quite common. For example, a scenario could exist in which an agency directs its field officers to enforce a statute in a certain way, such as by not bringing enforcement actions against certain types of behavior; by only bringing enforcement actions when specific factors are triggered; or by approving permits in specific situations. If the public alters its behavior in response to that guidance, has the agency effectively altered the law?\nSpeaking broadly, courts agree that policy statements may not have binding legal effects. However, determining precisely what counts as \"legally binding\" is difficult. As courts and commentators have noted, the distinction between policy statements and legislative rules is \"enshrouded in considerable smog.\" Courts often frame the inquiry as an examination of whether the agency has established a binding norm on the public or itself; a variety of heuristics are applied, however, ranging from a somewhat formalistic analysis of relevant legal consequences to a more functional focus on a statement's practical effects.\nA somewhat formalistic analysis when making this determination focuses on the concrete legal effects of policy statements for regulated parties. Such an approach can ask, for example, whether the agency is relying on a violation of the terms of the document itself to support an enforcement proceeding, or if the agency is pointing to an independent substantive statute or regulation that constitutes the underlying binding norm. If the violation is predicated on the latter, then the agency's statement is presumably not a legislative rule. In other words, if no legal consequences flow from a violation of the agency statement itself, then it does not establish a legislative rule. For example, although often framed within the finality inquiry, if an agency policy statement merely restates what is already required of a regulated party in a statute or regulations, then it does not alter rights or obligations.\nAnother line of cases diagnoses legislative rules according to a more functional approach—even if a specific document does not formally operate with independent legal force, a purported guidance document can be practically binding and qualify as a legislative rule. This analysis can include a focus on whether a guidance document \"genuinely leaves the agency and its decisionmakers free to exercise discretion.\" In other words, the agency can deliberately bind itself through a statement that restricts its own discretion in applying a policy. If an agency statement narrows the scope of discretion for agency officials applying a statute or rule such that application of the statement to particular facts is automatic, leaving no room for discretion, then courts may find that the statement has created a legislative rule. Under this heuristic, if a \"so-called policy statement is in purpose or likely effect one that narrowly limits administrative discretion , it will be taken for what it is—a binding rule of substantive law.\" Of course, this analysis can overlap with an examination of the effect on regulated parties. If an agency applies a document as conclusively dispositive of an issue with \"present-day binding effect\" on the public, the document can operate as a substantive rule. Further, courts may be more likely to find a legislative rule has been created when the statement is binding on the agency and expands an agency's regulatory reach or \"creates new rights or imposes obligations\" on the public.\nCourts pay close attention to the particular language used in the document when making this determination. Mandatory language delineating an agency's position can serve as strong evidence of intent to bind the public or the agency itself. As the D.C. Circuit has noted in the past, \"an agency pronouncement will be considered binding as a practical matter if it ... appears on its face to be binding.\" Agency statements \"couched in terms of command\" may be read to eliminate agency discretion when applying a policy, transforming the statement into a legislative rule. In General Elec tric Company v. E.P.A. , for example, the EPA issued a guidance document outlining when it would accept applications for plans to conduct certain types of waste disposal in order to conform to substantive regulations. The court noted that the document facially \"impos[ed] binding obligations\" on applicants to adhere to the terms of the guidance document and upon the agency to accept applications that met a certain standard. The court vacated the document because its \"commands ... indicate that it has the force of law.\"\nIn contrast, if an agency directive or statement allows agency officials to retain discretion when applying a statute or rule, then courts will be more likely to view the statement as a guidance document. In other words, if an agency statement permits agency officials to enjoy flexibility to make individualized determinations in particular cases, then the agency has not created or imposed a binding norm. For instance, in National Mining Association v. Secretary of Labor , the Mine Safety and Health Administration permitted agency officials to, on a case-by-case basis, approve plans that exempted mine operators from compliance with certain regulations. The agency sent a letter to its officials providing factors to consider when granting an exemption. The court ruled that the directive was simply a statement of policy because agency officials had discretion to consider individual facts on a case-by-case basis when considering whether to grant an exemption. This discretion meant that no binding norm was created.\nSimilarly, some courts have found that when parties have been \"reasonably led to believe that failure to conform will bring adverse consequences,\" then an agency statement is practically binding. In addition, if an agency statement purports to create a \"safe harbor,\" compliance with which can shield an entity from enforcement, \"it can be binding as a practical matter.\" In other words, if an agency statement \"specifi[es] precisely what a regulated entity can do to comply with agency legislative rules,\" it has effectively established a legislative rule.\nSome courts have arguably expanded this approach and looked to an agency's treatment of a policy statement in the field—concluding that an agency's application of a document can reveal its binding nature. As the D.C. Circuit put it, when an agency:\nacts as if a document issued at headquarters is controlling in the field, if it treats the document in the same manner as it treats a legislative rule ... if it leads private parties or State permitting authorities to believe that it will declare permits invalid unless they comply with the terms of the document, then the agency's document is for all practical purposes \"binding.\"\nFor example, in U.S. Telephone Association v. F.C.C. , the Federal Communications Commission (FCC) issued a schedule of penalties to determine fines for violation of the Communications Act. The Commission described the schedule as a policy statement and claimed that it retained discretion to \"depart from the standards in specific applications.\" The D.C. Circuit noted that the agency had applied the schedule 300 times and claimed to have departed from the schedule in only eight situations. The court, however, largely rejected the eight departures as truly exercising any sort of discretion. The court concluded that this practice revealed the agency's intention to bind itself to a particular position and set aside the schedule because it had not undergone notice and comment rulemaking.\nThe importance of the difference between a formal and a functional heuristic is illustrated by a case currently pending before the Supreme Court. In Texas v. United States , a federal district court entered a nationwide preliminary injunction barring the Obama Administration from implementing the DAPA program and its proposed expansion of the earlier DACA program, initiatives which had been announced in a memorandum from the DHS Secretary to high-level agency officials. The memorandum directed agency officials to establish a process whereby aliens that met certain criteria could, on a \"case-by-case basis,\" obtain one type of relief from removal, known as deferred action. The district court found that because this memorandum constituted a legislative rule rather than a policy statement, its issuance without notice and comment violated the APA. The court rejected the agency's claim that agency employees maintained meaningful discretion when determining whether to grant deferred action to individual aliens who met the criteria set forth in the memorandum, reasoning that the memorandum \"virtually extinguished\" discretion for agency personnel, who would simply decide whether an application met the specified criteria. In reaching this conclusion, the court relied on data regarding the implementation of the earlier DACA program, noting that there is \"no reason to believe that DAPA will be implemented any differently than DACA.\" Under DACA, the court found, while a small percentage of applications were denied, those were the result of failing to meet the eligibility criteria or for fraud; the government failed to present evidence of an application that met the relevant criteria but was rejected based on individualized discretion.\nOn appeal, the Fifth Circuit reviewed the district court's order for clear error and upheld its ruling. Dissenting from the majority's opinion, Judge King criticized the district court's legal reasoning and factual findings, concluding that the DHS memorandum was a statement of policy. She noted that applying the applicable criteria to particular facts itself required discretion, and that one criterion set forth in the DHS memorandum explicitly preserved agency employees' discretion to deny an application if granting it would be \"inappropriate,\" a term the memorandum does not define. Apparently adopting a more formal approach to distinguishing between legislative rule and policy statements than the district court, she noted that the most important relevant factor is the \"actual legal effect\" of the memorandum, which she viewed as having no effect. Denied applicants could not, in her view, challenge the agency's decision in court, and the agency could generally not be prevented from removing individuals who met the relevant criteria. Judge King also criticized the district court's focus on the memorandum's apparently mandatory commands to implement the policy. She noted that \"channeling enforcement discretion ... is entirely consistent\" with policy statements; in fact, \"that is their point.\" So long as the agency retains discretion to make \"individualized determinations,\" the memorandum does not become a legislative rule, in Judge King's view. Judge King also critiqued the district court's factual conclusions, particularly its finding that the memorandum's discretionary language is \"merely pretext.\" She noted that DAPA had yet not been implemented, so the court lacked evidence to conclude that agency employees retained no discretion. Further, she wrote, the court erred in relying on data about DACA's implementation in concluding that agency officials had no discretion in implementing DAPA. The application process to implement DAPA had not been established and the \"substantive criteria\" for eligibility for the two programs are different, in Judge King's view.\nThis case is currently pending before the Supreme Court, although it is unclear whether the Court will reach these issues. In arguing for affirmance of the district and circuit court decisions, the plaintiff states' brief arguably adopts a functional approach to analyzing policy statements, claiming that the DHS memorandum is a legislative rule because it legally binds the agency and \"modifies substantive rights and interests.\" The memorandum legally binds the agency, the brief argues, because of what it characterizes as the prior \"mechanical[]\" application of DACA, mandatory language in the memorandum, and the fact that the agency's policy is not \"tentative,\" but rather reflects the agency's final decision. The policy establishes legal rights, the plaintiff states argue, because it \"modifies substantive rights and interests.\" The policy is thus a legislative rule because without the memorandum, the plaintiff states assert, the agency could not support its \"action to confer benefits.\" In contrast, the Department of Justice's (DOJ) brief appears to follow a more formal tack in disputing these claims, noting that the memorandum preserves agency discretion in individual cases, and confers no legal rights on anyone. Deciding not to enforce a law against a particular individual does not have \"the force and effect of law\" necessary to transform a policy into a legislative rule. Moreover, notice and comment procedures have already taken place independently for the regulations that authorize the specific benefits at issue (e.g., authorization to work in the United States). Further, DOJ argues that it is entirely appropriate for policy statements to direct the activities of agency staff—Congress delegated discretionary authority to the Secretary of DHS, who has lawfully delegated aspects of his responsibilities to agency personnel. A legal principle that finds all such directives to be legislative rules subject to notice and comment would disrupt the proper functioning of the Executive Branch, in DOJ's view.", "The question of whether a given agency document is properly identified as a legislative rule or policy statement has a significant impact on a federal court's willingness to engage in judicial review of the agency action. Indeed, obtaining judicial review of a pronouncement that is characterized as a policy statement can be difficult. Unlike legislative rules, which may be immediately reviewable once they are finalized (i.e., issued as a final rule), policy statements often cannot be challenged until the agency takes further action to implement or enforce the policy. The Supreme Court, however, has provided only limited guidance in determining whether and when policy statements are reviewable, and as a result, lower courts have not adopted a uniform approach to the reviewability question.\nAs a general matter, there is a \"strong presumption that Congress intends judicial review of administrative action.\" The APA, however, extends this presumption only to \"final\" agency action. In Bennett v. Spear , the Supreme Court held that, for purposes of the APA, an action is final and reviewable only if it is (1) \"the 'consummation' of the agency's decisionmaking process,\" and (2) an action \"by which 'rights or obligations have been determined,' or from which 'legal consequences will flow.'\" The finality inquiry, the Court has suggested, is both \"flexible\" and \"pragmatic.\"\nMany policy statements may satisfy the first prong of the finality test, in that they represent the culmination of the agency's deliberative process, and are not \"tentative or interlocutory.\" It is the \"legal consequences\" prong of the finality requirement that typically acts as a significant obstacle to obtaining judicial review of an agency policy statement. Policy statements, by definition, are nonbinding or advisory, and thus generally neither create legal \"rights or obligations\" nor \"command anyone to do anything or to refrain from doing anything.\" It would appear that the Supreme Court's interpretation of the APA's finality requirement acts as a barrier to obtaining judicial review of true policy statements (i.e., those that are advisory only and, as a result, do not hold direct legal consequences).\nLower federal courts have struggled, however, with the reviewability question when the basis of a challenger's argument is that the agency pronouncement, although identified as a policy statement, is effectively binding on either the agency or the public and should have been promulgated pursuant to the notice and comment procedures of Section 553. In evaluating these more contentious policy statements, some courts appear to have merged the \"legal consequences\" prong of the finality inquiry with the ultimate, merits-based question of whether a policy statement is in fact a legislative rule. In the D.C. Circuit, for example, it would appear that a party seeking to challenge a policy statement will be required to prove that the policy statement constitutes a \"de facto rule or binding norm that could not properly be promulgated absent the notice-and-comment rulemaking required by §553 of the APA.\"\nIn Center for Auto Safety v. National Highway Traffic Safety Administration , the D.C. Circuit held that a series of agency letters to automakers establishing guidelines for the agency's regional recall policy were policy statements that did not constitute final agency action and, therefore, were not subject to judicial review. After noting that \"it is not always easy to distinguish between those 'general statements of policy' that are unreviewable and agency 'rules' that establish binding norms,\" the court immediately turned to the \"critical\" question of whether the letters were a rule for purposes of Section 553. The court reasoned that if the letters \"constitute a de facto rule ... then they would clearly meet Bennet's test for final agency action and §553 of the APA would require the agency to afford notice of a proposed rulemaking and an opportunity for public comment prior to promulgating the rule.\" The court then held that to distinguish between unreviewable policy statements and \"agency actions that occasion legal consequences that are subject to review,\" it was necessary to consider the same factors used to determine whether an action was a legislative rule for purposes of Section 553.\nSimilarly, in National Mining Association v. McCarthy , the D.C. Circuit found an Environmental Protection Agency (EPA) guidance document relating to the conditions upon which a state should grant Clean Water Act permits to be unreviewable. In evaluating the agency guidance, the circuit court began by asserting a bright line rule that \"in terms of reviewability, legislative rules ... may be subject to pre-enforcement judicial review, but general statements of policy are not.\" In order to determine whether the EPA guidance was reviewable, the court then moved directly to the question of whether it was properly characterized as a policy statement or a legislative rule. The court held that the agency guidance was not a legislative rule; did not qualify as final agency action; and therefore was not subject to review.\nThe circuit court did clarify, however, that although the EPA guidance was not subject to immediate judicial review, once an applicant was denied a permit \"the applicant at that time may challenge the denial of the permit as unlawful.\" As such, the court acknowledged that \"[t]he question is not whether judicial review will be available but rather whether judicial review is available now .\" In the case of such a challenge, the agency would need to \"be prepared to support the policy just as if the policy statement had never been issued.\" Because the EPA guidance was nonbinding, it could not act as a source of authority for agency action.\nThe U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit), by contrast, appears to have adopted a different approach. In Air Brake Systems v. Mineta , the court considered whether a series of opinion letters authored by the National Highway Traffic Safety Administration's (NHTSA's) chief counsel in response to questions from Air Brake customers—stating that a certain Air Brake braking system would not comply with NHTSA standards—constituted final agency action subject to judicial review. In evaluating these letters, the court drew a sharp distinction between the \"essential content\" of the letters and the \"legal interpretations\" within each letter. The court found the essential content of the letter to be \"tentative,\" based on a \"hypothetical factual situation,\" and therefore not final under the standards established by the Supreme Court in Bennett . The Sixth Circuit focused on the conditional nature of the chief counsel's conclusions, noting that \"by their terms, they state tentative conclusions based on limited information presented to the agency.\"\nThe court applied a separate line of reasoning when considering the legal interpretations contained within the letters. Citing to the second prong of the Bennett finality test, the court noted that \"the [] question is whether the letters, while not directly binding on Air Brake, occasion sufficient legal consequences to make them reviewable.\" In an attempt to answer this question, the court noted that \"one reliable indicator that an agency interpretation [] has the requisite legal consequence ... is whether the agency may claim Chevron deference for it.\" The court, therefore, appears to have adopted an analytical framework in which a legal interpretation found within a policy statement may be considered to have a legal consequence, and therefore reviewable, if the interpretation would qualify for deference under Chevron v. Natural Resources Defense Council. The Chevron doctrine is a judicial doctrine under which courts will defer to reasonable agency interpretations of ambiguous statutes. As discussed in greater detail below, whether an agency interpretation qualifies for Chevron deference depends on both the formality of the process used in adopting the interpretation and its \"binding\" nature, thus making the doctrine's application to policy statements an area of significant debate. In Mineta , the court found that the letters were \"too informal\" to qualify for deference under Chevron and therefore were not final for purposes of the APA and not subject to judicial review.\nIt is difficult to glean much clarity from the varying approaches that lower federal courts have taken to the question of finality and the reviewability of policy statements. However, it would appear that policy statements may generally be subject to judicial review in at least two instances. First, if a court determines that an agency policy statement has \"legal consequences\"—an ambiguous standard that may require the challenger to make any range of showings, including that the policy statement is, in fact, a legislative rule—that statement may then be subject to review. Second, absent a showing that a policy statement has the required \"legal consequences\" to establish finality, once the agency implements the policy in a concrete way by taking final agency action pursuant to the statement—often in the form of enforcement action or the denial of a permit or benefit—that action would then likely be subject to judicial review.", "One might argue that some of the tests to distinguish between policy statements and legislative rules impose procedures on agencies beyond what the APA requires. At least one commentator has noted that certain judicial methods of distinguishing between legislative rules and statements of general policy may be hard to square with Supreme Court doctrine. The Court has made clear that the APA provides the \"maximum procedural requirements\" that courts may impose on agencies. Courts may not require notice and comment rulemaking beyond what the APA requires. In the 1978 case Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc ., the Supreme Court rejected the imposition by federal courts of procedural requirements on agencies beyond the text of the APA. The Court characterized the practice as \"Monday morning quarterbacking\" that forces agencies to adopt more stringent procedures than those required by Congress. Permitting courts to do so would make the parameters of judicial review unpredictable, obfuscate the benefits of informal rulemaking that Congress intended to permit in certain circumstances, and rob agencies of the discretion to decide what procedures are best when permitted by Congress.\nThe Supreme Court recently applied this doctrine to invalidate a line of cases in the D.C. Circuit—which established what is known as the Paralyzed Veterans doctrine—that similarly imposed procedural requirements on agencies beyond the APA's requirements. In Perez v. Mortgage Bankers Association , the Supreme Court ruled unanimously that an agency need not undergo notice and comment rulemaking procedures when modifying an interpretive rule. The D.C. Circuit had ruled that when an agency gives a regulation a definitive interpretation, and later significantly changes that interpretation, the agency has effectively altered its rule, and must undergo notice and comment procedures to do so. The Supreme Court reversed, stressing that the APA established the full scope of \"judicial authority to review executive agency action for procedural correctness\"—courts are barred from imposing additional procedural requirements. Because the APA expressly exempts interpretive rules from notice and comment requirements, requiring agencies to do so when changing an interpretive rule—whether sound as a policy matter or not—violated the text of the APA.\nUnder Mortgage Bankers and Vermont Yankee , courts may not require notice and comment procedures for anything other than legislative rules. Arguably, some applications of the functional tests for distinguishing between legislative rules and policy statements might run afoul of this principle. While the Supreme Court has not conclusively articulated a test for making the distinction, its opinion in Lincoln v. Vigil is instructive. In that case, the Indian Health Service discontinued a program—funded out of lump sum appropriations—that provided direct clinical services to Indian children in favor of a nationwide services program. The U.S. Court of Appeals for the Tenth Circuit (Tenth Circuit) had held that the decision—announced via a memorandum addressed to agency staff—amounted to a legislative rule and should have undergone notice and comment procedures. The Supreme Court reversed, explaining that the category of policy statements \"surely include[] an announcement ... that an agency will discontinue a discretionary allocation of unrestricted funds from a lump-sum appropriation.\" While the Court did not engage in lengthy analysis on the distinction between legislative rules and policy statements, the agency decision at issue appears to have been \"practically binding\" on the agency itself with direct consequences for the public. In the words of one commentator, the agency decision had a \"binding effect\" because it \"changed the legal condition of [the] plaintiff[s] ... by announcing 'the termination of all direct clinical services to children'\" in certain areas. After the decision, agency officials could no longer administer certain benefits to a specific class of people. Nonetheless, the Court rejected the proposition that it constituted a legislative rule.\nInsofar as Lincoln v. Vigil classifies an agency document with certain binding effect on an agency and the public as a policy statement, rather than a legislative rule, the case might stand in some tension with many appellate opinions distinguishing between legislative rules and statements of policy. One reading of the case is that it provides implicit support for identifying legislative rules by analyzing whether the agency statement has the force of law. One commentator has argued that Lincoln v. Vigil is \"difficult to take ... as anything other than an endorsement of the 'force of law' test. As mentioned above, this approach would not classify agency statements that are practically binding as legislative rules. Instead, only documents with independent legal force would qualify. In effect, this would likely mean that policy statements would be reviewable only if an agency relied on a statement's substantive content to support its action. Otherwise, the document would not constitute a legal norm independent of an underlying statute or regulation.\nOn the other hand, a defense of the practically binding test, or at least some of its iterations, might note that the ultimate question is what constitutes a legislative rule . As an initial matter, one might distinguish the Supreme Court's opinion in Lincoln v. Vigil as limited to agency decisions concerning their discretionary appropriations, rather than a broad principle rejecting a legal test that understands legislative rules to include statements that functionally bind the agency or the public. Consequently, if agency statements that effectively bind the agency or the public—without independently carrying the force of law such that they can be relied upon to bring an enforcement action—actually qualify as legislative rules, then requiring agencies to undergo notice and comment procedures is required by the APA. One might argue that to conceptualize legislative rules as simply those relied upon by an agency in enforcement actions is ultimately too formalistic an understanding of a substantive regulation. Instead, a legislative rule includes situations where the agency functionally binds itself or the public. A substantive regulation can take the form of a \"binding norm\" that induces compliance with the agency's statement. Even if a document is not binding in a formal sense, if the agency acts as if it does control, and the public alters its behavior in response to the agency's position, then a substantive rule has been created in all but name. In other words, agencies establishing binding norms through the issuance of documents are effectively promulgating substantive rules. As such, courts requiring notice and comment procedures for agency statements that effectively bind the agency or the public are not adding to the APA's procedural requirements, but simply complying with them.", "The weight that a reviewing court is willing to give to an agency's interpretation of the law is an important aspect of judicial review. Indeed, the level of deference accorded to an agency interpretation can control the outcome of a challenge to agency action. Supreme Court precedent would appear to suggest that agency interpretations of ambiguous statutory provisions reached in policy statements are generally not accorded the same weight that a court will typically give to an interpretation that is reached through more formal processes.\nThe Supreme Court, in Chevron U.S.A., Inc. v. Natural Resources Defense Council , outlined a limited role for courts in reviewing interpretive decisions reached by agencies in implementing delegated authority. The Chevron test requires courts to first enforce the clearly expressed intent of Congress. In the absence of such clarity, Chevron instructs reviewing courts to defer to an agency's construction of an ambiguous statute if the agency's interpretation is reasonable. Under Chevron then, it is generally left to federal agencies, and not the courts, to resolve ambiguities necessary to interpret and implement authority provided to the agency by Congress.\nIn the wake of Chevron , however, the Court has made clear that not all methods of interpretation will be accorded this degree of deference. The formality of the agency process undertaken to reach the interpretation is an important factor in determining whether an interpretation is eligible, in the first instance, for Chevron deference. Although the legal principles governing this threshold determination are uncertain, it would appear that while legislative rules with the force and effect of law are eligible for Chevron deference, policy statements often are not.\nIn Christensen v. Harris County , the Court held that interpretations reached through informal processes, such as opinion letters, guidance documents, policy statements, interpretive documents, and agency manuals, do not qualify for Chevron deference. The Court drew a distinction between interpretations reached in formal adjudications and notice and comment rulemaking, which warrant deference, and informal agency interpretations lacking the \"force of law,\" which do not. Christensen , therefore, arguably established a bright line rule that policy statements simply do not qualify for deference under Chevron .\nSubsequent Supreme Court cases, however, appear to have rejected such an absolutist view of Christensen . In United States v. Mead Corp , the Court held that a U.S. Customs Service letter ruling was not entitled to Chevron deference. Mead established that the applicability of Chevron deference would turn not only on the process through which the agency adopted its interpretation, but also the extent to which Congress had intended to delegate authority to the agency to reach definitive interpretations. Specifically, the Court held that \"administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law , and that the agency interpretation claiming deference was promulgated in the exercise of that authority .\"\nThe \"force of law\" standard from Mead has not been clearly articulated, and importantly, Mead further suggested that an agency interpretation need not necessarily be reached by notice and comment rulemaking or formal adjudication in order to receive Chevron deference. The majority noted that the determination did not rest solely on whether the interpretation was made via rulemaking, \"for we have sometimes found reasons for Chevron deference even when no such administrative formality was required and none was afforded.\"\nThe Court further obfuscated Chevron eligibility in Barnhart v. Walton by identifying a number of additional factors to be considered in determining whether a specific interpretive process is one that may qualify for Chevron . In that case, the Court reaffirmed that an interpretation need not be reached pursuant to notice and comment rulemaking to qualify for Chevron deference by suggesting that a Social Security Administration interpretation reached in an agency adjudication, manual, and letter warranted deference. In evaluating the interpretation in question, the Court suggested that whether \" Chevron provides the appropriate legal lens through which to view the legality of the agency interpretation here at issue\" depends on a variety of factors, including \"the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the agency has given the question over a long period of time.\"\nDespite the somewhat abstruse language in Barnhart , it would appear that in determining whether an agency interpretation qualifies for Chevron deference, federal courts generally look to (1) the process by which the interpretation was reached and (2) the degree to which the interpretation is of a \"binding character.\" Interpretations reached through formal processes that have the force and effect of law are most likely to qualify for Chevron deference. In contrast, interpretations reached through informal processes, and which are neither binding nor precedential, are unlikely to be eligible for Chevron deference. In accordance with these factors, courts have generally held that interpretations reached in policy statements—which typically are not issued through formal processes and, by definition, are nonbinding—do not qualify for Chevron deference.\nAlthough policy statements generally do not qualify for Chevron deference, they may nonetheless be accorded a lesser degree of deference under Skidmore v. Swift . In Skidmore , the Supreme Court held that respect was due to agency policies that are \"made in pursuance of official duty, based upon more specialized experience and broader investigations and information than is likely to come to a judge in a particular case.\" The Court concluded that such interpretations should be accorded the \"power to persuade, if lacking power to control.\"\nThe weight to be accorded statutory interpretations reached in policy statements that do not qualify for Chevron deference is generally evaluated under the Skidmore rubric. Skidmore deference does not require that a court defer to an agency's interpretive choice. Rather, the degree of deference accorded by a reviewing court directly correlates to the strength of the agency's reasoning. Under Skidmore , evaluating the strength of an agency's interpretive choice involves an assessment of the \"thoroughness,\" \"validity,\" and \"consistency\" of the agency's decision making. Later in Mead , the Supreme Court suggested that courts may also consider factors such as the \"agency's care\" and \"formality\" in reaching the interpretation, \"consistency\" with past interpretations, and the agency's \"relative expertness.\"", "The applicable legal test governing agency use of policy statements, whether imposed by courts or Congress, has important implications for the executive branch and the public. As discussed above, one framework would require notice and comment procedures only for rules that formally carry the \"force of law.\" Judicial review, under this theory, would generally occur only ex post under a strict understanding of the APA's procedural limits—if an agency document did not undergo notice and comment rulemaking, then agencies could not rely upon the document in any proceeding. Policy statements would usually be unreviewable ex ante because—at least as a formal matter—they lack legal effect. Consequently, in order to challenge an agency's policy statement, a party must challenge an agency's stance after the culmination of a full proceeding, such as an enforcement action, petition for a permit or license, or application for a benefit. Ultimately, agencies would enjoy significant latitude to release guidance documents without the procedural constraints of notice and comment rulemaking or ex ante judicial review.\nSupporters of agencies having flexibility in issuing policy statements might argue that the use of policy statements can increase administrative efficiency by easily notifying the public of an agency's policy priorities, guiding agency staff as to enforcement directives, and permitting the agency to focus resources away from procedural requirements. Agency leaders can thus distribute guidance to sometimes widely dispersed staff as to how to apply particular statutes and regulations. In turn, this guidance can inform the public as to an agency's policy priorities, eliminating confusion as to what an agency requires —which may, for example, save costs for regulated firms or potential applicants for licenses.\nConversely, one might argue that this approach would permit agencies to issue policy statements that effectively bind the public—or, at least do so practically speaking—without effective oversight. At least in some cases, such as the nonenforcement context, policy statements would never be subject to judicial review. Regulated parties may very well adjust their behavior in response to policy statements even though the guidance document formally lacks the force of law. Further, if no ex ante judicial review is available for policy statements, the third party beneficiaries of agency regulations may never have an opportunity to object to agency positions. However, at least some commentators suggest that under such a legal regime, agencies nonetheless have a strong incentive to participate in ex ante notice and comment procedures. Doing so—at least in the usual case—triggers Chevron deference for the agency's legal interpretations.\nAn alternative legal test would restrict the circumstances in which agencies may issue policy statements, for example, by looking at the practical effects of policy statements on the agency or the public to determine when a legislative rule has been created. Arguably, this requirement could generate more public participation in a greater number of agency decisions than would occur if agencies have to seek public participation only for rules that carry the force of law. Increased public participation could be justified on at least two grounds. First, one might argue that requiring agencies to consult with the public before issuing policy statements fosters dialogue and thereby serves to bolster democratic legitimacy. Under this view, engagement with the public legitimates government decisions and processes. Second, it might increase the relative amount of information available to agencies in formulating their policies. Public comment can aid regulators by fleshing out issues and providing insight into a regulated industry's behavior and preferences. In turn, agency choices might better accommodate and recognize the practical effects of enforcement policies on the public.\nOn the other hand, the response of agencies to more stringent limits on the use of policy statements is unclear. Arguably, faced with a requirement to use notice and comment procedures when issuing policy statements, agencies may significantly limit their use in the first place. The Supreme Court has made clear that the choice between using adjudication or rulemaking is up to the agency, even if the agency pursues specific policy objectives via adjudications. Similarly, a legal test requiring notice and comment procedures if a statement practically binds the agency or the public could result in fewer guidance statements being released, or issuance of much broader statements that cannot be considered binding, but are less helpful to regulated parties. Either way, the result is less concrete guidance for the public as to an agency's enforcement strategy and priorities.\nUltimately, the precise effect of either legal approach on agency behavior is unclear. For now, federal courts do not consistently apply either test. However, at least one commentator has noted that the lack of a clear principle in the federal courts for determining a legislative rule ultimately permits courts to require notice and comment procedures in situations where the benefits of seeking public input are substantial, but decline to do so when the benefits are minimal. Congress has authority to either increase or reduce the scope of judicial review of agency policy statements by amending the APA and providing a new definition of legislative rule or policy statement, which would clarify more precisely when notice and comment procedures are required." ], "depth": [ 0, 1, 1, 2, 2, 1, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h1_title", "h1_full", "", "h1_full", "", "h2_full", "h3_full", "h2_full" ] }

{ "question": [ "How do agencies set regulatory policy?", "How do these documents differ from legislative rules?", "How are guidance documents regarded?", "What does this report cover?", "How does the type of agency policy affect judicial review?", "Why are legislative rules important?", "Why are general statements less important?", "How can general statements and legislative rules be identified?", "How do courts often define the difference?", "How has difficulty differentiating agency policies affected judicial tests?", "How has the Court responded to judicial tests?", "What reach does the use of policy statements have?", "How could an approach increase public knowledge?", "How could an approach inform the public less?", "What does no longer receive Chevron deference often?", "How does an agency's interpretation of the law effect judicial review?", "How does this change outcomes of challenges?", "What interpretations are most likely to receive the Chevron defense?", "What interpretations are least likely to receive the Chevron defense?" ], "summary": [ "Agencies frequently use guidance documents to set regulatory policy.", "While \"legislative rules\" carry the force of law and are required to undergo the notice and comment procedures of the Administrative Procedure Act (APA), guidance documents are exempt from these constraints and can be issued more swiftly than legislative rules.", "The issuance of such guidance documents, however, has not escaped criticism. Some have argued that agencies use guidance documents to effectively change the law or expand the scope of their delegated regulatory authorities.", "This report focuses on agency use and judicial review of one type of guidance document: general statements of policy.", "Judicial review of challenges to agency policy statements often turns on whether the agency document is actually a legislative rule.", "Pursuant to congressionally delegated authority, agencies promulgate legislative rules that carry the force and effect of law.", "General statements of policy are not legally binding; rather, they are issued in order to advise the public about the manner in which the agency intends to exercise its discretionary authority.", "While these analytical categories might seem relatively clear, distinguishing between the two in practice can be difficult.", "Courts often frame the inquiry as to whether the agency has established a binding norm on the public or itself, although a variety of heuristics are applied, ranging from a somewhat formalistic analysis of relevant legal consequences to a more functional focus on a statement's practical effects.", "In light of the difficulty in distinguishing between legislative rules and policy statements, questions have been raised concerning whether some judicial tests to make this determination are consistent with Supreme Court doctrine.", "The Court has made clear that the judiciary may not impose procedural requirements on agencies beyond the text of the APA.", "The applicable legal test governing agency use of policy statements, whether imposed by courts or Congress, has important implications for the executive branch and the public.", "One approach might grant agencies flexibility to issue policy statements in order to increase public knowledge of agency priorities, but risks permitting agencies to effectively bind the public without going through notice and comment procedures.", "An alternative might be to require heightened procedures when agencies issue policy statements, but this approach risks less overall notice to the public about agency intentions.", "Finally, although the relevant Supreme Court tests do not entirely preclude federal courts from deferring to an agency's statutory interpretation contained in statements of policy, such documents usually do not receive Chevron deference.", "The weight that a reviewing court is willing to give to an agency's interpretation of the law is an important aspect of judicial review.", "Indeed, the level of deference accorded to an agency interpretation can sometimes determine the outcome of a challenge to agency action.", "Interpretations reached through formal processes that have the force and effect of law are most likely to qualify for Chevron deference.", "In contrast, interpretations reached through informal processes, and which are neither binding nor precedential, are unlikely to be eligible for Chevron deference." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, 3, -1, 0, -1, 2, 2, -1, -1, 1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4 ] }

{ "title": [ "Background", "The United States Made Available an Estimated $13.9 Billion for Foreign Police Assistance during Fiscal Years 2009 through 2011", "Funds Made Available for U.S. Foreign Police Assistance Rose and Then Fell during Fiscal Years 2009 through 2011", "Other U.S. Agencies Also Made Available Assistance to Foreign Police", "DOD and State Are Taking Steps to Address Limitations in Their Procedures for Assessing and Evaluating Foreign Police Assistance Activities", "DOD Assesses the Performance of Police Forces It Trained and Equipped in Afghanistan, Iraq, and Pakistan", "DOD Reported It Lacks Data on Civil Policing Effectiveness for Afghanistan, but Plans to Expand Its Assessment Process to Include Such Data", "State/INL Has Conducted Limited Evaluation of Its Foreign Police Assistance Activities", "State/INL Is Developing an Evaluation Plan That Is Consistent with State’s Evaluation Policy", "U.S. Agencies Coordinate Foreign Police Assistance Activities, but Some Areas for Improvement Exist", "The United States Has Implemented Mechanisms at Headquarters and Overseas Posts to Coordinate Foreign Police Assistance Policy, Guidance, and Activities", "NSC-Led Interagency Policy Committee Has Not Defined Roles and Responsibilities", "Overseas Posts Do Not Always Document Information Sharing", "Conclusions", "Recommendations for Executive Action", "Agency Comments and our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: DOD and State Funds Made Available for Police Assistance, by Region and Country, Fiscal Years 2010 and 2011", "Appendix III: DOD and State Amounts Made Available for Police Assistance, by Account, Fiscal Years 2010 and 2011", "Appendix IV: Profiles of Selected Countries Receiving Foreign Police Assistance, Fiscal Year 2010 and Fiscal Year 2011", "Appendix V: Supplemental Information on DOD Assessment Process for the Iraqi and Afghan National Police Forces", "Afghanistan", "Iraq", "Pakistan", "Appendix VI: Comments from the Department of Homeland Security", "Appendix VII: Comments from the Department of State", "Appendix VIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Although numerous U.S. agencies are engaged in U.S. efforts to provide assistance to foreign police forces, DOD and State are the major providers—providing police training around the world through a variety of authorities. DOD trains and equips foreign police forces to support its counterinsurgency operations. It also provides support for the counterdrug activities of foreign law enforcement agencies for purposes including counterdrug training of foreign law enforcement personnel. DOD provides such assistance around the world through a variety of authorities. For example, section 1004 of the NDAA for Fiscal Year 1991, as amended, authorizes DOD to provide support for the counterdrug activities of foreign law-enforcement agencies for purposes including counterdrug training of foreign law-enforcement personnel, if requested by an appropriate official of a federal agency with counterdrug responsibilities.\nState trains and equips foreign police to support a variety of U.S. foreign policy objectives, including suppressing international narcotics trafficking, combating terrorism, and developing and implementing U.S. policies to curb the proliferation of all types of weapons of mass destruction. Different State bureaus carry out police assistance under different authorities. For example, according to State/INL officials, State/INL carries out its mission under authorities in Chapter 8 of the Foreign Assistance Act, as amended, which among other things, authorizes the provision of law-enforcement training. DOE provides training and equipment to overseas law enforcement, both at national borders and to police and security forces, as part of the mission of its National Nuclear Security Administration’s Second Line of Defense program to strengthen the capability of foreign governments to deter, detect and interdict illicit trafficking in nuclear and other radioactive materials across international borders, through the global maritime shipping system, and by equipping teams to be deployed throughout their countries. USAID provides community-based police assistance as part of its role in promoting the rule of law through assistance to the justice sector. Treasury provides training as part of its mission to support the development of strong financial sectors and sound financial management overseas. DOJ and DHS implement foreign police assistance activities primarily funded by State. Treasury also receives some funds from State.\nPub. Law No. 87-195, as amended.\nInvestigation (FBI) Academy in Virginia, and at various DOD training facilities. Trainers provided by various U.S. agencies also travel overseas to provide instruction. Foreign law enforcement personnel are also trained at State-funded international law enforcement academies located in El Salvador, Thailand, Hungary, Botswana, and Peru. The training covers a variety of subject matter, including crime scene investigation, postblast investigations, forensics, and behavioral analysis.", "We estimate the U.S. government made available $13.9 billion for foreign police assistance during fiscal years 2009 through 2011. Most U.S. funding made available for foreign police assistance during fiscal years 2009 through 2011 provided training and equipment to Afghanistan, Iraq, Pakistan, Colombia, Mexico, and the Palestinian Territories. DOD and State funds constituted about 97 percent of the U.S. funds for police assistance in fiscal year 2009 and 98 percent of U.S. funds for police assistance in fiscal years 2010 and 2011. Four other agencies provided the remaining amount.", "On the basis of data provided by DOD, State, DOE, USAID, Treasury, and DOJ, we estimate that the U.S. government made available $3.5 billion in foreign police assistance in fiscal year 2009, $5.7 billion in fiscal year 2010, and $4.7 billion in fiscal year 2011 (see fig. 1).made available focused on sustaining the counternarcotics, counterterrorism, anticrime, and other civilian policing efforts of police forces around the world.\nGAO, Combating Terrorism: Pakistan Counterinsurgency Funds Disbursed, but Human Rights Vetting Process Can Be Enhanced, GAO-11-860SU (Washington, D.C.: Sept. 11, 2011). million in fiscal year 2011. State’s activities included support to the Colombian National Police’s aviation program and training on weapons and other equipment to rural police units. DOD support included training for a special unit of the Colombian National Police. In Mexico, DOD and State funds made available decreased from an estimated $167 million in fiscal year 2010 to $21 million in fiscal year 2011. Activities in Mexico included State’s Mérida Initiative, which provided training and equipment including aircraft and boats, inspection equipment, and canine units. DOD support to Mexico included training on aviation, communications equipment, maintenance, and information sharing. For the Palestinian Territories, State’s funds made available increased from an estimated $97 million in fiscal year 2010 to $142 million in fiscal year 2011. State provided battalion-level basic law enforcement and security training conducted at the Jordanian International Police Training Center located outside Amman, Jordan. Appendix IV contains additional information on activities in Afghanistan, Iraq, Pakistan, Colombia, Mexico, and the Palestinian Territories.", "Four other agencies—DOE, USAID, Treasury, and DOJ—also made available about $83 million, or 2 percent of the estimated funds, for foreign police assistance in fiscal year 2011 (see table 1). DOE made available the majority of the funds ($52 million) for its nuclear security programs; USAID, Treasury, and DOJ made available the remaining amounts.", "DOD and State/INL have acknowledged limitations in their procedures to assess and evaluate their foreign police assistance activities and are taking steps to address them. DOD assesses the performance of the national police forces it has trained and equipped for counterinsurgency operations in Afghanistan, Iraq, and Pakistan—countries that were the three largest recipients of DOD’s foreign police assistance funds during fiscal years 2009 through 2011. However, according to an October 2011 DOD report to Congress, the assessment process for Afghanistan does not provide data on civil policing operations such as referring cases to the justice system, a fact that hampers the department’s ability to fully assess the effectiveness of the training it provides to the ANP. DOD plans to begin collecting these data to assess civil policing effectiveness. As of April 2012, State/INL had conducted only one evaluation of a program that includes foreign police assistance activities. Recognizing the need to conduct such evaluations, State/INL is developing an evaluation plan that is consistent with State’s February 2012 Evaluation Policy and implementing its June 2010 guidelines that recommended including evaluation as a part of its budget and planning documents for programs in Iraq and Mexico. Other priority programs for evaluation include ones for Afghanistan, Colombia, the Palestinian Territories, and Pakistan.", "DOD assesses the performance of the national police forces it has trained and equipped for counterinsurgency operations in Afghanistan, Iraq, and Pakistan—countries that were the three largest recipients of DOD’s foreign police assistance funds during fiscal years 2009 through 2011.\nFor Afghanistan, DOD has assessed the Afghan National Security Forces, which consists of the Afghan National Army (ANA) and ANP, using its Commander’s Unit Assessment Tool. The assessment tool provides quantitative data for security force units, including personnel, equipment, and training, and qualitative assessments for functions such as training and education. In addition, the assessment tool reports on the operational performance of the ANA and ANP units using rating definition levels. Rating definition levels include (1) independent, (2) effective with advisers, (3) effective with assistance, (4) developing, (5) established, and (6) not assessed. As of August 2011, DOD reported 26 ANP units were rated as independent. We previously reported on U.S. efforts to train and equip the ANP in 2009 and more recently in 2012.\nFor Iraq, DOD used a readiness assessment system to determine when units of the Iraqi security forces, including the Iraqi national police, could assume the lead for conducting security operations. This system’s classified assessments were prepared monthly by the unit’s coalition commander and Iraqi commander. According to multinational force guidance, the purpose of the assessment system was to provide commanders with a method to consistently evaluate units. It also helped to identify factors hindering unit progress, determine resource shortfalls, and make resource allocations. Units were evaluated in the areas of personnel, command and control, equipment, sustainment/logistics, training, leadership, operational effectiveness, and reliability, including how militia and sectarian influences affected the loyalty and reliability of Iraqi police and military forces. Further information on the results of these assessments is classified.\nFor Pakistan, DOD reported that, since March 2009, the Strategic Implementation Plan has been the principal mechanism for monitoring and assessing the administration’s progress in attaining the core Pakistan- related objectives of the President’s Afghanistan-Pakistan strategy, which include developing the counterinsurgency capabilities of Pakistan’s Frontier Corps and army. Although details of these and supporting assessments are classified, DOD reported that a series of events beginning in late 2010 heightened bilateral tension between the United States and Pakistan. Pakistan’s military subsequently requested significant reductions in U.S. military personnel in Pakistan. According to the report, the reduced number of U.S. military personnel and trainers, along with continued delays in obtaining visas, hindered the United States’ provision of security-related assistance to Pakistan. As a result, the progress achieved since 2010 in training, advising, and equipping Pakistan security forces has eroded, particularly in the area of counterinsurgency effectiveness for tactical- and operational-level combat forces.", "Although DOD is assessing ANP’s operational performance, the department recently reported it lacked data to assess civil policing effectiveness. According to a DOD October 2011 report, DOD uses the same report template to assess ANA’s and ANP’s ability to meet their counterinsurgency mission, but it does not address civil policing and the other roles and responsibilities of ANP. In 2008, we reported that the deterioration of Afghanistan’s security situation since 2005 had led to increased ANP involvement in counterinsurgency operations, resulting in additional training in weapons and survival skills and counterinsurgency tactics. We also reported that ANP’s role is to enforce the rule of law, protect the rights of citizens, maintain civil order and public safety, control national borders, and reduce the level of domestic and international organized crime, among other activities. In its report, DOD acknowledged that transitioning ANP’s role from performing counterinsurgency operations to a community police force that interacts with the population will be challenging, especially in contested areas.\nDOD reported that it plans to create a separate ANP report template that will include data on law enforcement operations in 2012. According to the DOD report, the ANP report template will provide data on community policing and law enforcement operations (see table 2). For example, DOD plans to include questions in the ANP report template that will assess the extent to which ANP units are recording complaints from the public.\nIn developing the new template, DOD is working with the International Police Coordination Board (IPCB), according to the department’s report. First established in the Afghanistan Compact at the London Conference in 2006, IPCB serves as the main coordination board for police reform in Afghanistan. Upon its establishment, IPCB had 13 member nations, including the United States. To increase DOD’s ability to assess civil policing effectiveness, IPCB has established a partnership with the International Security Assistance Force-Joint Command. According to the DOD report, IPCB is assisting DOD by having law enforcement professionals report data in its report template, and DOD is assisting IPCB by sharing current and historical ANP data. IPCB has also assisted DOD with drafting targeted questions that will be used within the ANP report template to provide data on the ANP units’ ability to conduct law enforcement operations, which we defined earlier.", "State/INL issued guidelines in June 2010 that recommended conducting evaluations. These guidelines were developed in response to the Secretary of State’s June 2009 directive for systematic evaluation and to promote a culture change among program offices that included support for conducting evaluations, according to State/INL officials. The bureau’s guidelines recommend that State/INL programs have  a defined strategy and written performance management plan that identifies performance measures, including indicators and targets, and establishes an approach for evaluation;  program implementation documents such as letters of agreement, interagency agreements, and contracts that specify State/INL, host country, and implementing partner responsibilities for conducting evaluations; and  budget proposals for programs that identify funding for evaluations as a separate item.\nState/INL guidelines for monitoring and evaluation also identify the types of evaluations that should be performed and the timing for them based on project length and budget. For example:  Projects shorter than 2 years may focus on output metrics such as the number of trained and equipped law enforcement personnel.  Projects longer than 2 years or greater than $25 million must evaluate outcomes and impacts.  Programs that have a life cycle longer than 5 years or exceed $5 million should conduct one or more midterm evaluations, as well as a final evaluation.\nPrograms that exceed $25 million must conduct periodic midterm evaluations and a final evaluation. To leverage external expertise for programs exceeding $25 million, State/INL has recommended final evaluations be conducted by an independent party.\nAs a key component of effective program management, evaluation assesses how well a program is working and helps managers make informed decisions about current and future programming. Evaluation provides an overall assessment of whether a program works and identifies adjustments that may improve its results. Types of evaluation include process (or implementation), outcome, impact, and cost-benefit and cost-effectiveness analyses. First, process (or implementation) evaluation assesses the extent to which a program is operating as it was intended. Second, outcome evaluation assesses the extent to which program goals or targets are met. Third, impact evaluation is a form of outcome evaluation that assesses the net effect of a program by comparing program outcomes with an estimate of what would have happened in the absence of the program. Finally, cost-benefit and cost- effectiveness analyses compare a program’s outputs or outcomes with the costs to produce them.\nThe bureau has conducted only one evaluation of a program that includes foreign police assistance activities because it lacked guidelines and a culture among program offices that supported evaluation, according to State/INL officials. For State/INL’s one outcome evaluation, State/INL reported that the U.S. Embassy, Beirut, hired a contractor to evaluate its training program for the Lebanese Internal Security Forces between November 2010 and May 2011. The purpose of the evaluation was to assess if the training had been successful, as well as to provide recommendations for its improvement. The final report was submitted to State/INL in June 2011. It identified what elements of the program worked and why the training failed to achieve its higher-order objectives. For example, the evaluators noted that the police training program had trained over 5,000 Lebanese Internal Security Forces personnel and that the training had been largely effective. However, the report concluded that the design of the training was not informed by a systematic assessment of training needs and engagement from the Lebanese Internal Security Forces during the planning process.", "In response to State’s February 2012 Evaluation Policy, State/INL is developing its annual evaluation plan, according to State/INL officials. The new policy requires that (1) all large programs, projects, and activities be evaluated at least once in their lifetime or every 5 years, whichever is less; (2) bureaus determine which programs, projects, or activities to evaluate; (3) bureaus evaluate two to four projects, programs, or activities over the 24-month period beginning with fiscal year 2012; and (4) program managers identify up to 3 to 5 percent of their resources for evaluation activities. State/INL officials said the bureau will assess its guidelines to ensure they are consistent with State’s policy and incorporate them into its annual evaluation plan.\nState/INL officials said that the bureau is implementing its monitoring and evaluation guidelines in phases beginning with its largest programs in Iraq and Mexico. Other priority programs for independent external evaluations include Afghanistan, Colombia, the Palestinian Territories, and Pakistan. For Iraq, State/INL officials said they have established a three-person monitoring and evaluation unit for the bureau’s Police Development Program. The unit recently used its civilian police advisers to conduct a baseline assessment of Iraqi law enforcement capabilities and is relying on advice from State/INL’s Office of Resource Management. For example, the office is assisting the unit with developing program objectives and performance measures to ensure they are specific, measurable, attainable, realistic, and timely.\nState/INL officials identified numerous goals, functions, objectives, tasks, and indicators for the bureau’s Police Development Program in Iraq. For example:\nGoal: Iraq’s Police Training Systems provide basic and advanced instruction to impart the skills required while promoting community policing, gender, and human rights.\nFunction: Community Policing/Community Relations—Police specifically trained in establishing and maintaining positive relationships between the law enforcement agency and the public for the purpose of identifying and solving crimes, enhancing public service, and building community trust in the police.\nObjective: Ministry of Interior establishes Community Policing Training\nTask 1: Review existing curriculum for community policing training.\nTask 2: Assist General Directorate for Training Qualification as requested to ensure community policing curriculum adopts and integrates international human rights standards in terms of police service delivery.\nState/INL’s program office for Mexico has dedicated $3 million in fiscal year 2011 funds to conduct evaluations of its programs and is in the process of identifying contracting mechanisms to complete them, including institutions of higher education in Mexico.", "U.S. agencies have implemented various mechanisms to coordinate their foreign police assistance activities as part of wider foreign assistance activities. Such mechanisms include (1) interagency policy committees chaired by the National Security Council (NSC) that coordinate policies at a high level; (2) headquarters working groups established to coordinate specific issues, such as antiterrorism and nonproliferation; (3) various working groups at the overseas posts; and (4) special positions to coordinate foreign police assistance activities. However, we noted some areas for improvement, including lack of defined agency roles and responsibilities and inconsistent information sharing.", "Interagency groups at various levels coordinate policy, guidance, and activities related to assistance to foreign police. NSC coordinates policies at the highest level of government through interagency policy committees. For example, an NSC-led interagency policy committee on security sector assistance, which includes assistance to foreign police, is conducting a policy review of the security sector. This committee does not conduct coordination or oversight of the actual provision of assistance. One of the goals of the committee is to define the roles and missions of U.S. agencies providing such assistance. The committee is also attempting to establish interagency goals and guidelines to better shape, integrate, prioritize, and evaluate U.S. government efforts in this sector. The review of security sector assistance was proposed for a variety of reasons related to a desire to improve the integration, effectiveness, and responsiveness of security sector assistance, including a proposal by Secretary of Defense Gates, according to a U.S. Institute for Peace report. In addition, according to a State official, the committee was established as a result of NSC concerns about DOD’s increasing role in providing foreign assistance. According to officials of agencies participating in the committee, membership includes NSC, Office of Management and Budget, DOD, State, USAID, Treasury, DOJ, and DHS. The attendees are usually assistant secretaries or deputy assistant secretaries. Working-level officials participate in subgroups such as those on roles and responsibilities. The table below provides examples of various coordination mechanisms.\nIn addition, for Iraq, from 2009 through the end of 2011, the key mechanism for managing the transfer of responsibilities from DOD to State was the Iraq Enduring Presence Working Group composed of individuals from offices in Baghdad and Washington, D.C. In addition to this working group, the embassy’s management section operated an interagency structure composed of 13 sub-working groups that covered all major areas of the transition—provincial affairs, police training, security, and administrative and support initiatives.", "According to State, DOD, DOJ, and DHS officials, the interagency policy committee on security sector assistance has met sporadically since its inception, which has contributed to delays in issuing a final report and associated recommendations that would address the roles and responsibilities of the various agencies and provide overall U.S. government policy guidance on security sector assistance. Agreeing on roles and responsibilities is a key practice that can enhance interagency collaboration. According to State, DOD, USAID, and DOJ officials, the committee began meeting sometime in 2009 but stopped in December 2010. A State/INL official said the committee reconvened in June 2011 and met or provided documents for review weekly through September. The committee met for a final session to review conclusions and policy recommendations in April 2012. State and DOD officials stated that they reviewed and commented on a draft policy directive on roles and responsibilities that was issued in 2011 and one that was issued in early 2012. Agencies reviewed proposed draft policy on roles and missions in April 2012 for final review. State officials attributed the lack of regular meetings to National Security Staff turnover and workload issues.", "While State and DOD had mechanisms to manage the transition from DOD to a State-led police development program in Iraq, they did not consistently share information. Establishing collaborative mechanisms to share information with partners is also a key practice for enhancing and sustaining interagency collaboration. Moreover, timely dissemination of information is critical for maintaining national security. The key mechanism for managing the transition was the Iraq Enduring Presence Working Group, composed of individuals from offices in Baghdad and Washington, D.C. In addition, the 2010 Joint Campaign Plan for Iraq—a strategic document composed and approved by top State and DOD officials in Iraq—included tasks State would need to consider as part of the transition. Despite these mechanisms, there was inconsistent and incomplete sharing of operational readiness assessments of the Iraqi police by DOD. Though State requested official copies of these assessments, DOD did not provide them. According to a former DOD civilian police adviser, DOD destroyed the database that contained the assessments of the Iraqi police forces during the transition, because it had completed its mission to train the Iraqi police. As a result, State developed a baseline assessment of Iraqi law enforcement capabilities without the benefit of DOD’s assessments.\nMoreover, overseas posts do not consistently document or share the results of their coordination efforts. In 2009, we reported that information is a crucial tool in national security and its timely dissemination is critical for maintaining national security. However, State/INL officials stated that overseas posts do not provide documentation of the results of their coordination efforts. In addition, several State Inspector General reports have discussed the need for agendas and minutes for interagency groups, including in Afghanistan, Colombia, and Mexico. For example, the Inspector General reported that although the working group at the U.S. embassy in Colombia concisely addressed law enforcement issues during these meetings, there was no published agenda or minutes of these proceedings. In another case, while the law enforcement working group at the U.S. Embassy in Islamabad issues minutes to the embassy executive office, it does not necessarily share them with headquarters.\nThe Deputy Chief of Mission for the U.S. Embassy in Bogotá, Colombia, acknowledged that the Homeland Security Group did not record the results of its coordination but stated that it will begin to issue an agenda and minutes for the meetings. The failure of overseas posts to document and disseminate their coordination efforts may hamper the agencies’ ability to have all the information they need to analyze the results of their foreign police assistance activities.", "Foreign partners’ counterinsurgency, counternarcotics, counterterrorism, and anticrime capabilities are critical to U.S. national security objectives. As such, interagency collaboration is essential to ensuring that U.S. agencies effectively and efficiently manage the resources they contribute to training and equipping foreign police forces. However, U.S. government agencies lack clearly defined roles and responsibilities for providing security sector assistance, including assistance to foreign police forces. While NSC has been tasked with leading efforts to define agencies’ roles and responsibilities, progress to date has stalled. U.S. agencies providing foreign police assistance need to define and agree on their roles and responsibilities to ensure that they make the most rational decisions about U.S. efforts to enhance foreign police forces’ capability. In addition, the lack of information sharing and documentation among agencies at some overseas posts providing foreign police assistance can inhibit the effectiveness of future U.S. assistance efforts.", "To better prioritize, evaluate, and avoid duplication of U.S. efforts to provide foreign police assistance, we recommend that NSC complete its efforts to define agency roles and responsibilities.\nTo ensure that information is available for future U.S. foreign police assistance efforts, we recommend that the Secretaries of Defense and State establish mechanisms to better share and document information among various U.S. agencies.", "We provided a draft of this report to DOD, State, DOE, USAID, Treasury, DOJ, DHS, and NSC. State and DHS provided written comments which are reproduced in appendices VI and VII. DOD provided comments by e- mail. In addition, State, DOD, DOE, Treasury, DOJ, and NSC provided technical comments that were incorporated as appropriate. USAID noted that it had no comments.\nNSC did not comment on the report’s recommendations. DOD concurred with the report’s recommendation to establish mechanisms to better share and document information among various U.S. agencies. State partially concurred and described actions it was continuing to take to collaborate with other federal agencies. State noted that it will work with its interagency partners to identify ways to improve the sharing of best practices and lessons learned concerning U.S. foreign police assistance efforts. DHS noted that it remains committed to continuing its work with interagency partners such as the U.S. Department of Justice and other relevant agencies. This includes work to better define agency roles and responsibilities, as appropriate.\nAs we agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution of it until 30 days from the date of this letter. At that time, we will send copies to the Secretaries of Defense, State, Energy, Homeland Security; and the Treasury; the Attorney General; the Administrator of USAID; the Executive Secretary of the National Security Council; and interested congressional committees. The report will also is available at no charge on the GAO Web site at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-7331 or johnsoncm@gao.gov. Contact points for our Offices of Public Affairs and Congressional Relations may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IX.", "To identify U.S. agencies that trained and equipped foreign police forces during fiscal years 2009 through 2011, we reviewed past GAO reports, relevant legislation, and agency websites. To identify the amount of U.S. government funding made available for foreign police training and equipment activities, we examined past GAO reports; congressional budget submissions, including the Department of State’s (State) Bureau of International Narcotics and Law Enforcement Affairs’ (State/INL) program and budget guides for fiscal year 2011; the Afghanistan Security Forces Fund fiscal year 2012 congressional budget justification; and the Department of Defense (DOD) fiscal year 2012 congressional budget justification and other budget documents. To identify countries and police assistance activities, we reviewed funding amounts reported to GAO by agencies, the fiscal year 2012 budget appendix, congressional budget submissions, agency annual reports, interagency agreements, and other program documents. We also interviewed officials from the Departments of Defense, State, and Energy (DOE); the U.S. Agency for International Development (USAID; and the Departments of the Treasury, Justice (DOJ), and Homeland Security (DHS). We collected data for fiscal year 2010 and fiscal year 2011 to update foreign police assistance funding information provided in our prior report.\nWe used the same definition of police assistance that we used in the previous report. We defined police training and equipment activities (which we referred to as “police assistance”) as all training—regardless of its content—and equipment provided to law enforcement units or personnel with arrest, investigative, or interdiction authority. Officials from the Office of the Deputy Assistant Secretary of Defense for Counternarcotics and Global Threats (DASD-CN>) updated information on DOD police assistance from fiscal year 2009 for fiscal years 2010 and 2011 using the definition we developed with State. DASD-CN> has oversight of program funding through a web-based database. However, specific funds for police assistance are managed at the combatant command level. The data DASD-CN> compiled included allotments for fiscal years 2010 and 2011 that were provided by combatant commands for training and equipping activities. Using our definition, DOD’s Defense Threat Reduction Agency provided funding data based on allotments from DOD’s defensewide operations and maintenance account. We also obtained total amounts made available after reprogramming for Afghanistan, Iraq, and Pakistan from the Afghanistan Security Forces Fund, Iraq Security Forces Fund, and Pakistan Counterinsurgency Fund from the Comptroller’s Office in the Office of the Secretary of Defense. We reviewed these figures along with congressional budget justifications and DOD’s fourth quarter, fiscal year 2011 report to Congress on the Iraqi, Afghan, and Pakistan Security Forces, as required by Section 9009 of DOD’s Appropriation Act for fiscal year 2011. We combined data from all funding sources to derive the DOD total. We included funding for equipment and transportation, training, and sustainment. We excluded any infrastructure costs because such costs are not typical of most police assistance activities. We compared the DOD data for reasonableness of the reported information and questioned DOD officials about their methodology and the reliability of the data. Some of the data may have included both military and civilian police personnel, which might result in overestimating DOD funding. However, for fiscal years 2010 and 2011, the majority of DOD funds (over 90 percent) were provided through the Afghanistan Security Forces Fund, Iraq Security Forces Fund, and Pakistan Counterinsurgency Fund, which separate funds provided to military and civilian personnel. To identify any discrepancies in the funding data, we compared the data from fiscal year 2010 and fiscal year 2011 with that provided for fiscal year 2009. We reconciled discrepancies with the agencies and determined that the data were sufficiently reliable for our purposes.\nState/INL analyzed data reported in its annual program and budget guides to provide allocations for police-assistance activities that fit our definition. The funding data covered all country programs funded through the International Narcotics Control and Law Enforcement (INCLE) account directed to law enforcement, stabilization operations, counternarcotics, border control, and transnational crime. State also used the definition to identify police assistance funded through other foreign assistance accounts. State analyzed appropriations and obligations funding data from the Foreign Assistance Coordination and Tracking System database, which tracks data on U.S. foreign assistance programs. Allotments or allocations were provided for the Assistance for Europe, Eurasia and Central Asia account and the Nonproliferation, Antiterrorism, Demining, and Related Programs account. State also provided obligations for the Pakistan Counterinsurgency Capability Fund, which received funds transferred from DOD’s Pakistan Counterinsurgency Fund, and allotments from funding transferred from DOD to State under Section 1207 authority of the fiscal year 2006 National Defense Authorization Act. We compared State’s data for fiscal year 2009 with data for fiscal years 2010 and 2011 for reasonableness. We also questioned State officials about their methodology, reviewed the program and budget guides, reviewed other GAO reports that used the same data sources, and discussed data reliability with agency officials. We determined that the data were sufficiently reliable for our purposes. We combined the data from the various funding accounts to derive the State total. The State data included funding provided to Treasury, DOJ, and DHS. It excluded funding provided to State from other agencies, with the exception of Pakistan Counterinsurgency Capability Fund and 1207 funds transferred from DOD. We excluded any infrastructure costs because such costs are not typical of most police assistance activities.\nDOE’s National Nuclear Security Administration provided allotments and obligations funding data for police assistance for fiscal year 2010 and fiscal year 2011 in response to our request for funding data based on our definition. DOE’s funds were made available from its Defense Nuclear Nonproliferation account. USAID reviewed the Foreign Assistance Coordination and Tracking System database by program element to identify programs that might have a civilian policing component. USAID then consulted with its geographic bureaus and its overseas missions to obtain detailed data not available at headquarters. USAID provided us with funding data based on allotments for activities that included civilian police training. We reviewed the data for reasonableness and discussed their reliability with agency officials. We determined that the data were sufficiently reliable for our purposes. We excluded programs that did not meet our definition, such as judicial exchanges. Treasury provided appropriations funding for police assistance from its Economic Crimes division for fiscal years 2010 and 2011 in response to our request for funding data based on our definition. Funds were made available from the Treasury International Affairs Technical Assistance account and included supplemental funding provided during fiscal year 2010.\nFor DOJ, we used funding data provided by the Federal Bureau of Investigation (FBI) and the Drug Enforcement Administration (DEA). The FBI explained that the primary purpose of its foreign police training is not to provide ‘foreign assistance. Rather, the primary purpose of such training is to further the FBI’s statutorily authorized mission to detect, investigate, and prosecute crimes against the United States, which include federal crimes of terrorism and other crimes that the FBI is authorized to investigate extraterritorially. FBI provided funding data using its definition of police assistance: any activity, including the provision of equipment in association therewith, that is intended to develop or enhance foreign law enforcement capabilities to prevent, deter, detect, investigate, or respond to criminal or terrorist acts or support public safety and security. Such training occurs both in the United States and abroad. FBI officials explained that our definition would exclude some types of law enforcement personnel, such as crime lab technicians, who do not have arrest authority, and that they could not isolate such individuals from their submission. FBI provided data on obligations that were also disbursed based on its definition. This definition did not materially affect the total amount of U.S. funding. We reviewed the data for reasonableness and determined that the data were sufficiently reliable for our purposes. DEA provided data on obligations that were also disbursed in response to our request for data based on our definition. DEA provided funding data by country for Afghanistan, Colombia, and Mexico, but neither DEA nor FBI provided total funding data by country.\nWe combined the funding data provided by DOD, State, DOE, USAID, Treasury, and DOJ to obtain total U.S. government funds made available. The amounts are estimates because, according to agency officials, agencies do not generally track funding by a category specifically for activities to train and equip foreign police. In addition, to estimate funding for all elements of police training, the agencies relied on project code reports, manual estimates, and data calls to overseas posts. On the basis of our review of the data and discussions with agency officials, we determined that the data were sufficiently reliable for a broad estimate of U.S. government funding.\nTo assess the extent to which DOD and State/INL report on the results of their police assistance activities for countries with their largest programs, we reviewed GAO reports, including those that examined the capabilities of the Iraqi Security Forces and Afghan National Security Forces, including the Iraqi national police and Afghan National Police (ANP). We also reviewed DOD’s October 2011 Report on Progress toward Security and Stability in Afghanistan. Within DOD, we spoke with officials from U.S. Central Command and the Afghan National Security Forces Desk. Within State, we spoke with officials from relevant components about State/INL’s monitoring and evaluation guidelines, including the Office of Resource Management, Office of Program Assistance and Evaluation, Office of Iraq Programs, and the Office of Afghanistan and Pakistan. To identify reporting requirements, we reviewed letters of agreement and interagency agreements provided by State/INL. Further, we reviewed relevant documents including State/INL guidelines for program monitoring and evaluation and one evaluation completed by State/INL for its police assistance activities.\nTo examine the mechanisms U.S. agencies use to coordinate their police assistance activities, we reviewed GAO reports, including those describing practices for enhanced interagency collaboration; State Office of Inspector General reports; and other reports, legislation, and documents describing NSC’s interagency policy committees. We also interviewed State, DOD, DOJ, DHS, Treasury, and USAID officials, including officials who participated on the NSC Security Sector Assistance Interagency Policy Committee. We also interviewed State and U.S. law enforcement officials at the U.S. embassies in Bogotá, Colombia, and Lima, Peru. On the basis of the document review and the testimonial evidence, we identified mechanisms for coordinating foreign police assistance and areas for improvement. We did not assess the overall effectiveness of the coordinating mechanisms.\nWe conducted this performance audit from April 2011 through May 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 work objectives.", "This appendix provides information on DOD and State funds made available for police assistance activities during fiscal years 2010 and 2011, by region and country. DOD and State funds constituted about 98 percent of U.S. funds for these purposes. We did not include funds made available from other agencies because they provided only 2 percent of U.S. funds and not all agencies provided information by individual countries. These graphs also do not include regional funds, which totaled $182 million for DOD and State in fiscal year 2010 and $186 million for DOD and State in fiscal year 2011.\nOur analysis of DOD and State data shows that both DOD and State made available funds for police assistance activities in 8 of 12 recipient countries in the South and Central Asia region for fiscal years 2010 and 2011 (see fig. 5). For Afghanistan, agencies made available more than $3 billion each year, and for Pakistan, agencies made available between $176 million and $299 million each year. Agencies made available less than $10 million per country each year for 8 of the remaining 10 countries.\nAs shown in figure 6, both DOD and State made funds available for police assistance activities in 3 of the 13 recipients in the Near East for fiscal year 2010 and 4 of the 13 recipients in the Near East for fiscal year 2011. State alone made assistance available for 10 recipients in fiscal year 2010 and 9 recipients in fiscal year 2011. State and DOD made available more than $972 million for Iraq in fiscal year 2010 to train and equip the Iraqi security forces, including the provision of equipment, supplies, services, training, facility and infrastructure repair, and renovation. State alone made available $97 million and $142 million to the Palestinian Territories in fiscal years 2010 and 2011, respectively. Agencies made available less than $10 million per country in each fiscal year for 9 of the remaining 11 countries.\nFigure 7 shows that both DOD and State made funds available for police assistance activities in 7 of 20 countries in fiscal year 2010 and in 6 of 18 countries in fiscal year 2011 in the Western Hemisphere. DOD alone made funds available for assistance in 7 countries each fiscal year, while State alone made funds available in 6 countries in fiscal year 2010 and 5 countries in fiscal year 2011. In fiscal year 2010, Colombia, Mexico, and Haiti each had more than $100 million made available for police assistance activities, while in fiscal year 2011, only Colombia had more than $100 million made available. In fiscal year 2010, agencies made less than $10 million available in police assistance for 14 countries, and in fiscal year 2011, agencies made less than $10 million available in police assistance for 13 countries.\nFigure 8 shows that both DOD and State made available police assistance in 11 of 21 countries in fiscal year 2010 and 10 of 20 countries in fiscal year 2011 in Europe and Eurasia. DOD alone made assistance available to 7 countries in fiscal year 2010 and 5 countries in fiscal year 2011, while State alone made assistance available to 3 countries in fiscal year 2010 and 5 countries in fiscal year 2011. In fiscal year 2010, agencies made available between $1 million and $22 million in police assistance to each of 11 countries, while agencies made available less than $1 million to each of 10 countries. In fiscal year 2011, agencies made available between $1 million and $8 million in police assistance to 12 countries, while agencies made available less than $1 million to each of 8 countries.\nAs shown in figure 9, both DOD and State made police assistance available in the Africa region in 12 of 29 countries in fiscal year 2010 and 12 of 35 countries in fiscal year 2011. DOD alone made assistance available in 6 countries in fiscal year 2010 and 16 countries in fiscal year 2011. State alone made assistance available in 11 countries in fiscal year 2010 and 7 countries in fiscal year 2011. DOD and State made available between $1 million and $14 million to each of 16 countries in fiscal year 2010, and from $1 million to $11 million to each of 13 countries in fiscal year 2011. Agencies made less than $1 million available to each of 13 countries in fiscal year 2010 and less than $1 million to 22 countries in this region in fiscal year 2011.\nFigure 10 shows that both DOD and State made funds available for police assistance in 6 of 12 countries for fiscal year 2010 and 6 of 14 countries for fiscal year 2011 in the East Asia and Pacific region. DOD alone made assistance available in 3 countries in fiscal year 2010 and 5 countries in fiscal year 2011, while State alone made funds available in 3 countries each fiscal year. DOD and State made between $1 million to $16 million available to each of 6 countries in this region in fiscal year 2010 and 5 countries in fiscal year 2011. Agencies made less than $1 million available in police assistance to 6 countries in fiscal year 2010 and 9 countries in fiscal year 2011.", "This appendix provides information on DOD and State amounts made available for police assistance activities by account during fiscal years 2010 and 2011 (see tables 4 and 5). For a description of accounts, see table 4. For the amounts made available from each account, see table 5.", "Profiles on Afghanistan, Iraq, Pakistan, Colombia, Mexico, and the Palestinian Territories can be found on the following pages.\nRelated GAO Work In GAO-09-280, we reported that the Combined Security Transition Command-Afghanistan had begun retraining Afghan National Police units through its Focused District Development program. However, a lack of military personnel constrained the command’s plans to expand the program.\nWe also reported in GAO-10-291 that U.S. agencies reported progress within counternarcotics program areas, but we were unable to fully assess the extent of progress because of a lack of performance measures and interim performance targets to measure Afghan capacity.\nGAO Recommendations In GAO-09-280, we recommended that the Secretaries of Defense (DOD) and State provide dedicated personnel to support creation of additional police mentor teams to expand and complete the Focused District Development program. In September 2010, we closed this recommendation as implemented because DOD and State took actions to increase trainers and mentors for the Afghan police. centers in Kunduz and Heart\nProvided antiterrorism assistance to build capacity in protection of national leadership and explosives incident countermeasures\nProvided introductory and advanced training to members of the Sensitive Investigation Unit of the Counternarcotics National Police. This training focused on investigative methods for apprehending drug traffickers.\nRelated GAO Work During April and May 2012, we provided briefings to staff on selected committees regarding U.S security assistance to Iraq. The Sensitive But Unclassified briefings covered the transition of lead responsibility from DOD to State for U.S. assistance to Iraq’s military and police.  Assumed full responsibility for the U.S. presence in Iraq in fiscal  Funding for 2010 supported U.S. personnel hired to position State to assume responsibility for the police development mission in Iraq. Activities included developing plans and requirements for transitioning police development from DOD to State, training curricula, statements of work, position descriptions, comprehensive work plans, and oversight and administrative processes.\nGAO Recommendations Not applicable.\nRelated GAO Work GAO-11-860SU is sensitive but unclassified\nProvided aviation support through flight and maintenance training to civilian Pakistani law enforcement agencies\nProvided training, technical assistance, and equipment to law enforcement entities, including train-the-trainer and instructor development courses\nProvided training and equipment to Pakistani law enforcement\nProvided antiterrorism assistance to build capacity in protection of national leadership, critical incident management, and protection of digital infrastructure\nProvided equipment, including protective equipment such as helmets and night vision devices to the Frontier Corps\nProvided counternarcotics training and equipment\nProvided radiation detection equipment to the Port of Qasim. The program included refresher training for Pakistani officials on radiation detection equipment.\nRelated GAO Work In GAO-09-71, we found that U.S.- funded helicopters provided the air mobility needed to rapidly move Colombian counternarcotics and counterinsurgency forces. U.S. advisers, training, equipment, and intelligence assistance helped professionalize Colombia's military and police forces. We also reported that State and the other U.S. departments and agencies had accelerated their nationalization efforts, with State focusing on Colombian military and National Police aviation programs.\nGAO Recommendations We recommended that State, in conjunction with the other departments, USAID, and Colombia, develop an integrated nationalization plan that defines U.S. and Colombian roles and responsibilities, future funding requirements, and timelines. State agreed and noted that its annual multiyear strategy report offers the most useful format to address our recommendation. However, we did not believe this report sufficiently addressed our recommendation. In September 2011, State/INL officials in Colombia reported it reached agreement with the government of Colombia to nationalize aircraft, contractor personnel, facility maintenance, and other programs. For example, State/INL officials in Colombia told us they plan to nationalize 103 aircraft by 2014, which would represent an annual cost savings of $83 million.\nRelated GAO Work In GA0-10-837, we reported on the Mérida Initiative, which provides training and equipment to law enforcement in Mexico and Central American countries. We found that deliveries of equipment and training had been delayed by challenges associated with an insufficient number of staff to administer the program, negotiations on interagency and bilateral agreements, procurement processes, changes in government, and funding availability. We also found that while State had developed some of the key elements of an implementation strategy, its strategic documents lacked certain key elements that would facilitate accountability and management. In addition, State had not developed a comprehensive set of timelines for all expected deliveries, though it plans to provide additional equipment and training in both Mexico and Central America.\nProvided training and equipment under the Mérida Initiative to help address the problem of increasing crime and violence in Mexico and Central America. Equipment included aircraft and boats.\nProvided antiterrorism assistance to build capacity in protection of\nProvided counternarcotics support including pilot and maintenance training, surveillance aircraft, information sharing, technical advice, and related support SLD provided radiation detection equipment for cargo scanning at five Mexican ports. This includes fixed and handheld equipment, maintenance and in-country training to officials in the ports of Altamira, Lazaro, Cardenas, Manzanillo, and Veracruz. Additional technical assistance was provided to Mexican Customs officials at a national level.\nGAO Recommendations We recommended that the Secretary of State incorporate into the strategy for the Mérida Initiative outcome performance measures that indicate progress toward strategic goals and develop more comprehensive timelines for future program deliveries. State agreed and is working to develop better metrics and more comprehensive timelines. As of April 2012, State is revising its performance measures, according to State officials. GAO will examine the extent to which these efforts address the recommendation in a separate engagement.\nGAO Summary In GAO-10-505, we reported that although U.S. and international officials said that U.S. security assistance programs for the Palestinian Authority had helped improve security conditions in some West Bank areas, State and the Office of the United States Security Coordinator (USSC) had not established clear and measurable outcome-based performance indicators to assess progress. State and USSC officials noted that they planned to incorporate performance indicators in a USSC campaign plan to be released in mid-2010.\nOpen GAO Recommendation We recommended that, as State developed the USSC campaign plan for providing security assistance to the Palestinian Authority, the Secretary of State should define specific objectives and establish outcome-based indicators enabling it to assess progress. State partially concurred with this recommendation. It agreed with the need for more performance-based indicators but noted that factors outside its control influence progress. GAO continues to monitor this development.", "", "As a part of its assessment process in Afghanistan, DOD uses criteria— called capability milestones—to assess the professionalism and capacity of departments under the Afghan Ministry of Interior, including components of the ANP. Departments are assessed against four capability milestones that range from 1 to 4. A department rated at 1 is fully capable of conducting its primary operational mission but may require coalition oversight. By contrast, a department rated at 4 has been established but cannot accomplish its mission.", "DOD’s basic assessment system in Iraq contained capabilities ratings in the areas of personnel, command and control, equipment, sustainment/logistics, training, and leadership. Commanders used the assessment results and their professional judgment to determine a unit’s overall readiness level. The assessment reports also included the commanders’ estimates of the number of months needed before a unit could assume the lead for counterinsurgency operations. DOD also reported readiness assessments for headquarters service companies, such as engineering and signal units that support combat units. The assessment reports included the coalition commander’s narrative assessments of the Iraqi unit’s overall readiness level, known as the Performance Capability Assessment, which was designed to clarify the overall assessment. The narrative assessed the Iraqi unit’s leadership capabilities, combat experience, and ability to execute intelligence-based operations, and described any life support issues affecting the Iraqi unit’s capabilities. Commanders also explained and addressed any regression in the unit’s overall assessment level and listed the top three issues preventing the unit from assuming the lead for counterinsurgency operations or advancing to the next level. Remarks were intended to provide information and details that would help resolve the problems that degrade the unit’s status.", "Details on DOD’s assessments of the Pakistan Security Forces are classified.\nThe table below provides definition of the capability milestones, as identified in DOD’s October 2011 Report on Progress toward Security and Stability in Afghanistan.\nAccording to DOD’s October 2011 report, advisers from the North Atlantic Treaty Organization Training Mission–Afghanistan and Combined Security Transition Command–Afghanistan used capability milestones to assess individual offices and cross-functional activities on a quarterly basis against specific end-state objectives, quarterly milestones, and skill- building requirements. For example, DOD reported in October 2011 that the Afghan National Civil Order Police advanced from requiring some coalition assistance to requiring minimal coalition assistance.", "", "", "", "", "In addition to the individual named above, Judy McCloskey (Assistant Director), Lynn Cothern, Brian Egger, Mark Needham, and La Verne Tharpes made key contributions to this report.\nRobert Alarapon, Martin De Alteriis, Etana Finkler, Mary Moutsos, and Anthony Pordes provided technical support." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full", "", "", "h1_full", "h1_full", "", "", "h1_full", "h2_full", "", "", "h2_full", "h2_full", "", "", "", "", "", "h2_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How did US provide foreign police assistance FY2009 through FY2011?", "How did US foreign police assistance change from FY2009 to FY2011?", "How has most of the US foreign police assistance distributed?", "How did DOD and State funds provide for foreign police assistance?", "How has DOD and State/INL evaluated their limitations?", "What does the DOD assess?", "What is this assessment missing?", "How does the DOD plan to address this?", "How is State/INL changing their plans?", "What will this plan affect?", "How has the US coordinated foreign police assistance?", "How does the GAO view NSC handling of assistance?", "How does the GAO view DOD and State?", "How has the DOD failed to provide Iraqi police data?", "How do some US embassies follow the same faults?" ], "summary": [ "The United States provided an estimated $13.9 billion for foreign police assistance during fiscal years 2009 through 2011.", "Funds provided by U.S. agencies rose and then fell between fiscal years 2009 and 2011.", "During fiscal years 2009 through 2011, the United States provided the greatest amount of its foreign police assistance to Afghanistan, Iraq, Pakistan, Colombia, Mexico, and the Palestinian Territories.", "Department of Defense (DOD) and State (State) funds constituted about 97 percent of U.S. funds for police assistance in fiscal year 2009 and 98 percent in fiscal years 2010 and 2011.", "DOD and State’s Bureau of International Narcotics and Law Enforcement Affairs (State/INL) have acknowledged limitations in their procedures to assess and evaluate their foreign police assistance activities and are taking steps to address them.", "DOD assesses the performance of the police forces it trains and equips in Afghanistan, Iraq, and Pakistan.", "However, the assessment process for Afghanistan does not provide data on civil policing effectiveness.", "DOD plans to expand its assessments to obtain data to assess the ability of these forces to conduct civil policing operations.", "In addition, recognizing that it had conducted only one evaluation of its foreign police assistance activities because it lacked guidelines, State/INL is developing an evaluation plan that is consistent with State’s February 2012 Evaluation Policy.", "This evaluation plan includes conducting evaluations for its largest programs in Iraq and Mexico.", "U.S. agencies have implemented various mechanisms to coordinate their foreign police assistance activities as part of wider foreign assistance activities, such as the National Security Council’s (NSC)-led interagency policy committees that coordinate policies at a high level and various working groups at the overseas posts.", "However, GAO noted some areas for improvement. Specifically, NSC has not defined agencies’ roles and responsibilities for assisting foreign police.", "Further, DOD and State do not consistently share and document information.", "For example, DOD did not provide copies of its capability assessments of the Iraqi police to State, which is now responsible for police development in Iraq, because it destroyed the database containing the assessments at the end of its mission to train the police.", "Further, some U.S. embassies, including the one in Bogotá, Colombia, do not publish agendas or minutes of their proceedings." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, 2, -1, 4, -1, -1, -1, 2, 2 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 5, 5, 5, 5, 5 ] }

{ "title": [ "Background", "Data Indicate Most Agencies Have Not Consistently Complied with Mandated Requirements, Because of Improper Exclusions and Differing Methodologies", "Agency Data Indicate That Agencies Did Not Consistently Comply with Mandated Program Spending Requirements", "Agencies and SBA Have Not Consistently Complied with Certain Reporting Requirements", "Agencies’ Reporting of Methodologies Did Not Consistently Comply with Requirements", "SBA Annual Reports to Congressional Committees Are Often Late and Incomplete", "Basing Spending Requirements on Agencies’ Total R&D Budgets Could Increase Spending and Program Participation", "Changing the Base for SBIR and STTR Budgets to Total R&D Would Increase Agency Spending Requirements", "Changing the Calculation Methodology Would Increase the Number of Agencies Required to Participate", "Agencies’ Cost for the Administration of the Programs Cannot Currently Be Determined Because the Agencies Do Not Identify or Track All Costs", "Agencies Have Not Comprehensively Identified or Tracked Administrative Costs for Several Reasons", "Most Estimated SBIR and STTR Administrative Costs Were in Salaries and Expenses, Contract Processing, Outreach and Technical Assistance, Support Contracts, and Other Categories", "Participation in the Administrative Costs Pilot Program Will Require Agencies to Track Certain, but Not All Costs", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Comparison of Participating Agencies’ Reported Requirements and Spending for the SBIR and STTR Programs, Fiscal Years 2006 to 2011", "Appendix II: Analysis of Alternative Scenarios for Basing SBIR and STTR Spending Requirements on Total R&D Budget", "Appendix III: Description of SBIR and STTR Administrative Cost Data Obtained from the Participating Agencies", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact:", "Staff Acknowledgments" ], "paragraphs": [ "SBIR has four overarching purposes: to (1) use small businesses to meet federal R&D needs, (2) stimulate technological innovation, (3) increase commercialization of innovations derived from federal R&D efforts, and (4) encourage participation in technological innovation by small businesses owned by women and disadvantaged individuals. The SBIR program has a three-phase structure as follows: In Phase I, agencies award up to $150,000 for a period of about 6 to 9 months to small businesses to determine the scientific and technical merit and feasibility of ideas that appear to have commercial potential.\nIn Phase II, small businesses whose Phase I projects demonstrate scientific and technical merit, in addition to commercial potential, may compete for awards of up to $1 million to continue the R&D for an additional period, normally not to exceed 2 years.\nPhase III is for small businesses to pursue commercialization objectives resulting from the Phase I and II R&D activities, where appropriate. Phase III is the period in which Phase II innovation moves from the laboratory to the marketplace. SBIR Phase III work completes an effort made under prior SBIR phases, but it is funded by sources other than the SBIR program. To commercialize their products, small businesses are expected to raise additional funds from private investors, the capital markets, or from non-SBIR sources within the agency that made the initial award.\nAccording to SBA documents, STTR’s purpose is to stimulate a partnership of ideas and technologies between innovative small businesses and research institutions through federally funded R&D.program provides funding for research proposals that are developed and executed cooperatively between small businesses and research institutions. Like the SBIR program, the STTR program is structured in three phases as follows:\nPhase I aims to establish the technical merit, feasibility, and commercial potential of the proposed R&D efforts and to determine the quality of performance of the small businesses. STTR Phase I awards generally do not exceed $150,000 for 1 year.\nPhase II funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the Phase II project proposed. STTR Phase II awards generally do not exceed $1 million total costs for 2 years.\nPhase III is for small businesses to pursue commercialization of research or technology resulting from the Phase I and II R&D activities, and it completes an effort made under the prior STTR phases but is funded by sources other than the STTR program. According to SBA, Phase III work can involve commercial application of R&D financed by nonfederal capital, including STTR products or services intended for use by the federal government and continuation of R&D that has been competitively selected in Phases I and II, according to the 2012 SBA policy directive.\nAs noted, federal agencies with a budget of more than $100 million for extramural R&D are required to have an SBIR program, while federal agencies with extramural R&D budgets that exceed $1 billion annually are required to have an STTR program. Generally, the extramural R&D budget is defined as the sum of the total obligations for R&D minus amounts to be obligated for intramural R&D, that is, R&D conducted by employees of a federal agency in or through government-owned, government-operated facilities. In determining their extramural R&D budget, agencies have authority to exclude certain R&D programs from the extramural R&D base used for calculating SBIR and STTR spending requirements, such as facilities and equipment used for R&D and certain intelligence activities. For example, under the Small Business Act, DOE must exclude amounts obligated for its naval reactor program from its extramural R&D budget. Likewise, under the act, DOD excludes programs carried out by certain elements of the intelligence community. In addition, DOT must exclude funds obligated for the Federal Highway Administration State Planning and Research program from its extramural R&D budget.\nIn fiscal year 2011, the 11 participating agencies reported spending a total of $2.2 billion for SBIR, and the 5 participating agencies reported spending a total of $251 million for STTR, with DOD spending the most on these programs––$1.1 billion and $121 million, respectively. DOD’s reported spending constituted 48.8 percent of total SBIR spending and 48.2 percent of total STTR spending in fiscal year 2011.\nAccording to SBA documents, the agency’s role is to serve as the oversight and coordinating agency for the SBIR and STTR programs and is to direct and assist the agencies’ implementation of the programs, review their progress, collect agency reports, analyze the information in the agencies’ methodology reports, and report annually to Congress on the programs. In this role, SBA issued SBIR and STTR policy directives in September 2002 and December 2005, respectively, and updated them in August 2012; these directives provide agencies with detailed guidance on implementation of the SBIR and STTR programs.", "Data reported by the participating agencies to SBA for fiscal years 2006 to 2011 indicate that most of the agencies have not consistently complied with the mandated spending requirements for SBIR and STTR. In calculating their spending requirements, some participating agencies made improper exclusions and used differing methodologies.", "Our analysis of data the participating agencies reported to SBA indicates that, from fiscal years 2006 to 2011, most agencies did not consistently comply with mandated spending requirements. Specifically, 8 of the 11 agencies did not consistently meet annual spending requirements for SBIR. Data from 3 of the agencies—DHS, Education, and HHS—indicate that they met their spending requirements for all 6 years. For STTR, 4 of 5 agencies did not consistently meet annual spending requirements. Data from 1 agency—HHS—indicate that it met its STTR spending requirements for all 6 years. Figure 1 shows the number of years that each agency met its annual SBIR and STTR spending requirements, based on the information submitted to SBA in each agency’s annual reports.spending on these programs.\nSee appendix I for further details on each agency’s reported Evaluation budget of the United States Special Operations Command subunit from its extramural R&D budget because the budget is less than the $1 billion required for participating in the STTR program.\nHHS reported excluding the extramural R&D budgets of the Centers for Disease Control and Prevention and the Food and Drug Administration because these subunit budgets are less than the $1 billion required for participating in the STTR program.\nIn another example, a third agency, DOT reported excluding the Federal Aviation Administration’s extramural R&D budget, which is well in excess of $100 million annually, from the SBIR program budget calculation. We asked DOT and FAA to provide the legal authority for this exclusion, but they did not supply this information.\nImproperly excluding subunits reduced calculations of three agencies’ respective extramural R&D and, in turn, the agencies’ spending requirements for SBIR and STTR. Over fiscal years 2006 to 2011, these improper exclusions resulted in a $7.7 million reduction to DOD’s STTR spending requirement, a $34.7 million reduction to DOT’s SBIR requirement, and HHS’ exclusions resulted in a $6.1 million reduction to its STTR spending requirement. Officials at DOD said they changed the agency’s policy on exclusions as of fiscal year 2013 and that the new policy, which will not allow these improper exclusions, is currently being implemented. DOT provided no further information on its exclusion. HHS met its overall agency spending requirement even with the improper exclusions, according to the data in HHS’ annual reports to SBA.\nIn addition to identifying improper exclusions, we found that, when appropriations were received late in the year, agencies used differing methodologies to calculate their spending requirements, making it difficult to determine whether agencies’ calculations were correct. For example, some agency program managers told us that, when appropriations were received late in the year, they used their prior year actual spending to calculate their current year spending requirement, while others calculated their current year spending requirement using some other methodology. Specifically, program managers at the National Institute of Standards and Technology (NIST)—a subunit of Commerce—stated that program managers at NIST used the past year’s actual SBIR spending to calculate the current year’s requirement. In contrast, NASA calculated its SBIR spending requirement by determining what percentage its extramural R&D spending comprised of its total R&D spending in the prior year. NASA then applied this percentage to the current year’s total R&D budget to calculate the current year’s extramural budget, which it then used as the basis for calculating the SBIR and STTR spending requirements. Although SBA provided guidance in policy directives for participating agencies on calculating their spending requirements, neither SBA’s prior nor its current policy directives provide guidance to agencies on how to calculate such spending requirements when agency appropriations are delayed. Without such guidance, agencies will likely continue to calculate spending requirements in differing ways.", "Agencies participating in the SBIR and STTR programs have not consistently complied with Small Business Act requirements for annually reporting a description of their methodologies for calculating their extramural R&D budgets to SBA. In addition, SBA has not consistently complied with the act’s requirements for annually reporting to Congress, including reporting on SBA’s analysis of the agencies’ methodologies for calculating their extramural R&D budgets.", "With the exception of NASA in certain years, agencies did not submit their methodology reports to SBA within the time frame required by the Small Business Act for fiscal years 2006 to 2011 for the SBIR and STTR programs. The act requires that agencies report to SBA their methodologies for calculating their extramural budgets within 4 months after the date of enactment of their respective appropriations acts. However, most participating agencies documented their methodologies for calculating their extramural R&D budgets for these fiscal years and submitted them to SBA after the close of the fiscal year with their annual reports, but three agencies—USDA, Education, and DOT—did not provide a methodology report for 1 fiscal year during this period. USDA did not submit a report on its fiscal year 2007 methodology because agency officials said it was identical to prior years. Officials from Education and DOT said they typically submitted their methodology reports with their annual reports. However, they told us that for fiscal year 2011 they did not submit their methodology reports to SBA on time because that was the first year that agencies were required to submit their annual reports to SBA’s automated system and there was not a place in SBA’s system to submit methodology reports. SBA officials said that they nonetheless expected agencies to submit their methodology reports and that there are several methods to transmit this information, such as by memorandum or e-mail. Education officials later told us they submitted their 2011 methodology report to SBA in January 2013.\nSBA officials said that they have not held the agencies to the act’s deadline for submitting methodology reports, in part because continuing resolutions enacting final appropriations have sometimes not been passed until the middle of the fiscal year. This timing for appropriations has pushed the required reporting date of the methodology report—due 4 months after appropriations are set—until late in the fiscal year. SBA officials said this has made it more convenient for participating agencies to submit the methodology report with the annual report. Further, SBA officials said the agency uses the methodology reports for their annual reports to Congress. By not having the methodology reports earlier in the year as specified by law, however, SBA does not have an opportunity to promptly analyze these methodologies and provide the agencies with timely feedback to assist agencies in accurately calculating their spending requirements. SBA officials said they have provided feedback orally and through e-mails to the participating agencies about their methodology reports, but many agency program managers said that SBA has provided little feedback. By not providing such feedback, SBA is forgoing the opportunity to assist agencies in correctly calculating their program spending requirements and helping to ensure that they meet mandated requirements.\nMore significantly, the majority of the agencies did not include information consistent with a provision in SBA’s SBIR and STTR policy directives that specifies the act’s requirement for a methodology report from each agency. Specifically, the SBA policy directives state that the methodology report must include an itemization of each R&D program excluded from the calculation of the agency’s extramural budget and a brief explanation of why it is excluded. In our review, we found that two of the participating agencies—EPA and HHS—complied fully with the requirements because they included in their methodology reports an itemization of the programs excluded from the calculation of their extramural R&D budget and an explanation of why the programs were excluded for all 6 fiscal years in our review; and six agencies—DHS, DOD, DOE, DOT, NASA and NSF—did not fully meet these requirements for the 6 fiscal years in our review because their methodology reports either identified some excluded programs but not others that we identified or the reports omitted explanations for exclusions.\nAs a result, agencies submitted different information, including different levels of detail on their methodologies. For example, some agencies provided itemization of each R&D program excluded, including dollar amounts and statutory authority, as part of the calculation of the agency’s extramural budget and a brief explanation of why it is excluded, while other agencies only provided a brief explanation. SBA officials told us that most participating agencies’ methodology reports have changed little from year to year, so SBA does not raise questions about details of their methodologies. In the absence of guidance from SBA on the format in which the methodology reports are to be presented, DOD developed a methodology template that guides the calculation of DOD’s extramural R&D budget and in turn the programs’ spending requirements, including the identification of any R&D programs excluded from the basis for calculating their spending requirements and a brief explanation of why they are excluded. Without guidance on the format of methodology reports, participating agencies are likely to continue to provide SBA with broad, incomplete, or inconsistent information about their methodologies and spending requirements. Furthermore, without having more consistent information from agencies, it is difficult for SBA to comprehensively analyze the methodologies and determine whether agencies are accurately calculating their spending requirements.\nIn addition, for the agency annual report requirement, SBA has provided a template that asks agencies for the extramural R&D budget base used to calculate the SBIR or STTR spending requirements, but it does not ask for the specific calculations used to derive that budget base. Unlike the requirement set by law and SBA policy directives for methodology reports to include a description of their methodologies for calculating extramural R&D budgets, information on actual calculations, such as identifying exclusions, is not required for agency annual reports to SBA. However, because annual reports show the results of the previously described methodology including such information in the annual reports is important. By not requesting that agencies include calculations used to derive the budget base in its template, SBA has been receiving incomplete information from the participating agencies, which limits the usefulness of data the agency reports to Congress. SBA officials told us that participating agencies’ calculations of spending requirements have changed little from year to year, and so SBA does not raise questions about the calculations. SBA likewise does not request that agencies include information in their annual reports that would enable SBA to conduct better oversight, including information on (1) whether agencies met the mandated spending requirements, (2) the reasons for any noncompliance with these requirements, and (3) the agencies’ plans for meeting any noncompliance in future years. By including this information, SBA could more fully oversee the programs and provide more complete information to Congress.", "SBA has not consistently complied with the requirement for reporting its analysis of the agencies’ methodologies in its annual report to Congress, as required by the Small Business Act. Over the 6 years covered in our review, SBA reported to Congress for 3 of those, fiscal years 2006, 2007, and 2008. Furthermore, these reports contained limited analyses of the agencies’ methodologies, and some of the analyses were inaccurate. For example, SBA’s analysis was limited to a table attached to the annual report to Congress that often did not include information on particular agencies; SBA provided no other documentation showing the results of its analysis of the agency methodology reports. For example, in its fiscal year 2006 annual report, SBA concluded that all of the participating agencies complied with program requirements in calculating their extramural R&D budgets but did not present the basis for its conclusion. As noted earlier, our review showed that some participating agencies improperly excluded some extramural programs from their funding base calculation and did not consistently comply with SBA’s instructions in its policy directive to itemize the exclusions in their calculation of the R&D extramural budget for either the SBIR or STTR program. Without more comprehensive analysis and accurate information on participating agencies in SBA’s annual report, Congress does not have information on the extent to which agencies are reporting what is required by law or if they are under spending by, for example, taking improper exclusions.\nMoreover, SBA officials said they delayed submitting their annual reports to Congress for fiscal years 2009, 2010, and 2011 to reconcile significant inconsistencies the agency found between spending data submitted by participating agencies in their annual reports to SBA and data routinely collected in SBA’s automated system from agencies and awardees on SBIR and STTR awards made during the fiscal year. In commenting on a draft of this report in August 2013, SBA program officials said that the three reports had been consolidated into one report that was being reviewed by the Office of Management and Budget. The agency plans to submit the reports to Congress in 2013, making the data available to Congress on the programs 2 to 4 years after the end of the fiscal year.", "Changing the methodology to calculate the SBIR and STTR spending requirements based on each agency’s total R&D budget instead of each agency’s extramural R&D budget would increase the amount of each agency’s spending requirement for the programs, some much more than others, depending on the assumptions about how the funding base change is implemented. Also, it would increase the number of agencies that would be required to participate in the programs. Some agencies reported that such a change could have effects on their R&D programs and may create challenges.", "If the SBIR and STTR spending requirements under current law were applied to an agency’s total R&D budget rather than to the extramural R&D budget, the spending requirements for each agency would increase because their extramural R&D budget is a part of, and therefore smaller, than their total R&D budget. Table 3 shows a comparison of the agencies’ spending requirements for the SBIR and STTR programs in fiscal year 2011 under the current law, based on an agency’s extramural R&D budget, and this alternative methodology.\nAs shown in table 3, some agencies’ spending requirements would increase more than others. This is due to differences in the relative proportions of the extramural and intramural R&D budgets among agencies. Examples are as follows:\nNSF used almost its entire R&D budget for extramural R&D in fiscal year 2011 and was required to spend about $124 million on its SBIR program in that year. Its spending requirement would have increased slightly to $127 million—about a 3 percent increase—if the spending requirement were based on the total R&D budget instead of the extramural R&D budget. For NSF’s STTR program, the spending requirement in fiscal year 2011 would have increased about 3 percent—the same percentage increase as for SBIR.\nCommerce used a relatively small percentage of its total R&D budget—about 25 percent—for extramural R&D in fiscal year 2011, and its spending requirement for SBIR would have more than quadrupled from about $6 million to $26 million—333 percent—in fiscal year 2011 if the calculation methodology changed. While Commerce does not participate in the STTR program currently, it would have to participate in the STTR program if the calculation methodology changed. Its spending requirement would have been $3 million rather than zero.\nTo put these figures in perspective, if the funding percentage in law were applied to the total R&D budget instead of the extramural budget, NSF’s spending on SBIR in 2011 would have increased to about 2.6 percent of its extramural R&D budget, while Commerce’s spending would have increased to about 10.7 percent of its extramural R&D budget. For the STTR program, if the funding percentage in the law were applied to the total R&D budget instead of the extramural budget, NSF’s spending on STTR would have increased to about 2.7 percent of the extramural R&D budget, and Commerce’s spending would have increased from zero.\nIn addition to the changes in the dollar amount of funds available for STTR and SBIR spending requirements, agencies said that changing the base for calculation of budgets for these programs would affect agency operations, depending on assumptions about how the funding base change is implemented. For example, changing the base would increase SBIR and STTR budgets and could result in reductions in certain types of intramural R&D with corresponding reductions in full-time equivalent staffing of these programs. In addition, some agency officials said there were potential changes in the content of the agency’s extramural R&D effort because of changes in the types of businesses that receive grants and contracts.\nIn addition to applying the same percentages as used under current law to the total R&D budget, we analyzed the potential changes to spending requirements using two other alternative scenarios that apply different percentages to the total R&D budget. In these scenarios, some agencies would have experienced an increase in spending requirements, while others would have experienced a decrease. Appendix II contains a discussion of the alternate scenarios and the results of our analysis.", "Changing the calculation methodology to the total R&D budget would also increase the number of agencies that would be required to participate in the SBIR and STTR programs, assuming the same dollar thresholds for participating in the programs were applied to the total R&D budget rather than only the extramural R&D budget. For example, our analysis of the total R&D budget for all federal agencies for fiscal year 2011 indicates that\nFor SBIR, two additional agencies—the Departments of Veterans Affairs (VA) and the Interior—would have been required to participate in fiscal year 2011 if total R&D budgets had been the criteria. These agencies reported total R&D budgets to SBA in excess of $100 million, which is the threshold for participation in the SBIR program. Adding these two agencies to participating SBIR agencies in fiscal year 2011 with the total R&D budget as the base, would have increased total federal SBIR spending by $48 million.\nFor STTR, three additional agencies—Commerce, USDA, and VA— would also have been required to participate in the STTR program for fiscal year 2011 if total R&D budgets had been the criteria for meeting the threshold. These agencies reported total R&D budgets in excess of $1 billion, which is the threshold for participation in the STTR program. Adding these three agencies to STTR in fiscal year 2011 with the total R&D budget as the base would have increased total STTR spending by $13 million.\nTable 4 shows these agencies’ R&D budgets and what their SBIR and STTR spending requirements for fiscal year 2011 would have been if the spending methodology was changed to the total R&D budget.", "The participating agencies’ cost of administering the SBIR and STTR programs cannot be determined because the agencies neither collect that information nor have the systems to do so. Neither the authorizing legislation for the programs nor SBA guidance directs agencies to track and estimate all administrative costs, and neither the law nor SBA guidance defines these administrative costs. Estimates agencies provided indicated that the greatest amounts of administrative costs in fiscal year 2011 were for salaries and expenses, contract processing, outreach programs, technical assistance programs, support contracts, and other purposes. With the implementation in 2013 of a pilot program allowing agencies under certain conditions to use up to 3 percent of SBIR program funds for certain administrative costs, SBA expects to require agencies in the pilot program to track and report the spending of that 3 percent but not all of their administrative costs.", "The participating agencies have not comprehensively identified or tracked the cost of administering the SBIR and STTR programs for several reasons. Agency officials said that the costs cannot be determined because the agencies do not have the systems for collecting the data. Neither the authorizing legislation for the programs nor SBA guidance directs agencies to track and estimate administrative costs, and neither the law nor SBA guidance defines these administrative costs. We found that the amount of funds that participating agencies spent administering the SBIR and STTR programs—and the way the funds were used— cannot currently be estimated because the agencies have not identified or tracked many categories of program administrative costs. Agency officials said an important reason that administrative costs for the SBIR and STTR programs are not comprehensively identified or tracked is that using SBIR or STTR budgets to fund administrative costs has been generally prohibited. The Small Business Act generally prohibits agencies, except for DOD, from using any of their SBIR or STTR budgets to fund administrative costs of the programs, including the cost of salaries. Agencies reported that administrative costs of the programs were paid out of budget accounts other than the SBIR and STTR accounts.\nIn addition, agency officials told us that the SBIR and STTR programs cut across many agency programs and disciplines and that the staff supporting the programs may work on a full-time or part-time basis, making identification and estimation of costs more difficult. For example, DOE reported the administrative costs of the SBIR and STTR program office only, but pointed out that the programs involved the part-time efforts of 70 to 100 additional people throughout DOE, including technical program managers, grants specialists and contracting officers, whose costs were not estimated.\nSimilarly, HHS officials said it would be an exceptionally complex calculation to determine how much is currently spent on the administrative costs of the SBIR or STTR program because a large number of HHS staff work a fraction of their time on these programs. Officials in HHS’ National Institutes of Health (NIH), which accounts for the majority of HHS’ SBIR and STTR R&D programs, said there were a small number of full-time staff on these programs; rather, NIH officials said that most staff managing the programs do so as a collateral part of their duties and are not required to track the portion of their time spent on the programs. NASA reported that its budget estimate included a separate line for SBIR and STTR program management that covers personnel costs, travel, and procurement costs. NASA officials noted, however, that other costs to operate the programs are not included in this budget estimate, including the cost of NASA technical experts to review proposals and the cost of technical and contracting representatives interacting with small businesses. NASA officials did provide a rough estimate for the number of hours and full time equivalent staff spent by NASA technical reviewers and contracting personnel in a typical year as 25 to 38 full-time equivalent staff. The officials noted that the estimate does not include hours spent by others involved: mission directorate representatives, center chief technologists, contracting officers, support contractors, procurement support, and legal support. They also said that they did not have estimates for such categories as support contracts, outreach, and technical assistance.", "In response to our request for information on administrative costs for fiscal year 2011, 9 of the 11 participating agencies provided us with estimates of a portion of their costs to administer the SBIR and STTR programs in fiscal year 2011. Of the administrative costs estimated by these 9 agencies, the greatest amounts were for salaries and expenses, contract processing costs, outreach programs, technical assistance programs, and support contracts, and the “other” category. In some cases, officials for some agencies identified having costs in these categories or several others but provided no estimates of the amounts. The agency with the most administrative costs estimated in the most categories for 2011 was DOD, which provided estimates in 10 cost categories.\nOf the 11 participating agencies, Commerce and HHS did not provide estimated administrative costs or identify having administrative costs in any category.\nIn response to our data requests and questions regarding fiscal year 2011, the 9 agencies provided some estimates, identified unestimated costs, or had no response in many of the costs categories for which we requested data. An overview of the information we obtained is contained in appendix III.", "As noted earlier, the National Defense Authorization Act for Fiscal Year 2012 created a pilot program beginning in fiscal year 2013 that would allow up to 3 percent of SBIR program funds to be used for administrative costs, the provision of outreach and technical assistance and contract processing, and other specified purposes. Agencies are otherwise generally not permitted to spend SBIR or STTR program funds on administrative costs.\nAccording to SBA’s policy directive, funding under this pilot is not intended to and must not replace current agency administrative funding in support of SBIR activities. Rather, funding under this pilot program is intended to support additional initiatives. SBA issued its guidance for the pilot program as part of its revised policy directive of August 2012 and requires agencies to submit annual work plans to SBA for approval on spending priorities, amounts, milestones, expected results, and performance measures before agencies can begin the pilot.guidance also directs agencies to report to them on the use of the funds allowed to be spent on administrative costs under the pilot program authority in their annual reports. However, agencies will not identify or track all of their administrative costs so SBA will not be able to report to Congress on total administrative costs. Of the 11 agencies participating in The SBA the SBIR program, 10 have submitted plans for the pilot program to SBA. SBA officials told us that, as of August 2013, all 10 of the agencies’ pilot plans had been approved for implementation in the current fiscal year.", "To help small businesses develop and commercialize innovative technologies, federal agencies have awarded billions of dollars to such businesses under the SBIR and STTR programs, which SBA oversees. In its role overseeing the programs, SBA has issued policy directives that provide agencies with guidance on the implementation of the programs. Agencies participating in the programs are required by law to spend a specific minimum portion of their extramural R&D budgets on these awards and to report certain information related to their spending to SBA. In turn, SBA is to review this information and report on it annually to Congress. However, participating agencies’ compliance with the programs’ spending requirements is unclear because some agencies improperly calculated their spending requirements and—in the absence of specific guidance from SBA when their appropriations were delayed— agencies used differing methodologies for calculating these requirements. Without guidance from SBA, agencies will likely continue to calculate spending requirements in differing ways, which will continue to raise questions about their compliance. In addition, most agencies’ reports to SBA about their methodologies for calculating their spending requirements did not contain key details, such as the identification of any R&D programs excluded from the basis for calculating their spending requirements and a brief explanation of why they are excluded, which is required both by law and SBA policy directives. Agencies also submitted differing information in these reports because SBA’s policy directives do not specify the format for the reports. Without guidance on the format of methodology reports, participating agencies are likely to continue to provide SBA with broad, incomplete, or inconsistent information about their methodologies and spending requirements. Furthermore, without more complete and consistent information from agencies, it is difficult for SBA to comprehensively analyze the methodologies and whether agencies are accurately calculating their spending requirements. Moreover, according to agency officials, SBA provided little timely feedback about the agencies’ methodology reports. By not providing such feedback, SBA is forgoing the opportunity to assist agencies in correctly calculating their program spending requirements and helping to ensure that they meet mandated requirements.\nIn addition, for the participating agencies’ annual report requirement, SBA has provided a template requesting the extramural R&D budget base that agencies used to calculate the programs’ spending requirements, but the template does not request the specific calculations agencies used to derive those requirements. By not requesting such calculations, SBA has been receiving inconsistent and incomplete information from the participating agencies, which limits the usefulness of data it reports to Congress. SBA likewise does not request that agencies include information in their annual reports that would enable better oversight, including information on (1) whether agencies met the mandated spending requirements, (2) the reasons for any noncompliance with these requirements, and (3) the agencies’ plans for meeting any noncompliance in future years. Finally, SBA’s annual reports to Congress have been years late or contained little analysis of the methodology reports agencies submitted to describe how they calculated their spending requirements. Without more rigorous oversight by SBA and more timely and detailed reporting on the part of both SBA and participating agencies, it will be difficult for SBA to ensure that intended benefits of these programs are being attained and that Congress receives critical information to oversee these programs.", "To ensure that participating agencies and SBA comply with spending and reporting requirements for the SBIR and STTR programs, we recommend the SBA Administrator take the following four actions:\nProvide additional guidance on how agencies should calculate spending requirements when agency appropriations are received late in the fiscal year and the format agencies are to include in their methodology reports.\nProvide timely annual feedback to each agency following submission of its methodology report on whether its method for calculating the extramural R&D budget used as the basis for the SBIR and STTR spending requirements complies with program requirements including an itemization of and an explanation for all exclusions from the basis for the calculations.\nDirect participating agencies to include in their annual reports the calculation of the final extramural R&D budget used as the basis for their SBIR and STTR spending requirements and, if they did not meet the spending requirements, the reasons why not and how they plan to meet the spending requirements in the future.\nProvide Congress with a timely annual report that includes a comprehensive analysis of the methodology each agency used for calculating the SBIR and STTR spending requirements, providing a clear basis for SBA’s conclusions about whether these calculations meet program requirements.", "We provided copies of our draft report to the Secretaries of USDA, Commerce, DOD, Education, DOE, HHS, DHS, and DOT; the Administrators of SBA, EPA, and NASA; and the Director of NSF for review and comment. In response, six of the agencies—USDA, Education, DOE, EPA, NASA, and NSF—stated by e-mail that they had no technical or written comments. Five other agencies—Commerce, DHS, DOD, DOT, and HHS—provided technical comments by e-mail, which we incorporated into the draft report as appropriate.\nSBA provided technical comments on the draft report and officials of SBA’s Office of Technology said by e-mail through the Office of Congressional and Legislative Affairs that they agree with the findings of the report and will work to implement the recommendations. Specifically, in response to our recommendation to provide additional guidance on how agencies should calculate spending requirements, SBA said it plans a training session for all SBIR and STTR agencies to provide guidance and uniformity in the calculation of extramural budgets. In response to our finding that SBA is not receiving timely methodology reports from the agencies in order to provide feedback, SBA said it has strongly encouraged the agencies to submit their methodologies to SBA in a timely manner. We incorporated SBA’s technical comments into the report as appropriate.\nWe are sending copies of this report to the Secretaries of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, and Transportation; the Administrators of the Small Business Administration, the Environmental Protection Agency, and the National Aeronautics and Space Administration; the Director of the National Science Foundation; the appropriate congressional committees; and other interested parties. In addition, this 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) 512-3841 or ruscof@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 IV.", "Figures 2 through 12 compare reported spending requirements of the 11 agencies participating in the Small Business Innovation Research (SBIR) program with their reported spending over fiscal years 2006 to 2011.\nFigures 13 through 17 compare reported spending requirements of the 5 agencies participating in the Small Business Technology Transfer (STTR) The program with their reported spending over fiscal years 2006 to 2011.Department of Homeland Security also had an STTR program in FY 2006 and 2007. However, the agency was not required to participate, because its extramural R&D budget for each of those years was actually below the $1 billion threshold required for participation in the STTR program. The agency stated it had inadvertently used an incorrect extramural budget amount to determine its participation requirement. Since the agency was not required to participate in STTR and therefore had no spending requirement, no figure is included here for its STTR expenditures.", "To calculate the expenditure requirements for the SBIR and STTR programs, we used two key variables: (1) the “base,” which is the research and development (R&D) funding from which the requirement is calculated, and (2) the percentage that is applied to that base. For example, for fiscal years 2006 to 2011, the base for SBIR and STTR funding is the extramural R&D budget, and the mandated percentages applied to that base were 2.5 and 0.3 percent, respectively. We tested three alternative scenarios that vary the percentage applied to the total R&D budget to illustrate the potential effects of changing the methodology to calculate agencies’ SBIR and STTR expenditure requirements. The scenarios analyzed were as follows:\nFor scenario 1, we applied the same percentages for the expenditure requirements under the current law to the total R&D budget instead of the extramural R&D budget.\nFor scenario 2, using fiscal year 2006 numbers as our base, we determined the percentage to apply to the total R&D budget of all participating agencies for fiscal years 2006 through 2011 that would hold the total expenditure requirement constant for the programs.\nFor scenario 3, using fiscal year 2006 numbers as our base, we determined the percentage to apply to the total R&D budget of each individual agency for fiscal years 2006 through 2011 to hold each individual agency’s expenditure requirement constant for the programs.\nSee the details of the three scenarios and current law in table 5, and their effects on spending requirements are in table 6.", "The following describes the administrative cost data obtained, identified, or not available from the participating agencies for fiscal year 2011.\nDepartment of Commerce (Commerce): Officials with the two participating subunits, the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration (NOAA), said that the administrative costs for the program included salaries and expenses but that they did not have an estimate of them. The officials said the agencies did not specifically track administrative costs. Such costs were not allowed to be charged against the SBIR funds.\nDepartment of Homeland Security (DHS): Officials in DHS’ Science and Technology Directorate, which is one of two subunits managing the SBIR program at DHS, provided a partial list of administrative costs for the fiscal year. These included salary, travel, and other costs (e.g. contracting fees, support contracts and audit costs) that were estimated at $962,000. Categories of costs that the agency identified but did not estimate included salaries and expenses of other DHS supporting staff and contractors. DHS officials in the Science and Technology Directorate said that the directorate’s management and administrative budget began fully funding the administrative costs for SBIR in 2011; previously, these costs were funded from the extramural R&D budget of the directorate. The other DHS unit with an SBIR program, the Domestic Nuclear Detection Office did not identify or estimate administrative costs.\nDOD: Agency officials said that while DOD had not tracked administrative costs of the SBIR or STTR programs through 2011 agency-wide, such costs had been reported to various extents by the 13 DOD subunits that participate in one or both of the programs. Based on reports from some subunits, DOD’s partial administrative costs totaled $30.2 million. The 13 DOD subunits varied in their identification of administrative costs. Some identified none; some identified a few; and others identified many categories but did not provide estimates for each cost category. DOD Office of Small Business Programs officials stated that the department did not track “non-legislated administrative expenses,” which were described as the program administrative costs before the start of the administrative costs pilot program.\nDepartment of Energy (DOE): Agency officials in the DOE Office of Science, which manages most of the SBIR and STTR programs in DOE, said administrative costs for these programs were in three categories: salaries and benefits, support contracts, and travel, and totaled $1.2 million in fiscal year 2011. According to these officials, these costs did not include personnel expenses for over 70 specialists who spend a fraction of their time on the programs.\nDepartment of Transportation (DOT): Agency officials said administrative costs in fiscal year 2011 were estimated at $363,000, primarily for salaries and expenses but also including travel and other smaller categories. These program managers said this represents part of its administrative costs that directly support the SBIR program’s management but not other support activities like procurement and legal services that are provided by other DOT subunits.\nDepartment of Education (Education): Agency officials estimated administrative costs for fiscal year 2011 totaled $479,000, of which $4,000 was for travel, $174,000 for salaries and benefits of department employees who administer the program, including preparing solicitations, running competitions, performing oversight, congressional reporting, and monitoring awards. Officials said the 2011 total included $38,000 for salary and benefits of the department contracts and acquisitions management staff, and $263,000 for salary and benefits of personnel assisting with application reviews.\nEnvironmental Protection Agency (EPA): Agency officials said that known administrative costs for fiscal year 2011 were $953,000, which included $533,000 for the salaries and expenses of four FTE staff that run the program, $350,000 for external peer review of SBIR proposals at various funding phases, and $70,000 for a contract to provide program support. Officials said there were other administrative costs that were associated with staff that also manage other grant programs and that these costs were not easily separated by program and they were not tracked.\nDepartment of Health and Human Services (HHS): Agency officials said they do not track or report the amount of administrative costs for the SBIR and STTR programs. They said it would be very difficult to determine how much is currently spent on the administrative costs of the program. HHS officials reported that since authorizing legislation did not allow SBIR/STTR funds to be spent on administration, funding for administrative costs, such as salary and expenses, training and travel, comes from other accounts.\nNational Aeronautics and Space Administration (NASA): Agency officials estimated administrative costs for certain categories as roughly $11.9 million in fiscal year 2011, which included, among other things, $8.6 million for procurement costs, about $3 million for salaries and expenses, and $151,000 for travel. According to these officials, other identified unestimated and untracked costs to administer the SBIR and STTR programs include the costs of technical experts within NASA reviewing proposals, the cost of holding review panels, and the cost that technical and contracting representatives spend interacting with companies seeking and receiving funding.\nNational Science Foundation (NSF): Agency officials said they identified administrative costs of $4 million for the SBIR and STTR programs. These include 10 FTE within the agency costing approximately $2 million in salaries and benefits and $2 million NSF designates from its extramural research and spends for SBIR and STTR administrative costs, primarily for contracted technical and administrative support. NSF has contracted for this support for many years because of the high volume of actions in the program and the time frames that need to be met in the process. NSF officials said there were other administrative costs, including the efforts of federal staff that devote substantial time to the programs, but these have not been tracked or estimated.\nU.S. Department of Agriculture (USDA): Agency officials said that in fiscal year 2011 administrative costs for SBIR included $184,000 for experts who provided peer review of project proposals to cover such costs as honoraria and travel. Officials said USDA does not break out administrative costs for the SBIR program beyond honoraria and travel.", "", "", "In addition to the individual named above, Tim Minelli, Assistant Director; Hilary Benedict; Antoinette Capaccio; Cindy Gilbert; Richard Johnson; Cynthia Norris; John Scott; Ilga Semeiks; and Vasiliki Theodoropoulos made key contributions to this report." ], "depth": [ 1, 1, 2, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_title h3_title", "h0_full h3_full", "h0_title h1_title h3_title", "h0_full h1_full", "h3_full h1_full", "", "", "", "h2_full", "h2_full", "h2_full", "", "h3_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How did agencies violate spending requirements in the SBIR and STTR programs?", "What parts of their spending did not comply?", "How does SBA guidance assist in noncompliance with spending requirements?", "How did this affect calculations?", "How will this guidance continue to affect the agencies?", "What agencies have not complied with reporting requirements?", "How has report detail been noncompliant?", "How does the SBA allow for this?", "How have reports on agencies been noncompliant?", "How does this fall short of reporting requirements?", "How has SBA's annual report been noncompliant?", "Why could agency administration cost not be determined?", "How were these costs then provided to the GAO?", "How does the SBA plan to change tracking of program funds?", "How did the Small Business Act meet federal R&D needs?", "How does this impact agencies with extramural R&D budgets?", "How is this information reported?", "What agencies participate in SBIR and STTR programs?", "How did the 2011 reauthorization affect the GAO?", "How did the GAO perform this review?", "How did the GAO collect information for this report?" ], "summary": [ "Using data agencies had reported to the Small Business Administration (SBA), GAO found that 8 of the 11 agencies participating in the Small Business Innovation Research (SBIR) program and 4 of the 5 agencies participating in the Small Business Technology Transfer (STTR) program did not consistently comply with spending requirements for fiscal years 2006 to 2011.", "In calculating their annual spending requirements for these programs, some agencies made improper exclusions from their extramural research and development (R&D) budgets and used differing methodologies.", "SBA, which oversees the programs, provided guidance in policy directives for agencies on calculating these requirements, but the directives do not provide guidance on calculating the requirements when appropriations are late and spending is delayed, resulting in agencies using differing methodologies.", "This made it difficult to determine whether agencies' calculations were correct.", "Without further SBA guidance, agencies will likely continue calculating spending requirements in differing ways.", "The participating agencies and SBA have not consistently complied with certain program reporting requirements.", "For example, in their methodology reports to SBA, the agencies submitted different levels of detail on their methodologies, such as the programs excluded from the extramural budget and the reasons for the exclusions.", "SBA's guidance states that the methodology reports are to itemize each R&D program excluded from the calculation of the agency's extramural budget and explain why a program is excluded but does not specify the format of the methodology reports to ensure consistency.", "Also, SBA's annual reports to Congress contained limited analysis of the agencies' methodologies, often not including information on particular agencies.", "Without more guidance to agencies on the formats of their methodology reports and more analysis of the contents of those reports, SBA cannot provide Congress with information on the extent to which agencies are reporting what is required.", "Further, SBA has not submitted an annual report on these programs for fiscal years 2009 to 2011 but plans to submit the reports to Congress later in 2013--making the data available to Congress on the programs 2 to 4 years late.", "The agencies' cost of administering the programs could not be determined because the agencies have not consistently tracked that cost as they are not required to by the authorizing legislation of the programs.", "Nine of the 11 agencies in SBIR provided GAO with estimates of some of these costs for fiscal year 2011--most of which were for salaries and expenses.", "With the start of a pilot program allowing agencies to use up to 3 percent of SBIR program funds for administrative costs in 2013, SBA plans to require agencies to track and report administrative costs paid from program funds.", "The Small Business Act established the SBIR and STTR programs to use small businesses to meet federal R&D needs.", "The law mandates that agencies, with extramural R&D budgets that meet the thresholds for participation, must spend a percentage of these annual budgets on the SBIR and STTR programs.", "The agencies are to report on their activities to SBA and, in turn, SBA is to report to Congress.", "Eleven agencies participate in SBIR, and five of them also participate in STTR.", "The act's 2011 reauthorization mandates that GAO review SBA's and the agencies' compliance with spending and reporting requirements, and other program aspects, for fiscal years 2006 to 2011.", "GAO determined (1) the extent to which participating agencies complied with spending requirements and how the agencies calculated these requirements, (2) the extent to which participating agencies and SBA complied with certain reporting requirements, (3) the potential effects of basing the spending requirements on an agency's total R&D budget, and (4) the cost to participating agencies of SBIR and STTR program administration.", "GAO reviewed agency calculations of spending requirements and the required reports and interviewed SBA and participating agency program and financial officials." ], "parent_pair_index": [ -1, 0, -1, 2, 2, -1, -1, 1, -1, 3, -1, -1, 0, -1, -1, 0, 1, 0, -1, 4, 5 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 4, 4, 4, 0, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "The Global Threat of Infectious Diseases", "Tuberculosis", "Global TB Statistics6", "HIV/AIDS and TB", "Drug Resistance to TB Treatments", "Multi-Drug Resistant TB (MDR-TB)", "Extensive Drug Resistant (XDR)-TB", "U.S. Global TB Efforts", "U.S. Agency for International Development", "U.S. Centers for Disease Control and Prevention (CDC)", "Department of State", "International TB Efforts", "World Health Organization and Implementing Partners", "DOTS-Plus", "Green Light Committee", "Stop TB Partnership", "Global Drug Facility (GDF)", "The Global Fund to Fight AIDS, Tuberculosis, and Malaria", "Bill and Melinda Gates Foundation", "Issues for Congress", "Strengthen Health Systems", "Address Health Worker and Health Center Shortages", "Integrate HIV/AIDS and TB Programs", "Provide Additional Funds for Research", "Treatments", "Vaccines", "Diagnostic Tools", "Consider Involuntary Detention", "Address Poverty", "Appendix. Tables and Figures" ], "paragraphs": [ "", "In January 2000, the National Intelligence Council (NIC) released a report asserting that, \"[n]ew and reemerging infectious diseases will pose a rising threat to U.S. and global security over the next 20 years. These diseases will endanger U.S. citizens at home and abroad, threaten U.S. armed forces deployed overseas, and exacerbate social and political instability in key countries and regions in which the United States has significant interests.\" NIC cited a number of factors that heighten the infectious diseases threat, including increasing drug resistance, slow development of new antibiotics, urban sprawl, environmental degradation, and the growing ease and frequency of cross-border movements.\nOver the past decade, there has been considerable debate about countries' abilities to contain and prevent infectious disease outbreaks. In 2002, the international community struggled to identify an unknown infectious disease that rapidly spread across 31 countries, infected more than 8,400 people, and killed 813 of those who contracted it. In 2003, when the disease was ultimately contained, scientists called the agent severe acute respiratory syndrome (SARS). That same year, Influenza A/H5N1 (bird flu) reemerged and spread to more than 50 countries. As of April 17, 2008, 381 people have contracted H5N1, 240 of whom died. About 63% of those who contracted the disease have died.", "TB is one of the most widespread infectious diseases in the world. The World Health Organization (WHO) estimates that someone contracts TB every second and that about one-third of all people in the world are currently infected with TB; most of these cases, however, are latent. TB is a highly contagious disease that spreads through the air when infectious people cough, sneeze, talk or spit. People with TB are only infectious when the bacteria is active. Those with active TB who do not receive treatment and are not properly quarantined infect, on average, between 10 and 15 people every year. TB can lie dormant in an infected person for years and may not cause any symptoms or illness. The TB bacteria most often becomes active and causes sickness when one's immune system is weakened, such as with human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS).", "Although TB is curable, WHO estimates that in 2006 (the year for which the most current data are available), there were 14.4 million prevalent cases of TB, including some 9.2 million people who contracted the disease that year. About 80% of annual TB cases occur in 22 high-burden countries (see Figure A-1 in the Appendix ). All but two of those high-burden countries were in Africa or Asia. More than 50% of all new TB cases occurred in five countries (in descending order of TB cases): India, China, Indonesia, South Africa, and Nigeria. The disease killed an estimated 1.7 million people in 2006, including 230,857 who were also infected with HIV/AIDS (see Table A-1 in the Appendix ).\nAlthough southeast Asia had the highest number of new TB cases, incidence and mortality per capita rates were considerably higher in sub-Saharan Africa. Among the 15 countries with the highest estimated TB incidence rates, 13 were in Africa, due in part to relatively high rates of HIV co-infection (see Table A-2 in the Appendix ). In 2006, about 3.10 million people in Southeast Asia were newly infected with TB (109 per 100,000 people) and about 2.81 million in sub-Saharan Africa (363 per 100,000). The actual number of TB-related deaths and the mortality per capita rates were higher in sub-Saharan Africa than in Southeast Asia. About 514,699 people died of TB in southeast Asia (30 per 100,000 infected), while some 639,089 people died of TB in sub-Saharan Africa (83 per 100,000 infected). WHO asserts that a number of factors contribute to Africa's relatively high per capita rate. Key factors include weak health systems, low quality health care, poor access to health facilities, insufficient staffing and other human resource constraints, ill-equipped and substandard laboratory services, and little collaboration between TB and HIV programs.", "In areas with significant HIV/AIDS prevalence, the virus is contributing to rising TB prevalence. People living with HIV/AIDS are at greater risk of contracting TB because of their weakened immunity. Each disease accelerates the advancement of the other. TB considerably shortens the survival of people with HIV/AIDS and quickens the progression of HIV into AIDS. Meanwhile, HIV/AIDS is the most potent risk factor for converting latent TB into active TB. Many people infected with HIV/AIDS in developing countries develop TB as the first manifestation of AIDS. The two diseases represent a deadly combination, since they are more destructive together than either disease alone. Other key facts about HIV/AIDS-TB co-infection include:\nIn HIV-positive people, TB is harder to diagnose, progresses faster, is almost always fatal if undiagnosed or left untreated, and kills up to half of all AIDS patients worldwide; People with HIV/AIDS are up to 50 times more likely to develop TB in a given year than HIV-negative people; and About 90% of people living with HIV/AIDS die within four to twelve months of contracting TB if they are not treated for TB.\nIn sub-Saharan Africa, HIV/AIDS and TB co-infection is becoming a growing problem. In 2006, about 85% of all HIV-positive people with TB were found in Africa. That year, an estimated 709,000 people were co-infected with HIV/AIDS and TB, some 606,000 of whom were African. About 205,000 of the 231,000 co-infected patients who died from TB were African, representing 89% of those deaths. In countries with high HIV/AIDS prevalence, HIV/TB co-infection poses a significant health challenge. In Swaziland, for example, 75% of TB patients were HIV-positive. South Africa, with 0.7% of the world's population and the most number of people living with HIV/AIDS, had 28% of all HIV/TB co-infection cases and 33% of HIV-positive cases in sub-Saharan Africa.\nIn many high-burden countries, particularly in sub-Saharan Africa, TB patients are not yet routinely tested for HIV, and HIV patients are not yet routinely tested for TB. HIV testing for TB patients has increased, however, between 2002 and 2006. In 2002, nine countries reported testing 21,806 TB cases for HIV, representing less than 1% of notified TB cases. By 2006, 112 countries had reported testing 687,174 patients for HIV, equivalent to about 12% of notified TB cases. In Africa, 287,945 patients were tested for HIV—some 22% of all notified TB cases. In Africa, HIV testing of TB patients increased from 7.5% to 35% from 2004 to 2006. The testing increase was driven primarily by Kenya and South Africa. In spite of improvements in HIV testing in Africa, the region still lagged behind other countries. On average, 56% of TB patients were tested for HIV outside of Africa.", "", "MDR-TB are TB organisms that do not respond to at least two first-line drugs. Drug resistance mostly arises from poor treatment adherence or incorrect drug usage. Adherence means taking accurately prescribed drugs in the right amounts at the correct time. If the wrong drugs or the wrong combinations of drugs are prescribed, providers fail to ensure that they are taken correctly on schedule, or patients do not take their medicine for the full term, TB may become resistant to the drugs.\nThe development of MDR-TB is particularly troubling to scientists, because MDR-TB carriers can transmit resistant forms of TB to others. MDR-TB is transmissible, even among those who have never had TB. Research has indicated that patients are less likely to complete regimens for treatment-resistant forms of TB, in part, because resistant forms take longer to cure. Non-resistant forms of TB take between six and nine months to cure, while MDR-TB takes about two years to cure. MDR-TB treatments are also more toxic, more expensive, often of limited availability in resource-limited settings, and generally less effective, especially among HIV-positive people. If patients adhere to treatment regimens, cure rates for non-resistant TB range between 80% and 95%; cure rates for MDR-TB range between 50% and 60%.\nWHO advises that health care providers treat MDR-TB patients in separate facilities than those with HIV/AIDS. Separating MDR-TB patients from HIV/AIDS\npatients can be particularly challenging in resource-limited settings, where hospitals are frequently overcrowded, ill-equipped, and unable to house individuals for the entire treatment term. In areas with high HIV-prevalence, efforts to care for MDR-TB patients separately from HIV/AIDS patients are often complicated by the high proportion of hospital beds filled with HIV/AIDS patients.\nIn February 2008, WHO released a report on TB drug resistance that summarized findings from surveys conducted between 2002 and 2006 in 81 countries. Based on those surveys, WHO estimates that almost 490,000 MDR-TB cases emerged in 2006, representing about 5% of all new TB cases—though MDR-TB rates varied widely from 0% in some western European countries to over 35% in some former Soviet states. Among the 490,000 MDR-TB cases, 285,718 were new cases and 203,230 had been previously treated.\nWHO estimated that, of the countries for which adequate data exist, China, India, and Russia are estimated to have the highest number of MDR-TB cases. China and India hold about 50% of all MDR-TB cases and Russia comprises another 7%. Russia has the greatest proportion of MDR-TB cases among new ones, however. About 13% of all new TB cases were MDR-TB, 19% of all TB cases were MDR-TB, and almost 50% of previously treated TB cases were identified as MDR-TB. Although no other HBC reported equally high MDR-TB rates, a number of Eastern European countries are estimated to have greater proportion of MDRT-TB prevalent rates. WHO has identified 27 countries, which together account for about 86% of all global MDR-TB cases; 15 of them are in Eastern Europe (see Figure A-1 and Table A-3 in the Appendix ).\nAlthough WHO's report provided greater insight into the prevalence of drug resistant forms of TB, little is known about resistance in Africa. The findings included in the report were estimated to have measured about one-half of all drug-resistant TB cases, because the surveys were conducted only in those countries with the capacity to conduct drug resistance surveys. Such capacity remains limited in Africa. Findings from six countries in sub-Saharan Africa were included in the analysis (Cote d'Ivoire, Ethiopia, Madagascar, Rwanda, Senegal, and Tanzania). Data from South Africa were included in the illustrations and tables throughout the report, but not in the analysis, because WHO used a different methodology to analyze data previously collected from South Africa.\nBased on available data, WHO estimates that in 2006, some 2% of all TB cases were MDR-TB in Africa, 7% in the Western Pacific Region, and 19% in Eastern Europe (see Table A-4 in the Appendix ). WHO asserts that although it can use available data to approximate the global burden of MDR-TB, it cannot detect global changes in MDR-TB prevalence, because data in many high-burden countries are unavailable, incomplete, and/or have only recently begun to be compiled. The organization can, however, extrapolate trends in key areas. WHO found that MDR-TB cases declined in China and the United States; were stable in Thailand, some parts of Vietnam, and three Baltic countries; and increased in the Republic of Korea and Peru. In Peru, a decline in TB notification rates suggests weaknesses in TB control. In Korea, the TB burden is shifting to the elderly and the number of MDR-TB cases among new TB cases is increasing. Two regions in the Russian Federation are showing increases in the proportion of MDR-TB among new cases at a very rapid rate, while the TB notification rate in those regions is falling slowly.\nWHO has indicated that similar outbreaks of drug resistance with associated high mortality are likely occurring in other African countries but are going undetected because of insufficient laboratory capacity. MDR-TB patients are not yet routinely checked for HIV/AIDS in Africa, though they are extremely susceptible to the disease. Botswana, Mozambique, and South Africa are reportedly the only countries in sub-Saharan Africa that routinely test drug-resistant TB cases for HIV. According to the latest available data, in 2006, almost 90% of new MDR-TB cases that occurred in the three countries were found in high HIV-prevalent settings.", "MDR-TB is considered XDR-TB when it becomes resistant to three or more of the six classes of second-line drugs. In high-quality health facilities, XDR-TB treatment is successful in 30% of the cases. In low-resource settings, XDR-TB is almost always fatal. WHO is uncertain about the extent of XDR-TB prevalence, in large part because drug resistance testing to second-line drugs is not available in most high-burden countries. The majority of countries that reported XDR-TB cases to WHO were low-burden countries and do not reflect the global magnitude of the phenomenon. WHO estimates that XDR-TB is widespread, with 45 countries having reported at least one case.\nA survey conducted by WHO and the Centers for Disease Control and Prevention (CDC) on data from 2000-2004 found that XDR-TB occurs in all regions of the world, but most frequently in the countries of the former Soviet Union and Asia. In the United States, 4% of MDR-TB cases met the criteria for XDR-TB. In Latvia, a country with one of the highest rates of MDR-TB, 19% of MDR-TB cases met the XDR-TB criteria.\nConcern about the spread of XDR-TB rose in May 2006 when an outbreak caused several deaths in Kwazulu-Natal, South Africa. Many health experts were alarmed by the high mortality rates. South African officials invited CDC and WHO to assess the situation. Five hundred forty-four patients were studied; 221 were diagnosed with MDR-TB, including 53 cases determined to be XDR-TB. Forty-four of the 53 XDR-TB cases were tested for HIV/AIDS; all were HIV/AIDS-positive. Only one of the 53 patients with XDR-TB survived. On average, the 52 patients died within 25 days, including those who received anti-retroviral drugs.\nWHO has indicated that similar outbreaks of drug resistance with associated high mortality are taking place in other African countries, but going undetected because of insufficient laboratory capacity. HIV/AIDS patients are not yet routinely checked for TB in Africa (except in Botswana, Mozambique, and South Africa), though they are extremely susceptible to the disease. According to latest estimates, 996 of 17,615 MDR-TB cases in South Africa were identified as XDR-TB, representing some 5.6% of all MDR-TB cases. XDR-TB cases were considerably higher in Kwazulu-Natal, with some 14% (656 cases) of all MDR-TB cases identified as XDR-TB. Some observers believe more undetected cases may exist in the country, asserting that testing results are often inaccurate, testing methods are outdated, and many patients die before they are diagnosed.\nOn January 16, 2008, the Government of Botswana confirmed that 100 people were diagnosed with MDR-TB and an additional two were diagnosed with XDR-TB. Botswana's Ministry of Health officials are urging those with chronic coughs and all who have been exposed to patients with active TB to go to their nearest health facility to be tested.\nWHO has ramped up its XDR-TB efforts in southern Africa. A delegation of WHO officials and its partners visited Lesotho early 2008 to help plan XDR-TB surveillance and treatment, as well as improve basic TB control. Similar missions were also held in Malawi and Swaziland in February 2008. In March 2008, a team of WHO officers began to assist KwaZulu-Natal authorities investigate the origin and spread of XDR-TB in the province. The team is expected to remain in the country for several months. Botswana, Lesotho, Malawi, Mozambique, Swaziland, and Zimbabwe have reportedly submitted national XDR-TB response plans to WHO. Lesotho has reportedly completed a rapid survey on suspected XDR-TB cases; Botswana has started one; and Malawi, Mozambique, Namibia and Swaziland intend to start surveys within a few months. Madagascar, Mozambique, and Tanzania have ongoing anti-TB drug resistance surveys; Angola, Lesotho, Malawi, Namibia, South Africa, and Zimbabwe plan to start surveys by the end of 2008.", "A number of U.S. agencies, centers, and departments implement a range of programs aimed at treating and containing the global spread of tuberculosis. Congress designates funds for global TB interventions only to the U.S. Agency for International Development (USAID), while other agencies and departments draw from general funds (see Table A-5 in the Appendix ). Because agencies and departments might use discretionary funds to support global TB initiatives, some U.S. international TB activities might not be included here, such as research conducted by the National Institute of Health (NIH) to develop a new TB drug with a shorter treatment regimen.", "USAID is the leading U.S. agency involved in anti-TB efforts around the globe. In more than 35 countries, USAID-supported TB programs train health care workers on TB response and control, fund research and development of TB drugs and vaccines, facilitate the coordination and harmonization of TB and HIV/AIDS interventions, address MDR-TB issues, and improve the procurement and management of TB treatments. USAID is also a working member of several international TB partnerships and supports the WHO Global TB Monitoring and Surveillance project. In FY2004, Congress provided $85.1 million to USAID for international TB efforts, $92.0 million in FY2005, $91.5 million in FY2006, $94.9 million in FY2007, and $162.2 million in FY2008. The Administration requested $97.1 million for USAID's FY2009 international TB interventions.", "CDC supports global TB efforts by providing epidemiologic, laboratory, and programmatic support to USAID, WHO, and the International Union Against TB and Lung Diseases. It also assigns expert staff to help implement global TB programs. CDC helps WHO develop and implement guidelines on TB prevention in resource-limited settings. Additional global TB technical assistance by CDC includes strengthening laboratory capacity and referral systems, developing protocols for epidemiologic studies, and refining information on TB prevalence and incidence. CDC reports that in each fiscal year since FY2004, it has spent on average some $2 million of its TB appropriation on global TB efforts and anticipates spending the same amount on global TB in each of FY2008 and FY2009.\nUSAID also transferred $3.4 million in each of FY2006 and FY2007 to CDC in support of CDC's technical efforts in other countries. Through its Global AIDS Program (GAP), CDC supports the Global Fund (the Global Fund is discussed more comprehensively in the \" International TB Efforts \" section below) and has technical staff assigned to positions in the Office of the Global AIDS Coordinator (OGAC), USAID, the HHS Office of Global Health Affairs and WHO.", "On January 28, 2003, during his State of the Union Address, President Bush proposed that the United States spend $15 billion over the next five fiscal years to combat HIV/AIDS through an initiative he called the President's Emergency Plan for AIDS Relief (PEPFAR). The initiative, authorized in May 2003 by P.L. 108-25 , the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act, anticipates channeling $10 billion through the Global HIV/AIDS Initiative (GHAI) to 15 Focus Countries; directing $4 billion to global TB programs, international HIV/AIDS research, and bilateral HIV/AIDS programs in more than 100 additional non-Focus Countries; and reserving $1 billion for U.S. Global Fund contributions.\nCongress appropriates the bulk of PEPFAR funds to the GHAI account, which was established to streamline funds for global HIV/AIDS, TB, and malaria programs to the 15 Focus Countries. The Office of the Global AIDS Coordinator (OGAC) at the U.S. State Department transfers funds from GHAI to implementing agencies and departments, and international partnerships, such as the Global Fund. OGAC reports that, in FY2006, it transferred $48.4 million to implementing agencies for TB projects in the 15 Focus Countries and $131.0 million in FY2007. The Administration did not request any funds for TB activities for FY2008, though Congress directed OGAC to provide not less than $150 million for joint HIV/TB programs through FY2008 Consolidated Appropriations, Division J, Foreign Operations Appropriations.", "A number of organizations collaborate to combat TB globally. Most of these adhere to guidelines and recommendations that WHO and its partners drafted. WHO is the directing and coordinating authority for health within the United Nations system. It is responsible for providing leadership on global health matters, shaping the health research agenda, setting norms and standards, articulating evidence-based policy options, providing technical support to countries, and monitoring and assessing health trends.", "In 1991, the World Health Assembly (WHA)—WHO's decision making body composed of delegations from all 193 member countries—passed a resolution that recognized TB as a major global public health problem and established two goals for TB control: detection of 70% of new smear-positive cases, and cure of 85% of such cases, by the year 2000. In 1994, WHO and global health experts developed and recommended that all health practitioners use the Directly Observed Treatment, Short-course (DOTS) strategy to combat TB. DOTS has five key components:\nPolitical commitment with increased and sustained financing; TB detection through bacteriology, the recommended method of TB case detection; Standardized treatment with supervision and patient support; Effective drug supply and management systems; and Monitoring and evaluation systems, and impact measurement.\nIn 2000, WHO and its partners launched the first Global Plan to Stop TB, which outlined what actions needed to be taken from 2001 to 2005 to control TB. By 2004, more than 20 million patients had been treated in DOTS programs worldwide and more than 16 million of them had been cured. Mortality due to TB has been declining and incidence diminishing or stabilizing in all regions except sub-Saharan Africa and eastern Europe. The global treatment success rate among new smear-positive TB cases had reached 83% by 2003 (just short of the WHA target of 85% by 2005), and in 2004 the case detection rate, which has accelerated globally since 2001, was 53% (against the target of 70% by 2005).\nIn 2005, WHO Member States passed a resolution that advocated Member States provide sustainable financing for TB control and prevention and commit to achieve the TB-related targets included in the Millennium Development Goals (MDGs). WHO and its partners have also developed additional policies, strategies, and working groups that facilitate the achievement of global TB control targets. Innovative mechanisms such as the Global Drug Facility and the Green Light Committee improve access to quality-assured and affordable drugs in resource-poor settings. These activities are described below.\nWHO estimates that $56 billion would be needed from 2006 through 2015 to implement its Global Plan to Stop TB (see Table A-6 in the Appendix ). Of the estimated $56 billion needed to reverse the incidence of TB, WHO suggests that $28.9 billion be spent on expanding DOTS, $5.8 billion be spent on DOTS-Plus initiatives, $6.7 billion be spent on treating people co-infected with HIV/AIDS and TB, and $9.0 billion be spent on research and development. WHO estimates that governments and donors will provide about 45% of the funds needed, leaving a funding gap of an estimated $31 billion.", "In areas with moderate to high levels of MDR-TB, WHO and its partners implement DOTS-Plus, a strategy that provides guidance on issues, such as the appropriate use of second-line anti-TB drugs. DOTS-Plus is currently operational in Bolivia, Costa Rica, Estonia, Haiti, Latvia, Malawi, Mexico, Peru, Philippines, Russia, and Uzbekistan. Additional DOTS-Plus projects have been approved in Georgia, Honduras, Jordan, Kenya, Kyrgyzstan, Lebanon, Nepal, Nicaragua, Romania and Syria.", "The Working Group on DOTS-Plus for MDR-TB identified access to second-line anti-TB drugs as one of the major obstacles to the implementation of DOTS-Plus pilot projects. The Working Group made arrangements with the pharmaceutical industry to provide concessionally priced second-line anti-TB drugs to DOTS-Plus pilot projects. In some cases, treatment prices were 99% lower in DOTS-Plus countries compared with retail prices. Before second-line TB treatments are provided, the Green Light Committee reviews requests for treatments through DOTS-Plus projects and determines whether it can provide the medication in compliance with international standards of care.", "Established in 2000, the Stop TB Partnership seeks to achieve universal access to high-quality diagnosis and treatment; reduce the human suffering and socioeconomic burden associated with TB; protect poor and vulnerable populations from TB, MDR-TB, and TB and HIV/AIDS co-infection; and develop new TB treatment and diagnostic tools and enable their effective use. The Stop TB Partnership is comprised of a network of international organizations, countries, donors, governmental and non-governmental organizations and individuals that have expressed an interest in eradicating TB. Seven Working Groups within the partnership focus on TB-related issues and facilitate coordinated action. The seven groups are: Advocacy, Communication, and Social Mobilization; DOTS Expansion; MDR-TB; New TB Diagnostics; New TB Drugs; New TB Vaccines; and TB/HIV/AIDS. Each Working Group within the partnership is independently governed and collectively supports efforts to\nincrease access to accurate diagnoses and effective treatments; expand the availability, affordability and quality of TB drugs; promote research and development for new TB drugs, diagnostics and vaccines; and ensure appropriate use of and access to affordable new and improved TB prevention and control tools.", "GDF, housed in WHO and managed by a small team in the Stop TB Partnership Secretariat, is a financing mechanism that provides technical assistance in the management and surveillance of TB drug use, as well as procurement of high-quality TB drugs at a relatively low price. Countries can purchase TB treatments directly from GDF at prices below market value or apply for grants to purchase first-line TB treatments. GDF regularly assesses and monitors the use of its funds to ensure that grant recipients adequately detect and monitor TB cases, properly prescribe and oversee the use of medicines, transparently use finances, and consistently administer drugs without interruption. GDF also works with grantees to estimate drug needs for the next year of GDF support.", "The Global Fund, headquartered in Geneva, Switzerland, is an independent foundation intended to attract and rapidly disburse new resources for fighting the three diseases. The Fund is a financing vehicle, not a development agency, and its grants are intended to complement existing efforts rather than replace them. As of March 4, 2008, the Fund approved more than $10 billion in support of nearly 500 grants in 136 countries, making it the single largest donor for TB and malaria control and among the three largest donors for HIV/AIDS programs. About 17% of Global Fund grants are targeted at TB control and treatment. According to the Fund's website, it has helped to detect 5 million TB cases, supported treatment for 3 million TB cases using the DOTS strategy, and administered treatment for 24,000 MDR cases.", "Since the Gates Foundation funded its first grant in 1999, the foundation has provided $781 million to combat TB globally. The foundation has pledged an additional $650 million to the Global Fund to Fight AIDS, Tuberculosis, and Malaria, of which $350 million has been paid to date. Gates Foundation grants support projects that focus on four key areas:\nTB research that focuses on developing more accurate and rapid diagnostics for resource-poor settings, more effective TB vaccines, and more effective drugs and shorter regimens to treat active disease; innovative strategies that fight TB, including identifying effective ways to manage TB in areas heavily affected by HIV/AIDS; new TB control and prevention tools; and advocacy and coordination with an emphasis on joint TB and HIV/AIDS programs.", "Since PEPFAR was launched in FY2004, overall U.S. spending on international TB initiatives has hovered around $90 million (see Table A-5 in the Appendix ). In FY2004, Congress appropriated $85.1 million to USAID for global TB efforts, $92.0 million in FY2005, $91.5 million in FY2006, and $94.9 million in FY2007. In FY2008, Congress significantly boosted support for global TB programs, providing $162.2 million to USAID for international TB efforts and directing OGAC to provide not less than $150 million for joint HIV/TB programs. Although Congress voted to increase support for global TB efforts, some Members expressed concern that the additional funds might be provided at the expense of other global health programs. The section below presents some issues Congress might consider as it debates the appropriate level of funding for global TB initiatives.", "WHO asserts that weak health systems play a key role in the continued spread of TB across Africa. Many health practitioners argue that inadequate access to rapid and accurate diagnostic tests significantly contribute to the rise in new TB cases on the continent. More than a century after its development, in most developing countries, TB is primarily identified through microscopic examination of sputum. This tool, however, only detects from 40% to 60% of TB cases, and as little as 20% of HIV co-infected cases. Although sputum testing has limited reliability, this procedure is the most widely used in developing countries and is usually performed only after TB treatment has failed—after which the patient could have transmitted the disease to others. About 85% of all countries who reported TB testing practices to WHO indicated that all suspected pulmonary TB cases undergo sputum testing. Of the 22 HBCs, 7 did not meet the minimum requirement of at least one sputum testing laboratory per 100,000 persons (see Table A-7 in the Appendix ).\nHealth experts also advocate for improved access to advanced testing technology, because sputum tests do not reliably detect smear-negative TB cases, particularly among HIV-positive patients. Culturing, a process requiring laboratory diagnosis, is the most definitive method of detecting TB, particularly in smear-negative cases. WHO recommends that countries have at least one laboratory per 5 million people that is capable of culturing samples. Seven of the 22 high-burden countries meet this minimum requirement: Brazil (5.1), Cambodia (1.1), China (1.4), Russia (34.0), South Africa (1.3), Thailand (5.1), and Vietnam (1.0) meet this criteria. South Africa is the only country in sub-Saharan Africa that meets this criteria.\nIn order to prescribe medications properly, laboratories must be capable of conducting drug susceptibility tests (DST). Prescribing the wrong medication or dosage not only minimizes the effectiveness of TB treatments, but can also lead to drug resistance. WHO recommends that countries have at least one DST lab per 10 million people. Of the 22 high-burden countries, Bangladesh and Nigeria have no DST labs, nine countries have one DST lab to serve their entire population (about one-third of high-burden countries), and nine meet the minimum of one per 10 million people: Brazil, Cambodia, China, Indonesia, Russia, South Africa, Thailand, Uganda, and Vietnam.\nIn many countries, patients might experience lapses in TB treatments, because clinics might not have the medicines in stock. Irregular drug deliveries are often caused by poor data collection, deficient road and transport conditions, and poor-quality distribution systems. Inconsistent use of medication can reduce the potency of TB treatments, extend the term of use, and result in drug resistence. Health advocates argue that in order to boost the impact of TB programs, congressional support for TB efforts must be accompanied by funding of health systems, including laboratory systems.\nThe African Health Capacity Investment Act of 2007 ( H.R. 3812 / S. 805 ) aims to address some of these issues. The bills authorize funds to improve health care capacity on the continent. Related activities include training African health care workers, providing incentive to retain health worker, and establishing off-site HIV/AIDS testing and treatment facilities for health care providers. The bill also requires the President to develop a strategy that would coordinate health-related strategies with other donors.", "Shortages of properly trained health care workers and sufficiently equipped health centers in high-burden countries, particularly in Africa, complicate efforts to properly contain and treat TB cases. Most of the 22 high-burden countries do not have enough health workers to meet the most basic health care needs, including identifying and treating TB cases and monitoring drug usage (see Table A-8 in the Appendix ). In addition, many health centers are unable to contain airborne infections like TB.\nHigh HIV prevalence in some parts of Africa further complicates shortage issues, because HIV and TB patients are usually housed within close proximity of each other in poorly equipped facilities. WHO maintains that in order for countries to effectively control TB and prevent increases in MDR-TB and XDR-TB cases, HIV/AIDS and TB patients should be housed separately and teams of health workers should be trained specifically to manage drug resistance and work in hospitals or isolation units dedicated to TB patients. Another challenge is that in some countries with high HIV prevalence, a significant number of health workers are HIV-positive, posing a risk to themselves and their patients. WHO contends that all of these issues converge to cause the extremely high mortality in KwaZulu-Natal.\nIt is widely understood that MDR-TB is caused in large part by poor treatment adherence. Health worker shortages lessen the likelihood that the dispensing of medication will be properly supervised. WHO fears that the inability to manage sufficiently first- and second-line treatments will lead to a rise in XDR-TB cases. Global health advocates urge Congress to increase support for health worker training, fund initiatives that supplement the salaries and provide incentives for indigenous health workers, and stop recruiting health practitioners from countries with shortages to fill U.S. health positions.", "Global health experts are concerned about how HIV/AIDS and TB are converging to worsen mortality rates, particularly in Africa. Early diagnosis and treatment of both diseases can extend life expectancy and, in the case of TB, decrease transmission rates. Greater awareness about the intersection of these diseases has led many health practitioners to routinely test TB patients for HIV. While WHO applauds those efforts, it has expressed concern that HIV patients are not yet routinely tested for TB in most high-burden countries. WHO asserts that countries could significantly improve TB case identification if health professionals would routinely test all those newly diagnosed with HIV for TB. Proponents of this idea contend that the practice could ameliorate outcomes of HIV and TB programs, reduce overall program costs, and make TB and HIV/AIDS efforts more efficient. In FY2006, OGAC reportedly spent nearly $50 million on TB efforts in the 15 Focus Countries and about $120 million on addressing HIV/TB co-infection in FY2007. Health advocates urge Congress to increase funding for programs that integrate HIV/AIDS and TB responses. Congress directed OGAC to spend not less than $150 million of the $4.7 billion appropriated to OGAC on joint HIV/TB programs through FY2008 Consolidated Appropriations, Division J, Foreign Operations Appropriations.", "", "Many health experts urge Congress to increase support for TB research that could lead to the development of treatments with shorter regimens, which might improve adherence. On average, patients must take their medicines daily for six-to-eight months to be fully cured. Supporters contend that improved adherence might reduce the incidence of emergent drug-resistant TB strains. WHO and others are seeking to develop new TB treatments that will be effective against MDR-TB, can cure patients between one and two months, and will cure latent TB infection. Researchers are also attempting to develop drugs that will be affordable and easily managed in resource-limited settings.", "Advocates maintain that congressional support for TB research should include TB vaccine research. Health experts assert that Bacille Calmette-Guerin (BCG), a vaccine currently administered to millions of newborns around the world, effectively prevents TB in childhood, but not in adulthood. Proponents urge Congress to support organizations like Aeras Global TB Vaccine Foundation, which are seeking to develop a vaccine that protects the innoculated throughout their lives.", "TB experts stress the need for new diagnostic tests that could be more easily used in low-resource settings. At present, culturing is required to provide a definitive diagnosis. Culturing, however, takes weeks and requires laboratory capacities that are usually unavailable in many resource-limited settings. Advocates urge Congress to support efforts, such as WHO's Tuberculosis Diagnostics Initiative (TBDI), which forms partnerships with the private sector, academic researchers, and national and local health officials to facilitate and accelerate the development of diagnostic tools.\nIn 2007, Representatives Gene Green and Sherrod Brown introduced H.R. 1532 and S. 1551 , the Comprehensive Tuberculosis Elimination Act of 2007. The bills amend Section 317E of the Public Health Service Act (42 U.S.C. 247b-6) to authorize funds for the research and development of TB vaccines, new treatments, and more effective diagnosis tools that could be used in low-resource settings. In October 2007, the House passed and the Senate Foreign Relations Committees reported out companion TB bills, S. 968 and H.R. 1567 , the Stop Tuberculosis (TB) Now Act. The bills are aimed at fighting tuberculosis overseas and authorize $330 million in FY2008 and $450 million in FY2009 for related foreign assistance programs. They also authorize $70 million in FY2008 and $100 million in FY2009 for anti-TB programs at CDC.", "Debate about whether to forcefully detain those infected with XDR-TB has intensified, particularly in South Africa. In January 2007, WHO issued a statement indicating that \"if a patient wilfully refuses treatment and, as a result, is a danger to the public, the serious threat posed by XDR-TB means that limiting that individual's human rights may be necessary to protect the wider public.\" Forcefully detaining people carrying XDR-TB has a number of human rights implications. The low quality of some health facilities in high-burden countries complicates arguments about involuntary detention. A number of individuals being forcefully isolated in South African health centers reportedly held protests and walked out of facilities, complaining of poor treatment and prison-like conditions. One patient was reportedly shot while attempting to leave the premises. Several provinces in South Africa have reportedly taken legal action to force drug resistant TB patients to stay in hospitals in isolation units surrounded by wire fences and protected by guards.\nThe South African Medical Research Council (MRC) asserts that forcibly quarantining individuals is a complicated issue, because MDR- and XDR-TB patients might never be cured (MDR- and XDR-TB are difficult to cure in low-resource settings), forcing the patients to be confined until death. MRC does not support coerced treatment, because of \"the lower success rate of [resistant forms of TB] and the reduced life expectancy of MDR-TB patients.\"\nSome observers point out that forced isolation is also complicated by socio-economic factors. About 10 million South Africans—about 25% of the population—receive some form of social welfare. South African policy mandates that those who are hospitalized at the country's expense lose their government assistance. Many MDR-TB patients choose not to stay in hospitals, in part because they can not earn money or receive assistance while hospitalized and MDR-TB treatment takes between 18 and 24 months.", "Tuberculosis experts are increasingly studying the intersection of poverty and tuberculosis. The Stop TB Partnership has recently commissioned the World Bank to study the economic impacts of TB at the household and macro level in Africa. At the household level, some analysts contend that people sickened by TB experience reduced earning potential, which in impoverished areas might induce them to avoid or discontinue treatment as soon as symptoms abate. At the macro level, observers assert that the crowded, poorly planned, unsanitary conditions that often characterize urban slums facilitate transmission of TB. Some 1 billion people are believed to live in urban slums, and the figure is expected to reach 2 billion in the next 30 years. In the world's poorest countries, about 80% of the urban population live in slums. Some health advocates are beginning to argue that TB control should be considered an integral part of poverty reduction strategies.", "" ], "depth": [ 0, 1, 2, 3, 3, 1, 2, 2, 1, 2, 2, 2, 1, 2, 3, 3, 3, 3, 2, 2, 1, 2, 2, 2, 2, 3, 3, 3, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h1_full", "h1_full", "", "", "", "", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "h2_full h1_title", "", "", "", "h2_title h1_title", "", "", "h2_full h1_full", "", "", "" ] }

{ "question": [ "What effect do infectious diseases have?", "What are recent outbreaks that have been concerning?", "How has air transportation changed the way infectious diseases are handled?", "How can this transportation cause spread?", "How has infectious disease caused more alarm?", "What event led to this concern?", "How common is TB?", "What are the statistics of TB?", "What deaths have been caused by TB?", "Where does TB occur?", "How was TB funding special in FY2008?", "What was the funding amount for Consolidated Appropriations?", "What was the funding amount from the House and Senate?", "How did they also support programs?", "Why was increased global TB efforts not supported?", "How did funding change for FY2009?", "What issues will this report cover?" ], "summary": [ "Infectious diseases are estimated to cause more than 25% of all deaths around the world.", "A number of infectious disease outbreaks over the past decade, such as H5N1 avian influenza and severe acute respiratory syndrome (SARS), have heightened concerns about how infectious diseases might threaten global security.", "International air travel and trade have complicated efforts to detect and contain infectious diseases.", "People could cross borders carrying a highly contagious disease before an infectious agent causes symptoms.", "Non-health officials are becoming increasingly aware of the threat that infectious diseases pose.", "An event that illuminated the issue occurred in May 2007, when a man known to be carrying a drug-resistant form of tuberculosis (TB) crossed a number of international borders unabated.", "The World Health Organization (WHO) estimates that someone contracts TB every second and that about one-third of all people in the world carry TB; most of these cases, however, are latent.", "In 2006, an estimated 14.4 million people were living with TB globally, including 9.2 million who contracted the disease that year.", "About 1.7 million people carrying TB died in 2006, including 200,000 people co-infected with HIV/AIDS.", "About 80% of all estimated new TB cases arising in the world each year occur in 22 high-burden countries (HBCs).", "In FY2008, Congress funded U.S. global TB operations at unprecedented levels.", "Through FY2008 Consolidated Appropriations, Congress provided $162.2 million to international TB programs and an additional $840.3 million for a U.S. contribution to the Global Fund to Fight HIV/AIDS, TB, and Malaria (Global Fund).", "The House passed and the Senate Foreign Relations Committees reported out companion TB bills, Stop TB Now Act (H.R. 1567 and S. 968) to support global TB efforts and authorize $330 million in FY2008 and $450 million in FY2009.", "They also authorized $70 million and $100 million for anti-TB programs at the U.S. Centers for Disease Control and Prevention (CDC) in FY2008 and FY2009, respectively.", "Although Congress voted to increase support for global TB efforts, some Members expressed concern that the additional funds might be provided at the expense of other global health programs.", "The Administration requested $97.1 million for FY2009 global TB efforts, some $55 million less than appropriated in FY2008.", "This report, which will be updated periodically, discusses some key issues Congress might consider as debate ensues about the proper level and use of global TB funds." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, 2, 2, -1, 0, 0, 2, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 3, 3, 3, 3, 3, 3, 3 ] }

{ "title": [ "Background", "NDF Authorities", "NDF Project Review and Approval Process", "NDF Projects", "NDF’s Authorities Provide It Significant Operational Flexibility, but under Its No-Year Budget Authority, NDF Has Not Determined Needed Carryover Balances", "NDF Used Its Notwithstanding Authority to Implement Several Projects Where Laws and Regulations Otherwise Restricted U.S. Assistance", "NDF’s Geographic Authority Has Allowed It to Fund Projects around the World", "State Has Not Conducted a Program Evaluation of NDF and Lacks Information for Conducting an Evaluation to Inform NDF’s Program Management", "State Has Not Conducted an NDF Program Evaluation", "State Has Developed a New Evaluation Policy Along with Tools to Facilitate Evaluations and Lessons Learned", "ISN Did Not Include NDF in Its Fiscal Years 2012 through 2014 Bureau Evaluation Plan", "State Currently Lacks Information Useful in Conducting an NDF Program Evaluation and Managing NDF’s Program", "Conclusion", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Department of State", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Congress authorized the President to establish NDF in 1992 under section 504 of the FREEDOM Support Act. The legislation authorized the President to use NDF to promote a variety of bilateral and multilateral nonproliferation and disarmament activities. In 1994, the President delegated authority for the program to the Secretary of State, who subsequently delegated authority for the program to the Under Secretary of State for Arms Control and International Security. The NDF office, within ISN, is responsible for day-to-day management of the program. The NDF Director leads the office, which has a staff of 16 people, including both State officials and contract employees.\nCongress funds NDF annually through the Nonproliferation, Anti- terrorism, Demining, and Related Programs appropriations account, within the Foreign Operations, Export Financing, and Related Programs Appropriations Acts. NDF received $10 million in initial funding for fiscal year 1994. Since fiscal year 1994, NDF has received $597 million in total appropriations. From fiscal years 2007 through 2012, NDF appropriations ranged from a high of $118 million in fiscal year 2009 to a low of $30 million in fiscal year 2012. According to State, NDF is unusual among U.S. foreign assistance programs in that it does not request funding for specific activities as part of its annual Congressional Budget Justification. The NDF Director stated that this helps ensure that NDF has the flexibility to respond to nonproliferation and disarmament opportunities as they arise, rather than tying NDF funds to particular projects or locations in advance.", "The FREEDOM Support Act provided NDF with a broad mission to fund bilateral and multilateral nonproliferation and disarmament activities and annual appropriations bills have consistently granted NDF other key authorities. NDF has used its authorities under the FREEDOM Support Act to fund a diverse set of projects. Table 1 outlines NDF activities authorized by the FREEDOM Support Act and provides examples of the types of activities NDF has funded. State officials and NDF program documents have characterized NDF’s mission as focused on funding unanticipated or unusually difficult projects of high priority to the U.S. government.\nFigure 1 illustrates the dismantling of a Scud missile as part of an NDF- funded project in Ukraine.\nIn addition to the authorities granted to NDF in the FREEDOM Support Act, annual appropriations bills have also consistently provided NDF with three key authorities that are designed to increase NDF’s flexibility in carrying out nonproliferation and disarmament activities around the globe, as opportunities arise. These include the authority to (1) undertake projects notwithstanding other provisions of law (notwithstanding authority); (2) implement projects anywhere in the world or through international organizations when it is in the national security interest of the United States to do so, notwithstanding provisions of the FREEDOM Support Act that limited certain NDF activities to the independent states of the former Soviet Union (FSU) (geographic authority); and (3) use funding without restriction to fiscal year (no-year budget authority).", "State uses a multistep process to review NDF project proposals and determine which projects to fund, as shown in figure 2.\nAccording to NDF officials, NDF does not typically develop its own project proposals. Rather, other agencies, such as DOD and DOE, and other State offices, such as the Office of Export Control Cooperation, submit project proposals. NDF’s Review Panel, which is chaired by the Assistant Secretary of State from ISN, reviews these proposals. Two ISN Deputy Assistant Secretaries of State and the Assistant Secretaries of State from the Bureau of Political-Military Affairs and the Bureau of Arms Control, Verification, and Compliance serve as the other voting members on the panel. Officials from other U.S. agencies, including DOD, DOE, OMB, the Department of Commerce, and the Department of Homeland Security, as well as representatives from the National Security Council and U.S. intelligence community, also attend panel meetings. After reviewing the project proposals, the voting members of the NDF Review Panel make recommendations to State’s Under Secretary for Arms Control and International Security to approve, deny, or defer projects. In the Review Panel meetings, members can also propose modifications, such as increasing or decreasing the amount of funding for a project. The Under Secretary has the final authority to approve a project. NDF officials stated that in certain cases—for example, if a project is particularly urgent—the NDF Review Panel may not formally meet to review a proposal before it is submitted to the Under Secretary. In those cases, NDF instead may discuss the proposal with other Review Panel agencies in a different venue, such as at a National Security Council meeting.\nAfter the Under Secretary approves a project, but before work begins, State provides a 15-day advance notification to Congress to inform it of State’s intent to begin work on the project. As part of the notification, NDF informs Congress of its intent to obligate a specified amount of funds on the project. NDF then considers these funds designated for that project and not available for use on other projects, unless a subsequent notification is made.", "From fiscal years 1994 through 2012, NDF notified Congress of its intent to initiate work on 179 projects. NDF subsequently cancelled 19 of these projects after their notification and put an additional project on hold because of congressional concerns. As of the end of fiscal year 2012, NDF had 33 active projects. NDF also reported that, as of the end of fiscal year 2012, it had an additional 42 projects for which work was completed or cancelled, and the financial review of the projects was finished. In accordance with NDF close-out procedures, NDF is in the process of seeking approval from the Under Secretary for Arms Control and International Security before officially closing them.\nSince the beginning of fiscal year 2007, NDF has notified Congress of its intent to initiate work on a total of 24 projects, with a high of 15 in fiscal year 2010 and a low of zero in fiscal year 2011. Figure 3 shows the number of congressionally-notified projects from fiscal years 2007 through 2012.\nNDF funding amounts for projects vary significantly. NDF has notified Congress of its intent to spend as much as $50 million to as little as $179,000 on individual projects initiated since the beginning of fiscal year 2007. The lengths of projects also vary. For example, since the beginning of fiscal year 2007, NDF has closed out projects that were completed in as little as a few months to more than 9 years. In addition, some projects are follow-up projects that build on projects initiated in earlier fiscal years. For example, beginning in fiscal year 1998, NDF has undertaken five separate projects—the most recent of which was initiated in fiscal year 2010—to assist the government of Kazakhstan in shutting down a nuclear reactor in Aktau.\nNDF divides its projects into four categories: (1) destruction and conversion, (2) safeguards and verification, (3) enforcement and interdiction, and (4) education and training. Since the beginning of fiscal year 2007, State has committed the most resources to projects in the destruction/conversion category. In fiscal years 2007 through 2012, 39 percent of NDF funding for new projects went to projects in this category. Figure 4 shows a breakdown of funding for NDF among the four project categories, as well as administrative expenses, for fiscal years 2007 through 2012.", "NDF has several key authorities that provide it significant operational flexibility; however, it has not determined its needed carryover balances and it has taken years to close out many of its projects in the absence of guidance for closing them. Annual appropriations bills have consistently provided NDF with three key authorities that it has used to carry out its activities. First, NDF has used its notwithstanding authority to fund projects in countries where other U.S. programs are barred from operating by U.S. sanctions or other legal restrictions. Second, NDF has used its geographic authority to fund projects in a range of countries around the globe. Third, NDF has used its no-year budget authority to carry over balances not designated for specific projects from one year to the next. However, NDF has not determined appropriate levels for these balances, which have increased significantly in the past several years. Additionally, NDF has taken many years to close some projects where work was never started, or was suspended, and has not established guidance for determining when inactive projects should be closed out and unexpended no-year funds made available for other projects.", "Annual appropriations acts have consistently granted NDF notwithstanding authority, which allows NDF to undertake projects “notwithstanding any other provision of law.” As a result, NDF has the ability to fund projects in countries where other U.S. programs are generally barred from operating by U.S. legal restrictions. For example, when North Korea agreed to the disablement of its Yongbyon nuclear reactor in 2007 after progress in diplomatic talks, NDF was able to fund the project because of its notwithstanding authority, while other U.S. agencies, such as DOD and DOE, could not because various U.S. legal restrictions limited the assistance they could provide the country.\nAccording to State officials, NDF’s broad notwithstanding authority is uncommon among U.S. government programs. For example, the 2010 National Defense Authorization Act provided DOD’s Cooperative Threat Reduction (CTR) program notwithstanding authority for the first time in the program’s history and granted only limited use of the authority.cannot use its notwithstanding authority for more than 10 percent of CTR’s appropriation for a given fiscal year and must meet other requirements before exercising the authority, such as obtaining concurrence from the Secretaries of State and Energy.\nWhen seeking to use its notwithstanding authority, NDF requests approval from the Under Secretary for Arms Control and International Security. According to the NDF Director, when NDF was established, State decided that NDF’s notwithstanding authority should, as a matter of policy, be approved at the Under Secretary level, rather than at a lower level. intent to use the authority as part of the 15-day congressional notification process. Although U.S. law does not require that State inform Congress of NDF’s use of its notwithstanding authority, the conference report accompanying the fiscal year 2012 Consolidated Appropriations Act directed the Secretary of State to notify the Committees on Appropriations in writing, within 5 days of exercising NDF’s notwithstanding authority. The conference report also directed that the notification include a justification for the use of the authority.\nState noted that legally, notwithstanding authority applies to NDF funds by the terms of the legislation and does not require a formal determination to rely upon this authority.\nSecretary for approval given the sensitive nature of the projects. In the final three cases, NDF requested the use of its notwithstanding authority for classified projects whose details cannot be publicly reported.\nIn those cases where NDF requested the use of its notwithstanding authority to overcome specific laws or regulations, it identified several different legal restrictions it needed to overcome. For example:\nNDF requested the use of its notwithstanding authority to initiate work on a project in Libya in fiscal year 2012. Among other things, the authority was required to overcome restrictions on U.S. security assistance to countries that engage in a consistent pattern of gross violations of human rights.\nIn the case of two projects at the Yongbyon site in North Korea, NDF requested the use of its notwithstanding authority to, among other things, overcome “Glenn Amendment” restrictions within the Arms Export Control Act. The Glenn Amendment triggers U.S. sanctions if the President determines that a nonnuclear country (as defined by the Nuclear Nonproliferation Treaty) has detonated a nuclear explosive device.\nNDF also requested the use of its notwithstanding authority to overcome a restriction that the Foreign Assistance Act would have imposed on a project in Iraq. The Act restricts U.S. assistance to countries that have severed diplomatic relations with the United States and which have not entered into a new bilateral assistance agreement once diplomatic relations have resumed. At the time of the project, there were concerns regarding the status of the United States’ bilateral agreement with Iraq.\nIn addition to using its notwithstanding authority to bypass restrictions on U.S. assistance to particular countries, NDF has in some cases also used its notwithstanding authority to overcome laws and regulations pertaining to contracting and acquisitions. For example, NDF used its notwithstanding authority on some contracts to overcome Federal Acquisition Regulation (FAR) competition requirements, according to a 2004 State Inspector General report. Additionally, a 2009 National Academies of Science report examining options for strengthening and expanding DOD’s CTR program noted that, because of its notwithstanding authority, NDF is not subject to contracting requirements, including the FAR, which CTR must follow. The report noted that this ability may allow NDF to undertake certain projects more quickly and at less expense than CTR. However, according to State officials, NDF has not typically used the program’s notwithstanding authority to bypass federal contracting laws and regulations. State officials said that, while NDF has almost always relied on sole-source bids, rather than a competitive bidding process, it primarily selected contractors to implement projects using existing flexibilities in the law and regulations available to all agencies. For example, State officials stated that NDF has relied on provisions in the FAR that permit sole-source contracts in situations where there is an urgent and compelling need.\nIn addition to competition requirements, some NDF officials stated that NDF may use its notwithstanding authority to bypass other types of acquisition requirements, such as “Buy America” provisions. For example, one NDF official stated that to expedite work on NDF’s project at the Yongbyon reactor in North Korea, NDF purchased some of the equipment used from China.", "Since 1994, annual appropriations acts have provided NDF with broad geographic authority to fund projects worldwide as nonproliferation and disarmament opportunities arise. NDF’s geographic authority allows it to fund projects outside the states of the FSU if the Under Secretary for Arms Control and International Security makes a determination that it is in the national security interest of the United States to do so. NDF’s authority to fund projects globally since the program’s start in 1994 is in contrast to the authorities of some other U.S. nonproliferation programs. For example, DOD’s CTR program was not authorized to fund any projects outside the FSU until the passage of the Fiscal Year 2004 Defense Authorization Bill and continued to face various restrictions on conducting work outside the FSU until 2007. In addition, as we reported in December 2011, many of DOE’s Defense Nuclear Nonproliferation programs, which originated in the early 1990s following the dissolution of the Soviet Union, have focused primarily on improving nuclear security in Russia. The NDF Director stated that, while NDF has been used to supplement projects in the FSU or to fill emergency gaps, its primary emphasis has always been on other parts of the world.\nSince 1994, NDF has used its geographic authority to fund projects in Central and South America, North and Sub-Saharan Africa, Eastern and Western Europe, the Balkans, the Middle East, and Asia. As shown in figure 5, NDF has funded projects in several different countries since the beginning of fiscal year 2007, including Afghanistan, Egypt, Kazakhstan, North Korea, and Ukraine, among others. It has also funded a limited number of projects in the United States, including the construction of training facilities at DOE’s Hazardous Materials Management and Emergency Response site in Washington State for the purpose of training foreign nationals.\nOver the life of the program, Congress has consistently granted NDF no- year budget authority in annual appropriations bills. This authority makes NDF appropriations available for obligation until expended, rather than requiring them to be obligated within a particular time period, such as a fiscal year. This authority has allowed NDF to carry over balances across multiple fiscal years that it has not designated for specific projects. NDF considers money to be designated for a specific project and no longer available for use on other projects at the point when it notifies Congress of its intent to fund the project, unless NDF renotifies the funds for the purpose of another project. NDF’s carryover balances have increased over time and are at historically high levels. Figure 6 provides an overview of NDF’s various categories of funding and how NDF accumulates carryover balances. In addition, NDF’s no-year budget authority allows it to close projects and apply the unexpended funds to future projects; however, NDF has sometimes delayed in closing out some projects for many years, including projects where no work ever occurred or was suspended. Until projects are closed, any unexpended project funds are not reported as part of NDF’s carryover balances. As a result, NDF’s carryover balance is likely understated.\nNDF’s carryover balances have grown significantly in the past few years to historically high levels. NDF’s carryover balance peaked at the end of fiscal year 2009 at $122 million in unnotified funds, which were carried over into fiscal year 2010 as shown in figure 7. Unnotified funds include funds never designated for a project, as well as any unobligated and unexpended project funds that once again become available as unnotified funds when a project is closed. Before the end of fiscal year 2009, NDF’s balance carried over into the next fiscal year had been $10 million or higher three times since the program began in fiscal year 1994 and had never been higher than $22 million. NDF’s carryover balance was $86 million at the end of fiscal year 2012.\nNDF has not established a formal means of determining the amount of money it needs to carry over from year to year to respond to unanticipated nonproliferation and disarmament opportunities.According to the Assistant Secretary of State for International Security and Nonproliferation, State management is aware of the growth in NDF’s carryover balances and is committed to spending them down as opportunities consistent with the mission of NDF arise.\nIn the past several years, increases in NDF’s annual appropriations from levels in earlier fiscal years, as well as the initiation of work on a smaller number of projects, have contributed to NDF’s increased carryover balances. As shown in figure 7 above, NDF’s appropriation was never more than $30 million before fiscal year 2005 and was only higher than $20 million in one fiscal year. However, from fiscal years 2005 through 2012, NDF’s appropriation has been $30 million or more every year. NDF’s appropriation reached a high of $118 million in fiscal year 2009, which included $77 million in a supplemental appropriation. NDF also initiated a limited number of projects in the past 2 years. For example, it initiated only one new project in fiscal year 2012 and no projects in fiscal year 2011. In total, NDF notified Congress of 24 projects from fiscal years 2007 through 2012, compared with 63 projects from fiscal years 2001 through 2006. In part, NDF officials stated that the decline in the number of projects initiated was caused by the creation of other U.S. government programs that are now able to fund various activities from their own budgets that might have previously required NDF funding. For example, NDF officials noted that NDF previously funded certain types of export control assistance activities that State’s Export Control and Related Border Security Assistance program is now able to fund and implement. However, NDF officials noted that while NDF has initiated a smaller number of projects in fiscal years 2007 through 2012, many of the projects it has initiated have involved significantly larger amounts of notified funds than in fiscal years 2001 through 2006. For example, NDF had only one project with over $10 million in notified funds in fiscal years 2001 through 2006, while it had 11 projects with over $10 million in notified funds in fiscal years 2007 through 2012.\nNDF’s budget request for fiscal year 2013 was $30 million.\nOther U.S. government programs also receive no-year money and have the ability to carry over balances from year to year. We have previously reported on efforts by some of these programs to determine appropriate carryover balance amounts. For example, in contrast with NDF, DOE’s National Nuclear Security Administration has established thresholds for the carryover balances of its Defense Nuclear Nonproliferation programs. These threshold amounts are based upon specified percentages of the total funds available to each of the Defense Nuclear Nonproliferation programs in a given fiscal year. As we reported in December 2011, if programs’ carryover balances exceed these thresholds, they will trigger additional scrutiny by the National Nuclear Security Administration as to whether the carryover balances are appropriate to meet program requirements.\nNDF also maintains a significant amount of funds that it notified to Congress in the past for projects, but has not yet obligated. Of the 32 active NDF projects initiated in fiscal year 2010 or earlier, 25 percent of the total notified funds have not yet been obligated. This represents more than $66 million in notified but unobligated funds. As some NDF projects take many years to complete, NDF does not necessarily obligate all funds early in their implementation. However, of the 32 active NDF projects initiated in fiscal year 2010 or earlier, we identified 5 projects for which less than 25 percent of the notified funds had been obligated.\nBecause NDF’s funding is no-year money, NDF can close projects for which it has never started work, or has suspended work, and apply the unexpended funds to future projects. However, NDF has not established guidance for determining when it should close out inactive projects. As a result, NDF funds may be tied up for years in projects where no work is occurring, precluding the funds’ use for other projects. For example, NDF maintains over $24 million in unobligated funds from a $25 million project in North Korea that it notified to Congress in fiscal year 2008. NDF has not obligated any of the funds for this project since North Korea expelled International Atomic Energy Agency inspectors and U.S. monitors from the country in April 2009 and work on the project was abruptly halted. Additionally, NDF has not yet obligated any of the $750,000 notified in fiscal year 2005 for a project to support Proliferation Security Initiative interdiction activities. According to NDF officials, no funds have been obligated to date because they have not identified any Proliferation Security Initiative activities that warranted the use of the funds.\nNDF has not developed guidance that establishes time frames for closing cancelled or completed projects to ensure that they are closed out in a timely manner. NDF data show that in the past, NDF has taken years to cancel and close some projects where little or no work ended up occurring. Of the 61 projects NDF has closed out since the beginning of fiscal year 2007, 16 were cancelled projects for which less than 20 percent of the notified funds were ever obligated and expended. For six of these cancelled projects, NDF took more than 10 years to close them out from the date they were initially notified to Congress, and for an additional 3 projects NDF took more than 5 years to close them out from the date they were notified to Congress. In total, these 9 projects had over $8.3 million in notified funds that were never expended.\nIn addition to cancelled projects, NDF has taken years to close some completed projects. For example, of the 61 projects NDF has closed out since the beginning of fiscal year 2007, we identified 13 that NDF closed out more than 10 years after work on the project was completed and an additional 18 that NDF closed out more than 5 years after work on the project was completed. These 31 projects had over $3.5 million in notified but unexpended funds. The unexpended funds for these cancelled and completed projects were eventually made available for use on future projects. However, it can take years from the time projects are cancelled or completed to the time they are closed out, which can result in an understatement of the amount of money NDF has available.\nNDF officials noted that prior to 2005, NDF took years to close completed and cancelled projects because it lacked the needed staff. However, NDF officials stated that since then, the office has hired additional staff and developed procedures to help ensure that projects are closed out more quickly. Additionally, NDF officials noted that the office has eliminated its backlog of projects needing to be closed. However, NDF still has 42 projects for which it has completed all financial close-out activities, but is in the process of seeking approval from the Under Secretary for Arms Control and International Security before closing them and returning the unexpended funds to the NDF account. These 42 projects have a total of over $19 million in unexpended funds that will be added to NDF’s unnotified balances, once they are closed.", "State has not conducted a program evaluation of NDF and lacks information that would be useful in doing so. A program evaluation is a systematic study to assess how well a program is working and that can identify lessons learned for future projects. State has developed a new policy requiring bureaus to evaluate programs, projects, and activities. To comply with this policy, State issued guidance requiring bureaus to submit an evaluation plan for fiscal years 2012 through 2014, identifying the programs and projects they plan to evaluate. However, ISN, which oversees NDF, did not include NDF in its fiscal years 2012 through 2014 evaluation plan. Moreover, State currently lacks information, such as the results of some projects and lessons learned, that could be used to conduct a program evaluation of NDF and that would help inform the management of the program.", "Since NDF became operational in 1994, State has not conducted a program evaluation of NDF, according to ISN and NDF officials.\nAlthough NDF reported to Congress in its fiscal year 2013 budget submission that all of its projects are evaluated in-house, these documents are project close-out monitoring reports and not evaluations. As State and other organizations have noted, monitoring and evaluations are conceptually and operationally different. GAO defines evaluation as individual, systematic studies that are conducted periodically or on an as- required basis to assess how well a program is working, while project close-out reports consist of formal documentation that indicates completion of the project or phase of the project.\nISN and NDF officials explained that NDF and its projects have never been subject to a program evaluation because of the unique nature of each project. For example, according to NDF officials, to get one country to agree to dismantle its Scud missiles, NDF agreed to pay for that country’s armed forces to use a labor-intensive method to dismantle the missiles. However, NDF officials also noted that there are common features to many projects that can serve as the basis for lessons learned. Our analysis of NDF’s project database shows that since NDF’s first project in 1994, NDF has implemented a number of similar projects that could have been evaluated to determine the lessons learned for use in present and future projects. For example, NDF has implemented 11 destruction and conversion projects involving missiles and rockets, 5 of which involved the destruction of Scud missiles. The first of these missile destruction and conversion projects took place in 1994 and the latest began in 2010. In addition, as noted earlier in this report, NDF has implemented at least five projects involving the shutdown of a nuclear reactor in Kazakhstan.", "The Government Performance and Results Modernization Act of 2010 strengthened the mandate to evaluate programs, requiring agencies to include a discussion of evaluations in their strategic plans and performance reports. In part to comply with the requirements of this Act, State established a policy in February 2012 to evaluate programs and projects. In addition, as we reported in May 2012, according to officials from State’s Bureau of International Narcotics and Law Enforcement, the policy was established to comply with a June 2009 directive from the Secretary of State for systematic evaluation and to promote a culture change among program offices.February 2012 policy superseded an evaluation policy dating from September 2010 that did not fully comply with a recommendation later According to State officials, the detailed in State’s December 2010 Quadrennial Diplomacy and Development Review that State adopt an evaluation framework consistent with that of the U.S. Agency for International Development.\nState’s 2012 evaluation policy outlines requirements and provides a framework and justification for evaluations of all State programs, including both diplomatic and development programs, projects, and activities. For example, the policy notes that a robust, coordinated, and targeted evaluation policy is essential to State’s ability to measure and monitor program performance, document program impact, and identify best practices and lessons learned. It also states that such a policy can help assess return on investment and provide input for policy, planning, and budget decisions.\nState’s evaluation policy assigns a key role to the bureaus and requires them to evaluate two to four programs, projects, or activities over a 24- month period starting in fiscal year 2012 and all large programs, projects, and activities at least once in their lifetime or every 5 years, whichever is less. It also requires the bureaus to appoint a coordinator to ensure that the bureaus meet the new policy’s requirements; requires bureaus to develop and submit a bureau evaluation plan as an annex to their multiyear strategic plans, but gives bureaus flexibility in determining the specific programs to evaluate, as well as the timing and manner of evaluations they will perform; and notes that bureaus should integrate evaluation findings into decision making about strategies, program priorities, and project design, as well as into the planning and budget formulation process.\nState’s evaluation policy also draws a clear distinction between monitoring and evaluation. State defines monitoring as a continual process designed to assess the progress of a program, project, or activity. By comparison, evaluations go beyond monitoring to identify the underlying factors and forces that affect the implementation process, as well as the efficiency, sustainability, and effectiveness of the intervention and its outcomes. As our previous work, State, and other organizations have noted, evaluations also require a measure of independence. According to State, this can be promoted in several ways, including entrusting the evaluation to an outside research and evaluation organization or fostering a professional culture that emphasizes the need for rigorous and independent evaluations.\nTo complement the new evaluation policy and provide further direction, State issued new guidance in March 2012 that describes several types of evaluations that bureaus can conduct and outlines data collection methods. The March 2012 guidance also defines the information that must be included in each bureau evaluation plan. For example, bureaus must include in the first plan a list of evaluations to be initiated or completed between fiscal years 2012 and 2014. Bureaus are expected to update these plans annually, according to State officials.\nIn addition to the guidance, State has developed or is in the process of developing other resources and tools to complement and support the new evaluation policy. These include an internal website containing resources to assist bureaus with their evaluation responsibilities and the establishment of a community of practice where officials can share their expertise and discuss evaluation issues.", "ISN submitted its first bureau evaluation plan in April 2012, but the plan did not include any NDF projects. According to ISN officials, the bureau had a short amount of time in which to submit its bureau evaluation plan and for that reason the plan focused on programs that already had projects scheduled for evaluation. After the State evaluation guidance was finalized in late March 2012, the bureaus only had 1 month to submit their bureau evaluation plans for fiscal years 2012 through 2014, according to ISN officials. In canvassing ISN’s five program offices, ISN determined that some offices were already planning evaluations for certain projects within their programs, according to ISN officials and documents. For example, according to the ISN bureau evaluation plan, State’s Global Threat Reduction (GTR) Program plans to contract for four evaluations during the fiscal years 2012 through 2015 period. GTR has in the past contracted for evaluations of its projects in Iraq, Ukraine, and Russia.", "State currently lacks information that would be useful in conducting a program evaluation of NDF and in improving the management of its program. NDF uses project close-out reports to document its final monitoring of a project.the importance of preparing good monitoring reports since these both complement evaluations and can provide valuable information for use in preparing evaluations. They can also be a key source of information that can be used to improve the management of a program, such as the State’s March 2012 evaluation guidance notes results of a project and lessons learned. However, NDF’s project close- out reports did not document information that could be useful to NDF and the NDF Review Panel. The reports also varied in content and format.\nProject management standards note the importance of documenting results in project close-out documents, but not all of the project close-out reports that we examined discussed the results of the project. Of the 23 project close-out reports that we examined, 2 did not address project results at all. In addition, for the other 21, we found some instances where the discussions of results were fairly minimal and other instances where the reports did not state whether all intended outcomes or goals had been achieved. According to the Project Management Body of Knowledge Guide, a recognized standard for project managers, project close-out documents or reports should include formal documentation that indicates completion of a project, including results. Moreover, according to NDF officials, NDF and the NDF Review Panel consider potential results in determining whether to fund future projects.\nProject management standards note the importance of documenting project results and entering this information into a database of lessons learned. However, 13 of the 23 project close-out reports that we examined did not discuss lessons learned. Moreover, NDF officials stated that they did not have a database of lessons learned. To document and share lessons learned, NDF officials said that they primarily used informal mechanisms such as e-mails or face-to-face meetings. The Project Management Body of Knowledge Guide notes the importance of documenting lessons learned and entering this information into a lessons- learned database for use in future projects. Some agencies that implement projects or with an interest in communicating lessons learned have formal databases that they use to enter lessons learned and communicate this information to project implementers. For example, the U.S. Agency for International Development and the U.S. Army Center for Lessons Learned have both established lessons-learned databases.State Bureau of Budgeting and Planning officials told us that as part of its effort to implement the new evaluation policy, State is considering the establishment of a lessons-learned database that could include information from NDF.\nIn addition, the close-out reports often did not address other criteria that the NDF Review Panel considers in assessing future projects for NDF funding. For example, 11 of the 23 project close-out reports that we examined did not discuss cost, and 17 of the 23 did not discuss the timeliness of the project. In one instance, the final cost of the project was approximately 66 percent under the amount notified to Congress, but the close-out report did not provide a reason why this had occurred. Of the 23 reports we examined, 19 did not discuss the appropriateness of using NDF funding for the project and none discussed the project’s return on According to the guidelines promulgated by State when investment. NDF was established in 1994, NDF criteria used to assess a project’s suitability for NDF funding include the cost and the appropriateness of using NDF as a source of funding. In addition, according to NDF officials, the NDF Review Panel also considers the project’s return on investment and timeliness as part of its criteria. Moreover, according to NDF officials, the NDF Review Panel has sometimes modified its initial assessment of a project’s cost based on past experience.\nReturn on investment is a measure of the benefits gained by implementing a project. use of a standard format in project close-out reports might not always be appropriate or useful given the wide variety of projects that NDF funds and undertakes. However, it may be difficult to obtain information useful to future evaluations from reports that vary so significantly in content and format.\nRecognizing the need for NDF project managers to prepare a close-out report to ensure that information is consistently documented, in December 2010, NDF established the expectation that NDF project managers produce a project close-out report. NDF also produced a project management guide designed to encourage project managers to standardize their procedures. The NDF project management guide, which according to NDF officials is based on the Project Management Body of Knowledge Guide, among other things lists the preparation of a project close-out report as one of the steps for closing out a project. However, NDF officials stated in July 2012 that while project managers are expected to write project close-out reports, they are not required to do so. In addition, NDF officials stated that NDF encourages but does not require the use of the project management guide and the guide does not detail the information that project managers need to include in their reports or specify the report format. Partly in response to our work, NDF officials stated that they plan to develop standard operating procedures to address the issues we identified in the project close-out reports, which will also include a requirement for project managers to identify lessons learned. However, as of November 2012, they had not made any changes to their procedures.", "Over its lifetime, NDF has responded to pressing nonproliferation and disarmament needs, helping to address significant threats to international security. To support NDF in accomplishing its mission, U.S. law has provided NDF with an unusual degree of flexibility in how it manages its resources and conducts its work. While the critical nature of NDF’s mission provides a strong rationale for such flexibility, it also increases the need for State to effectively manage its program resources to ensure that NDF is achieving its intended results. However, State has not taken the necessary steps to do so. For example, unlike some programs, NDF lacks a formal process for determining how much carryover balance it needs to maintain in reserve to meet unanticipated program requirements. Without such a process, NDF cannot know to what extent its carryover balances, which have increased in the past few years to historically high levels, may be exceeding its unanticipated funding needs. In addition, NDF has taken years to close some projects, delaying the availability of unexpended funds for other projects and likely understating NDF’s carryover balances. A methodical process for determining NDF’s needed carryover balances and for closing projects could help ensure that NDF’s budget requests accurately reflect program needs. Additionally, NDF lacks a process to identify and incorporate lessons learned into future projects. State has never performed a program evaluation of NDF in its 18-year history to determine lessons learned for better designing projects that contribute to U.S. nonproliferation goals. State has implemented a new evaluation policy that could encourage the bureaus to more rigorously rationalize and prioritize their resources over time and identify and incorporate lessons learned. Nonetheless, State is not including NDF among the programs to be evaluated during fiscal years 2012 through 2014. Finally, NDF’s project close-out reports could provide useful information to inform future program evaluations’ identification of lessons learned that could be systematically incorporated into future projects.", "To more effectively manage NDF’s resources, increase program accountability, and ensure that NDF has the information necessary to improve program performance, we recommend that the Secretary of State take the following four actions: direct NDF to develop a methodology for determining the amount of reserves that it should carry over annually to meet program requirements to address unanticipated nonproliferation and disarmament opportunities; direct NDF to develop guidance for determining when inactive NDF projects should be closed and the remaining, unexpended funds made available for use on other projects; direct ISN and NDF to periodically and systematically conduct and document program evaluations of NDF; direct NDF to revise its project management guide to establish requirements for project managers’ close-out reports to include information useful for improving the management of NDF projects.", "We provided a draft of our report to DOD, DOE, OMB, and State for their review and comment. DOD and OMB did not provide comments. State provided written comments, which we have reprinted in appendix II. State concurred with all four of our recommendations and identified several actions it intends to take in response to the recommendations. For example, State said that it will direct NDF to develop a methodology that the NDF Review Panel can then use to make an annual recommendation on the appropriate level of carryover balances for the next fiscal year to the Under Secretary for Arms Control and International Security. State also said that NDF has begun implementing the recommendation to revise its project management guidance to establish requirements for close-out reports, by creating a standard operating procedure for these reports. State and DOE provided technical comments, which we incorporated in the report, as appropriate.\nWe are sending copies of this report to interested congressional committees, the secretaries and agency heads of the departments addressed in this report, 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) 512-9601 or 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 III.", "This report examines (1) the Department of State’s (State) use of Nonproliferation and Disarmament Fund (NDF) authorities in developing and implementing NDF projects and (2) the extent to which State has conducted a program evaluation of NDF and used this information to improve program performance.\nTo assess how State has used NDF’s authorities in developing and implementing NDF projects, we obtained program-wide and project-level data from NDF’s Financial and Information Management System (FIMS) for fiscal years 1994 through 2012. To assess the reliability of data in FIMS, we reviewed NDF documentation on the system, reviewed previous audits that assessed the reliability of FIMS data, compared FIMS data to data from other sources to confirm FIMS data’s accuracy, and interviewed cognizant State officials. To gain additional information on the reliability of data in FIMS, we met with a private contractor conducting a review for NDF under the supervision of the State’s Office of the Inspector General. The scope of the contractor’s work included a review of the reliability of FIMS data. On the basis of the information we obtained, we determined that the FIMS data were sufficiently reliable for our purposes. We analyzed NDF program-wide data to determine program appropriations, commitments, obligations, and carryover balances for fiscal years 1994 through 2012. We analyzed NDF project data to determine project funding amounts, locations, objectives, and time frames for fiscal years 1994 and 2012. Additionally, we reviewed NDF project documentation including project proposals, approval memos, and congressional notifications, for all NDF projects initiated since the beginning of fiscal year 2007 to assess the types of projects NDF has funded and how it used its authorities in developing and implementing these projects. To gain additional information on NDF projects, we also reviewed State press releases, speeches by State officials, and fact sheets describing NDF activities. To identify NDF’s key legal authorities, we reviewed relevant laws and regulations, including the FREEDOM Support Act and NDF appropriations legislation for fiscal years 1994 through 2012. Additionally, we examined congressional committee and conference reports from 1999 through 2012 to identify relevant congressional guidance regarding NDF. We also reviewed key NDF documents discussing the program’s authorities, including the 1994 memorandum pursuant to the FREEDOM Support Act establishing the program and the accompanying NDF Guidelines. To gather additional information on NDF’s authorities and how it develops and implements projects, we conducted a series of interviews with NDF officials and also met with officials from other agencies that proposed or implemented NDF projects, including the Departments of Defense and Energy. We also interviewed officials from the Office of Management and Budget to gain additional information on NDF’s budget planning process. Finally, we reviewed previous GAO reports, as well as reports by the State Inspector General, the Congressional Research Service, and the National Academies of Science, to identify relevant findings regarding NDF and related U.S. nonproliferation and disarmament programs.\nTo assess the extent to which State has evaluated NDF and used this information to improve program performance, we interviewed State officials with the Bureaus of International Security and Nonproliferation (ISN) and Budgeting and Planning. We also obtained copies of State’s February 2012 evaluation policy and March 2012 evaluation guidance, as well as a copy of ISN’s April 2012 bureau evaluation plan. NDF officials described their project close-out reports as evaluations, but based on our discussion with State ISN and Budgeting and Planning officials, our review of GAO reports discussing evaluations, and State’s February 2012 evaluation policy, we determined that NDF’s project close-out reports fit more closely the standard of a monitoring report. GAO defines evaluations as individual, systematic studies that are conducted periodically or on an as-required basis to assess how well a program is working. State’s evaluation policy notes that in addition to assessing the progress of a program, project, or activity, evaluations go beyond monitoring to identify the underlying factors and forces that affect the implementation process, as well as the efficiency, sustainability, and effectiveness of the program or project and its outcomes. As such, State’s policy draws a clear distinction between evaluation and monitoring. As previous GAO reports, State, and other organizations have noted, evaluations require a measure of independence, which can be promoted in several ways, including entrusting the evaluation to an outside research and evaluation organization or fostering a professional culture that emphasizes the need for rigorous and independent evaluations. By comparison, State defines monitoring as a continual process designed to assess the progress of a program, project, or activity. The Project Management Body of Knowledge Guide notes that project close-out documentation consists of formal documentation indicating the completion of a project or phase of a project. For all these reasons, on the basis of our analysis of NDF’s project close-out reports, we made the determination that NDF’s project close-out reports better fit the standard of a monitoring report than an evaluation. While project close-out reports serve a different purpose from evaluations, based on our review of the Project Management Body of Knowledge Guide and NDF’s Project Management Guide, we determined that we could assess the project close-out reports to determine their usefulness in enabling NDF to improve its management of the program. For this purpose, we obtained a judgmental sample of 23 project close-out reports—14 of which we selected and 9 of which State selected. In selecting our sample, we chose only to consider projects that NDF had closed out since the beginning of fiscal year 2007—of which there were 61—in order to ensure that all close-out documentation was completed for the projects. Our selection criteria for our sample included project cost, location, and type. For example, we selected a variety of projects from all four categories of projects that NDF funds—destruction and conversion, safeguards and verification, enforcement and interdiction, and education and training. State selected its projects using similar criteria; however, State did not limit itself to projects that were closed out. In some cases, State selected projects where work was completed, but the project was not yet officially closed out. In reviewing the documentation for the projects State selected, we determined that these projects were broadly similar to the ones that we selected and the inclusion of these projects in our analysis did not alter our overall findings or compromise the independence of our work. To conduct our analysis of the close-out reports, we developed a list of key terms, such as “results,” “completion,” and “lessons learned.” Our inclusion of these terms was based on our analysis of project management standards, which note the importance of the project close- out process in the project management cycle and the importance of obtaining information about the results of the project and lessons learned. We also included other terms such as “cost,” “timeliness,” “on time,” “return on investment,” and “appropriateness of using NDF funding.” We included these terms because NDF officials told us that NDF and the NDF Review Panel include these criteria in determining a project’s suitability for NDF funding. Because NDF does not have any requirement to use a standard terminology in its reports, we used a dictionary to obtain other synonyms of these terms as well. We examined each of the project close- out reports to determine the presence of these key terms. We also examined each of the project close-out reports to determine the author, content, and format. We did this on the basis of discussions with NDF officials, who told us that they had established an expectation that NDF project managers complete a project close-out report and had developed a project manager’s guide that contained a checklist. While NDF does not have a requirement for project reports to be written in a standard format, we determined that the close-out reports that we had examined varied widely in their content and format and concluded that such variety could make it more difficult for evaluators to extract key information from these reports. After completing our initial review, the lead analyst submitted the results of his work and the methodology used to two additional levels of review. These reviewers were asked to validate the methodology and results. The sample of 23 project close-out reports cannot be generalized to the entire population of NDF project reports for the period in our review. We also reviewed NDF’s Project Management Guide to determine the extent to which NDF has established specific requirements or guidance regarding how project close-out reporting should be conducted. To obtain the list of 11 similar missile destruction and conversion related projects, we conducted a word search of NDF’s projects using the key terms “missiles” and “rockets.”\nWe conducted this performance audit from March 2012 through November 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.", "", "", "", "In addition to the contact named above, the following staff made key contributions to this report: Jeff Phillips, Assistant Director; Lynn Cothern; Martin De Alteriis; Mark Dowling; José M. Peña, III; and Ryan Vaughan. Etana Finkler and Jeremy Sebest provided graphics support and Debbie Chung provided editorial assistance. Julie Hirshen and Julia Jebo Grant also provided additional technical assistance." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "", "", "", "h0_full h2_full", "h0_full", "h0_full h2_full", "h1_full", "", "", "", "h1_full", "", "", "", "h2_full", "", "", "", "" ] }

{ "question": [ "How does carryover affect the Department of State's (State) Nonproliferation and Disarmament Fund (NDF)?", "How has the NDF received their authorities?", "What authority affects NDF's undertaking of projects?", "How has this been used to fund some projects?", "What authority affects the scope of NDF?", "How has this diversified the projects being funded?", "What authority sets NDF's timeline?", "What issue has arrived with NDF balances?", "How has the length of NDF projects been an issue?", "How has State regarded NDF?", "How did State change their evaluation policy?", "What action did State take to begin these evaluations?", "How did the ISN fail to send proper information?", "Why is the missing information important?", "What is an example of missing information?", "How might State keep records?", "How does the NDF's guide fail to be standardizing?", "How does the NDF plan to address this issue?", "What is the role of weapons and threats to the US?", "Why did the NDF begin?", "What flexibility has this program been provided?", "What questions have come up about the NDF?", "What does this report cover?", "What information did the GAO collect for this report?" ], "summary": [ "The Department of State's (State) Nonproliferation and Disarmament Fund (NDF) has several key authorities that provide it significant operational flexibility; however, it has not determined its needed carryover balances and it has taken years to close out many of its projects in the absence of guidance for closing them.", "Annual appropriations bills have consistently provided NDF with three key authorities that it has used to carry out its activities.", "First, NDF has the authority to undertake projects notwithstanding any other provision of law.", "NDF has used this authority to fund projects in countries, such as North Korea, where U.S. assistance is prohibited by U.S. sanctions and other legal restrictions.", "Second, NDF has the authority to undertake projects globally.", "NDF has used this authority to fund projects in numerous regions around the world, in contrast with other U.S. nonproliferation programs, which have historically focused on countries in the former Soviet Union.", "Third, NDF's appropriations do not expire within a particular time period, enabling NDF to carry over balances from year to year not designated for specific projects.", "However, NDF has not determined appropriate levels for these balances, which increased significantly in the past few years.", "Additionally, NDF has sometimes taken many years to close projects, including those where work was never started or was suspended, and has not established criteria to determine when inactive projects should be closed and unexpended resources made available for other projects. As a result, NDF funds may be tied up for years in inactive projects, precluding the funds' use for other projects.", "State has never conducted a program evaluation of NDF.", "In February 2012, State developed a policy requiring bureaus to evaluate programs, projects, and activities, and outlined the requirements for these evaluations.", "As part of this policy, State required bureaus to submit an evaluation plan for fiscal years 2012 through 2014 that identified the programs and projects they plan to evaluate.", "However, the Bureau of International Security and Nonproliferation (ISN), which oversees NDF, did not include NDF in its fiscal years 2012 through 2014 evaluation plan. State currently lacks information that could be used to conduct a program evaluation and to improve NDF's management of the program.", "Project close-out reports are critical to the process of closing out a project and identifying lessons learned, but NDF project close-out reports do not contain information that could enable NDF to better manage its program.", "For example, not all closeout reports address the results of the project. NDF uses e-mails and face-to-face meetings to communicate lessons learned without documenting them.", "Established standards suggest that these should be transferred to a database of lessons learned for use in future projects and activities, an action State officials said they are considering taking.", "NDF has also produced a project management guide to encourage project managers to use standard procedures and write close-out reports, but does not require the use of this guide. In addition, the guide does not detail a format for project managers to use in preparing their close-out reports or list the information that project managers must address.", "NDF officials said they plan to develop standard operating procedures to address these issues, but had not done so as of November 2012.", "The proliferation of weapons of massdestruction and advanced conventionalweapons poses significant threats toU.S. and international security.", "State’sNDF began operating in 1994 to helpcombat such threats by funding a variety of nonproliferation and disarmament projects.", "NDF’s legal authorities provide it significant flexibility to perform its work and it has initiated high-profile projects in locations that are significant to U.S. interests.", "Nonetheless, questions have been raised about how NDF has used its authorities, including its authority to carry over balances into future fiscal years, and the extent to which NDF is effectively implementing its activities.", "This report examines (1) State’s use of NDF authorities in developing and implementing NDF projects and (2) the extent to which State has conducted a program evaluation of NDF and used this information to improve program performance.", "To conduct this review, GAO analyzed NDF program and project data and documentation, analyzed a sample of NDF project close-out documents, and interviewed NDF and other U.S. officials." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 4, -1, 6, 6, -1, -1, 1, -1, 3, 4, -1, -1, 7, -1, -1, 1, 1, -1, 4 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Over the Past 5 Fiscal Years, More than 100 DHS Employees Were on Administrative Leave for Personnel Matters for 1 Year or More", "Numerous Factors Affect the Length of Administrative Leave", "DHS’s Recently Issued Policy Increases Oversight of Administrative Leave but Does Not Include an Evaluation Strategy", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Department of Homeland Security (DHS) Employees on Administrative Leave for 3 Months or More between Fiscal Years 2011 and 2014 by Component", "Appendix II: Comments from the Department of Homeland Security", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Federal agencies, including DHS and its components, have discretion to place employees on administrative leave in appropriate circumstances and for an appropriate length of time. Administrative leave is an excused absence without loss of pay or charge to another type of leave. In the absence of statutory authority to promulgate regulations addressing administrative leave by all federal employees, OPM has mentioned this leave in limited contexts in regulations covering other types of leave and excused absences for federal employees. OPM has provided additional guidance to federal agencies on administrative leave via government- wide memorandums, handbooks, fact sheets, and frequently asked questions. For example, in May 2015, OPM sent a memorandum to federal agencies that described the steps it was taking to address the recommendations from our October 2014 report on administrative leave and that included a fact sheet focused on this type of leave.\nOPM guidance has acknowledged numerous purposes for which administrative leave is appropriate. To promote equity and consistency across the government, OPM advises that administrative leave be limited to those situations not specifically prohibited by law and satisfying one or more of the following criteria:\nThe absence is directly related to the department or agency’s mission,\nThe absence is officially sponsored or sanctioned by the head of the\nThe absence will clearly enhance the professional development or skills of the employee in his or her current position, or\nThe absence is as brief as possible under the circumstances and is determined to be in the interest of the agency.\nWith respect to administrative leave for personnel matters, OPM states that placing an employee on administrative leave is an immediate, temporary solution for an employee who should be kept away from the worksite. As a general rule, administrative leave should not be used for an extended or indefinite period or on a recurring basis.\nSpecifically, OPM guidance discusses agency use of administrative leave before or after proposing an adverse action against an employee. For example, an agency may place an employee on administrative leave during an investigation prior to proposing an adverse action when the agency believes the employee poses a threat to his own safety or the safety of others, the agency mission, or government systems or property. According to OPM, a federal agency should monitor the situation and move towards longer-term actions when it is possible, appropriate, and prudent to do so.\nAn agency may also place an employee on administrative leave after proposing an adverse action. According to OPM regulations, under ordinary circumstances, an employee whose removal or suspension has been proposed will remain in a duty status in his or her regular position after the employee receives notice of the proposed adverse action. In those rare circumstances after the agency proposes an adverse action when the agency believes the employee’s continued presence in the workplace may pose a threat to the employee or others, result in loss of or damage to government property, or otherwise jeopardize legitimate government interests, the agency may place the employee on administrative leave for such time as is necessary to effect the adverse action. However, OPM strongly recommends agencies consider other options prior to using administrative leave in this scenario. Options include assigning the employee to duties and a location where he or she is not a threat to safety, the agency mission, or government property; allowing the employee to take leave (annual leave, sick leave as appropriate, or leave without pay); or curtailing the advance notice period for the proposed adverse action when the agency can invoke the “crime provision” because it has reasonable cause to believe the employee has committed a crime for which a sentence of imprisonment may be imposed.\nThe Merit Systems Protection Board (MSPB), among other things, adjudicates individual federal employee appeals of agency adverse actions. MSPB has recognized the authority of agencies to place employees on short-term administrative leave while instituting adverse action procedures. MSPB has also ruled that placing an employee on administrative leave is not subject to procedural due process requirements and is not an appealable agency action. This is in contrast to adverse actions, such as removals or suspensions of more than 14 days, including indefinite suspensions, which require procedural due process (such as 30 days advance notice), and are subject to appeal and reversal by MSPB where agencies fail to follow such due process procedures. Similarly, where an agency bars an employee from duty for more than 14 days, requiring that employee to involuntarily use his or her own leave, such agency actions are also subject to appeal. A federal employee may obtain judicial review of a final MSPB decision with the United States Court of Appeals for the Federal Circuit by filing a petition for review within 60 days after the Board issues notice of its final action.", "Between fiscal years 2011 and 2015, DHS placed 116 employees on administrative leave for personnel matters for 1 year or more, with a total estimated salary cost of $19.8 million during the same period, as shown in table 1. DHS placed the majority of these employees (69 employees or 59 percent) on administrative leave for matters related to misconduct allegations, according to DHS data. For example, as of September 30, 2015, a law enforcement agent at a DHS component had been on administrative leave for over 3 years while under investigation for allegations of criminal and administrative misconduct. These allegations raised concerns about the protection of government resources and precluded him from working as a law enforcement agent, according to the component. While on administrative leave, the employee received an estimated $455,000 in salary and benefits, according to DHS.\nDHS also placed employees on administrative leave for personnel matters involving fitness for duty and security clearances. Of the 116 DHS employees on administrative leave for at least 1 year between fiscal years 2011 through 2015, 28 employees (24 percent) faced matters related to fitness for duty and 19 employees (or 16 percent) faced matters related to security clearances. For example, a component placed an employee on administrative leave because of concerns regarding his personal conduct and his handling of protected information. After proposing revocation of his security clearance and allowing the employee time to respond, the agency revoked the employee’s security clearance. The employee’s position required a security clearance, and the employee remained on administrative leave while he exhausted the agency’s appeal process for revocation of his security clearance. Ultimately, after almost 18 months on administrative leave with an estimated salary cost of over $160,000, the employee was removed from the agency. As shown in table 1, CBP had the most employees placed on administrative leave for 1 year or more between fiscal years 2011 and 2015 (52 employees or 45 percent of the 116 DHS employees). The estimated salary cost for these employees for the same period was $8.9 million, according to DHS.\nDHS reported the current status, as of the end of fiscal year 2015, of the employees that had been on administrative leave for more than one year as one of four options: returned to duty, on indefinite suspension, separated, and on administrative leave. Prior to proposing an adverse action, such as suspension or removal, an agency often conducts an investigation. If the agency determines that for safety or security reasons the employee cannot stay in the workplace while the investigation is being conducted, the agency may put the employee on administrative leave until it has sufficient evidence to support a proposed adverse action. If the agency cannot gather sufficient evidence, the agency may need to return the employee to duty. For example, on the basis of allegations of misconduct, a component placed an employee on administrative leave. The employee remained on administrative leave—for over 3 years with an estimated salary cost of over $340,000—while the component conducted an investigation into the allegations of misconduct, according to DHS. Ultimately, the employee was returned to duty after the component determined that it had insufficient evidence to remove the employee or to put him on indefinite suspension.\nTable 2 shows, as of September 30, 2015, the status of the 116 DHS employees who had been on administrative leave for at least 1 year between fiscal years 2011 and 2015. Specifically, DHS ultimately returned to duty 32 employees (28 percent), separated from the agency more than half (59 percent) of the employees, and put on indefinite suspension 2 employees (2 percent), according to DHS data. As of September 30, 2015, 14 of the 116 employees (12 percent) were still on administrative leave, pending a final outcome, with an estimated salary cost of $2.6 million between fiscal years 2011 and 2015.", "Several factors can contribute to the length of time an employee is on administrative leave for personnel matters. Factors contributing to the time an employee is on administrative leave include (1) adverse action legal procedural requirements and the length of time needed for completing investigations related to misconduct, fitness for duty, or security clearance issues; (2) limited options other than administrative leave; and (3) agency inefficiencies in resolving administrative leave cases as expeditiously as possible. These factors are described below with examples from the DHS case files we reviewed where the employee was on administrative leave for 1 year or more.\nAdverse action requirements. It is important to note that an agency cannot take an adverse action, such as suspending for more than 14 days or removing an employee before taking certain procedural steps outlined in law. These procedural steps are described below.\nPrior to proposing an adverse action, an agency may place an employee on administrative leave in situations when the employee should be kept away from the workplace when the agency believes the employee poses a threat to his or her own safety or the safety of others, to the agency mission, or to government systems or property while an investigation is pending. For example, one DHS employee believed to be involved in alien smuggling and considered a risk was placed on administrative leave while the component collected evidence against the employee. An option could include assigning the employee to duties where he or she is no longer a threat to safety, the agency mission, or government property, if feasible.\nAfter proposing an adverse action, agencies are required to provide employees with at least 30 days advance written notice of proposed adverse action (e.g., notice of proposed indefinite suspension, notice of proposed removal), unless there is reasonable cause to believe the employee has committed a crime for which a sentence of imprisonment may be imposed, in which case a shorter notice may be provided. For example, the notice period was shortened to a 7-day notice period for a case in which an employee was indicted for extortion and bribery, among other things. After a proposed removal notice was issued, the employee resigned. In another case, there were two 30-day proposed suspension notice periods because the employee was indefinitely suspended, reinstated, and then indefinitely suspended a second time. Further, during the adverse action process, if new facts come to light it may be necessary to provide additional notification to the employee and provide them the opportunity to reply to that new information that will be considered in the final decision.\nAn employee is also entitled to a reasonable time, but not less than 7 days, to respond to the notice of proposed adverse action orally and in writing and to furnish affidavits and other documentary evidence in support of the answer. In some cases, these responses can take months. For example, in one case the component issued a proposed removal notice in March 2014 because of the employee’s lack of candor under oath. The employee responded in writing and orally over the next few months, raising issues that required clarification by the agency. Ultimately, the removal was finalized in November 2014, nearly 8 months after the original proposal. In addition, an employee or representative may request an extension of time to reply and has a right to review the information that the agency is relying upon. For example, in a case involving an employee accused of aggravated assault, the employee designated an attorney and requested time for the attorney to review the case before responding. Further, the component twice provided the employee with new information and time to respond. The original indefinite suspension proposal was issued in March 2014, but with the addition of the attorney and new evidence introduced, the oral response was not submitted until October 2014.\nIf the employee wishes for an agency to consider any medical condition that may contribute to a conduct, performance, or leave problem, the employee must be given a reasonable time to furnish medical documentation. The agency may, if authorized, require a medical examination, or otherwise, at its option, offer a medical examination. For example, in a case that took more than 20 months to resolve, the component ordered the employee to take a fitness-for-duty exam in July 2012, after the employee exhibited hostile behavior at work. Over the course of the next 20 months, the employee received a general exam and two psychiatric exams. During this time, the employee remained on administrative leave while exams were rescheduled, physicians requested additional information, and there was miscommunication regarding medical records. In March 2014, the component determined that, according to the medical evidence, the employee was a threat to others and not able to safely perform his duties. The component ultimately removed the employee in September 2014.\nConducting investigations and collecting evidence to make adverse action determination. Investigations into allegations of employee misconduct may be extensive, potentially involving multiple interviews over a lengthy period of time, or require investigations by third parties. Component officials indicated where parallel criminal investigations are ongoing by a third party, such as the Federal Bureau of Investigations, U.S. Attorney’s Office, Department of Justice Office of Public Integrity, or the DHS OIG, the investigation may be lengthy and the component may be limited in its ability to conduct its own investigation because it may be precluded from obtaining documents and interviewing witnesses as that may interfere with the criminal investigation. For example, in a particularly long and complex misconduct investigation, component officials said the third-party investigation (by the DHS OIG) took over 2 years to complete, including over 50 interviews conducted abroad.\nHowever, as DHS and component officials noted, well-documented investigations are vital for ensuring adverse action decisions are properly supported, as officials are cautious to avoid liability in subsequent proceedings from an appealable decision that may result in an award of back pay and attorney’s fees, which can be as much as three times or more the cost of employee back pay. For example, in one case involving an employee who had been removed for knowingly hiring an undocumented alien, the employee appealed the component’s decision to the MSPB. The MSPB reversed the removal decision, finding that the deciding official’s consideration of the employee’s conviction as grounds for removal without first notifying her of the significance that he attached to her criminal status was a due process violation. The MSPB ordered the component to retroactively restore pay and benefits to the employee. Components have also withdrawn adverse actions in response to MSPB decisions. For example, after the MSPB handed down several decisions regarding indefinite suspensions based on security clearance investigations, DHS component officials rescinded the indefinite suspensions for two similar cases and returned the employees to administrative leave in order to reevaluate its procedures for these cases.\nLimited options other than administrative leave. In certain situations, management officials may have limited alternative options to administrative leave. The DHS policy and OPM guidance note that agencies should consider options other than administrative leave, such as assigning the employee to alternative work arrangements or duties where he or she is no longer a threat to safety or government property. According to DHS, telework is an alternative option to administrative leave. However, if an employee engages in alleged misconduct involving the misuse of government equipment, telework is not likely an alternative option as the individual would have access to the same government equipment and systems that they have allegedly misused. In this case, the only alternative is placing the individual on administrative leave. Also, DHS and component officials noted that reassignment to another position is not always feasible or viable, depending on other circumstances. For example, the U.S. Secret Service requires all of its employees to maintain a top secret security clearance, so if an employee’s clearance is suspended pending an investigation, there are no alternative duties or positions to assign the employee to until the investigation is complete and a final decision is made.\nPotentially inefficient agency procedures. Inefficient procedures may also in some cases contribute to the extended use of administrative leave. While the facts and circumstances of each case are unique and management is faced with difficult decisions regarding appropriate actions to take in situations involving the use of administrative leave, our review of DHS case files identified examples where inefficient procedures may have contributed to the length of time the employee was on administrative leave. For example, at one DHS component, resolution of a case was delayed for months when the designated proposing and deciding officials—who are the officials responsible for proposing and making the decision on the adverse action regarding the employee—left their positions and the agency did not designate new officials in a timely manner. During this time, the employee remained on administrative leave. Filling the positions and allowing for replacements to become familiar with the case added time to resolve the case, according to agency officials. The component has since revised its procedures to allow flexibility in terms of who serves in those roles. In another case, an employee’s top secret security clearance was suspended based on concerns about the employee’s behavior and the employee was placed on administrative leave in December 2011. However, a mandatory physical examination to establish the employee’s fitness for duty was not scheduled for this employee until May 2012. In another case, it was almost 5 months from the notice of proposed removal to the final decision, although the component already had medical documentation the employee was unable to perform his job.", "In September 2015, DHS issued a policy on the proper use of administrative leave across the department. Prior to its issuance, the department did not have a policy or guidance regarding the proper use of administrative leave. Instead, components had their own approach to managing administrative leave, and policies and procedures varied across the components in terms of oversight, approvals, and tracking. According to DHS officials, they issued this policy to help ensure proper and limited use of administrative leave across the department, consistent with OPM guidance. Component officials said they would modify their policies and procedures as necessary to ensure compliance with the requirements of the DHS policy. Key provisions in the DHS policy include the following.\nAn emphasis on using administrative leave for short periods of time and only as a last resort for personnel matters. Citing OPM’s guidance on the appropriate use of administrative leave, the policy includes examples of when it is appropriate for a manager to grant administrative leave, such as for dismissal or closure because of severe weather, voting, or blood donations. For personnel matters, such as during an investigation of the employee, the policy states that employees should remain in the workplace unless the employee is believed to pose a risk to him/her self, to others, or to government property, or otherwise jeopardize legitimate government interests. Other management options should then be considered, such as indefinite suspension, if appropriate, with administrative leave as a last resort.\nRequiring elevated management approval for longer periods of use. Supervisors can approve administrative leave for short periods, consistent with legal authority and relevant guidance. Supervisors are expected to consult with human resources officials and counsel as appropriate. No component may place an employee on administrative leave for more than 30 consecutive days without the approval of the component head or his/her designee.\nRoutine reporting on administrative leave use to component and DHS management for increased visibility. Component heads are to receive quarterly reports on employees who are placed on administrative leave for 320 hours or more and to consider whether administrative leave continues to be warranted. Components are to report quarterly to the DHS Chief Human Capital Officer regarding employees placed on administrative leave for 960 hours (6 months) or more.\nDHS’s new policy is intended to increase DHS and component awareness regarding the use of administrative leave by requiring elevated management approval and routine reporting to component heads and the DHS Chief Human Capital Officer, among other things, according to DHS officials. However, the policy does not address how DHS will evaluate the effectiveness of the policy in ensuring proper and limited use of administrative leave. Federal internal control standards call for agency management to establish internal control activities to ensure that ongoing monitoring occurs in the course of normal operations and that separate evaluations are conducted to assess effectiveness at a specific time. The standards also note that information on the deficiencies found during ongoing monitoring and evaluations should be communicated within the organization. DHS’s new administrative leave policy provides for routine monitoring by component heads and the DHS Chief Human Capital Officer of administrative leave usage, which should help increase management visibility of the issue. DHS officials said they intend to use the quarterly reports to determine if administrative leave continues to be warranted for those specific cases. However, they acknowledged that conducting evaluations and sharing of evaluation results could help ensure the effectiveness of the policy and procedures across DHS.\nEvaluations of DHS’s administrative leave policy can help the department identify and share particularly effective component practices for managing administrative leave, such as identifying alternative duties to assign employees instead of placing them on administrative leave. They may also help identify inefficient component processes, such as those we identified, that could increase the length of time an employee spends on administrative leave, allowing DHS to then take steps to address such inefficiencies and their causes. An evaluation may also identify unintended consequences resulting from DHS’s administrative leave policy that monitoring does not capture. For example, an evaluation may find that the reporting aspects of the policy serves as an incentive to suspend or remove an employee before such actions are supported by an investigation, which may cost a component more if the action is successfully appealed. Finally, conducting evaluations of DHS’s administrative leave policy may help ensure DHS’s administrative leave policy and procedures are effective in reducing the use of administrative leave—one of the intended goals of the new policy—and ensuring the use is proper and justified.", "Administrative leave is a cost to the taxpayer and its use should be managed effectively. While the reporting requirements in DHS’s new administrative leave policy should help increase DHS and component awareness regarding the use of such leave and will allow for regular monitoring, the policy does not require a more comprehensive separate evaluation of the effectiveness of the policy and related procedures. Once the DHS policy and procedures have been in place and administrative leave routinely monitored, a separate evaluation of the policy and procedures can help the department identify and share effective components practices for managing administrative leave as well as make adjustments needed to help ensure proper and limited use of administrative leave across DHS.", "To ensure that the department’s administrative leave policy is working as intended, we recommend that the Secretary of Homeland Security direct the Chief Human Capital Officer to conduct evaluations of the department’s policy and related procedures to identify successful practices, potential inefficiencies, and necessary policy and procedural adjustments, and to share the evaluation results across the department.", "We provided a draft of this product to DHS and OPM for their review and comment. DHS provided written comments, which are reproduced in full in appendix II. OPM did not provide written comments. In its comments, DHS concurred with the recommendation in the report and described planned actions to address it. Specifically, DHS stated that it will evaluate the effectiveness of the new administrative leave policy and related procedures, as GAO recommends. Also, DHS noted that an initial review of the administrative leave data from the first quarter of fiscal year 2016 was completed in February 2016, and the review of all fiscal year 2016 data and recommendations concerning administrative leave policy and related procedures will be completed by March 31, 2017. These planned actions, if fully implemented, should address the intent of the recommendation contained in this report.\nWe are sending copies of this report to the Secretary of Homeland Security, the Acting Director of the Office of Personnel Management, and the appropriate congressional committees. 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 (213) 830-1011 or vonaha@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 significant contributions to this report are listed in appendix III.", "To present more detailed information on DHS’s use of administrative leave, and to help verify the reliability of the information we obtained from DHS, we analyzed data from the Office of Personnel Management’s (OPM) Enterprise Human Resources Integration (EHRI) system on DHS employees on at least 3 months of administrative leave between fiscal years 2011 and 2014. Fiscal year 2015 data were not available at the time of this report. As shown in table 3, during this period a total of 752 DHS employees were on administrative leave for 3 months or more between fiscal years 2011 and 2014, and 90 of these DHS employees were on this type of leave for 1 year or more during this period. This last number of employees is similar to the 87 employees on administrative leave for at least 1 year between fiscal years 2011 and 2014 reported in the DHS information.", "", "", "", "In addition to the contact named above, Adam Hoffman (Assistant Director), Juan Tapia-Videla (Analyst-in-Charge), Monica Kelly, Tracey King, David Alexander, Cynthia Grant, and Chris Zbrozek made significant contributions to this report." ], "depth": [ 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h1_full", "h1_full", "", "h0_full", "h2_full", "", "h2_full", "h2_full h1_full", "", "", "", "" ] }

{ "question": [ "Why did DHS issue a leave policy?", "What does this policy clarify?", "How was this policy regarded by components?", "What do federal internal control standards address for agency controls?", "How does the new policy relate to this control?", "What was DHS reaction to evaluations?", "What is the benefit of evaluations?", "What are administrative leaves?", "How have the GAO considered administrative leave?", "What did they find regarding the use of administrative leave?", "What agencies used administrative leave?", "What was the GAO asked to review?", "What does this report cover?", "What information did the GAO evaluate?", "How were cases chosen?" ], "summary": [ "In September 2015, DHS issued an administrative leave policy to ensure proper and limited use of administrative leave across the department.", "The policy clarifies when such leave is proper, elevates the level of management approval needed for longer periods of leave, and requires quarterly reporting of leave use to component heads and the Chief Human Capital Officer.", "Component policies and procedures varied prior to the DHS policy; however, component officials stated they would make changes needed to comply with the new policy.", "Federal internal control standards call for agencies to conduct routine monitoring and separate evaluations to ensure agency controls are effective, and to share their results.", "While the quarterly reports required under DHS's policy provide routine monitoring information, the policy does not address how DHS will evaluate the effectiveness of the policy and related procedures or how DHS will share lessons learned.", "DHS officials said they plan to learn from reviewing quarterly reports, but agreed evaluations could be valuable in assessing policy effectiveness.", "Evaluations of DHS's administrative leave policy can help the department identify effective practices for managing administrative leave, as well as agency inefficiencies that increase the time employees spend on such leave. Sharing evaluation results with components may help ensure DHS's administrative leave policy and procedures are effective, and are achieving the intended result of reducing leave use.", "Federal agencies have the discretion to authorize administrative leave—an excused absence without loss of pay or charge to leave—for personnel matters, such as when investigating employees for misconduct allegations.", "In October 2014, GAO reported on the use of administrative leave in the federal government.", "GAO found that, between fiscal years 2011 and 2013, 263 federal employees were on this type of leave for 1 year or more during this 3-year period.", "Of these, 71 were DHS employees.", "GAO was asked to examine DHS's use of administrative leave across directorates, offices, and components (DHS components).", "This report describes (1) the number of DHS employees who were on administrative leave for 1 year or more for personnel matters from fiscal years 2011 through 2015, (2) the factors that contribute to the length of time employees are on administrative leave, and (3) the extent to which DHS has policies and procedures for managing such leave.", "GAO used data from DHS and the Office of Personnel Management, reviewed DHS policies and procedures, interviewed DHS officials, and reviewed information on selected cases of DHS employees placed on administrative leave.", "Cases were selected based on length of leave, reason for using leave, and DHS component, among other things." ], "parent_pair_index": [ -1, 0, 0, -1, 3, 4, 5, -1, -1, 1, 1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 12, 12, 12, 12, 12, 12, 12, 0, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "State Has Improved the Consistency of Its Approach, but Unanticipated Events and Other Factors Contribute to Differences between Actual and Projected Staff Levels", "State Has Improved the Consistency of Its Rightsizing Reviews Since 2006", "Over Half of Staffing Projections Were within 10 Percent of Actual Staffing Levels as of December 2011, but Some Posts Have Larger Differences", "Rightsizing Recommendations Focus on State Administrative and Management Staff, and State Relies on Non-State Agencies to Determine Their Own Staffing Needs", "State’s Recommendations Generally Focus on State Administrative and Management Staff at a Specific Post to Improve Efficiency", "State Does Not Often Make Recommendations Directed at Other U.S. Government Agencies and Relies on These Agencies to Determine Their Own Staffing Needs Overseas", "State Offices Vary in Their Use of Rightsizing Reviews, and State Does Not Monitor Implementation of Rightsizing Recommendations", "Some State Officials Use Rightsizing Reviews to Plan Construction and for Certain Staffing Considerations", "Some U.S. Officials Use Rightsizing Reviews Less Often than Other Documents that Are More Timely and More Widely Known", "State Does Not Monitor Implementation of Rightsizing Recommendations and Has Not Clearly Designated an Office Responsible for Following Up on Recommendations", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Comments from the Department of State", "Appendix III: GAO Contacts and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The U.S. government maintains more than 270 diplomatic posts, including embassies, consulates, and other diplomatic offices, in about 180 countries worldwide. More than 80,000 U.S. government employees work overseas, including both U.S. direct hires and locally-employed staff under chief of mission authority, representing more than 30 agencies and government entities. Agencies represented overseas include the Departments of Agriculture, Commerce, Defense, Homeland Security, Justice, State, the Treasury, and USAID.\nIn the aftermath of the August 1998 bombings of two U.S. embassies in Africa, State formed the Overseas Presence Advisory Panel to conduct an assessment of overseas presence. The panel determined that overseas staffing levels had not been adjusted to reflect changing missions, requirements, and security concerns. Some missions were overstaffed, while others were understaffed. In 2002, we outlined a In 2003, we found that framework for assessing overseas staff levels. U.S. agencies’ staffing projections for new embassy compounds were developed without a systematic approach or comprehensive rightsizing analysis.\nIn 2004, Congress mandated the establishment of the Office of Rightsizing within State. The Office of Rightsizing was combined with two other offices in 2007 to create M/PRI. The House Foreign Affairs Committee directed the office to lead State’s efforts to develop internal and interagency mechanisms to coordinate, rationalize, and manage the deployment of U.S. government staff overseas. This legislation was intended to result in the reallocation of resources to achieve a leaner, streamlined, more agile and secure U.S. government presence abroad. The conference report accompanying the legislation establishing the Office of Rightsizing stated that a proper rightsizing plan should include a systematic analysis to bring about a reconfiguration of overseas staffing to the number necessary to achieve U.S. foreign policy needs, and noted that rationalizing staffing and operations abroad had the potential for significant budgetary savings. The office was directed by the Senate Foreign Relations Committee to review all U.S. government staffing overseas, including all American and foreign national personnel, in all employment categories. The House Foreign Affairs Committee also directed OBO to work closely with M/PRI to ensure that projected staffing levels for new embassy compounds were prepared in a disciplined and realistic manner, and that these estimates become a basis for determining the size, configuration, and budget of new embassy construction projects.\nM/PRI conducts rightsizing reviews before each construction project and on each mission every 5 years, among other responsibilities. M/PRI focuses on streamlining staffing levels by, for example, consolidating or outsourcing administrative functions. M/PRI also looks for opportunities to substitute less expensive, locally-employed staff for more expensive U.S. direct-hire employees. According to the guidance M/PRI provides to overseas missions, a rightsizing analysis may lead to the reallocation of resources from one mission goal to another and to enhancing operational efficiency through regionalization and centralization. M/PRI uses GAO’s definition of rightsizing: aligning the number and location of staff assigned overseas with foreign policy priorities, security concerns, and other constraints. Rightsizing may result in the addition or reduction of staff, or a change in the mix of staff at a given embassy or consulate. M/PRI’s guidance stresses that all sections and agencies of an overseas mission should be included in a rightsizing analysis.\nIn the first step of the rightsizing process, overseas missions, generally led by the mission’s management officer, prepare a report for M/PRI outlining their strategic goals, current staffing data for all agencies, and projected staffing levels 5 years into the future. State and non-State agencies present at an overseas mission provide their staffing data to be included in the mission’s submission to M/PRI. M/PRI officials stated that, under their current process, an M/PRI analyst usually visits the mission to assist in preparing the rightsizing report. After a mission completes its rightsizing report, the relevant regional bureau approves the submission before sending it to M/PRI. Next, M/PRI conducts its analysis of staffing at the mission, coordinating with the headquarters of non-State agencies to confirm the numbers provided at the mission for those agencies. When M/PRI completes a draft rightsizing review, other State bureaus and agencies have the opportunity to review and discuss it. According to officials from State bureaus, they frequently engage in a dialogue with M/PRI to negotiate the staffing projections to be published in the rightsizing review and in a majority of cases, differences in projected staffing numbers are resolved through these discussions. Once all bureaus and agencies have reviewed the rightsizing review document, M/PRI finalizes and publishes it on an internal State website. Since its creation in 2004, State’s rightsizing office has conducted 224 reviews. According to M/PRI officials, all overseas missions have undergone the process once, and a second round of reviews is now under way.\nM/PRI provided us with 181 rightsizing reviews within the time frame of our analysis. Since that time, M/PRI has completed additional reviews.\nThe staffing levels of a mission are determined by the chief of mission through the National Security Decision Directive 38 (NSDD-38) process, which provides authority for the chief of mission to determine the size, composition, or mandate of personnel operating at the mission. To add or abolish U.S. direct-hire positions at a mission, agencies electronically submit an NSDD-38 request for the chief of mission to either approve or deny. Requests may only include one agency in one country, but may include requests for multiple positions. Formal submission is generally preceded by informal discussions about the requested positions, according to officials.", "State has improved the consistency of its analyses across overseas missions, but differences between actual and projected staffing levels still exist due to unanticipated events and other factors. We reported in 2006 that the Office of Management Policy, Rightsizing, and Innovation (M/PRI) had not been conducting its rightsizing reviews in a consistent manner.State has since improved the consistency of its reviews by developing a variety of methodological tools and a standard template that it applies to each mission. These tools include ratios and formulas that compare missions similar in size and foreign policy priority to help M/PRI project what the office determines is the appropriate level of staffing at each mission. We found that although actual staffing levels as of December 2011 were within 10 percent of projected staffing levels in over half of the reviews we analyzed, over 40 percent of the missions have staffing level differences over 10 percent. Unanticipated events and other factors, such as changes in policies and priorities, contributed to the differences between actual and projected staffing levels.", "With its current approach to rightsizing, State has improved the consistency of its analysis across overseas missions. In 2006, we reported that the information presented in rightsizing reviews varied from mission to mission and the rightsizing elements that missions evaluated and reported were not consistent. Some missions provided narratives discussing various rightsizing elements, such as outsourcing and post security, while others did not. The reviews ranged in length from less than 5 pages to over 20 pages.\nAccording to current M/PRI officials, the methodology used in the rightsizing process has evolved since the office was created. M/PRI officials stated that their reviews are now more standardized than in the past. The reviews now contain the same types of information in a similar format and have a more uniform level of detail. The required elements of a rightsizing review include detailed analysis of current and projected staff for each section of an overseas mission, as shown in table 1. M/PRI has also refined its methodology for analyzing administrative, management, and program staff. M/PRI has developed uniform guidance for staff at overseas missions to use in preparing rightsizing submissions. The majority of State officials at posts we visited that had participated in a rightsizing review said that the M/PRI guidance was helpful for the post in completing its submission.\nM/PRI has developed standard methodological tools to examine overseas staffing on a mission-by-mission basis. These tools are ratios and formulas that compare missions considered similar in size, foreign policy priority, and management and administrative requirements, and help M/PRI to determine what it believes to be appropriate staffing levels in each section of an overseas post. The total management ratio, for example, is the number of customer units divided by the number of U.S. direct-hire management positions. Further, the level of program staff is analyzed using two tools—the Four Factor Index and diplomatic density. The Four Factor Index is an attempt to measure a country’s theoretical foreign policy importance to the United States using a combination of factors such as population, gross domestic product, trade volume with the United States, and U.S. foreign assistance. Diplomatic density is an effort to quantify the size of the U.S. diplomatic presence in a country with respect to U.S. interests in that particular country. It is calculated by dividing the number of diplomatic direct-hire positions present in a given country by the Four Factor Index. According to M/PRI officials, diplomatic density tends to be relatively low in developed countries with which the United States has close relations, such as Canada, Japan, and Germany, or where our interests are limited or primarily humanitarian. Diplomatic density may be higher where the United States has or has recently had difficult relations or where vital security interests are at stake, such as in Russia and many of the countries in the Middle East.\nMany post officials we spoke with considered M/PRI’s standardized analysis appropriate but emphasized the need for flexibility to account for varying circumstances at each post. Some officials noted that M/PRI’s comparative analysis among posts was particularly helpful in providing context for staffing decisions. For example, one management officer stated that the rightsizing review found that locally-employed staff at post had heavier workloads than their counterparts at similar posts. The post used this analysis as justification for requesting more locally-employed staff positions.\nAccording to non-State officials, M/PRI generally coordinates with other agencies in preparing rightsizing reviews of U.S. government staffing overseas. In 2006, we reported that coordination with other agencies in the rightsizing process was initially limited. Non-State agencies had voiced a number of concerns regarding their interaction with the Office of Rightsizing, including their desire for greater participation in the rightsizing process. We recommended that the Office of Rightsizing increase its outreach activities with non-State agencies so that all relevant agencies with an overseas presence could discuss rightsizing initiatives on a regular and continuous basis. During our current review, non-State officials stated that M/PRI’s current coordination efforts had improved.", "For more than half of the 144 staffing projections based on rightsizing reviews that we analyzed, actual staffing levels as of December 2011 were within 10 percent of review staffing projections, either higher or lower. However, over 40 percent of the projections based on the reviews had differences of greater than 10 percent. About 30 percent of these had more staff than projected and 13 percent had fewer (see fig. 1). In a few cases, the actual staffing levels as of December 2011 were much higher or lower than the projected levels. For example, the actual number of U.S. direct-hire desk positions (81) in Bolivia as of 2011 was less than half of the projected number of U.S. direct-hire desk positions (164). On the other hand, the actual number of U.S. direct-hire desk positions in Algeria (56) was nearly 20 percent higher than the projected level (45). See appendix I for more information about our methodology.\nNumerous factors contribute to differences between projected and current staffing levels, such as unanticipated U.S. and foreign government policy changes. Officials from ten missions we identified as having the largest differences between December 2011 staffing levels and the rightsizing projected staffing levels, either higher or lower, identified such factors. Table 2 shows the percentage differences between December 2011 actual staffing levels and projected total staffing levels based on the rightsizing reviews for these missions.\nUnanticipated changes in U.S. government policies and priorities contribute to differences between actual and projected staffing levels at overseas posts. Programs such as the President’s Emergency Plan for AIDS Relief (PEPFAR) and USAID and State hiring initiatives, including have added additional staff to overseas posts, while Diplomacy 3.0,other changes in U.S. foreign policy have led to lower-than-projected staffing levels.\nAccording to the management officer in Mozambique, the increase in the number of U.S. direct-hire and locally-employed staff positions as a result of PEPFAR’s initiation was greater than anticipated.\nThe introduction of the Visa Waiver Program for Korea reduced the need for consular officers to conduct visa interviews and led to lower- than-projected staffing levels, according to the management officer in Korea.\nGhana became a USAID priority country and the beneficiary of the Global Health Initiative, Feed the Future, and Partnership for Growth, which led to increased staffing levels, according to the management officer in Ghana.\nUSAID’s and State’s hiring initiatives added a human resource officer, a political officer, and a general service officer, positions not anticipated at the time of the rightsizing review, according to the management officer in Mozambique.\nAccording to the management officer in Pakistan, increased funding to address development and security projects has led to higher staffing levels than the rightsizing review projected.\nThe closure of an Arabic language school for State employees in Tunisia resulted in staffing levels below rightsizing projections, according to the management officer.\nUnanticipated changes in foreign government priorities and political environment can contribute to differences between actual and projected staffing levels. A foreign government’s decision to eliminate program funding or request the closure of a U.S. program usually leads to lower staffing levels, as in the following examples.\nAccording to the Deputy Chief of Mission in Kuwait, the decrease in Kuwaiti government funding for the Office of Military Cooperation- Kuwait caused the post to reduce staffing levels beginning in 2009. In 2008, the Bolivian government ordered the U.S. Drug Enforcement Agency to leave Bolivia, leading to an unexpected reduction in staff, according to the management officer in Bolivia.\nAccording to the management officer in Libya, staff levels decreased after the evacuation and destruction of the U.S. embassy in February 2011.\nAdditionally, some posts reported that they were unable to carry out the relatively large reductions in staffing levels projected in the rightsizing reviews, usually for locally-employed staff positions. M/PRI projected sizeable reductions in locally-employed staffing levels for posts through outsourcing or contracting. However, some posts reported that a lack of viable service options in the local economy made it unfeasible to outsource or contract services. For example, In Mozambique, outsourcing services such as the motor pool, customs shipping, travel services, and warehousing are not feasible due to the country’s poor infrastructure, according to a management officer in the country. In Bangladesh, according to a management officer in the country, the post does not contract custodial services, warehouse services, or car repair as recommended by the rightsizing review because no local contracting options exist. In Burkina Faso, the embassy did not contract guard services because no major contractors exist in the capital, Ouagadougou, and local companies cannot provide the level of quality and service required by the post, according to the embassy’s management officer.", "Rightsizing recommendations often focus on administrative or management positions, where efficiencies are considered likely to be achieved. M/PRI typically does not make recommendations to non-State agencies and generally relies on non-State agencies, as well as certain State bureaus, to determine their own staffing needs.", "Rightsizing reviews contain recommendations to improve post operations and eliminate duplicative services and positions; these recommendations often focus on State’s administrative and management staff. To develop its recommendations, M/PRI reviews the levels of all staff at missions and seeks input from both State and non-State agencies. Many of M/PRI’s recommendations that we analyzed focused on State administrative and management staff rather than programmatic staff or staff from other agencies. Officials stated that administrative and management functions are where greater efficiencies are considered likely to be achieved. M/PRI recommendations may include outsourcing or regionalization of administrative functions such as voucher processing or warehousing. These changes affect administrative staff responsible for those functions, at times addressing dozens of positions filled by locally- employed staff. In Albania, for example, the rightsizing review recommended a reduction of over half of the locally-employed staff non- desk positions, from 216 to 93, mainly through outsourcing of guard services. In Bangladesh, the rightsizing review recommended eliminating 27 locally-employed non-desk staff positions out of a total of 192 to improve the efficiency of administrative functions, such as building, gardening, and custodial services. The review found that the number of square meters maintained per service provider for both residential and non-residential buildings in Bangladesh was lower than the worldwide median. For example, the review found that the area a service provider maintained in Bangladesh was less than half that in other posts for non- residential buildings and thus deemed the service to be inefficient. It recommended eliminating a sufficient number of positions to bring the ratio of square meters per service provider on par with other posts.\nAccording to State officials, the focus on management services is appropriate because that is where duplication of effort is most likely to occur. State officials said that it is easier to apply M/PRI’s quantitative tools to administrative and management staff activities than to programmatic activities. According to State officials, administrative or management work is better suited to measurements that can be compared across posts. For example, voucher examiners can record the volume of vouchers handled in a given time and the length of time they take to process. M/PRI has developed tools to assess the level of administrative support needed at posts of different sizes and has used those tools to compare posts of similar size. By comparing the efficiency of administrative services across similar posts, M/PRI has developed targets that posts should meet and uses these targets to identify posts that may be under- or overstaffed in administrative functions. For example, the rightsizing review for Paraguay recommended that the embassy cut one U.S. direct-hire position in administrative services support, a general services officer. This recommendation was based on comparing the workload of Paraguay’s service providers with workloads of service providers at similar posts—Uruguay, Croatia, and Cyprus. Rightsizing reviews also evaluate whether posts can utilize locally- employed staff in a position rather than a more costly U.S. direct hire. For example, the 2010 rightsizing review for Kenya recommended that the post use appointment-eligible family members to serve in office management positions instead of U.S. direct hires. According to M/PRI, the cost of employing these appointment-eligible family members is only a fraction of U.S. direct-hire employees and helps minimize the American footprint in dangerous overseas environments. In addition, M/PRI recommended that appointment-eligible family members be considered for employment if host country nationals are unavailable or present an unacceptable risk.\nAccording to State officials, it is more difficult to quantify the workload of program staff such as political officers than that of administrative and management staff. M/PRI has developed methodological tools to measure a post’s diplomatic density and foreign policy priority for comparison with similar posts. However, State officials said that it is difficult to assess the efficiency of program staff due to the qualitative nature of their activities, such as discussing policy issues with their diplomatic counterparts or drafting briefing documents for visiting officials. Nevertheless, M/PRI makes recommendations regarding programmatic staff where possible. In Kuwait, for example, the 2010 rightsizing review recommended the periodic reevaluation of the political and economic sections to assess the possibility of combining them. In some cases, M/PRI has made broader recommendations for posts to review levels of staff across an entire region. For example, M/PRI recommended that the Bureau of European and Eurasian Affairs reevaluate an appropriate presence in former Warsaw Pact country posts, given that the political and economic environment in these countries has shifted dramatically during the past 2 decades.", "M/PRI reviews all U.S. government staffing overseas and incorporates staffing data and projections from non-State agencies with a presence overseas. While chiefs of mission have final decision-making authority on staffing changes at their missions, M/PRI officials stated that their office does not have the authority to direct non-State agencies’ overseas staffing decisions. M/PRI generally does not analyze staffing numbers of other U.S. agencies overseas or make recommendations affecting these staff. Instead, M/PRI officials stated that they rely on these agencies to conduct their own rightsizing assessments and determine independently what their staffing needs will be for each post. M/PRI infrequently makes recommendations to other agencies, such as USAID. For example, M/PRI recommended that USAID evaluate the distribution of its staff in Central America, questioning the sustainability and cost-effectiveness of high USAID staffing levels in El Salvador and suggesting that USAID’s development resources could be better utilized elsewhere in Central America. However, such broader recommendations are an exception in rightsizing reviews and not a common occurrence, according to M/PRI officials.\nAccording to some bureau officials, non-State agencies that are relatively new to operating overseas have been slow to acclimate to the rightsizing process. State officials noted that non-State agency officials in Washington might have a different view of long-range overseas staffing needs than their agency officials at post. Several officials from different regional bureaus said that agencies prefer to conduct their own strategic planning and staffing exercises and view rightsizing as an activity internal to State. Officials from several non-State agencies confirmed that they conduct their own internal staffing analyses. For example, officials from the Department of Homeland Security noted that they review overseas staffing on an ongoing basis, since current events dictate the department’s operational needs. Similarly, officials from the Centers for Disease Control and Prevention stated that they evaluate overseas staffing through annual updates to their strategic staffing plan and look for opportunities to reduce U.S. direct hires by empowering locally-employed staff to serve in senior management and leadership positions. The Defense Intelligence Agency coordinates the DOD’s rightsizing efforts at U.S. posts; DOD components reevaluate positions worldwide as requirements change to ensure that staff are best positioned to achieve the department’s mission, according to an agency official.", "State uses rightsizing reviews to plan facilities construction and for certain staffing considerations, but some U.S. officials said that use of the reviews is limited, and State officials do not monitor whether recommendations are implemented. State’s Bureau of Overseas Buildings Operations (OBO) uses the staffing projections in rightsizing reviews to plan the size and estimate the initial costs of new embassy and consulate compounds. Further, M/PRI uses rightsizing reviews when it assesses requests from State or other agencies to add staff to overseas posts, although the respective chief of mission makes the final decision for his or her mission. However, some regional bureau officials said that they do not actively use the reviews except as a historical overview of staffing, and some post officials said that they do not use the reviews at all. In addition, State often uses documents other than rightsizing reviews to inform decisions in areas such as determining staffing levels and regionalization. Finally, State does not monitor the implementation of rightsizing review recommendations and has not designated an office with that responsibility, making it difficult to know the extent to which rightsizing reviews are having an impact.", "State uses rightsizing reviews for various purposes, according to U.S. officials. These officials use reviews to, among other things, plan new construction, assess requests to add staff to a post, and sometimes, in conjunction with other information, allocate resources. In addition, some State officials stated that rightsizing is the only comprehensive process to verify the number of overseas positions and the personnel occupying them.\nThe reviews that precede the construction of a new diplomatic compound have the most impact, according to M/PRI’s fiscal year 2010 report to Congress, because OBO uses the rightsizing projections to plan the size and estimate the preliminary costs of such projects. OBO officials told us that using rightsizing reviews to plan new construction is a significant improvement over the process previously used, which was informal and not systematic. Rightsizing reviews must accompany any proposal for new construction that is sent to the Office of Management and Budget and to Congress. While OBO bases its construction plans on M/PRI’s rightsizing review, OBO officials stated that they also verify the staffing numbers in the rightsizing reviews with the staffing numbers in personnel databases and with agency and post officials. If post staffing levels increase by more than 10 percent (the amount of growth space OBO builds in) after a project has started, OBO asks M/PRI to do a rightsizing revision to obtain more accurate numbers and improve construction planning, according to OBO officials. Regional bureau officials stated that they and post officials pay particularly close attention to rightsizing reviews that are conducted in preparation for construction because they want to ensure that OBO plans enough space for the new diplomatic compounds.\nFurther, M/PRI and post officials stated that they use rightsizing reviews when assessing requests by State or other agencies through the NSDD- 38 process to add staff to overseas posts, although the final decision on requests is made by the chief of mission. An M/PRI official stated that rightsizing reviews are intended to be used by the chief of mission to inform decisions on staffing, including those made through the NSDD-38 process. A few post management officers told us that the rightsizing process had prompted posts to review staffing requests more carefully. One management officer said that the rightsizing process also prompted a more substantial justification for NSDD-38 requests, adding organization and structure to the decision-making process. Another management officer said that rightsizing prompted the post to launch a new internal mechanism to control growth. The post instituted an internal pre-NSDD-38 vetting process requiring each office or agency to justify the need for a requested position via internal memorandum and explain how it would be funded and address other logistical needs (such as available office space).\nIn addition, some officials from State bureaus and posts told us that they use rightsizing reviews in a variety of other ways. Bureau of Diplomatic Security officials said that they use rightsizing reviews in conjunction with Office of Inspector General (OIG) reports, annual Mission Strategic and other information to make resource Resource Plans (MSRP),allocation decisions in their annual staffing planning exercise. In addition, an official in Kuwait said that she read the rightsizing review when she arrived at post because it gave a more concise summary of conditions at post than other documents, such as the MSRP. Further, a regional bureau official stated that the primary value of rightsizing was that it forces missions to systematically collect information and plan for future staffing. Several officials stated that undertaking the rightsizing process acts as a check on growth in overseas staffing levels. For example, M/PRI’s fiscal year 2011 report to Congress states that M/PRI projected 42 fewer U.S. direct-hire positions than missions had projected.\nSome post officials, particularly those in management functions, said that they refer to rightsizing reviews to support staffing changes. For example, the management officer in Paraguay stated that the post concurred with the rightsizing recommendation to eliminate an assistant general services officer position; post officials are now in the process of abolishing the position. The financial management officer in Sarajevo said that she had already considered outsourcing cashiering, but a rightsizing recommendation to do so gave her more incentive to take action. Further, according to M/PRI officials, M/PRI’s 2007 review on Uruguay recommended adding a second U.S. direct-hire public diplomacy position, and the post has since implemented that recommendation.\nAccording to State officials, M/PRI provides a broader perspective in analyzing overseas staffing, providing information on where posts are overstaffed or understaffed, and recommending potential ways to achieve greater efficiencies. OBO officials stated that rightsizing is an independent process that provides staffing projections. According to regional bureau officials, the rightsizing review is currently the only tool that provides a comprehensive process to verify the number of overseas positions and the personnel occupying them. Officials from several regional bureaus said that M/PRI’s broader perspective in analyzing post operations was a benefit to rightsizing, as posts tend to have a narrower, more parochial perspective on what staffing levels are necessary.", "Several U.S. officials stated that they do not actively use rightsizing reviews; they view other documents and tools as more timely and useful for planning and staffing decisions. For example, officials from a regional bureau said that they do not actively use the reviews except as a historical overview of staffing. Officials from one regional bureau said that the 5-year reviews do not have as clear a use as those done specifically for construction. Some State post officials, especially in non-management functions, said that the rightsizing reviews were of little or no use to them.\nSeveral U.S. officials stated that that they use MSRPs and OIG reports more frequently than rightsizing reviews to make staffing and resource allocation decisions. These officials said that they were more aware of the annual MSRPs, which are more current than 5-year rightsizing reviews, and OIG reports and recommendations, which require follow-up until they are closed. Officials said that rightsizing reviews, done every 5 years, quickly become outdated as the situation at a post changes. Officials from the Centers for Disease Control and Prevention said that, while the rightsizing review is a long-term planning document, the more immediate time frame of the annual MSRP is more actionable, given the short-term program-driven nature of the agency’s work. Further, some State officials told us that because the rightsizing process is still relatively new and done at each post only once every 5 years, many post management officers have not yet gone through a rightsizing review and may be unfamiliar with it. As a result, some post officials may be resisting the rightsizing process rather than viewing it as a tool, according to M/PRI officials.\nIn addition, some officials said that the final rightsizing reviews are not widely disseminated, or that they do not know how to find the reviews. Department of Homeland Security officials said that this is the first year State has given them access to the final rightsizing review on State’s intranet. Previously, while they provided comments on drafts, they were not given access to the final document. In addition, a human resources officer at one of the posts we visited stated that the training State provides to new human resources officers does not mention the rightsizing review. Several officials at the posts we visited said that they first learned about their post’s rightsizing review in an announcement of our visit to discuss rightsizing.", "State has not clearly designated an office with responsibility for pursuing implementation of rightsizing recommendations and does not track recommendation status after completing a rightsizing review, making it The legislation that established the difficult for M/PRI to assess impact.rightsizing process states that the Secretary of State shall take actions to carry out the recommendations made in each rightsizing review.\nState officials have differing opinions about who should be responsible for implementing recommendations. M/PRI’s 2010 report to Congress states that rightsizing decisions are implemented through the NSDD-38 process, with the final decision resting with the chief of mission. However, one post official stated that regional bureaus should have responsibility for taking action on rightsizing recommendations because they make resource allocations across posts. Other post and regional bureau officials, in contrast, stated that individual posts have responsibility to take action on rightsizing recommendations because the recommendations are generally directed at the posts, not the bureau. Still other officials stated that the posts and regional bureaus should share responsibility for implementing the recommendations. Officials from one regional bureau said that M/PRI’s recent rightsizing recommendations were often developed in concert with the regional bureaus, which could prompt the bureau to follow up and encourage the post to implement the recommendations. M/PRI began requiring posts to provide recommendation implementation action plans in 2007 in response to one of our previous recommendations. However, officials said that they stopped doing the plans after about a year. The time horizon for implementing the rightsizing recommendations varied to such an extent that frequent reevaluation of progress would have been required to ensure compliance, which was impractical given M/PRI’s resource constraints, according to M/PRI officials. Officials from both M/PRI and the regional bureaus have noted that M/PRI does not have the authority to compel implementation of rightsizing recommendations.\nSome post officials noted that there is little incentive to implement recommendations, particularly if the recommendations are to decrease the workforce size. While posts may agree with rightsizing recommendations in concept, the tendency is for posts to protect their staffing levels and look for increases if possible. For example, an official in Prague agreed with a rightsizing recommendation to conduct a strategic regional review of staffing in former Warsaw Pact countries to determine whether the number of positions could be reduced. He noted, however, that it would be difficult to accomplish in practice because posts lack incentive to cut positions. The post’s budget provides salaries and other compensation for locally-employed staff, while State’s headquarters budget provides U.S. direct-hire staff salaries. incentive to reduce U.S. direct-hire staff even though they are more costly than locally-employed staff. In addition, the chief of mission in a particular country has final authority over staffing decisions and may have priorities that extend beyond rightsizing considerations.\nThe post budget also provides some benefits to U.S. direct-hire staff.", "Rightsizing reviews play a crucial role in planning construction of new diplomatic facilities overseas, can inform bureau and post decisions on staffing, and have prompted some posts to reassess staffing increases. M/PRI has improved the consistency of its rightsizing approach over the past several years. In addition, undertaking the rightsizing process can act as a check on growth in overseas staffing. A valuable component of the reviews is the recommendations made to improve post operations.\nThe legislation that established the rightsizing process requires the Secretary of State to ensure that rightsizing recommendations are addressed; however, State officials have not developed a clear approach or designated an office to address, track, and report on such recommendations. No State office has responsibility for following up on recommendations, and posts or bureaus have limited incentive to undertake an examination of recommendations and implement them if they prove to have value. Further, any actions post officials take to implement recommendations may not be known or documented outside the post, which contributes to a substantial loss of information for State officials. Although the reviews have certain limitations, including competing priorities at posts, State has not yet realized the full potential of its rightsizing reviews. To strengthen the impact of future rightsizing reviews, State needs a process by which it can capture this information to inform future decisions about the optimal number and mix of staff at posts overseas to maximize the use of limited resources. Such a process would also strengthen State’s ability to report to Congress on the accomplishments of its rightsizing process.", "To strengthen the effectiveness of the rightsizing effort, we recommend that the Secretary of State designate the appropriate entity or entities to take the following two actions: 1. ensure that rightsizing recommendations are addressed, including time frames for their evaluation and implementation, and 2. track and report on the actions taken to implement the recommendations.", "We provided a draft of this report to State for comment. In its written comments, reproduced in appendix II, State emphasized that correctly aligning staffing with foreign policy goals and ensuring the maximum safety and efficiency of overseas operations remain top department priorities. State also noted that, given the critical role rightsizing reviews play in determining staffing levels in preparation for the construction of diplomatic facilities overseas and informing bureau and post decisions on future staffing needs, it is important that the rightsizing function be carried out optimally and that rightsizing data and analysis be shared widely.\nState indicated that it would carefully consider our recommendations, and it described a number of actions it intends to take that could address them. State noted that M/PRI will take the lead with regard to tracking implementation of rightsizing review recommendations. For rightsizing reviews initiated after August 1, 2012, as part of the ongoing second cycle of reviews, M/PRI analysts will outline the extent to which specific recommendations M/PRI provided in the previous rightsizing cycle have been implemented, as appropriate. State proposed that this information on progress related to implementation of M/PRI’s recommendations for overseas posts be included in the yearly rightsizing report to Congress beginning in December 2012. In addition, beginning in calendar year 2013, M/PRI will survey each mission 1 year after the completion of a rightsizing review to assess progress with regard to the implementation of recommendations. Posts will be asked to report on measures taken to comply with recommendations, provide a time frame for doing so, or explain changing conditions or policies that make compliance unfeasible. State proposed to then include this additional information in the yearly rightsizing report to Congress beginning in December 2013. Further, State reported ongoing efforts to refine analytical tools used in the rightsizing analysis and cited an intention to expand the number of outreach sessions and training on rightsizing to classes at its Foreign Service Institute.\nState also provided technical comments that were incorporated, as appropriate. We provided the Departments of Defense; Health and Human Services; Homeland Security; and Justice; and the U.S. Agency for International Development with relevant excerpts of the report and requested technical comments, but none were provided.\nWe are sending copies of this report to interested congressional committees. We are also sending copies of this report to the Secretary of State. In addition, this 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) 512-8980 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 reported are listed in appendix III.", "The objectives of this report were to examine (1) the consistency of the Department of State’s (State) approach to conducting rightsizing reviews and how its projections compare to actual staffing levels; (2) the focus of State’s rightsizing recommendations; and (3) the extent to which State uses its rightsizing reviews and monitors implementation of recommendations.\nOur scope included the 181 rightsizing reviews that State’s Office of Management Policy, Rightsizing and Innovation (M/PRI) completed between 2005 and 2011 that were provided within the time frame of our review. Each U.S. overseas mission has undergone at least one rightsizing review, according to M/PRI; a few have undergone two reviews.\nTo obtain information on the consistency of State’s approach to conducting rightsizing reviews, the focus of rightsizing recommendations, and the extent to which State uses its rightsizing reviews and monitors implementation of recommendations, we reviewed agency documents— including M/PRI’s annual reports to Congress, and Office of Inspector General (OIG) reports—and interviewed officials from State and non- State agencies, both in Washington, D.C., and at overseas posts. Specifically, we discussed rightsizing with State officials in Washington from M/PRI, regional bureaus, the Bureau of Overseas Buildings Operations; the Bureau of Diplomatic Security; the Bureau of Consular Affairs; and the OIG. We also spoke with officials from non-State agencies in the United States and overseas, including the Departments of Commerce, Defense, Health and Human Services, Homeland Security, and Justice, and the U.S. Agency for International Development.\nTo obtain more detailed information on the consistency of State’s approach to conducting rightsizing reviews, how projections compare to actual staffing levels, the focus of rightsizing recommendations, and how State uses and monitors implementation, we selected 14 reviews to analyze in greater depth, traveling to 3 of the posts and contacting the other 11 by telephone or email. We based our selections on interviews with M/PRI and State’s regional bureaus, the content of the rightsizing reviews, and the political and security conditions at post to ensure that we analyzed a range of experiences. In selecting posts, we considered the date the rightsizing review was completed, whether other U.S. agencies were present at post, geographic diversity and whether a post was located in a new embassy compound. We traveled to Prague, the Czech Republic; Sarajevo, Bosnia and Herzegovina; and Kuwait City, Kuwait to discuss their respective rightsizing reviews with post officials. While at post, we interviewed officials in each embassy section, including the office of the chief of mission, management, human resources, financial management, facilities management, the regional security office, political affairs, public affairs, and consular affairs, among others. We also met with officials from other U.S. government agencies present at post. We also communicated with management officers at the following 11 missions: Bangladesh, Bolivia, Burkina Faso, Ghana, Korea, Libya, Mozambique, Pakistan, Paraguay, the Philippines, and Tunisia.\nTo obtain additional information on the consistency of State’s approach to conducting rightsizing reviews, we reviewed agency documents— including M/PRI’s annual reports to Congress, M/PRI’s guidance to posts, and M/PRI’s guide to rightsizing for its analysts—and interviewed officials from State and non-State agencies, both in Washington, D.C., and at overseas posts. During our overseas site visits to the Czech Republic, Bosnia and Herzegovina, and Kuwait, we discussed the rightsizing process with the embassy section heads. To examine M/PRI’s coordination with other U.S. government agencies, we spoke with officials from non-State agencies in the United States and overseas. We also discussed their process for allocating overseas staff with these officials. In addition, we reviewed legislation related to the establishment of the Office of Rightsizing within State and the intent of rightsizing. To examine how M/PRI’s methodology has evolved in recent years, we reviewed 181 rightsizing reviews completed by M/PRI between 2005 and 2011. We reviewed information papers on M/PRI’s methodological tools for assessing both administrative staff and program staff, including the total management ratio and diplomatic density.\nTo assess the extent to which State’s staffing projections compare with actual staffing levels, we relied on two main sources of data: (1) the staffing projections in the rightsizing reviews, which we manually entered into a spreadsheet and (2) the actual staffing levels State extracted from the Post Personnel database for us. To assess the reliability of the data, we conducted a data consistency check and interviewed knowledgeable State officials on how the data were collected and maintained, as well as how the data were extracted for our use. We sent the staffing projection data we manually entered to State for verification. We determined that the data were sufficiently reliable for our purpose of comparing staffing projections with actual staff levels as of December 2011. We obtained 181 rightsizing reviews from the Office of Rightsizing. We took the following steps to reduce the number of reviews to 144 for the comparison analysis: deleted entries with projection years prior to 2011; deleted entries based on an older review if there were multiple deleted entries with unreliable data. For example, State told us that Afghanistan personnel numbers were not reliable; consolidated projections for bilateral and multilateral missions in the same country. For example, we combined projections for the U.S. missions to Belgium, the European Union, and the North Atlantic Treaty Organization into one entry; consolidated projections for multiple posts in one country into one entry. For example, we consolidated projections for posts in Russia and posts in Poland; and deleted entries with no projections.\nTo compare rightsizing projections to the actual staffing levels of 2011, which is the year for which State provided personnel data, we extrapolated 2011 staffing levels based on rightsizing review projections. We assumed linear growth or decline in staffing levels. For example, if the base year was 2008 and the projection year was 2013, we divided the change in staffing levels by 5 (5 years between the projection year and the base year) to get the annual change in staffing levels. We added the changes for 3 years (3 years between the base year and 2011) to the base-year staffing level. We then identified the number of reviews in each category of differences between the actual and the projection: within 10 percent, 10 to 50 percent overprojection, 10 to 50 percent underprojection, more than 50 percent overprojection, and more than 50 percent underprojection. Missions with overprojections had fewer staff than projected, while those with underprojections had more.\nTo understand the factors that could lead to differences between the actual and projected staffing levels, we identified posts with relatively large differences by generating a composite index for each country, taking into consideration the differences in absolute numbers and percentages for the following three categories: (a) U.S. direct-hire desk positions, which have the most significant impact on the physical space at a post; (b) locally-employed staff, which comprise the majority of the personnel overseas; and (c) country total, which captures all personnel at a post . Based on the composite index, we identified five countries for overprojection—Tunisia, Libya, Bolivia, Korea, and the Philippines—and five countries for underprojection—Pakistan, Bangladesh, Ghana, Mozambique, and Burkina Faso. The differences between projected and actual total staffing levels as of December 2011 were over 10 percent for all 10 countries. We then sent questions to the management officers in each country asking them the reasons for the differences. We summarized their responses in the report.\nTo obtain information on the focus of recommendations made by State’s rightsizing office, we reviewed 181 rightsizing reviews completed by M/PRI between 2005 and 2011. During our overseas site visits to the Czech Republic, Bosnia and Herzegovina, and Kuwait, we discussed the rightsizing recommendations with the relevant section heads at each post. We also discussed rightsizing recommendations with the management officers in the other 11 missions that we selected for more in-depth review.\nTo assess the extent to which State uses its rightsizing reviews and tracks implementation of recommendations, we reviewed agency documents, including M/PRI’s annual report to Congress, and interviewed officials from State and non-State agencies, both in Washington, D.C., and at overseas posts to obtain information on how officials use the reviews and monitor implementation. In addition, we reviewed our prior work on rightsizing, embassy construction, and guidance on internal controls.", "", "", "", "In addition to the individual named above, Ming Chen, Debbie Chung, Lynn Cothern, Martin de Alteriis, Mark Dowling, Etana Finkler, Leslie Holen (Assistant Director), Heather Latta, Lisa Reijula, and Christina Werth made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "", "", "", "h0_title", "h0_full", "h0_full", "h1_full", "h1_full", "h1_full", "", "", "", "", "h1_full", "", "", "", "" ] }

{ "question": [ "What do rightsizing reviews contain recommendations for?", "How does M/PRI develop recommendations?", "What do State's recommendations focus on?", "How did State officials justify this?", "How do the agencies within State use rightsizing?", "How is the rightsizing process helpful?", "Why do some State officials avoid using rightsizing reviews?", "What does State fail to monitor?", "What risks might this lack of reporting cause?", "What was determined after the 1998 bombings of two U.S. embassies?", "What did Congress do in 2004 to solve this issue?", "What is the Office of Rightsizing responsible for?", "What is rightsizing intended to do?" ], "summary": [ "Rightsizing reviews contain recommendations to improve post operations and eliminate duplicative services and positions.", "To develop its recommendations, M/PRI reviews the levels of all staff at posts and seeks input from State and non-State agencies. M/PRI relies on non-State agencies to determine independently their own staffing needs.", "Many of State’s recommendations for a specific post focus on the level of State’s administrative or management staff, rather than State’s programmatic staff or staff from other agencies.", "Some State officials stated that the activities of administrative and management staff are better suited to quantitative measurement while the qualitative nature of programmatic staff activities, such as discussing policy issues with foreign diplomatic counterparts, is more difficult to measure.", "State’s use of rightsizing reviews varies, and State does not follow up on review recommendations. State’s Bureau of Overseas Buildings Operations uses the staffing projections in rightsizing reviews to plan the size of new embassy compounds. Further, M/PRI uses rightsizing reviews when it assesses requests by State or other agencies to add staff to overseas posts, although the final decision is made by the respective Chief of Mission. In addition, Bureau of Diplomatic Security officials said that they incorporate rightsizing reviews into their annual staffing planning exercise, and some post officials said that they refer to rightsizing reviews to support staffing changes.", "Some U.S. officials stated that undertaking the rightsizing process acts as a check on growth in overseas staffing levels.", "However, some State regional bureau officials said that they do not actively use the reviews except as a historical overview of staffing, and some post officials said that they do not use the reviews at all. State often uses documents other than rightsizing reviews for decisions in areas including staffing levels.", "Finally, State does not monitor the implementation of rightsizing review recommendations and has not designated an office with responsibility for their implementation. State issues an annual report to Congress in which it lists the rightsizing reviews it has completed, number of positions recommended for elimination, and potential cost savings; the report does not address whether recommendations have been implemented.", "Because State does not track or report on the implementation of recommendations, State cannot determine if rightsizing reviews are achieving their purpose of aligning overseas staffing levels with U.S. priorities.", "After the 1998 bombings of two U.S. embassies, a U.S. government panel determined that staffing levels had not been adjusted to reflect changing missions, requirements, and security concerns.", "In 2004, Congress mandated the establishment of the Office of Rightsizing within the Department of State.", "The office reviews levels of overseas staffing for all U.S. government agencies at every post every 5 years, projects future staffing levels it determines are appropriate to meet mission needs, and recommends ways to improve efficiency.", "Rightsizing is intended to align the number and location of staff with foreign policy priorities, security, and other constraints." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 0, -1, 3, -1, 0, 1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Overview of the Remote Identity Proofing Process", "The Role of CRAs in Knowledge-Based Verification", "OMB and NIST Provide Guidance to Agencies on Information Security Management", "Selected Agencies Use a Variety of Remote Identity Proofing Techniques, Including Knowledge- Based Verification", "Knowledge-Based Verification Poses Risks, but Alternative Techniques Have Been Developed That Are More Secure", "Several of the Selected Agencies Have Taken Steps to Better Ensure the Effectiveness of Their Remote Identity Proofing Processes, but Only Two Have Eliminated the Use of Knowledge-Based Verification", "General Services Administration Eliminated Knowledge-Based Verification from its Login.gov Service and Is Implementing Additional Verification Techniques", "Internal Revenue Service Eliminated Knowledge- Based Verification and Is Examining Additional Verification Techniques", "Department of Veterans Affairs Has Implemented Some Alternative Methods, but Has No Plans to Reduce or Eliminate its Remaining Use of Knowledge-Based Verification", "Social Security Administration Intends to Eliminate Knowledge- Based Verification, but Does Not Yet Have Specific Plans for Doing So", "United States Postal Service Intends to Eliminate Its Use of Knowledge-Based Verification, but Does Not Yet Have Complete Plans and Time frames for Doing So", "Centers for Medicare and Medicaid Services Has No Plans to Reduce or Eliminate its Use of Knowledge-Based Verification", "NIST and OMB Have Not Provided Sufficient Guidance to Ensure Agencies Move to More Secure Forms of Remote Identity Proofing", "NIST Guidance Does Not Provide Sufficient Direction to Agencies on How to Implement Alternative Methods for Remote Identity Proofing", "OMB Guidance Does Not Include Reporting Requirements to Facilitate Monitoring of Agencies’ Implementation of Secure Remote Identity Proofing", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Commerce", "Appendix III: Comments from the Department of Health and Human Services", "Appendix IV: Comments from the Internal Revenue Service", "Appendix V: Comments from the Social Security Administration", "Appendix VI: Comments from the United States Postal Service", "Appendix VII: Comments from the Department of Veterans Affairs", "Appendix VIII: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "Individuals engage in countless online transactions every day—from checking their bank accounts and making retail purchases to signing up for federal benefits and services. However, securing such transactions is a complex endeavor. A key part of this process is verifying that the person who is attempting to interact for the first time with an organization, such as a federal agency or a business, is the individual he or she claims to be. This process, known as identity proofing, is essential to prevent fraud, which could cause harm to both individuals and organizations.\nIdentity proofing may occur in person or through a remote, online process. In the case of in-person identity proofing, a trained professional verifies an individual’s identity by making a direct physical comparison of the individual’s physical features and other evidence (such as a driver’s license or other credential) with official records to verify the individual’s identity. Verification of these credentials can be performed by checking electronic records in tandem with physical inspection. In-person identity proofing is considered a strong method of identity proofing.\nHowever, it may not always be feasible to require that all applicants appear in person. In such cases, remote identity proofing is performed. Remote identity proofing is the process of conducting identity proofing entirely through an online exchange of information. When remote identity proofing is used, there is no way to confirm an individual’s identity through their physical presence. Instead, the individual provides the information electronically, or performs other electronically verifiable actions that demonstrate his or her identity. Because many federal benefits and services are offered broadly to large numbers of geographically dispersed applicants, agencies often rely on remote identity proofing to verify the identities of applicants.", "Remote identity proofing involves two major steps: (1) resolution and (2) validation and verification. During the resolution step, an organization determines which specific identity an applicant is claiming when they first attempt to initiate a transaction, such as enrolling for federal benefits or services, remotely. The most common form of remote interaction is through an organization’s website. The organization starts the identity resolution process by having the applicant provide identifying information, typically through a web-based application form. Examples of information that an organization may collect for identity resolution include name, address, date of birth, and Social Security number.\nThe organization then electronically compares the applicant’s identifying information with electronic records that it already has in its databases or with records maintained by another entity, such as a CRA, to determine (or “resolve”) which identity is being claimed. For example, if an individual named John Smith were applying, the organization would obtain enough identifying information about him to determine which “John Smith” he is from among the thousands of John Smiths that it may have in its records or that may be documented in the records of the CRA that it is using for this process.\nOnce the resolution process is complete, the process of validation and verification occurs. In this process, steps are taken to verify whether the applicant is really who they claim to be. For example, in the case of John Smith, it is not enough simply to determine which John Smith is being claimed, because the claimant may not really be John Smith at all. Organizations need to obtain electronic evidence from the remote applicant to verify their identity. Organizations can use a variety of techniques to accomplish this goal. Knowledge-based verification is a technique that commonly has been used for this purpose.\nWith knowledge-based verification, organizations ask applicants detailed and personal questions, under the presumption that only the real person will know the answers to these questions. To do this, the organization poses a series of multiple choice questions through an online web form, and the applicant selects the appropriate responses and submits the answers through the web form. If the applicant has chosen the correct responses, through the remotely accessed web form, their identity is considered to be verified, and the validation and verification step is complete. Figure 1 depicts the typical process that organizations use for remote identity proofing (including the use of knowledge-based verification).", "As previously mentioned, to perform knowledge-based verification for remote identity-proofing, federal agencies and other organizations often use services provided by CRAs. The CRAs assemble and evaluate consumer credit and other information from a wide variety of sources. Equifax, Experian, and TransUnion—the three nationwide CRAs—use the personal information they obtain about individuals from organizations, such as financial institutions, utilities, cell phone service providers, public records, and government sources, to compile credit files containing detailed records about individuals. They then use the information in these files to offer a variety of services to federal agencies and other entities. These services can include identity verification, as well as verification of income and employment of a candidate for a job or an applicant for benefits or services.\nTo support organizations that rely on knowledge-based verification, CRAs generate multiple choice questions that organizations can use to test applicants’ knowledge of information in their credit files. The organizations using the CRA services do not generate the questions themselves, because they do not have access to the credit history information maintained by the CRAs. Rather, the CRAs’ remote identity proofing systems transmit the questions and multiple choice answers to the organization through an automated electronic connection with the organization’s website. The organization’s website then displays the questions and multiple choice answers to the applicant through the web application that the applicant is using to apply for access to benefits or services.\nTypically, the questions generated by CRA identity proofing systems ask about lenders, mortgage details, current and past home addresses, or credit card accounts. Once the applicant has selected answers to the questions and enters them in the online application, the organization’s automated system electronically relays the applicant’s responses to the CRA’s remote identity proofing system; this system then compares the responses with information in the applicant’s credit file. If this comparison determines that the applicant correctly responded to the questions, then the applicant’s identity is considered to be verified. The CRA’s identity proofing system electronically transmits the results of its comparison to the organization’s website to allow the applicant, whose identity is now considered verified, to proceed with applying for benefits or services.", "The Federal Information Security Modernization Act of 2014 (FISMA) is intended to provide a comprehensive framework for ensuring the effectiveness of security controls over information resources that support federal operations and assets, as well as the effective oversight of information security risks. FISMA assigns responsibility to the head of each agency to provide information security protections commensurate with the risk and magnitude of the harm resulting from unauthorized access, use, disclosure, disruption, modification, or destruction of information systems used or operated by an agency or on behalf of an agency.\nFISMA assigns responsibility to NIST for developing comprehensive information security standards and guidelines for federal agencies. These include standards for categorizing information and information systems according to ranges of risk levels and guidelines for establishing minimum security requirements for federal information systems.\nTo fulfill its FISMA responsibilities, NIST has issued technical guidance on many different aspects of information security, including identity proofing. NIST issued its first guidance related to identity proofing in 2011. In 2017, NIST released an updated version of its guidance, which included guidance on identity proofing that outlines technical requirements for resolving, validating, and verifying an identity based on evidence obtained from a remote applicant. OMB requires agencies to implement NIST’s technical guidance on information security subjects within one year of issuance. In the case of NIST’s updated guidelines for remote identity proofing, agencies would have needed to implement the guidance by June 2018 to meet OMB’s time frames.\nFISMA assigns responsibility to OMB for overseeing agencies’ information security policies and practices. OMB, in turn, has established requirements for federal information security programs and has assigned agency responsibilities to fulfill the requirements of statutes such as FISMA. OMB policies and guidance require agencies to employ a risk- based approach and decision making to ensure that security and privacy capabilities are sufficient to protect agency assets, operations, and individuals.\nOMB has not issued guidance to agencies specifically on identity proofing. However, OMB developed a draft policy document in April 2018 that is intended to provide guidance to agencies on strengthening the security of information and information systems to ensure safe and secure access to federal benefits and services. While it has not yet been issued, the draft policy indicates that OMB intends to provide policy- level guidance for agencies to identify, credential, monitor, and manage user access to information and information systems and adopt sound processes for authentication and access control.", "The six agencies that we reviewed rely on a variety of remote identity proofing techniques, including knowledge-based verification, to ensure that the individuals who enroll for federal benefits and services are who they claim to be. These agencies typically use knowledge-based verification services offered by CRAs, which generate questions for the individuals applying for benefits or services and check the applicants’ answers to verify their identity. However, to the extent that they use knowledge-based verification, these agencies face risks because an attacker could obtain and use an individual’s personal information to answer knowledge-based verification questions and successfully impersonate that individual.", "Although commonly used by federal agencies for remote identity proofing, knowledge-based verification techniques pose security risks because an attacker could obtain and use an individual’s personal information to answer knowledge-based verification questions and successfully impersonate that individual. As such, NIST’s 2017 guidance on remote identity proofing effectively prohibits the use of knowledge-based verification for sensitive applications. The guidance states that the ease with which an attacker can discover the answers to many knowledge- based questions and the relatively small number of possible responses cause the method to have an unacceptably high risk of being successfully compromised by an attacker. In its guidance, NIST states that the agency no longer recommends using knowledge-based verification because it tends to be error-prone and can be frustrating for users, given the limitations of human memory.\nAccording to NIST officials, private-sector providers of remote identity proofing solutions and officials at the agencies we reviewed, alternative methods for verifying an individual’s identity are available that are not knowledge-based and can provide stronger security assurance than knowledge-based verification. Specific examples of such techniques include:\nRemote assessment of physical credentials. Recently developed technology allows an agency to remotely examine a physical credential, such as a driver’s license or a passport, to verify an individual’s identity. For example, an agency may have the individual use their mobile device, such as a cell phone, to capture and submit an image of their driver’s license to an agency or commercial provider of identity proofing services. The agency or commercial provider can then compare the image to documentation on file to confirm the authenticity of the credential. Technological advances in how images are captured and processed by mobile devices, such as cell phones, can provide improved assurance that the photos transmitted by these devices are genuine and that the credentials are authentic.\nVerification of mobile device possession. Many individuals use their cell phones on a near-continuous basis and keep their phones with them. These actions create a record of the owner’s connection with these mobile devices that is difficult for an imposter to falsify.\nAccordingly, an organization can query records maintained by cell phone carriers to verify the identity of an individual who is in possession of a specific mobile device and phone number. By doing this, the organization can determine how long the individual has had that particular device, compare unique identifiers, and determine if the location matches the individual’s billing information. The organization can be confident that the individual legitimately possesses the device if the device has been in use for some time and its current location corresponds to one where the device has been known to be used by its owner. Since an individual’s location information is obtained directly from the device and compared with cell phone carrier records, data entry errors by the individual, such as mistyping a phone number, are minimized and the risk of impersonation is reduced.\nVerification through mobile device confirmation codes. An additional method that organizations use to help verify an individual’s identity is to verify that an individual possesses a telephone number that they have supplied as part of the remote identity proofing process. Organizations perform verification of an individual’s possession of a phone number by sending a code to that phone number through the short message service (SMS) or another protocol, and ask the individual to enter the code into the online identity proofing application. This process can provide additional assurance about the individual’s identity because the verification code is transmitted through a separate electronic channel (specifically, the telephone system) from the online application where the remote identity proofing process was initiated.\nHowever, unlike the process for verifying the possession of a mobile device, the use of these codes may not prevent an imposter from using a stolen phone or stolen phone number. An imposter may be able to successfully complete the identity verification process if the applicant’s possession of the physical device has not been independently verified. In its remote identity proofing guidance, NIST requires federal agencies to use confirmation codes as a supplement to other identity proofing measures.\nVerification through postal mail confirmation codes. Another method that organizations use to help verify an individual’s identity is to send a confirmation code, such as a personal identification number (PIN), through the mail system to the individual’s address of record. The individual then enters the PIN in the organization’s online application to confirm that they received the code in the mail. Like the use of mobile device confirmation codes, the use of postal mail codes can provide additional assurance about the individual’s identity because the code is sent through a separate medium from the online application where the remote identity proofing process was initiated.\nEven with these alternatives to knowledge-based verification, however, there are limitations to the security assurances that can be provided. One way to overcome these security limitations is for a trained professional to conduct identity proofing in person. This is generally considered to be a strong approach because it allows for direct physical comparison of an individual’s documentation, including photographic evidence, to the individual attempting to enroll. Verification of the credentials being submitted can be performed by checking electronic records in tandem with physical inspection.\nFigure 2 provides examples of alternative identity verification and validation methods that federal agencies have reported using.\nEach of the alternatives to knowledge-based verification has other limitations, including implementation challenges. For example, in-person identity proofing is expensive to implement because it requires organizations to staff and maintain offices or other physical access points in multiple locations, and it can be inconvenient for applicants because it requires travel to one of these locations. Mobile device verification may not always be viable because not all applicants possess a mobile device that can be used to verify their identity. In addition, fraudsters can manipulate or “spoof” phone numbers that redirect phone calls and SMS confirmation codes to an attacker. Sending confirmation codes by postal mail can result in a delay in an individual being able to gain access to the services or benefits he or she is seeking.", "As previously discussed, in 2017, NIST released an updated version of its technical guidance on remote identity proofing. NIST’s 2017 guidance effectively prohibits the use of knowledge-based verification for sensitive applications because of the security risks associated with this technique.\nFor applications where identity verification is important, the guidance prohibits agencies from providing access to online applications based solely on correct responses to knowledge-based questions. Rather, the guidance provides detailed specifications regarding the required features of the identity evidence (such as driver’s licenses and birth certificates) that an individual is to provide and how agencies are to verify that evidence. Agencies are restricted to using knowledge-based verification only for the very limited role of linking a single piece of identity evidence to an individual and only for applications where the identity verification process is not of critical importance. As a result, agencies are effectively prohibited from using traditional knowledge-based questions—the type of questions typically used in identity verification services provided by CRAs—as part of their processes. Thus, in order for agencies to ensure the effectiveness of their remote identity proofing processes, they are required to find ways to eliminate the use of knowledge-based verification.\nThree of the six agencies we reviewed—GSA, IRS, and VA—have taken steps to enhance the effectiveness of their remote identity proofing processes. GSA and IRS recently eliminated knowledge-based verification from their Login.gov and Get Transcript services, respectively. VA has implemented alternative methods, but only as a supplement to the continued use of knowledge-based verification.\nAmong the other three agencies, two of them–SSA and USPS–are investigating alternative methods and have stated that they intend to reduce or eliminate their use of knowledge-based verification sometime in the future; however, these agencies do not yet have specific plans for doing so. One other agency, CMS, has no plans to reduce or eliminate knowledge-based verification for remote identity proofing.", "GSA has implemented alternative methods to knowledge-based verification for Login.gov. While GSA used knowledge-based verification on its Login.gov service in the past, the agency has recently implemented alternative verification techniques that do not rely on knowledge-based verification.\nSpecifically, GSA conducts independent verification of an applicant’s possession of a mobile device, an alternative technique we previously discussed. GSA contracts with a third-party vendor to compare status information about the phone number provided by an individual with telephone company records to confirm the individual’s identity. Further, GSA officials responsible for Login.gov stated that they plan to include additional alternative verification methods to Login.gov in the near future. Specifically, by the end of May 2019, the agency plans to implement software capable of analyzing and validating photos of documentation, such as driver’s licenses, provided by applicants to further enhance the verification of their identities. In 2018, the agency tested this technology through a pilot program.\nGSA officials responsible for Login.gov stated that they are pursuing several other initiatives to further enhance the verification techniques they use for Login.gov. For example, they are researching new software methods for confirming the authenticity of face images and other biometric information that could be transmitted by applicants to confirm their identity. According to the officials, additional work is needed to ensure that a fraudulent image, such as a photo of a mask, is not being provided in lieu of a live image—a threat known as a “presentation attack.”\nThe GSA officials also said they would like to work with other federal agencies to leverage data that have already been verified, such as USPS-validated mailing addresses, passport and visa information maintained by the Department of State, and IRS tax data. However, the officials cited legal and regulatory restrictions to sharing agency data as a challenge to being able to make use of resources such as these.\nGSA’s recent elimination of knowledge-based verification from its Login.gov identity proofing process is consistent with NIST’s 2017 guidance on remote identity proofing and reduces the risk of fraud associated with using Login.gov. The additional enhancements and coordination that the agency is working on, if successful, will likely further improve the effectiveness of its remote identity proofing processes.", "IRS has implemented alternative methods to knowledge-based verification for Get Transcript. While IRS used knowledge-based verification on its Get Transcript service in the past, the agency has recently implemented alternative verification techniques that do not rely on knowledge-based verification.\nSpecifically, IRS conducts independent verification of an applicant’s possession of a mobile device and uses mobile device confirmation codes, alternative techniques we previously discussed. IRS contracts with a CRA to compare status information about the phone number provided by an individual with telephone company records to confirm the individual’s identity. Further, IRS officials responsible for Get Transcript’s identity proofing and authentication services stated that they plan to continue to add alternative verification methods to Get Transcript in the future. They stated that, in June 2017, in response to the release of NIST’s updated digital identity proofing requirements, the agency started a task force to examine the updated requirements and make recommendations on possible changes to IRS’s processes to meet the updated guidance. According to the officials, the task force developed a digital identity risk assessment process that the agency started using to assess external facing online transactions in October 2018.\nIRS’s recent elimination of knowledge-based verification from its Get Transcript identity proofing process and the additional enhancements that the agency is working on, if successful, will likely further improve the effectiveness of its remote identity proofing processes.", "VA has taken steps to better ensure the effectiveness of its remote identity proofing processes, but it continues to rely on knowledge-based verification for certain categories of individuals. As previously mentioned, VA relies on two different providers, a commercial identity verification service (called ID.me) and DOD’s DS Logon, to conduct identity proofing for its benefits systems. These providers use a mix of knowledge-based verification and alternative techniques. DOD’s DS Logon verifies applicants using knowledge-based verification, while the commercial provider uses both knowledge-based verification processes as well as stronger alternative techniques. For example, the commercial provider uses cellular phone data to verify an applicant’s identity based on the device subscriber’s relationship to a claimed identity and the subscriber’s tenure with the carrier.\nVA’s commercial provider can also remotely authenticate identity documents. In this regard, applicants can scan the front and back of driver’s licenses, state identification, and passports, and upload the images to the commercial provider, which then analyzes the images to ensure that the documents meet standards and contain valid information. Further, the provider verifies applicants by having them take photos of themselves and then using facial recognition technology to match the applicants’ images with their identity documents.\nVA officials in the agency’s information technology and benefits program offices believe that the alternative forms of identity proofing used by its commercial provider as a supplement to knowledge-based verification provide an acceptable level of assurance. Nevertheless, the officials acknowledged that it is important to eventually eliminate knowledge- based verification from the agency’s identity-proofing processes.\nHowever, the agency does not have specific plans with time frames and milestones to eliminate the use of knowledge-based verification. VA officials stated that it has not yet established plans for doing so because of its reliance on DOD’s DS Logon service, which still uses knowledge- based verification. Until it develops a specific plan with time frames and milestones to eliminate its reliance on knowledge-based verification, VA and the individuals it serves will continue to face a degree of identity fraud risk that could be reduced.", "SSA continues to rely on knowledge-based verification for its My Social Security service, but SSA officials stated that the agency intends to eliminate knowledge-based verification in the future. According to the SSA Chief Information Security Officer, in fiscal year 2019, the agency intends to pilot alternative verification methods, such as using the commercial ID.me service. In addition, the official said SSA plans to research other alternatives that could be used to replace knowledge- based verification, including modernizing its legacy systems so that they can use Login.gov or another shared identity management platform. The agency has set a goal of eliminating the use of knowledge-based verification in fiscal year 2020.\nAs an interim measure to reduce the risks associated with knowledge- based verification, SSA officials stated that they limit the period of time and the number of attempts that an individual has to answer the knowledge-based verification questions. These limitations are designed to prevent a potential fraudster from researching the answers to the questions. In addition, SSA also sends a confirmation code via email or SMS, which individuals must enter online before being given access to their account.\nSSA does not yet have specific plans and milestones to achieve its goal of implementing enhanced remote identity proofing processes by fiscal year 2020. SSA officials stated that they cannot develop specific plans until they are able to identify an alternative method or methods that can be used successfully by all members of the public with which the agency interacts. Until SSA develops specific solutions for eliminating knowledge- based verification, the agency and the individuals that rely on its services will remain at an increased risk of identity fraud.", "USPS has not yet fully implemented alternative methods to better ensure the effectiveness of its remote identity proofing processes. According to officials responsible for the agency’s identity proofing program, USPS mitigates the risk of using knowledge-based verification by sending a written confirmation to the physical address associated with each identity- proofing transaction and provides instructions for what to do if the transaction is unauthorized or fraudulent.\nIn addition to this mitigation measure, the officials reported that they regularly evaluate new capabilities to further increase confidence in their identity-proofing processes and are planning several additional measures to supplement the use of knowledge-based verification. Specifically, in September 2018, USPS began allowing customers to request a confirmation code via the mail to allow them to enroll in Informed Delivery. In addition, the agency is planning on implementing verification of mobile device possession and SMS enrollment code verification in 2019 and other techniques at a subsequent time. According to USPS officials, these alternative techniques are expected to reduce the agency’s use of knowledge-based verification. The officials said that USPS has not completely eliminated the use of knowledge-based verification because available alternatives to the agency’s current processes do not satisfactorily address critical factors that they consider when deciding whether to implement alternative processes. These factors include cost, projected ability to reduce fraud and protect consumers, projected extent of the population that could be covered, and the burden on customers to complete the process.\nThe officials stated that the agency intends to implement alternative methods in the future for its Informed Delivery service but does not yet have specific plans with time frames and milestones. The officials noted that part of the reason for the slow implementation of alternative methods is that NIST technical guidance does not provide direction on how alternative methods are to be implemented and that additional guidance from NIST would be helpful to the agency for developing and implementing a plan to eliminate knowledge-based verification for the Informed Delivery service.\nWhile the supplemental processes implemented by USPS to date may help to reduce the risks associated with using knowledge-based verification, they do not eliminate such risks. Until it completes a plan with time frames and milestones to eliminate its reliance on knowledge-based verification for Informed Delivery, USPS and its customers will remain at increased risk of identity fraud.", "CMS has not implemented alternative methods to better ensure the effectiveness of the remote identity proofing processes used for its Healthcare.gov service. CMS officials in the Office of Information Technology and the Office of Consumer Information and Insurance Oversight stated that the agency uses a two-step email verification process to reduce the risks associated with knowledge-based verification. Specifically, individuals applying for an account on Healthcare.gov provide basic information (e.g., name, email address, password) and then are asked to acknowledge an email confirmation they receive from CMS. The email confirmation is intended to prove that the individual applying for a Healthcare.gov account is in possession of the email address that same individual provided to CMS.\nHowever, this process confirms only the email address that was used to create the account; it does not confirm the identity of the individual who is applying for the account. CMS stated that it uses this process because other mitigating measures are not cost effective. However, NIST’s guidance does not permit agencies to use knowledge-based verification on the basis of cost effectiveness. Further, the agency does not have specific plans with time frames or milestones to eliminate its use of knowledge-based verification for Healthcare.gov.\nCMS officials acknowledge that they do not have a plan to reduce or eliminate the use of knowledge-based verification because they have not yet identified any effective alternatives to knowledge-based verification for Healthcare.gov. According to these officials, based on a user study they conducted, individuals who use the agency’s services prefer knowledge- based verification over any available alternatives. In addition, the officials stated that certain alternatives, such as mobile device verification, may not always be suitable for the population they serve. As one example, not all applicants have a mobile device that could be used to remotely verify the individual’s identity. The CMS officials noted that NIST technical guidance does not provide direction on how alternative methods are to be implemented, given that they may not always be suitable for the population served by Healthcare.gov. However, until CMS takes steps to develop a plan with time frames and milestones to eliminate the use of knowledge-based verification, CMS and Healthcare.gov applicants will remain at an increased risk of identity fraud.", "While NIST has issued guidance to agencies related to identity proofing and OMB is drafting identity management guidance, these efforts are not sufficient to ensure that agencies adopt secure methods for remote identity proofing. As previously discussed, NIST’s guidance effectively prohibits the use of knowledge-based verification during the validation and verification phases of the remote identity proofing process, but does not provide direction to agencies on how to successfully implement alternative methods for remote identity proofing for large and diverse segments of the population. Further, OMB has not issued guidance requiring agencies to report on their implementation of remote identity proofing processes, which is essential for monitoring agencies’ progress.", "Best practices in IT management state that organizations should provide clear direction in order to achieve objectives. Specifically, the Control Objectives for Information and Related Technologies (COBIT), a framework of best practices for IT governance, states that organizations should provide clear direction for IT projects, including relevant and usable guidance, and ensure that those implementing the technology have a clear understanding of what needs to be delivered and how.\nHowever, NIST has not issued any supplemental implementation guidance to its 2017 technical guidance to ensure that agencies have a clear understanding of what needs to be done to implement alternative methods of remote identity proofing, as called for in the technical guidance. For example, NIST’s technical guidance provides abstract descriptions of identity evidence that individuals must provide, such as a credential containing a photograph or other biometric identifier as well as anti-counterfeiting security features. The guidance states that such credentials can be provided in person or remotely but does not detail the processes needed for providing credentials remotely.\nFor example, the guidance does not discuss the advantages and limitations of currently available technologies that agencies could successfully use to remotely verify credentials provided by individuals or to make recommendations to agencies on which technologies should be adopted. As previously discussed, several potential limitations could make choosing an alternative method difficult. Technologies such as secure, remote verification of a physical credential may not be commercially available. Also, some alternative technologies require that individuals use cell phones and maintain a verifiable record of having them in their possession. The NIST guidance does not discuss how agencies should accommodate segments of the public who do not possess advanced technological devices, such as cell phones, that may be needed for successful remote verification. Because the guidance does not include specific advice or direction on implementing alternative technologies, agencies may be unable to determine what alternative methods are viable for the populations they serve.\nAs previously discussed, several of the agencies we reviewed send confirmation codes to applicants via cell phone, email, or postal mail, as ways that they believe compensate for risks associated with using knowledge-based verification. However, NIST officials do not consider such methods for remote verification to be effective in compensating for the risks associated with knowledge-based verification. Instead, the NIST technical guidance requires agencies to send confirmation codes by mail when they use any remote identity proofing method, including more advanced, alternative verification methods, such as verification of mobile device possession.\nOfficials from CMS, SSA, and USPS stated that they have not eliminated their use of knowledge-based verification in part because the existing NIST technical guidance does not provide direction on how alternative methods are to be implemented, given the various limitations of those alternative methods that agencies have identified. The officials stated that federal agencies could benefit from additional guidance on implementing the alternative verification techniques called for in the NIST technical guidance.\nIn response to these agencies’ comments about being unable to fully implement the remote identity proofing guidance, NIST officials stated that agencies were expected to use their own judgment to determine how to meet the remote identity proofing requirements. The officials added that it was NIST’s position that the updated guidance was comprehensive enough for agencies to follow. Thus, at the time of our review, NIST did not have plans to assist agencies by issuing implementation guidance to supplement its existing technical guidance. NIST officials stated that they are available to provide assistance on an individual basis to agencies that seek their advice.\nWithout additional guidance from NIST on how agencies are to implement the alternative identity proofing methods specified in an agency’s existing technical guidance, agencies may not be using the most effective and secure identity-proofing methods, thus exposing their systems to risk of fraud.", "FISMA requires the Director of OMB to oversee agency information security policies and practices. However, OMB has not provided agencies with guidance establishing reporting requirements for OMB to use in monitoring agencies’ progress in implementing secure remote identity proofing processes. For example, OMB has not proposed including reporting requirements for remote identity proofing in its draft policy on identity, credential, and access management, nor has it included reporting requirements in its FISMA reporting guidance to agencies for fiscal year 2019.\nAccording to OMB staff, OMB plans to issue guidance to agencies on the implementation of identity, credential, and access management. OMB issued a draft of this guidance for public comment in April 2018. However, the draft guidance does not include a requirement for agencies to report on progress in implementing secure remote identity proofing processes.\nBecause it does not require agency reporting on progress in implementing secure remote identity proofing processes, OMB does not have visibility into the extent that agencies rely on insecure methods, particularly knowledge-based verification. Without establishing effective oversight measures, OMB cannot adequately monitor agency progress in implementing the secure identity proofing methods called for in NIST’s 2017 technical guidance. As a result, agencies may be at risk of implementing weak methods of remote identity-proofing for individuals who seek access to services and benefits from the federal government, which may put both the federal government and individuals at risk for fraud.", "The six agencies that we reviewed rely on a variety of remote identity proofing techniques to help ensure that the individuals who enroll for federal benefits and services are who they claim to be. Several of the selected agencies use knowledge-based verification processes that rely on CRAs to pose questions to individuals and check their answers as a way of verifying their identities before granting them enrollment in a federal benefit or service. However, given recent breaches of sensitive personal information, these agencies face risks because fraudsters may be able to obtain and use an individual’s personal information to answer knowledge-based verification questions and successfully impersonate that individual to fraudulently obtain federal benefits and services.\nTwo agencies we reviewed, GSA and IRS, recently implemented remote identity proofing processes for Login.gov and Get Transcript that allow individuals to enroll online without relying on knowledge-based verification. However, four agencies (CMS, SSA, USPS, and VA) were still using knowledge-based verification to conduct remote identity proofing. Moreover, none of the four agencies have developed specific plans to eliminate knowledge-based methods from their processes. Without such plans, these federal agencies and the individuals that rely on such processes will remain at risk for identity fraud.\nNIST has issued technical guidance regarding remote identity proofing, but it may not be sufficient to help ensure that federal agencies adopt more secure methods. NIST’s guidance does not provide direction on how agencies can adopt more secure alternatives to knowledge-based verification while also addressing issues of technical feasibility and usability for all members of the public. In addition, OMB has not issued guidance setting agency reporting requirements that OMB could use to track implementation of more secure processes across the federal government. Without additional guidance, federal agencies are likely to continue to rely on risky knowledge-based verification that could be used to fraudulently gain access to federal benefit programs and services.", "We are making a total of 6 recommendations to CMS, NIST, OMB, SSA, USPS, and VA. Specifically: The Administrator of the Centers for Medicare and Medicaid Services should develop a plan with time frames and milestones to discontinue knowledge-based verification, such as by using Login.gov or other alternative verification techniques. (Recommendation 1)\nThe Director of the National Institute of Standards and Technology should supplement the agency’s 2017 technical guidance with additional guidance to assist federal agencies in determining and implementing alternatives to knowledge-based verification that are most suitable for their applications. (Recommendation 2)\nThe Director of the Office of Management and Budget should issue guidance requiring federal agencies to report on their progress in adopting secure identity proofing processes. (Recommendation 3)\nThe Commissioner of Social Security should develop a plan with specific milestones to discontinue knowledge-based verification, such as by using Login.gov or other alternative verification techniques. (Recommendation 4)\nThe Postmaster General of the United States should complete a plan with time frames and milestones to discontinue knowledge-based verification, such as by using Login.gov or other alternative verification techniques. (Recommendation 5)\nThe Secretary of the Department of Veterans Affairs should develop a plan with time frames and milestones to discontinue knowledge-based verification, such as by using Login.gov or other alternative verification techniques. (Recommendation 6)", "We requested comments on a draft of this report from the eight agencies included in our review. In response, we received written comments from six agencies—Commerce (on behalf of NIST), HHS (on behalf of CMS), IRS, SSA, USPS, and VA. Their comments are reprinted in appendices II through VII, respectively.\nOf the six agencies to which we made recommendations, four of them (Commerce, SSA, USPS, and VA) agreed with our recommendations, and one agency (HHS) did not concur with our recommendation. One agency (OMB) did not state whether it agreed or disagreed with our recommendation. In addition, multiple agencies (GSA, IRS, OMB, USPS, and VA) provided technical comments on the draft report, which we have incorporated, as appropriate.\nThe following four agencies agreed with the recommendations that we directed to them:\nCommerce agreed with our recommendation. The department stated that it will develop additional guidance to assist federal agencies with alternatives to knowledge-based verification and expects to do so within one year from issuance of this report. Comments from Commerce are reprinted in appendix II.\nSSA agreed with our recommendation. The agency stated that it will continue to seek improvements in its existing remote identity proofing process. SSA also stated that, in addition to a roadmap it developed in fiscal year 2019 to update its knowledge-based verification process to a more secure multi-factor authentication technology, it will take steps to ensure compliance with NIST standards for remote identity proofing. SSA’s comments are reprinted in appendix V.\nUSPS agreed with our recommendation. The agency stated that it will be developing a roadmap to implement additional identity-proofing tools and techniques through 2020. Comments from USPS are reprinted in appendix VI.\nVA agreed with our recommendation. The department stated that it will develop a specific plan with time frames and milestones to eliminate knowledge-based verification from the aspects of the remote identity proofing process that it controls.\nFurther, in its response, VA requested that GAO direct a recommendation to the Department of Defense (DOD) to discontinue DS Logon and consider using Login.gov instead. However, we are not issuing any recommendations to DOD because our scope of work did not include auditing DOD’s remote identity proofing processes. Nevertheless, we have adjusted our recommendations to CMS, SSA, USPS, and VA to clarify that Login.gov is one option for identity proofing that they should consider when developing their plans to discontinue the use of knowledge-based verification. VA’s comments are reprinted in appendix VII.\nOne agency did not concur with our recommendation. Specifically, HHS raised several issues related to our findings. The agency stated that it uses a risk-based approach to designing systems controls and that a unilateral prohibition on the use of knowledge-based verification without alternatives is not a feasible solution. We agree with this comment and strongly support a risk-based approach to designing security controls, as required by FISMA. However, we believe that alternatives to knowledge- based verification exist that should be assessed and incorporated as appropriate. Similarly, HHS noted that for other applications across the department, it has considered factors such as consumer user experience, cost, and operational feasibility in addition to NIST guidelines. We agree that many factors need to be considered in assessing what method or methods of identity proofing are most appropriate for any given application but believe it is important for agencies to develop plans for addressing those factors that also eliminate the use of risky techniques, such as knowledge-based verification, that could have a negative impact on consumers and agencies.\nIn response to our specific recommendation to CMS, HHS stated that it does not believe that suitable alternative methods exist that would work for CMS’ population of users, such as those in the rural community, due to distance or individuals without cell phones. However, we continue to believe that CMS should develop a plan to discontinue the use of knowledge-based verification. We recognize that there are members of the population that may not be reached with certain identity proofing techniques; however, a variety of alternative methods to knowledge- based verification are available that CMS can consider to address the population it serves. Comments from HHS are reprinted in appendix III.\nIn addition, OMB did not state whether it agreed or disagreed with our recommendation. Further, in an email response, OMB staff from the office of the Federal Chief Information Officer provided a technical comment, which we incorporated. However, OMB did not otherwise comment on the report findings or our recommendation made to the agency.\nThe IRS also provided written comments on the draft report. In its comments, the agency described the status of its efforts to strengthen identity verification processes, including the fact that it has eliminated the use of knowledge-based verification. Comments from IRS are reprinted in appendix IV. Finally, GSA provided only technical comments on the draft report, as previously mentioned.\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, to the Administrators of the Centers for Medicare and Medicaid Services and General Services Administration; the Commissioners of Internal Revenue and Social Security; Director of the Office of Management and Budget; the Postmaster General of the United States; and the Secretaries of the Departments of Commerce and Veterans Affairs. 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 Nick Marinos at (202) 512-9342 or marinosn@gao.gov, or Michael Clements 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 major contributions to this report are listed in appendix VIII.", "Our objectives were to (1) describe selected federal agency practices for remote identity proofing of individuals seeking access to major web-based applications using services provided by consumer reporting agencies and the risks associated with those practices, (2) assess selected federal agencies’ actions to ensure the effectiveness of agencies’ remote identity proofing processes, and (3) assess the sufficiency of federal identity proofing guidance developed by OMB and NIST in assuring the security of federal systems.\nTo address the first objective, we made an initial, non-probability selection of federal agencies that (1) maintained major public-facing web applications to provide access to federal benefits or services and (2) relied on identity proofing solutions provided by the three nationwide consumer reporting agencies (CRAs)—Equifax, Experian, and TransUnion—to verify the identities of individuals applying for such benefits or services. We considered a “major” application to be one that could involve interaction with millions of individuals across the entire country. To select six agencies from this group, we reviewed prior GAO reports to identify potential agencies for review. We then interviewed officials at these agencies and at CRAs to confirm that these agencies use CRAs as part of their identity proofing processes and to obtain information about additional federal agencies that also employ CRAs for identity proofing for major applications. We included GSA in these interviews because its mission is to support federal agencies and it was likely to be aware of additional federal agencies that fit our criteria. From the information we gained from our interviews and research, we selected these six agencies: the Centers for Medicare and Medicaid Services (CMS), General Services Administration (GSA), Internal Revenue Service (IRS), Social Security Administration (SSA), United States Postal Service (USPS), and the Department of Veterans Affairs (VA).\nAt each of these agencies, we reviewed documentation that described the current remote identity proofing processes the agencies are using for their major public-facing web applications. In addition, we interviewed agency officials responsible for identity proofing to obtain details of the techniques used to verify remote users of these applications. To the extent that these entities used CRAs to conduct knowledge-based verification as part of their remote identity-proofing processes, we discussed the risks associated with using knowledge-based methods as well as the potential advantages and limitations of using alternative methods that are not knowledge-based. We also obtained information from officials at NIST about the risks of knowledge-based methods and the availability of alternative methods.\nTo address the second objective, we assessed remote identity proofing processes used by the selected agencies to determine the extent that they rely on knowledge-based verification to enroll online applicants for federal benefits and services. We also identified alternative methods used by these agencies, either in place of or in addition to knowledge-based verification, and assessed the extent to which agencies had implemented these methods to mitigate the risk of using knowledge-based methods. We compared the remote identity proofing processes at these agencies with the requirements as specified in NIST Special Publication 800-63, Digital Identity Guidelines, to determine whether the processes met the requirements of the NIST guidance. We also interviewed officials responsible for these identity proofing programs to obtain information about agencies’ plans, if any, to eliminate the use of knowledge-based verification from their remote identity proofing processes in the future and obtained relevant documentation of such plans.\nTo address the third objective, we reviewed NIST Special Publication 800-63, Digital Identity Guidelines, to identify federal requirements for remote identity proofing. We compared the guidance to the Control Objectives for Information and Related Technologies (COBIT), a framework of best practices for IT governance, to determine whether the NIST guidance contained clear direction, including relevant and usable guidance, to ensure that those implementing the technology have a clear understanding of what needs to be delivered and how. To assess the sufficiency of this guidance, we consulted with subject matter experts at NIST, ID.me, a private-sector provider of remote verification technologies, and relevant officials at the selected federal entities. Based on information we had obtained about available alternative methods, we determined the extent to which gaps existed in the NIST guidance with regard to implementation of alternative technologies. We also obtained the views of federal agency officials on the extent to which NIST guidance provided sufficient direction to assist them in implementing appropriate remote identity proofing methods.\nFurther, we reviewed OMB’s draft Identity, Credential, and Access Management policy and compared it to the requirements in FISMA and identified shortfalls. We also interviewed OMB staff to discuss the sufficiency of the office’s current guidance and to determine whether the office planned to issue additional guidance establishing reporting requirements for federal entities or conduct other forms of oversight of federal entities’ implementation of the NIST identity proofing guidance.\nWe conducted this performance audit from November 2017 to May 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.", "", "", "", "", "", "", "", "", "In addition to the individuals named above, John de Ferrari and John Forrester (assistant directors); Tina Torabi (analyst-in-charge); Bethany Benitez, Christina Bixby, Chris Businsky, Kavita Daitnarayan, Nancy Glover, Andrea Harvey, Thomas Johnson, David Plocher, Rachel Siegel, and Winnie Tsen made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full", "", "h0_full", "", "h1_title h3_title", "h3_full h1_full", "h2_full h3_title", "", "", "h2_full", "", "h3_full", "", "h4_full h1_title", "h4_full h1_full", "", "h0_full", "", "h5_full", "h0_full h4_full h5_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is remote identity proofing?", "How do agencies perform remote identity proofing?", "Why does the SSA perform remote identity proofing?", "What could stolen data be used for?", "How has the NIST responded to this concern?", "Why are other security methods more limited?", "How have GSA and IRS successfully eliminated knowledge-based identification?", "How has the VA partially eliminated knowledge-based identification?", "How do the USPS and SSA plan to eliminate knowledge-based identification?", "What agencies have no plans to eliminate knowledge-based identification?", "What reasons did officials cite for not adopting alternative methods?", "What is an example of a non viable alternative method?", "Why is knowledge-based verification a liability?", "What have NIST and OMB issued guidance to agencies on?", "How does NIST and OMB's guidance fail to meet guidelines for sound practices?", "Why were some agencies unable to implement this guidance?", "How did NIST officials respond to this concern?", "What agencies agreed with GAO's recommendations?", "Why did HHS disagree with GAO's recommendation?", "How did GAO respond to HHS's disagreement?", "How did OMB respond to GAO's recommendation?" ], "summary": [ "Remote identity proofing is the process federal agencies and other entities use to verify that the individuals who apply online for benefits and services are who they claim to be.", "To perform remote identity proofing, agencies that GAO reviewed rely on consumer reporting agencies (CRAs) to conduct a procedure known as knowledge-based verification. This type of verification involves asking applicants seeking federal benefits or services personal questions derived from information found in their credit files, with the assumption that only the true owner of the identity would know the answers. If the applicant responds correctly, their identity is considered to be verified.", "For example, the Social Security Administration (SSA) uses this technique to verify the identities of individuals seeking access to the “My Social Security” service, which allows them to check the status of benefit applications, request a replacement Social Security or Medicare card, and request other services.", "However, data stolen in recent breaches, such as the 2017 Equifax breach, could be used fraudulently to respond to knowledge-based verification questions.", "The risk that an attacker could obtain and use an individual's personal information to answer knowledge-based verification questions and impersonate that individual led the National Institute of Standards and Technology (NIST) to issue guidance in 2017 that effectively prohibits agencies from using knowledge-based verification for sensitive applications.", "Alternative methods are available that provide stronger security, as shown in Figure 1. However, these methods may have limitations in cost, convenience, and technological maturity, and they may not be viable for all segments of the public.", "Two of the six agencies that GAO reviewed have eliminated knowledge-based verification. Specifically, the General Services Administration (GSA) and the Internal Revenue Service (IRS) recently developed and began using alternative methods for remote identity proofing for their Login.gov and Get Transcript services that do not rely on knowledge-based verification.", "One agency—the Department of Veterans Affairs (VA)—has implemented alternative methods for part of its identity proofing process but still relies on knowledge-based verification for some individuals.", "SSA and the United States Postal Service (USPS) intend to reduce or eliminate their use of knowledge-based verification sometime in the future but do not yet have specific plans for doing so.", "The Centers for Medicare and Medicaid Services (CMS) has no plans to reduce or eliminate knowledge-based verification for remote identity proofing.", "Several officials cited reasons for not adopting alternative methods, including high costs and implementation challenges for certain segments of the public.", "For example, mobile device verification may not always be viable because not all applicants possess mobile devices that can be used to verify their identities.", "Nevertheless, until these agencies take steps to eliminate their use of knowledge-based verification, the individuals they serve will remain at increased risk of identity fraud.", "NIST has issued guidance to agencies related to identity proofing and OMB has drafted identity management guidance, but their guidance is not sufficient to ensure agencies are adopting such methods.", "However, NIST's guidance does not provide direction to agencies on how to successfully implement alternative identity-proofing methods with currently available technologies for all segments of the public. For example, the guidance does not discuss the advantages and limitations of currently available technologies or make recommendations to agencies on which technologies should be adopted.", "Further, most of the agencies that GAO reviewed reported that they were not able to implement the guidance because of limitations in available technologies for implementing alternative identify proofing methods.", "NIST officials stated that they believe their guidance is comprehensive, and at the time of our review they did not plan to issue supplemental implementation guidance to assist agencies.", "Four agencies—Commerce (on behalf of NIST), SSA, USPS, and VA—agreed with GAO's recommendations. These agencies outlined the additional steps they plan to take to improve the security of their remote identity proofing processes.", "One agency, HHS (on behalf of CMS), disagreed with GAO's recommendation because it did not believe that the available alternatives to knowledge-based verification were feasible for the individuals it serves.", "However, a variety of alternative methods exist, and GAO continues to believe CMS should develop a plan for discontinuing the use of knowledge-based verification.", "OMB provided a technical comment, which GAO incorporated, but OMB did not provide any comments on GAO's recommendation." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, -1, 0, 0, 0, -1, 0, -1, -1, 0, 0, 2, -1, 0, 1, 0 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 6, 6, 6, 7, 7, 7, 7, 13, 13, 13, 13 ] }

{ "title": [ "Background", "Agencies’ Physical Security Programs Are Largely Informed by Institutional Knowledge and ISC Standards", "Agencies Use a Range of Management Practices to Oversee Physical Security Activities, but Make Limited Use of These Practices to Help Allocate Resources", "Agencies Use Several Management Practices to Oversee Physical Security and Ensure Program Effectiveness", "Agencies Make Limited Use of Management Practices for Allocating Resources", "Conclusions", "Recommendations", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: List of Agencies Surveyed", "Appendix III: Comments from the Department of Homeland Security", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The federal government’s vast real property portfolio is used for all aspects of operations and includes buildings such as warehouses, office space, dormitories, and hospitals. Agencies’ physical security programs address how agencies approach aspects of physical security for these buildings, such as conducting risk assessments to identify threats and vulnerabilities, determining which countermeasures to implement, and coordinating security efforts within the agency and with other agencies. We have previously reported that because of the considerable differences in types of federal facilities and the variety of risks associated with each of them, there is no single, ideal approach to physical security. For example, in some instances, an agency’s component offices—which are subordinate entities such as bureaus, administrations, or other operating divisions—have their own physical security programs for the facilities they use. In other instances, an agency’s regions or districts play a role in physical security.\nISC was created by Executive Order 12977 in 1995, after the bombing of the Alfred P. Murrah federal building in Oklahoma City, to address physical security across federal facilities occupied by federal employees for nonmilitary activities. ISC’s mandate is to enhance the quality and effectiveness of security in and protection of federal facilities. To accomplish this, Executive Order 12977 directs the ISC to, among other things, develop and evaluate security standards for federal facilities, develop a strategy for ensuring compliance with such standards, and oversee the implementation of appropriate security measures in federal facilities. Executive Order 12977 also directs each executive agency and department to cooperate and comply with ISC policies and recommendations issued pursuant to the order. The order, as amended, gives the Secretary of Homeland Security the responsibility to monitor federal agency compliance with ISC policies and recommendations.\nPrior to the creation of ISC, there was no federal body responsible for developing government-wide physical security standards. Consequently, ISC became the government’s central forum for exchanging information and disseminating standards and guidance on physical security at federal facilities. ISC’s standards are intended to help agencies integrate security into the operations, planning, design, and construction of federal facilities and are intended to be customized to address facility-specific conditions. ISC has developed the following security standards and guidance, among others:9, 10\nPhysical Security Criteria for Federal Facilities establishes a process for determining the baseline set of physical security measures to be applied at a federal facility and provides a framework for the customization of security measures to address unique risks at a facility.\nDesign-Basis Threat establishes a profile of the type, composition, and capabilities of adversaries. It is designed to correlate with the countermeasures contained in the Physical Security Criteria for Federal Facilities.\nFacility Security Level Determinations defines the criteria and process to be used in determining the facility security level of a federal facility, a categorization that then serves as the basis for implementing ISC standards.\nUse of Physical Security Performance Measures directs all federal agencies to assess and document the effectiveness of their physical security programs through performance measurement and testing.\nFor a complete listing of ISC standards and guidance, see www.dhs.gov/interagency- security-committee-standards-and-best-practices. Accessed January 22, 2013.\nISC officials said that they are in the process of consolidating and streamlining several of their physical security standards into a single document, which they believe will help facilitate agencies’ use of the standards.\nThis standard provides guidance on how to establish and implement a comprehensive measurement and testing program.\nSecurity Specialist Competencies provides the range of core competencies federal security specialists should possess to perform their basic duties and responsibilities.\nISC’s 51 member agencies meet quarterly to promote information sharing on physical security. Members serve on working groups and subcommittees to develop and update physical security standards and guidance, including those listed above. ISC also engages with industry and other government stakeholders to advance best practices and provides training on its standards to federal facility security professionals and other stakeholders. Leadership for the ISC is provided by DHS’s Assistant Secretary for Infrastructure Protection, who is the chair of the ISC; an Executive Director; and eight standing subcommittees that identify long- and short-term priorities and oversee strategic initiatives.", "Agencies draw upon a variety of information sources in developing and continually refining aspects of their physical security programs, such as how and when to conduct risk assessments, what skills security staff should have, and how to determine which countermeasures to implement at their facilities. Sources can include an agency’s institutional knowledge or subject matter expertise in physical security, federal statutes and regulations, physical security standards issued by ISC, and state or local regulations, among others, as shown in figure 1. Characteristics such as agencies’ missions and the type, use, and location of their facilities can affect which of these sources agencies use. For example, a facility may adhere to local building codes that affect aspects of physical security such as perimeter fencing, or a facility that is used to house radioactive waste may be subject to federal requirements on the storage of nuclear materials. Institutional knowledge in physical security and ISC’s physical security standards were the two sources that our survey results and case- study interviews showed to be the most influential in guiding agencies’ physical security programs.\nAll 32 of the agencies we surveyed reported that institutional knowledge or subject matter expertise informs their physical security programs. This was the most widely used source cited in our survey, as shown in figure 1. For example, officials from three of the agencies we surveyed said that the knowledge, experience, and expertise that their security specialists have in physical security—which they consider institutional knowledge— is reflected in their physical security programs and policies. One of these officials said his agency contracts with a security company that has extensive knowledge and experience in providing security and law enforcement to high profile institutions across the federal government, and that this knowledge is used in managing the agency’s security program. Another agency official said that the knowledge gained from employees’ previous education, training, or work experiences, or historical knowledge of the agency has assisted in the development of several security policies and procedures within the agency.\nAgencies also rely heavily on institutional knowledge or subject matter expertise to inform specific aspects of their security programs, more so than any other source we asked about in our survey. As shown in figure 2, 26 agencies reported that institutional knowledge informs how they conduct risk assessments and determine appropriate countermeasures. For example, officials from two of our case-study agencies—DOE and USPS—said that they use institutional knowledge to inform how they conduct these activities. DOE headquarters officials told us that when developing and updating agency-wide physical security policies, which address topics such as risk assessments, they obtain input from DOE staff in their component offices, who have knowledge of the particular needs and constraints of their facilities based on their experience implementing security programs. In addition, USPS officials said that their security staff’s knowledge of the agency’s long-standing security program and their professional education in physical security helps them make decisions about security measures needed at their facilities, such as on the location of perimeter fencing and the appropriate brightness for security lights.\nTwenty-nine of 32 agencies surveyed reported that ISC standards inform their physical security programs, making it the second most-used source behind institutional knowledge, as shown in figure 1. Officials we interviewed from our case-study agencies said that they use ISC standards as one of many sources that inform what they include in their physical security programs. ISC has developed a number of government- wide physical security standards that address topics intended to help guide agencies’ physical security programs, including determining a facility’s risk level and identifying threats posed by potential adversaries, among other things. Agencies’ use of ISC standards can help ensure that physical security programs are effective government-wide. The standards are developed based on the collective knowledge and physical security expertise of ISC member agencies and, therefore, reflect leading practices in physical security. Every ISC member agency that we surveyed, as well as four agencies that are not ISC members, reported that they use ISC standards at least to some degree. The three agencies we surveyed that reported that they do not use ISC standards at all are not ISC members. According to our survey, ISC standards are most often used for conducting design-basis threat analysis of agency facilities, identifying aspects of facilities that need security measures, and determining appropriate countermeasures, as shown in figure 2.\nAlthough the majority of agencies we surveyed use ISC standards, the extent of their reliance varies—with some agencies using the standards extensively to inform their physical security programs and some using them in a more limited way. For example, 11 agencies reported that all of the physical security aspects shown in figure 2 are largely informed by ISC standards, whereas six agencies reported that none of these aspects are largely informed by ISC standards. Instead, these six agencies generally reported that these aspects are somewhat, minimally, or not informed by ISC standards. Among the six agencies that said none of these aspects are largely informed by ISC standards, three are primary ISC members, two are associate members, and one is not an ISC member.\nWe found that agencies’ reasons for making limited use of ISC standards reflect a lack of understanding by some agencies regarding how the standards are intended to be used. For example, officials from the case- study agencies that we interviewed said that certain conditions at their agencies contribute to their limited use of the standards. Specifically, these agencies cited the suitability of the ISC standards to the agencies’ facilities and their own physical security requirements as contributing to their limited use of the standards.\nSuitability of standards. Officials we interviewed at our case-study agencies told us that they are selective in their use of ISC standards because the standards are not suitable for the types of facilities in their portfolio. For example, USPS officials said that, consistent with ISC standards, they establish a baseline level of protection at their facilities that address facility-specific functions and threats, but they do not follow some practices included in the ISC standards— particularly those related to access control—because the practices are not suitable for the high degree of public access needed at post offices. Likewise, VA officials told us that they do not use ISC standards for all of their facilities because some practices included in the standards do not cover security topics that are specific to their facilities, such as hospitals and health clinics. In response to these comments, ISC officials told us that ISC’s standards are designed to be suitable for all facilities and to accommodate a broad range of security needs, conditions, and types of facilities. For example, ISC’s Physical Security Criteria for Federal Facilities—one of ISC’s key standards—establishes a decision-making process to help agencies consistently determine the baseline level of protection needed for each facility. The Criteria provide agencies the flexibility to build upon or customize the baseline level of protection to address facility- specific conditions. According to the Criteria, consistency in the process used to determine a baseline level of protection for each facility is important because it helps ensure that the risks that all facilities face—regardless of the type facility—are mitigated to an acceptable level. Furthermore, according to ISC officials, the Criteria do not prescribe specific countermeasures and, as a result, can be used by all agencies regardless of the type of facilities in their portfolio.\nUse of other physical security standards. Officials we interviewed at our case-study agencies also told us that they do not make greater use of ISC standards because they have their own standards for physical security. For example, officials at DOE told us that the Atomic Energy Act was the foundation for their security program long before the ISC was created and ISC standards developed. Additionally, DOE officials told us that the act and DOE’s security policy derived from it establishes physical security requirements for their facilities with classified or nuclear material and that these requirements are usually more stringent than ISC requirements. Similarly, VA officials told us that they have developed their own physical security standards that are specific to the needs of their hospital and clinic facilities, and that these standards go above and beyond ISC standards. ISC officials told us that, because ISC standards are intended to ensure a minimum or baseline level of protection, it is appropriate for agencies to have their own requirements and standards that exceed those of ISC. According to ISC officials, an agency should apply the decision- making process established by the ISC standards to determine if their facilities’ physical security requirements meet the baseline, and then add additional requirements based on their agency’s needs.\nAs previously discussed, ISC was established to enhance the quality and effectiveness of security in and protection of non-military, federal facilities. Although most agencies we surveyed use ISC standards to some degree, some agencies’ use of the standards is limited because they believe that the ISC standards are not suitable for their circumstances. Clarifying how agencies can use the standards regardless of the types of facilities in their portfolio and in concert with their existing physical security programs may result in the greater use of the standards. Use of ISC standards may be beneficial because they provide agencies with tools and approaches for consistently and cost-effectively establishing a baseline level of protection at all facilities commensurate with identified risks at those facilities. By using the standards to determine the level of protection needed to address the unique risks faced at each facility, agencies may be able to avoid expending resources on countermeasures that are not needed.\nISC currently does not formally monitor agencies’ compliance with ISC standards. ISC officials said that with only five full time employees and a budget that is not a dedicated line item within DHS’s budget, it lacks the staff and resources to conduct monitoring. Currently, in place of a formal monitoring program, ISC officials hold quarterly meetings and participate in ISC working groups along with their member agencies. ISC officials said that the information sharing that occurs through these channels helps them achieve a basic understanding of whether and how member agencies use the standards. This approach, however, does not provide a thorough or systematic assessment of ISC member agencies’ use of the standards, and provides no information on non-member agencies’ physical security practices. Further, because ISC conducts limited outreach to non-member agencies, property-holding agencies that are not ISC members may not be fully aware of the benefits that the use of the ISC standards might have for them. ISC stated in its 2012 to 2017 action plan that it plans to establish protocols and processes for monitoring and testing compliance with its standards by fiscal year 2014. According to ISC’s executive director, monitoring agencies’ compliance with the standards could include agency self-assessments or ISC officials’ assessing agencies’ compliance. Monitoring and testing as well as other methods of measuring the performance of the standards can help gauge the adequacy of facility protection, improve security, and ensure accountability for achieving the goals of the standards.\nIn commenting on a draft of this report, DOE and USPS stated that they use ISC standards as a baseline for at least some of their facilities. DOE officials said that ISC standards must be considered the baseline for security for facilities that do not have classified or nuclear material but have federal personnel. USPS officials said that ISC’s Criteria standard provides flexibility to customize baseline levels of protection to address facility-specific conditions and that it is within this framework that USPS employs appropriate countermeasures at its facilities when it is not able to adopt ISC’s recommended standards. As discussed, ISC is planning to monitor and test agencies’ compliance with ISC standards. This monitoring and testing will help shed more light on whether these and other agencies’ approaches align with ISC’s standards.", "", "Based on responses to our survey and our interviews with agency officials, we found that agencies use a range of management practices that can contribute to effective oversight of physical security programs, including: having a manager responsible for physical security, having agency-wide physical-security policies, using risk management practices that compare physical security measuring the performance of physical security programs.\nWe and others have reported that these practices can help agencies address risks, achieve effective results in their programs, determine program effectiveness, and identify whether changes are needed to better meet the program objectives.\nA physical security manager can be beneficial for an agency because the manager can establish a cohesive strategy for the agency to mitigate or reduce risk across the agency’s facilities, coordinate and oversee physical security efforts across departments, and minimize potential redundancies that could be occurring across departments if accountability for physical security is dispersed among several managers, according to guidance issued by ASIS International.\nMany of the agencies we surveyed reported that they have a manager at the agency-wide level responsible for their risk assessment approaches and monitoring and oversight (25 and 22 agencies, respectively), as shown in figure 3. However, we determined that physical security managers at our case-study agencies have varying levels of responsibility. For example, DOE’s director of security has agency-wide responsibility and works with component offices throughout the agency to ensure that the component offices’ security programs align with DOE policies, which helps achieve a consistent approach to security across the agency. Alternatively, FCC’s chief security officer is responsible for physical security at only a select group of the 14 facilities held by FCC. Two of FCC’s component offices are responsible for physical security at the remaining facilities. Each of these component offices approach physical security in a way that meets its particular needs. The FCC official we interviewed acknowledged, however, that if physical security were centrally managed—through a physical security manager with agency- wide responsibilities, for example—the agency could benefit from a consistent approach to physical security for facility types that are similar. Although it is important to tailor physical security to facilities so that the unique risks at those facilities are addressed, a consistent approach to certain aspects of physical security is beneficial because it helps ensure that all facilities are covered by a baseline level of physical security commensurate with identified risks at those facilities. For example, we previously reported that the Department of the Interior (Interior) established a central law enforcement and security office in 2002 that enabled it to develop a uniform risk assessment and ranking methodology to quantify risk, identify needed security enhancements, and measure risk-reduction benefits at some of its properties. In addition to fostering consistency, a central approach to physical security can also help coordinate physical security across component offices and provide a single point of contact for the agency for physical security. For example, Interior’s central office responsible for security provided the agency with a single point of contact that the Secretary and senior managers could depend upon for security information and advice.\nWe have previously reported that agencies’ physical security programs can benefit from documented agency-wide guidelines. According to GAO’s Standards for Internal Control in the Federal Government, policies and procedures that enforce management’s directives at an agency-wide level are an important part of an agency’s ability to achieve effective results in its programs, in physical security as well as other types of programs. Furthermore, according to the Standards for Internal Control, assessing compliance to policies and procedures can also assist agencies in monitoring and measuring the performance of programs, including physical security programs.\nA majority of the agencies (24) we surveyed reported that they have documented agency-wide guidelines for monitoring and overseeing security programs at individual facilities, as shown in figure 4. Our more in-depth analysis of the case-study agencies found that they have documented agency-wide policies for a range of physical security activities. For example, DOE has documented policies for facility-level security plans, performance assurance, facility clearance activities, and other security-related activities that apply to individual facilities, and according to OPM officials their agency has a documented general security policy and access control policy. Having documented policies can help agencies ensure that their security programs achieve results. For example, USPS’s security policy states that its security policies and adherence to these policies can help the agency ensure that the most appropriate level of security and protection available are provided to its facilities. DOE’s security policy states that adherence to the policies can help prevent adverse impacts on the safety of DOE and contractor employees and the public.\nMost agencies (26 of 32) we surveyed reported that offices at the agency- wide or component level, or both, monitor facilities’ compliance with policies and procedures. In addition, six agencies reported that their region or district offices or facilities are responsible for performing this activity, rather than agency-wide or component offices. Agency-wide offices at our case-study agencies monitor facilities’ compliance with agency-wide policies. For example, USPS staff working in field offices annually assess whether postal facilities are complying with agency-wide policies, and the headquarters security office reviews the results of the assessments. At DOE, component offices assess facilities’ compliance with security policies and the agency-wide security office reviews high risk facilities to determine if DOE policies have been adequately implemented.\nWe have previously identified risk management as a key practice in facility protection. A risk management approach that compares physical security across facilities can provide agencies assurance that the most critical risks at facilities across their agencies are being prioritized and mitigated, and that systemic risks are identified and addressed.\nAgencies we surveyed reported that they conduct risk management practices—such as comparing risk assessments across facilities and monitoring the implementation of countermeasures across facilities—and that such practices are most often the responsibility of agency-wide offices, component level offices, or both. Specifically, of the 32 agencies we surveyed, 24 agencies reported that agency-wide or component offices, or both, had primary responsibility for comparing risk assessments across facilities and 26 agencies reported that either or both of these offices had primary responsibility for monitoring countermeasure implementation across facilities. A few agencies reported that regional or district offices or facilities had primary responsibility for these activities instead of agency-wide or component offices. However, not all agencies we surveyed perform these activities: six agencies reported that they do not compare risk assessments across facilities, and two agencies reported that they do not monitor the implementation of countermeasures across facilities. Officials from OPM and DOE, two of our case-study agencies, said that they do not compare risk assessments across facilities. Specifically, OPM officials told us that they do not compare the results of the risk assessments across facilities because they have a small facility portfolio and have not seen the need to do such a comparison. Rather, the agency uses risk assessments to determine what countermeasures need to be implemented to address risks at individual facilities. Similarly, DOE officials told us that each of their component offices conducts risk assessments in different ways and that the Office of Health, Safety, and Security, which has agency-wide responsibility for physical security policy and oversight, does not compare risks across components or facilities. In contrast, officials from another case-study agency, USPS, said that they do perform such comparisons. USPS officials who have agency-wide responsibilities for physical security said that they review the results of risk assessment performed across facilities to identify trends or anomalies that may indicate a systemic problem, and use this information to determine which countermeasures need to be implemented on a national basis. Monitoring the implementation of countermeasures across facilities can provide agencies with an agency-wide understanding of their vulnerabilities and whether identified risks have been mitigated.\nAnother key practice in facility protection we have identified is the use of performance measures. In the area of physical security, performance measures could include the number of security incidents or the effectiveness of countermeasures, among other things. We have previously reported that benefits of performance measures for physical security include helping agencies reach their strategic objectives for physical security, evaluating the effectiveness of their physical security programs, and identifying changes needed to better meet the program’s objectives.\nTwenty-two of 32 agencies we surveyed reported that at least some of their performance measures are documented in agency-wide or component-level planning, budget, or performance reports. The remaining 10 agencies reported that they did not have or did not know if they have performance measures documented in such reports. One of our case-study agencies, OPM, uses agency-wide performance measures to measure the performance of its security program. In contrast, officials from another case-study agency, DOE, said that such measures are difficult to implement at their agency. OPM, for example, has specific goals for its physical security program that are reflected in the evaluation used for its director of security. These performance goals, which are linked to the agency’s strategic plan and operational goals, include measures such as completing a certain number of facility risk assessments, revising physical security policies, and fully implementing physical security technologies by specific dates. In contrast, DOE officials told us that although measuring performance on an agency-wide basis is a beneficial practice, they do not have agency-wide performance measures because each DOE facility varies, making it difficult to compare performance trends across facilities.", "Among the physical security activities we asked about, agencies we surveyed identified allocating physical security resources across an agency’s portfolio as the greatest challenge. A majority of agencies (17 or more) we surveyed identified the following resource allocation activities as extremely or very challenging: balancing the need for improved security with other operational needs and competing interests, obtaining funding for security technologies and personnel, and balancing the funding process with changing security needs. Additional activities related to resource allocation were also among those that surveyed agencies found most challenging, as shown in figure 5. Surveyed agencies generally reported other aspects of physical security that we asked about to be less challenging than those related to resource allocation.\nOfficials we interviewed at various levels in our case-study agencies— including at agency-wide offices and facilities—also cited challenges related to the timeliness of funding decisions or prioritizing resource allocation decisions. For example, DOE officials in the agency-wide office responsible for physical security said that once they decide which countermeasures they need to implement to address threats or vulnerabilities, it takes time to obtain funding because the budget cycle spans multiple years. Similarly, officials at a USPS facility we visited said that USPS’s funding process—which involves headquarters prioritizing security funds and reassessing the priorities during the year to take into consideration newly identified security deficiencies—makes it a challenge for the facility to obtain funding as quickly as it would like. A USPS headquarters official said that this might occur because there are other facilities that have higher priority security needs, and that facilities would be able to implement an interim solution while awaiting funding for a long- term solution. Officials must also prioritize funding for physical security along with other agency needs, as described by an official from a VA hospital we visited, who said that the medical center director has to balance funding for physical security needs, such as training for security personnel, with other hospital needs, such as medical equipment and overtime pay.\nAgency officials we interviewed at our case-study agencies said that the following circumstances contribute to the challenges they experience in allocating physical security resources:\nEvolving threats. DOE officials at the agency-wide level and a component office discussed the budgetary implications of the need to address constantly changing threats and increased risks, which results in the need for new or increased countermeasures at their facilities. For example, the agency-wide officials said that after the terrorist attacks of September 11, 2001, there was a large focus on security and that as a result, DOE incorporated many new countermeasures at its facilities. The officials stated that the threats have changed over time, and different countermeasures are required to address the new threats.\nLimited familiarity with aspects of physical security. A USPS headquarters official said that his agency recently took steps to help individuals who make funding decisions in physical security make more informed funding decisions. This official said that USPS improved the existing level of coordination between the individuals responsible for making funding decisions and those with expertise in physical security. According to USPS, this enabled the agency to more effectively prioritize and decide which physical security projects should get funded. Likewise, a police officer at a VA facility we visited described the challenge of identifying appropriate and cost-effective technologies to purchase because his training and expertise are in law enforcement, not in technological aspects of physical security.\nLimited budgets available for physical security. Agencies throughout the federal government have experienced or are experiencing budget constraints that have limited the funding available for their programs, including physical security programs. Agency officials we interviewed told us that they have limited funds to implement some physical security measures that address identified risks. A USPS official we interviewed said that while baseline physical security measures are in place at each USPS facility, financial constraints, caused by declining revenues at the agency, have affected the agency’s ability to deploy security enhancements at its facilities. For instance, because of limited funding, implementing security enhancements, such as an upgraded closed-circuit television (CCTV) system, may be delayed at a facility until the needed funding becomes available. In addition, an official at FCC stated that funding was not available to implement several recommendations identified in its fiscal year 2012 physical security risk assessments. This official said that while there has not been an immediate impact of not funding these recommendations, the lack of funding results in continued risks not being addressed. However, in instances when a risk assessment identified an immediate or imminent threat, this official said that funding was made available to mitigate or reduce the threat.\nAs discussed, agencies are already using management practices to support oversight of their physical security programs, but according to our survey, agencies make limited use of some of these management practices for the purposes of allocating resources. For example, as shown in figure 3, of the 30 agencies responding to the survey question on whether they have a manager responsible for physical security aspects we asked about, only 13 reported that they have a manager for allocating resources based on risk assessments. In contrast, a majority of agencies reported having managers for other aspects of physical security, including those related to oversight. In addition, as discussed, 6 agencies do not compare risk assessments across facilities and 10 agencies do not have or do not know if they have documented agency- or component- wide performance measures. In addition to supporting oversight, we identified a number of examples of how agencies’ use of management practices can contribute to more efficient allocation of physical security resources across an agency’s portfolio of facilities. Below are examples of how management practices—such as having a physical security manager, comparing risk assessments across facilities, and using performance measures—can aid in more efficient resource allocation. The use of management practices for the purposes of resource allocation is particularly relevant given the challenges cited in this area.\nDOE’s Office of Inspector General recently reported that the agency could realize efficiencies by consolidating security guard contracts from multiple offices throughout the agency to a single unified office. A physical security manager who is responsible for allocating resources across an agency or across components within an agency can help bring about greater efficiencies in procurement of equipment or personnel at the agency.\nWe have previously reported that comparing physical security across facilities, such as comparing the results of risk assessments across facilities and monitoring the implementation of countermeasures across facilities, is another risk management practice that can help agency officials prioritize resource allocation decisions. In this context, USPS headquarters officials said that they are in the process of improving their capability to compare the results of risk assessments across facilities. They plan to use these comparisons to help them prioritize which facilities in their portfolio have the greatest physical security needs and then direct funding to meet the priority needs.\nWe have also previously reported that using physical security-related performance measures can help agencies justify investment decisions to maximize available resources. Such performance measures have helped security officials in one government agency in Australia allocate resources more effectively across facilities. One performance measure this agency used allowed security officials to monitor the impact of additional security expenditures on a facility’s risk rating while controlling for existing security enhancements that mitigate the risk, such as the number of guard patrols and the adequacy of access control systems. Security officials then used the results to justify spending decisions and prioritize security investments. Although this example is from an agency outside of the United States, the use of such performance measures could be a useful practice to more effectively allocate resources at agencies within the United States as well.\nAs the government’s central forum for exchanging information and disseminating guidance on physical security at federal facilities, ISC is well positioned to develop and disseminate guidance on management practices that can help agencies make funding decisions across a portfolio of facilities. ISC’s key physical security standards can help agencies make resource allocation decisions at individual facilities, but the standards do not currently address management practices for allocating resources across an agency’s entire portfolio of facilities. ISC’s key standards—Facility Security Level Determinations, Physical Security Criteria, and Design-Basis Threat—are intended to be used to determine the types of countermeasures needed at a given facility to provide a baseline level of protection. In this regard, the standards can help agencies make spending decisions at individual facilities, but do not provide direction to guide funding decisions across a portfolio of facilities. ISC officials we interviewed said that compiling information on management practices that support the allocation of resources across a portfolio of facilities would be useful for agencies.", "Agencies’ physical security programs are mainly informed by their own institutional knowledge and subject matter expertise and, to a lesser degree, ISC standards. A few agencies rely extensively on ISC standards to inform key aspects of their security programs, but others use the standards in a more limited way. Agencies whose officials we interviewed and those we surveyed told us that they do not use ISC standards to a greater degree because the standards are not suitable to their facilities or because their agencies base their security programs on their own physical security standards that they believe obviate the need to use ISC standards. These reasons indicate some agencies lack an understanding of how the standards are intended to be used. As ISC officials stated, the standards are meant to accommodate almost any type of facility and are to be used in concert with other physical security requirements to which agencies may be subject. ISC has an opportunity to clarify to agencies how the standards are intended to be used when it disseminates new or updated standards, provides training to agencies on the standards, or engages in other outreach regarding the standards. Furthermore, ISC can use its quarterly meetings with its member agencies as a forum to share best practices on how the standards are to be used. Such outreach to clarify how the standards can be used may result in the greater use of the standards by ISC member agencies. Likewise, outreach by ISC to executive branch agencies that are not ISC members to clarify how the ISC standards are to be used may also lead to wider adoption of ISC standards. Potential benefits of more widespread use of ISC standards include helping to achieve the purpose of Executive Order 12977 to enhance the quality and effectiveness of security of federal facilities. Moreover, consistent use may help ensure that federal agencies are following a decision-making process that helps ensure that all facilities are covered by a cost-effective baseline level of protection commensurate with identified risks at those facilities. In addition to these benefits, clarifying to executive branch agencies how ISC standards are to be used will also help the agencies understand what the standards require, which is an important first step for ISC as it prepares to monitor and test agencies’ compliance with its standards.\nGovernment agencies are faced with increasing security requirements and limited budgets. Effective program management, including the use of management practices such as risk management strategies and a centralized management structure, can help make the most effective use of limited resources. While agencies are already using management practices to support oversight of their physical security programs, agencies make limited use of some of these management practices for the purposes of allocating resources. For example, most agencies do not have a central manager or agency-wide guidelines for allocating resources across facilities based on risk assessments, and some agencies do not compare risk assessments across facilities. Agencies also reported that the greatest challenge they face—among the physical security activities we asked about—is allocating physical security resources. ISC’s key standards do not currently provide guidance on management practices that agencies can use to allocate resources across their entire portfolio of facilities. Agencies’ use of management practices could help agencies make resource allocation decisions strategically for their entire portfolios of facilities and maximize effective resource allocation agency-wide. As the government’s central forum for exchanging information and disseminating guidance on physical security at federal facilities, ISC is well positioned to develop and disseminate guidance that could increase agencies’ use of these practices.", "We recommend that the Secretary of Homeland Security direct ISC to take the following two actions:\nTo help achieve the purpose of Executive Order 12977 to enhance the quality and effectiveness of security of federal facilities, conduct outreach to all executive branch agencies to clarify how the standards can be used in concert with agencies’ existing physical security programs.\nTo help agencies make the most effective use of resources available for physical security across their portfolios of facilities, develop and disseminate guidance on management practices for resource allocation as a supplement to ISC’s existing physical security standards. This effort could include identifying practices most beneficial for physical security programs and determining the extent to which federal agencies currently use these practices.", "We provided a draft of this report and the e-supplement that provides summary results of our survey to DHS, DOE, VA, USPS, FCC, and OPM for comment. In written comments, reproduced in appendix III, DHS concurred with the report’s recommendations. DHS said that ISC would conduct outreach with agencies to clarify how its standards can be used and that it would develop guidance to help agencies make the most effective use of resources available for physical security across their portfolios of facilities. DHS also provided technical clarifications, which we incorporated as appropriate. Further, DHS said that it concurred with the e-supplement. DOE and USPS did not provide formal written comments on the draft report or e-supplement, but provided technical clarifications, which we incorporated as appropriate. VA, FCC, and OPM did not have any comments on the draft report or e-supplement.\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 Secretaries of Homeland Security, Energy, and Veterans Affairs; the Postmaster General; the Chairman of the Federal Communications Commission; and the Director of the Office of Personnel Management. 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) 512-2834 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. GAO staff who made key contributions to this report are listed in appendix IV.", "The objectives of our review were to examine (1) the sources that inform how federal agencies conduct their physical security programs and (2) the management practices that agencies use to oversee physical security activities and allocate physical security resources. Our review focused on executive branch agencies that have facilities that are not protected by the Federal Protective Service (FPS) and that have facilities located in the United States and its territories. Facilities in the judicial or legislative branches, military facilities, and facilities located abroad were not included in the scope of our review.\nTo help inform our research, we reviewed and synthesized reports and documentation on physical security, and interviewed officials familiar with this issue area. For example, we reviewed prior reports from GAO, the Congressional Research Service, and the Congressional Budget Office on the security of federal government facilities and effective program management, as well as documentation from the Department of Homeland Security’s Interagency Security Committee (ISC), including physical security standards developed by the ISC. We also interviewed physical security officials at the General Services Administration (GSA); ISC; the Department of Defense (DOD); the Department of State; and ASIS International, an organization for security professionals in the public and private sector that has developed physical security standards for the federal government and non-government entities.\nWe conducted a web-based survey of 36 cabinet level and independent agencies in the federal government. The surveyed agencies included all non-military agencies that are required under Executive Order 13327 to report to GSA’s Federal Real Property Profile (FRPP) as well as those that are not required to report to the FRPP but optionally did so in fiscal year 2010. In addition, although not included in the FRPP, we surveyed the U.S. Postal Service (USPS) because of its large number of federal real property holdings. See appendix II for a list of agencies we surveyed. We obtained responses from all 36 surveyed agencies. To determine whether the surveyed agencies were within the scope of our review, we asked questions in the survey to determine if all of their facilities were protected by FPS. Four agencies reported that all of their facilities were protected by FPS, and we therefore did not include them in our review. The remaining 32 agencies are included in our review, and in this report we identify these agencies as the agencies we surveyed. Of the 32 agencies that were within the scope of our review, 16 are primary ISC members, 9 are associate ISC members, and 7 are not members of ISC.\nWe asked chief security officers or equivalents at the surveyed agencies a series of questions with both closed- and open-ended responses regarding physical security within their agency. The survey included questions on (1) the organization and administration of their agencies, (2) sources used to inform physical security programs, (3) security program policy elements and implementation, (4) challenges and best practices in physical security, and (5) the agencies’ building portfolios. We developed the survey questions based on previous GAO work and interviews with agency officials. This report presents survey results in aggregate and does not discuss individual agency responses in a way that would identify them. Summary results for each survey question, except those requiring narrative responses, are available in a supplement to this report, GAO-13-223SP.\nBecause this was not a sample survey, it had no sampling errors. However, the practical difficulties of conducting any survey can introduce non-sampling errors, such as difficulties interpreting a particular question, which can introduce unwanted variability into the survey results. We took steps to minimize non-sampling errors by pre-testing the questionnaire in person with six different agencies. The agencies were GAO, USPS, the Department of Energy (DOE), ISC, GSA, and the Federal Communications Commission (FCC). We conducted pretests to help ensure that the questions were clear and unbiased, that the data and information were readily obtainable, and that the questionnaire did not place an undue burden on respondents. An independent reviewer within GAO also reviewed a draft of the questionnaire prior to its administration. We made appropriate revisions to the content and format of the questionnaire based on the pretests and independent review.\nThe web-based survey was administered from May 15, 2012, to June 27, 2012. Respondents were sent an email invitation to complete the survey on a GAO web server using a unique username and password. To increase the response rate, we followed up with emails and personal phone calls to respondents to encourage participation in our survey. We then analyzed results of the survey, and as part of this survey analysis, we recoded certain responses that were inconsistent. We followed up with individual agencies as needed to ensure we properly understood what needed to be recoded. All data analysis programs were independently verified for accuracy.\nIn addition to the survey, we also conducted case studies with five agencies for more in-depth analysis. These case-study agencies were selected to achieve diversity in total building square footage and levels of public access allowed at facilities. The five agencies we selected for our case studies were DOE, the Department of Veterans Affairs (VA), USPS, FCC, and the U.S. Office of Personnel Management (OPM). Based on our review of agency square footage as presented in the Federal Real Property Council’s FY2010 Federal Real Property Report, we classified DOE, VA, and USPS as large property holders, and FCC and OPM as small property holders. To ensure that we had diversity in levels of public access at agencies’ facilities, we reviewed previous GAO reports and agency websites. For example, from initial interviews, we found that USPS provides a high level of public access to customers where as DOE provides limited public access except for employees and contractors. For each of these five agencies, we interviewed officials in their headquarters offices who are familiar with physical security policy and reviewed documentation on physical security. This report discusses the results of interviews on an individual agency basis, in which case the agency referred to is identified by name, as well as in the aggregate. Since these agencies were selected as part of a non-probability sample, the findings from our case studies cannot be generalized to all federal agencies.\nTo supplement these interviews, we conducted site visits to individual DOE, VA, and USPS facilities. For each of these agencies we visited facilities in New Jersey, West Virginia, and Illinois. We selected these locations and facilities to achieve diversity in geographic area, urban and rural environments, and facility risk level as determined by the agencies. We determined which facilities to visit at each location based on FRPP data for DOE and VA, USPS’s internal real property database, recommendations from agency officials, and research on the agencies’ facilities from their agency websites. The facilities we visited in each state are listed below.\nArgonne National Laboratory, DOE, Argonne\nJesse Brown VA Medical Center, Chicago\nCardiss Collins Processing and Distribution Center, USPS, Chicago\nPrinceton Plasma Physics Laboratory, DOE, Princeton\nLyons VA Medical Center, Lyons\nTrenton Main Post Office, USPS, Trenton\nNational Energy Technology Laboratory, DOE, Morgantown\nLouis A. Johnson VA Medical Center, Clarksburg\nClarksburg Processing and Distribution Facility, USPS, Clarksburg At each of these facilities we interviewed facility officials in charge of physical security and reviewed documentation related to physical security. If needed, we also interviewed officials from component offices—which are subordinate entities within an agency, such as bureaus, administrations, and other operating divisions within an agency—who oversee facilities with regard to physical security. This report discusses the results of site visit interviews on an individual basis, in which case the agency referred to is identified by name, as well as in the aggregate. Since these facilities and component offices were selected as part of a non-probability sample, the findings from our facility visits cannot be generalized to all federal agencies.\nWe conducted this performance audit from November 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.", "We conducted a web-based survey of 36 cabinet level and independent agencies. These 36 agencies are those non-military agencies that are required under Executive Order 13327 to report to the Federal Real Property Profile (FRPP); those that voluntarily reported to the FRPP in 2010; and the U.S. Postal Service which, although not included in the FRPP, is one of the federal government’s largest real property holders. The agencies we surveyed are listed below. Four agencies reported that all of their facilities were protected by FPS, and we therefore did not include them in our review.", "", "", "", "In addition to the contact named above, Heather Halliwell (Assistant Director), Eli Albagli, Steve Caldwell, Roshni Davé, Colin Fallon, Kathleen Gilhooly, Jill Lacey, Hannah Laufe, Ying Long, Sara Ann Moessbauer, John Mortin, and Nitin Rao made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_full", "h0_title h1_title", "h0_full h1_full", "h0_full h1_full", "h0_full h1_full", "", "", "h0_full h2_full h1_full", "", "", "", "", "" ] }

{ "question": [ "Where do agencies source information on developing physical security systems?", "How do ISC standards help ensure that agencies implement effective security practices?", "What factors hinder the effectiveness of ISC standards?", "How did the ISC respond to this concern?", "How could the ISC make its standards more effective?", "How would improving and increasing the use of ISC standards be beneficial?", "What management practices do agencies use to oversee physical security activities?", "How might documented performance measures be beneficial?", "How might the use of physical security managers be beneficial?", "How do some agencies fail to make use of helpful management practices?", "Why is it important for such agencies to make use of helpful management practices?", "How might guidance be distributed to help such agencies make use of helpful management practices?", "Why has GAO designated federal real property management a high-risk area?", "How is responsibility for property management distributed within the government?", "What was GAO asked to review?", "What does this report examine?", "What data did GAO collect for this report?", "How can the survey be accessed?" ], "summary": [ "Agencies draw upon a variety of information sources in developing and updating their physical security programs. The most widely used source, according to survey responses from 32 agencies, is the institutional knowledge or subject matter expertise in physical security that agencies' security staff have developed through their professional experience. The second most used source are standards issued by the Interagency Security Committee (ISC).", "The standards, which are developed based on leading security practices across the government, set forth a decision-making process to help ensure that agencies have effective physical security programs in place.", "However, according to survey responses, the extent of agencies' use of ISC standards varied--with some agencies using them in a limited way. Agency officials from the case-study agencies said that certain conditions at their agencies--such as the types of facilities in the agencies' portfolios and their existing physical security requirements--contribute to limited use of the standards.", "ISC officials said that the standards are designed to be used by all agencies regardless of the types of facilities or their existing security programs; the standards can be customized to the needs of individual facilities and do not require the use of specific countermeasures.", "ISC has an opportunity to clarify how the standards are intended to be used when it trains agencies on them; during quarterly meetings with member agencies, where ISC can share best practices on the use of the standards; or when ISC engages in other outreach on the standards.", "Clarifying how agencies can use the standards may result in their greater use. Greater use of the standards may maximize the effectiveness and efficiency of agencies' physical security programs.", "Agencies use a range of management practices to oversee physical security activities. For example, 22 surveyed agencies reported that they have a manager at the agency-wide level responsible for monitoring and overseeing physical security at individual facilities. In addition, 22 surveyed agencies reported that they have some documented performance measures for physical security.", "Such performance measures can help agencies evaluate the effectiveness of their physical security programs and identify changes needed to better meet program objectives.", "Agencies' use of management practices such as having a physical security manager responsible for allocating resources and using performance measures to justify investment decisions could also contribute to more efficient allocation of physical security resources across an agency's portfolio of facilities.", "However, some agencies make limited use of such practices to allocate resources. For example, only 13 reported that they have a manager for allocating resources based on risk assessments. In contrast, a majority of agencies reported having managers for other aspects of physical security, including those related to oversight.", "Greater use of management practices for allocating resources is particularly relevant given that the surveyed agencies identified allocating resources as the greatest challenge.", "As the government's central forum for exchanging information and disseminating guidance on physical security, ISC is well positioned to develop and disseminate guidance about management practices that can help agencies allocate resources across a portfolio of facilities. However, ISC's key physical security standards do not currently address management practices for allocating resources across an agency's entire portfolio of facilities.", "GAO has designated federal real property management as a high-risk area due, in part, to the continued challenge of facility protection.", "Executive branch agencies are responsible for protecting about 370,000 non-military buildings and structures; the Federal Protective Service (FPS) protects over 9,000 of these. ISC--an interagency organization led by the Department of Homeland Security (DHS)--issues physical security standards for agencies' use in designing and updating physical security programs.", "GAO was asked to review physical security programs at executive branch agencies with facilities that FPS does not protect.", "This report examines (1) the sources that inform agencies' physical security programs and (2) the management practices agencies use to oversee physical security and allocate resources.", "GAO reviewed and analyzed survey responses from 32 agencies. GAO also interviewed officials and reviewed documents from 5 of these agencies, which were selected as case studies for more indepth analysis.", "The survey and results can be found at GAO-13-223SP ." ], "parent_pair_index": [ -1, 0, 1, 2, 2, 2, -1, 0, 0, 0, 3, 3, -1, 0, -1, -1, 3, 4 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "", "Recent Developments", "Background", "The Angolan Conflict in the 1990s 4", "Recent Fighting", "Cabinda/FLEC", "Recent Political Developments", "Forthcoming Elections", "Dos Santos Candidacy", "Political Landscape Shifts", "Death of Savimbi", "Post-Savimbi Developments", "UNITA Leadership Succession", "Movement Toward Truce Talks", "Preliminary Cease-fire Talks", "Formal Cease-fire Signed", "UNITA and Possible Leadership Changes", "UNITA-Renovada", "U.N. Role in Angola", "Current U.N. Activities", "Human Rights and Civil Liberties", "Human Rights", "Civil Society and Opposition Politics", "Angolan Economy", "Overview", "Oil", "Diamonds", "Relations with the International Financial Community", "Oil, Political Power, and Corruption: The Views of Critics", "Angolan Government: Responses to Critics", "U.S. Policy", "U.S. Support for Current Peace Process", "Congressional Role", "Business and the U.S.-Angolan Relationship", "U.S. Assistance to Angola", "Appendix. Acronyms Used in this Report" ], "paragraphs": [ "", "A permanent cease-fire agreement between the Angolan government and its long-time military adversary, the National Union for the Total Independence of Angola (UNITA) was signed on April 4, 2002. It provides for the demobilization of UNITA forces and for their integration into a unified national military, in accordance with the Lusaka Protocol, an abortive peace accord. A new law provides UNITA forces with a general amnesty for wartime offenses. In mid-April, over 9,000 of about 55,000 UNITA troops had reported to demobilization areas. The cease-fire agreement was holding. Some logistical delays related to the supply of food, medicine, and other goods to the newly established cantonment were reported. The cease-fire accord followed the death of Jonas Savimbi, UNITA's founder and long-time leader. He was killed in a government ambush in February, 2002 in the eastern province of Moxico. The former Savimbi-led faction is led by General Paulo \"Gato\" Lukamba, the UNITA secretary-general and head of UNITA's Administrative Affairs commission. In mid-March, just prior to initial cease-fire talks, he issued a communiqué to UNITA fighters appointing an interim management commission, which he heads.", "Angola, a country of about 12.7 million people that is nearly twice the size of Texas, has vast oil reserves, diamonds and other minerals deposits, and rich agricultural potential. Most Angolans remain poor, however, due to a 25-year civil conflict that is estimated to have taken more than 1 million lives. A tripartite agreement among the three major liberation movements to form a transitional government collapsed just after Angola became independent of Portugal in 1975. Parties to the agreement included the Popular Liberation Movement of Angola (MPLA), the current ruling party; its armed rival, UNITA; and the National Front for the Liberation of Angola (FNLA), led until recently by Holden Roberto. Although all three groups sought national liberation and included members from across Angola, each drew the core of its support from different ethnic coalitions. UNITA has been dominated by the Ovimbundu ethnic group of central Angola, although it has also drawn support from the Chokwe, Luena, and Ovambo communities of eastern and southern Angola. The MPLA was originally predominantly a coalition between the Mbundu of northwest Angola, persons of mixed race, and urban dwellers. The FNLA drew much of its support from the northern Bakongo people and some rural Mbundu.\nA civil war began following the collapse of the agreement, as the MPLA, UNITA, the FNLA and other splinter groups fought one another for control of the government in Luanda, then – and since – held by the MPLA. In the 1970s and 1980s, the conflict was shaped by the Cold War. The Soviet Union and Cuba assisted the then-Marxist MPLA, which established a de facto one party state. The United States and South Africa aided UNITA and the FNLA. In 1985, Congress repealed a 1976 ban on covert aid to Angolan belligerents; in 1986 the Reagan Administration initiated covert military assistance to UNITA.\nIn 1979, Eduardo dos Santos, Angola's current president and leader of the governing MPLA, succeeded Agostino Neto, the country's president at independence. Dos Santos, born in1942 in Luanda to a family of ethnic Mbundu origins, studied petroleum engineering in the Soviet Union at the Institute of Oil and Gas in Baku. Before becoming president, he had been minister of foreign affairs in Angola's first post-independence government, after serving as first deputy prime minister and minister of planning (1978-1979). Dos Santos oversaw a gradual liberalization of the MPLA's socialist political ideology during the late 1980s and early 1990s, and later supported a reorientation toward liberal, free market policies, as did many other African leaders. He has presided over the long-running civil war, and in recent years he appears to have taken closer control of its prosecution. In 1999, he abolished the post of prime minister and created a highly autonomous Defense Ministry.\nThe Dos Santos government has been labeled authoritarian by many observers because of its sometimes harsh repression of its domestic political opponents, and journalists – and for curtailing public expression and the opportunity for its citizens to change their government (see \" Human Rights \" section, below). The country's first and only national election was held in 1992; it ended in an aborted run-off election and a return to civil war. The government's fierce prosecution of the war against UNITA, in which thousands of young Angolans were impressed into military service, has also contributed to a hardline image of the government.", "In May 1991, UNITA and the dos Santos government signed a peace pact known as the Bicesse Accords, which provided for disarmament, the creation of a unified national army, and national multi-party elections. Multi-party competition was permitted under constitutional amendments ratified in April 1992. In September 1992, Angola held its first and only multi-party elections, in which 18 parties contested, and which were monitored by the United Nations (U.N.). Campaigning was reportedly tense, given the recentness of open conflict, and because the separatist Cabinda movement FLEC (see below) called for an electoral boycott. Over 75% of voters cast ballots. The MPLA won a parliamentary majority, but the presidential race resulted in the necessity of a run-off election. Neither dos Santos, with 49.6% of the vote, nor Savimbi, with 40%, won a required majority.\nUNITA officials alleged that the MPLA government had engaged in widespread election fraud, including the use of dummy ballots, stolen ballot boxes, and rigged counts, and asserted that the personal security of UNITA supporters was being violated by government supporters. In an atmosphere of increasing conflict across Angola, UNITA dismissed a U.N. finding that the election had been substantially free and fair and, asserting that the conditions for a fair run-off did not exist, rejected a run-off election, effectively abandoning the Bicesse Accord. It rearmed and rapidly took control of large areas. The MPLA, which had substantially demobilized, faced the increasing UNITA attacks with the help of armed civilians and police; it subsequently invested heavily to build its military capacity, and launched a broad offensive against UNITA.\nInternational pressure on UNITA to return to negotiations grew. In September 1993, the United Nations imposed an oil and arms embargo on UNITA. Peace talks subsequently ensued, culminating in the November 1994 Lusaka Protocol, which called for a renewed cease-fire, the re-validation of the Bicesse Accords; the disarmament and demobilization of UNITA; and UNITA's participation in a government of national reconciliation. A 7,000-member U.N. peacekeeping operation was deployed, but implementation of the Protocols was repeatedly delayed. A Government of Unity and National Reconciliation was installed in April 1997, but Savimbi refused to come to the capital, citing safety concerns, and low-level conflict continued. In the same year, the fall of the Mobutu government in the Democratic Republic of Congo (the DRC, then called Zaire) – a strong UNITA backer – and of the Lissouba government in the Republic of the Congo (also known as Congo-Brazzaville), deprived UNITA of rear supply bases, and of political and logistical channels for the arms and diamond transshipments. The U.N. Security Council enacted stronger sanctions against UNITA, including a flight and travel ban, in October 1997.\nThe Protocols were never fully implemented, and a period of continuing insecurity characterized by sporadic conflict ensued; by mid-1998, armed clashes had become more frequent. In August 1998, UNITA was suspended from parliament. Full scale war did not resume until December 1998, when the MPLA government, angered by UNITA's failure to honor the Protocols, attacked UNITA strongholds in central Angola, causing the final collapse of the Protocols. UNITA managed to stall the offensive, and launched counterattacks, making significant territorial gains by mid-1999, including the seizure of much of diamond-rich eastern Angola. The U.N. targeted further sanctions against UNITA in April 2000. The U.N. has primarily blamed UNITA for its failure to implement the Lusaka Protocol. UNITA charged that the U.N. showed bias toward the government, and accused the government of violence against UNITA's supporters.", "The MPLA claimed many military successes in 1999-2000. In September 1999, the government captured key UNITA strongholds in the central towns of Bailundo and Andulo, although UNITA mounted a strong counter-offensive, and laid siege to several government-held cities. By July 2000, the government claimed control of over 90% of the country. In late 2000, the government undertook large scale operations along the Namibian border, in apparent military cooperation with Namibia, and later attacked UNITA in the east, near Zambia. UNITA also came under pressure as a result of the Angolan government's military presence in Congo-Brazzaville and the government's participation, as an armed ally of the DRC government, in the DRC war. The government conducted extensive military operations against UNITA in eastern Moxico Province, near Zambia in late 2001 and early 2002. It claimed to be routing Savimbi's forces, but some observers remained skeptical. Public comments by Angolan government officials had often predicted imminent military victory, but the conflict had endured.\nDespite the government's military successes and UNITA's reported loss of most of its conventional military capability, the group carried out many attacks across Angola throughout 2001 and into 2002. These included attacks near Luanda, the capital, which the government strongly countered. UNITA's attacks in 2001 and early 2002 were primarily guerrilla-style supply and harassment raids. In some, food and other provisions were seized, property destroyed, and vehicles burned. Civilian captives were reportedly taken by UNITA on multiple occasions, although UNITA has usually denied responsibility for such actions. Despite severe military pressure, UNITA appeared – based upon the high and continuing numbers of reported attacks by the group throughout 2001 and published analyses of the conflict – to possess a formidable, mobile guerrilla force and a national command-and-control network. Many observers saw the group as capable of waging an indefinite bush war, even though it had been unable to effectively occupy and control territory. UNITA was able to fund its operations by selling diamonds and obtaining arms, in violation of U.N. sanctions against it, U.N. reports state – albeit at a diminished level compared to earlier periods.", "In addition to its conflict with UNITA, the Angolan government has also faced sporadic armed attacks by factions of an armed rebel movement in Cabinda, the Front for the Liberation of the Enclave of Cabinda (FLEC). FLEC, which is splintered into several factions, advocates self-government for the people of Cabinda, a small, oil-rich Atlantic coast enclave of Angola that lies between the DRC and Congo-Brazzaville. Cabinda is the source of about 70% of Angola's oil. In early April 2002, FLEC accused the government of launching a widespread offensive against FLEC forces, and claims that following the April 4 cease-fire agreement, the Angolan government has increased its military presence in Cabinda. On April 18, FLEC accused the Angolan army of killing ten civilians in an attack on a village, a claim denied by the Angolan government, which has also denied increasing its military presence in the enclave.", "", "In June 1999, the parliament, whose term had been extended in 1996 for between two and four years, voted to postpone elections. Later in the year, the government announced that elections would take place in 2001, but later moved the date to 2002. President dos Santos announced to a meeting of the ruling MPLA party's central committee in August 2001 that the next elections would likely take place in late 2002 or in 2003. He asserted, however, that elections could not take place before people and goods could move freely throughout Angola, and internally war-displaced persons had been resettled. Defense Minister Kundi Paihama, was quoted on March 22 as saying that general elections would be held under U.N. supervision by 2003 \"at the latest.\"", "Mr. dos Santos told the MPLA party leadership in late August 2001 that he would not run as a candidate in the next presidential election, and that he would leave in the hands of the MPLA the selection and \"preparation\" of its presidential candidate. Dos Santos is widely perceived to have designated no clear successor. The president's announced intention not to run has reportedly elicited scepticism among some opposition members and observers of Angolan politics, given the president's firm control of national politics and military affairs. Some see the move as a bid to unify a sometimes fractious party prior to elections, to bolster the rationale for an extended dos Santos presidency, and to defend against and draw out potential contenders within his party. Some observers believe that the president will be \"persuaded\" by MPLA supporters to return as its presidential candidate. Others believe he will step down, but will continue to exert strong influence over national affairs as a leadership power-broker. Mr. dos Santos has periodically been rumored to suffer ill-health, but many observers discount such assertions.\nIn January 2001, dos Santos dismissed Angolan Armed Forces (FAA) Chief of Staff General João de Matos. De Matos had commanded the FAA since 1992, and had overseen many successful military operations against UNITA and commanded Angolan forces in the Republic of Congo and the Democratic Republic of the Congo (DRC). In late 2000, de Matos reportedly voiced doubts about the possibility of a military solution to the war and implied that a political settlement was necessary, raising speculation about policy differences with dos Santos. The latter had been seen as supporting a continued robust military campaign against UNITA. De Matos' business endeavors, particularly in the security and mining sectors, reportedly may also have placed him at odds with the president. De Matos has been seen as an effective leader and a possible MPLA challenger to dos Santos in upcoming presidential elections; he is said to be supported by a group of key MPLA members who are said to support internal reform of the MPLA and its political agenda.\nIn addition to de Matos, possible presidential candidates reported in the press include parliamentary president Roberto de Almeida; minister of defense Kundi Paihama; interior minister Fernando da Piedade Dias \"Nando\" dos Santos; MPLA secretary-general João Lourenço; former prime minister Marcolino Moco; and former MPLA secretary-general Lopo do Nascimento.", "", "Until February 2002, prospects for elections and many analyses of Angola's political future had been premised on the assumption that Angola would continue to be afflicted by armed conflict or related instability. The death of UNITA leader Jonas Savimbi on February 22, 2002 however, radically altered Angola's political landscape and raised the possibility that an end to the conflict could be reached.\nSavimbi, 67, was killed following a government ambush of a UNITA military convoy in which he had been traveling toward the Zambian border near Lucusse, a small town in Angola's eastern Moxico Province, where he was later buried. His death followed intensive FAA counter-insurgency operations against UNITA that placed the group under severe military pressure in Moxico and elsewhere. The ambush resulted in the death of over 20 UNITA officials and followers, and the capture of one of Savimbi's four wives. Some UNITA officials were reportedly able to escape. About a week before Savimbi's death, the government had reportedly captured UNITA's deputy military commander, and a number of UNITA officers were captured or killed in late 2001 and early 2002 as a result of similar military operations. Government forces were reportedly able to locate Savimbi by tracking satellite telephone phone calls made by him and members of his party; reconnaissance drones and tracking dogs were also reportedly used. UNITA representatives, citing the possible involvement of foreign governments in Savimbi's death, have called for an international investigation into the circumstances of Mr. Savimbi's killing.\nSavimbi's death raised the prospect that subsequent UNITA leadership changes or internal realignments might lead to a cease-fire or negotiations to end the conflict. The Angolan government and some international observers had long attributed the continuation of Angola's conflict to Savimbi. They charged that he had abandoned the Lusaka Protocol and the electoral process, instead seeking political power by force of arms. Savimbi, for his part, attributed the continued conflict to belligerence by the MPLA government, which UNITA viewed as a corrupt dictatorship that refused to renegotiate the Lusaka Protocol, seen as defective by Savimbi. The impasse between the two parties meant that no attempt to bring peace to Angola had succeeded after the failure of the Protocols.", "In the days after Savimbi's death, the Angolan government urged UNITA forces to surrender and stated its willingness to take \"decisive and rapid steps\" to bring about a cease-fire. Such actions have been welcomed and strongly encouraged by the international community. The U.S. and Portuguese governments, the European Union, and U.N. Secretary-General Kofi Annan, among others, have called for a cease-fire. No details of efforts to bring about a cease-fire, such as a proposed schedule for de-escalation, were initially announced. During the same period, leaders of the armed wing of UNITA – who were said to be in the bush fleeing Angolan government forces, which initially continued the strong offensive that had led to the killing of Savimbi – maintained a public silence. UNITA parliamentarians in Luanda and UNITA spokesmen in Europe spoke on behalf of the movement. They welcomed the prospect of a cease-fire and further dialogue in support of such an outcome, but stated that a cease-fire offer would need to come from the government. UNITA indicated that it was not prepared to surrender militarily, and asserted that the Angolan government – despite its call for a cease-fire – was not truly interested in peace negotiations, and intended to continue its military offensive. Some initial assessments of the post-Savimbi conflict posited that UNITA would likely continue to pursue its military objectives in the short term, if only because communicating political decisions to UNITA fighters in the field may take time. Peace negotiations that began in mid-March 2002, however, appear to be producing movement toward peace.", "The leadership vacuum created by Savimbi's sudden departure created a succession crisis. Prior to his death, Savimbi had reportedly sought to ensure the primacy of his leadership by eliminating rivals within UNITA who might seek detente with the government, and many key UNITA leaders had been captured in late 2001 and early 2002. These circumstances and the weak military position of UNITA implied that UNITA might not be able to maintain the organizational cohesion necessary to continue its armed struggle, and appear to have created the basis for later cease-fire negotiations.\nThe UNITA constitution reportedly calls for the UNITA vice-president to succeed Savimbi automatically, pending the election of a new leader by a UNITA congress. In conformity with this provision, the interim accession to the top leadership position by UNITA vice-president António Sebastião Dembo, 58, was announced in late February by UNITA representatives in Europe. The succession was complicated, however, after reports emerged that Dembo had died.\nThe current de facto political leader of the former Savimbi-led wing of UNITA is General Paulo \"Gato\" Lukamba, the UNITA secretary-general and head of UNITA's Administrative Affairs commission Gato has a reputation as a military hawk, but recently is reported to have stated that \"the phase of the armed struggle is over. Now we shall head towards the confrontation of political ideas.\" In mid-March, just prior to preliminary cease-fire talks, he issued a communiqué to UNITA fighters appointing an interim management commission, which he heads, to lead UNITA until the group's next congress. Gato, who held the third highest position within UNITA, is in his mid-40s, and is reported to have been in close contact with Savimbi just prior to his death. UNITA's External Mission, a group of members of UNITA's armed wing who reside outside of Angola, initially rejected the interim leadership commission, and claimed to be the sole legitimate representatives of UNITA. They asserted that UNITA leaders in Angola were government captives and were not free to speak openly. News reports in late March, however, indicated that the External Mission and a group of over 45 UNITA legislators in Luanda had each independently issued statements backing the \"caretaker commission\" formed by Gato.", "On March 13, 2002, the government announced that it had ordered the FAA to end offensive actions against UNITA prior to the initiation of talks between UNITA and the government. It also sought to prepare for a full cease-fire by initiating contacts between FAA field commanders and UNITA units across Angola, and announced plans to reintegrate UNITA soldiers into civilian life and to seek a Parliamentary grant of amnesty for all surrendering rebel fighters. It also repeated its intention to prepare for general elections, and stated that UNITA would be accepted as a legitimate political party following its disarmament, as per the Lusaka Protocol, which the government maintains UNITA must implement.\nThe government's actions followed earlier efforts to end to the conflict. In November 2000, the government announced a broad amnesty for UNITA fighters who agreed to surrender, and in January 2001, it established a Fund for Peace and Reconciliation to assist demobilized fighters. The government claimed that several thousand UNITA fighters subsequently defected, and indicated that it might consider negotiations with UNITA. Toward this end, a 22-member parliamentary commission on prospects for peace was created in April 2001. In October 2001, the government hosted representatives of the troika that had overseen the signing of the Lusaka Protocol – the United States, Russia, and Portugal – in an effort to resume the search for peace. In December 2001, the United Nations announced a government-approved U.N. initiative to seek contacts with UNITA.", "On March 15, 2002, a Angolan military delegation headed by Angolan armed forces Deputy Chief of Staff General Geraldo Sachipengo Nunda held a first round of cease-fire talks with a UNITA delegation headed by UNITA chief of staff General Geraldo Abreu Muhengu Ukwachitembo \"Kamorteiro.\" The government press agency, ANGOP, published a joint statement by the two delegations, which met in Cassamba town in Moxico Province, indicating that they had agreed to work toward a permanent end to hostilities and under the abortive Lusaka Protocol. Kamorteiro was reported to have been hospitalized due to a pre-existing health condition following the talks. Further talks were held in late March, and initial contacts between FAA and UNITA commanders at the provincial level were initiated. Limited UNITA troops movements and several attacks attributed to UNITA followed the initiation of the truce talks, but the level of hostilities decreased dramatically as the talks continued.\nMembers of UNITA's External Mission initially voiced skepticism about the talks. They asserted that several members of the UNITA delegation had been captured by government forces, and were likely participating under duress. They labeled the initial truce talks a \"farce,\" but later accepted the talks as legitimate after communicating with Gato. The government denied that the UNITA delegates were under detention or participating under duress, but the circumstances surrounding talks are unclear. The Angolan government has informed the U.N. that the talks are \"part of a military exercise.\" No outside mediators or observers were initially present at the talks, and news of the negotiations was limited to summaries published by Angolan state media.\nUNITA appeared to be negotiating from a position of weakness, and the government played a dominant role in shaping the agenda for the talks. The government announced that the FAA was \"in charge of the logistics and all technical arrangements for the holding of the talks, including the transportation of the UNITA forces.\" The government's strong hand was also signaled by an Angolan state television broadcast of a March 22 meeting between the FAA deputy chief and Gato at an unspecified UNITA base in northeast Angola. The talks reportedly focused on military issues only. Issues reportedly discussed included the siting of assembly points for disarming UNITA forces, and protocols for the demobilization of UNITA fighters and for their later integration into a unified national army.", "On April 4, 2002, a formal cease-fire agreement was signed by the Angolan government and UNITA. It followed the unanimous approval by the Angolan parliament on April 2 of a general amnesty for former UNITA soldiers and \"all civilians and soldiers, Angolan or foreign, who committed crimes against the security of the Angolan state.\" Present at the ceremony were the top UNITA leadership; President Jose Eduardo dos Santos; U.N. Undersecretary-General Ibrahim Gambari; representatives of the \"troika\" of observers to the Lusaka Protocol (Portugal, the United States and Russia); and regional leaders. The full terms of the cease-fire have not been published, but it reportedly includes a pledge by the former adversaries to abide by the terms of the Lusaka Protocol; provides for the demobilization of approximately 50,000 UNITA soldiers and their families; for their reintegration into society over the next four to nine months; and for the integration of many former UNITA fighters into the Angolan army and police. The two sides will hold additional discussions on further measures to extend the peace process.\nDemobilization at 27 regional centers, which will be monitored by the U.N., has begun. By mid-April, 2002, over 9,000 UNITA troops had reported to demobilization areas, and the cease-fire agreement was generally holding. Delivery of supplies to demobilization cantonment areas, however, was reportedly hampered by logistical delays.", "Although Gato appears to have garnered widespread support within UNITA, subsequent changes within the organization, including possible realignments with factions that had split with Savimbi in recent years, may bring new leaders to the fore. According to UNITA parliamentarian Jaka Jamba, deputy speaker of the Angolan national assembly, and news reports, key contenders – in addition to Gato – who may seek to lead UNITA include:\nAlcides Sakala, 44, UNITA Foreign Secretary, member of UNITA political commission, and close confidant of the late Savimbi. Sakala had reportedly lost some of his influence following the imposition of travel sanctions against UNITA, which have prevented Sakala from representing UNITA's cause overseas. Some news accounts report that he is ill. Isias Samakuva, UNITA's former top negotiator. He reportedly unofficially represents UNITA in France, where he resides. Geraldo Ukwachitembo \"Kamorteiro\" Abreu, late 40s, UNITA military Chief of Staff. Abreu Kamorteiro was reportedly close to Savimbi, but is said to lack independent political support within UNITA and, like Gato, may face dwindling support attributable to his hardline military stance. Kamorteiro represented UNITA during post-Savimbi cease-fire talks in mid-March 2002, and signed the April 4 ceasefire on behalf of UNITA. Celestino Mutuyakevela Kapapelo, a former UNITA parliamentarian, UNITA lawyer, and head of UNITA's Security Affairs commission. He is seen as playing a key role in the interpretation and application of rules governing the succession process. Abel Chivukuvuku, 44, a leading UNITA parliamentarian. Chivukuvuku is a former key Savimbi advisor and UNITA ideologue, and leader of a UNITA faction in Luanda that had distanced itself from Savimbi but is not part of UNITA-Renovada. A potential reunification of the disparate factions of UNITA has been raised repeatedly by observers and members of UNITA-R following Savimbi's death.", "Another issue facing UNITA is the possible reunification of the Gato-led wing with two or more UNITA splinter factions; reunification could make UNITA a strong electoral contender against the ruling MPLA. UNITA-Renovada (UNITA-Renewal or UNITA-R) is a dissident branch of the party that was formed in September 1998 following considerable government pressure on UNITA leaders in Luanda to speak out against Savimbi. UNITA-R, headed by Eugenio Manuvakola, was recognized by the government as \"the only valid interlocutor for the continuation of the implementation of the Lusaka Protocol, which it accepts and pledges to respect.\" The formation of UNITA-R appears to have been the result both of intra-UNITA leadership rivalries and of the government's desire to isolate and sideline Savimbi, and seek alternatives to his leadership. Savimbi's UNITA rejected the splinter group, and rival UNITA parliamentarian Abel Chivukuvuku was elected chairman of the UNITA parliamentary group in Luanda in October 1998. Several UNITA members of parliament, most prominently Chivukuvuku, have since remained independent of both the UNITA-Renovada faction and UNITA's armed wing. Despite the emergence of a more diverse UNITA, Savimbi, as leader of the armed wing, remained crucial to any future peace settlement.\nOn March 15, 2002 Luanda-based UNITA-Renovada leader Eugenio Manuvakola called for an all-UNITA congress in order to reunite the armed and Luanda-based factions of the party. On April 5, Gato and Manuvakola reportedly held a \"courtesy meeting\" to discuss reunification of their two factions, but Manuvakola was later quoted as saying that he rejected a \"mechanical reunification\" with the faction of Gato, who he called \"dictatorial\" and \"irascible, arrogant and violent.\" Gato was quoted as calling the reunification of the two factions \"a \"minor problem,\" and asserted that \"there were never two UNITAs, only a single one; that of Jonas Savimbi.\"", "The United Nations has supported past peace initiatives with verification and observer missions. The mission of the U.N. Angola Verification Mission (UNAVEM I) verified the redeployment and phased withdrawal from Angola of Cuban troops that had assisted the government in its military efforts. The withdrawal was completed in late May 1991. UNAVEM II (May 1991 to February 1995) was established by the U.N. Security Council (UNSC) to monitor a cease-fire and police activities under the Bicesse Accords. It was later charged with observing and verifying the 1992 presidential and legislative elections in Angola. After renewed fighting in October 1992 the UNAVEM II mandate was altered to allow the mission to assist the two sides to agree on modalities for finalizing the peace process and to broker related national or local cease-fire agreements. After the signing of the Lusaka Protocol in November 1994, UNAVEM II was charged with verifying the first stages of the peace agreement. It was superceded by UNAVEM III in February 1995, which was to monitor and verify the implementation of the Lusaka Protocol.\nIn June 1997 UNAVEM III was replaced by the U.N. Observer Mission in Angola (MONUA), which was given an enlarged, multi-sectoral mandate. Its political unit monitored the implementation of the Lusaka agreements and the normalization of state administration across Angola, and monitored UNITA's integration into these institutions. It also assisted with confidence-building and the mediation of conflicts arising from these activities. A police affairs unit assisted with police-related aspects of political normalization and post-conflict integration; verified police neutrality; promoted security, freedom of movement and association; and monitored the disarmament of civilians. A human rights unit investigated human rights abuses, and promoted the observation of human rights and the development of national human rights education and monitoring capacities. A military unit monitored cease-fire compliance, demobilization, and the integration of UNITA into the FAA. A U.N. organization, the Humanitarian Assistance Coordination Unit, supported the demobilization and social reintegration of UNITA ex-combatants, monitored humanitarian needs, and acted as a coordination unit for the delivery of humanitarian assistance. The security situation deteriorated sharply in 1998, leading to a resumption of full scale war, and in February 1999 the mission was terminated. In October 1999, the UNSC established the U.N. Office in Angola (UNOA) to liaise with the political, military, police and other authorities in Angola. UNOA was mandated with exploring possible measures for restoring peace; assisting in institutional capacity building; the delivery of humanitarian assistance; the promotion of human rights; and related coordination activities.\nIn order to compel UNITA to comply with peace accords that it had signed during the Lusaka peace process, existing U.N. sanctions on UNITA were strengthened in June 1998. The earlier sanctions had included an arms and fuel embargo on UNITA; restrictions on UNITA travel; bans on the delivery to UNITA of flight services, aircraft, and equipment; and restrictions on UNITA's overseas representational activities. The added sanctions included the freezing of UNITA assets abroad; restrictions on official contacts with UNITA in Angola; a ban on diamond exports from Angola not authorized by the Angolan government; and a ban on the provision to UNITA of mining equipment and services, and of water and road vehicles and spare parts. In May 1999, the U.N. Security Council created a panel of experts to trace violations of sanctions on arms trafficking, oil supplies and the diamond trade, and the movement of UNITA funds. In April 2000, the Security Council adopted resolution 1295 (2000); it tightened existing sanctions, created a new monitoring mechanism, and established a process by which the Security Council would consider actions to be taken against states suspected of violating the sanctions.", "In late 2001, the U.N. initiated efforts to establish contacts with Savimbi's UNITA wing in an attempt to restart peace negotiations to end what many observers had concluded was a militarily unwinnable war. The U.N. Security Council met in late March 2002, following the start of cease-fire talks, to discuss recent developments and decide further steps to be taken by the U.N. It dispatched Ibrahim Gambari, Secretary-General Kofi Annan's Adviser for Special Assignments in Africa, to Angola to monitor the cease-fire negotiations and related developments. During his two week trip, Mr. Gambari reportedly urged the disparate factions of UNITA to unite in order to ensure a smooth transition to peace.\nIn response to substantial progress toward peace following the death of Savimbi, the Security Council had reportedly been considering a gradual repeal of sanctions against UNITA. On April 18, however, the Security Council determined that \"the situation in Angola continues to constitute a threat to international peace and security in the region.\" It passed Resolution 1404, which, while welcoming the April 4 cease-fire agreement, extended by six months the mandate of the U.N. UNITA sanctions monitoring mechanism. The Security Council also restated its concern about humanitarian conditions in Angola. On April 17, the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) announced that U.N. humanitarian agencies were initiating a survey of humanitarian conditions in Angola in areas of the country that have long been inaccessible to relief agencies due to insecurity and logistical constraints. The survey findings, expected to be completed by late May, will be used to prioritize emergency relief delivery and to determine the roles and responsibilities of the government, non-governmental organizations (NGOs), and U.N. agencies in responding to humanitarian needs. U.N. agencies participating in the survey include the World Food Program (WFP); the U.N. Children's Fund (UNICEF); the Food and Agriculture Organization (FAO); the U.N. High Commissioner for Refugees (UNHCR); the U.N. Development Program (UNDP); and the World Health Organization (WHO).", "", "According to the U.S. Department of State and human rights advocacy groups, human rights in Angola are abused frequently by both government security forces and UNITA. Many abuses are related directly or indirectly to the war, and to police corruption. Social violence and gender inequality, including violence and discrimination against women, adult and child forced labor, and prostitution, were common problems. Labor issues are dominated by the government, and labor unions and worker rights were constrained. The government also repressed freedoms of expression, of assembly, and of association and movement, according to the State Department, news accounts, and human and civil rights monitoring reports by private voluntary organizations. In 2000, some observers, including the U.S. State Department and the Committee to Protect Journalists, saw moderate improvements in some areas. Examples included fewer detainments of journalists, limited toleration of some peaceful public protests and public forums on such issues as conflict resolution, prospects for elections, and poverty in Angola.", "Increasing international and domestic political pressure and the general goal of ending the civil war appear to be gradually prompting the government to allow a more open and tolerant political environment to develop. Churches, opposition parliamentarians, some MPLA moderates, journalists, national civil society groups, and foreign humanitarian organizations have placed increasing pressure on the government to ensure increased transparency and public accountability; to consider signing a cease-fire agreement with UNITA; and to engage in new peace negotiations. A petition advocating such a position was circulated after a March 2001 conference on peace and reform. The Inter-Ecclesiastical Committee for Peace in Angola (COIEPA) has been especially active in seeking civil society-based solutions to the conflict. In June 2000 and on other occasions since, thousands of citizens have marched for peace in Luanda. In July 2000, religious leaders called for a cease-fire and negotiations to end the war. The state appears unwilling or unable to simply coercively suppress these growing voices.", "", "Estimates of Angola's total annual gross domestic product (GDP) vary widely; the World Bank placed it at $8.8 billion in current dollars for 2000, and estimated annual Gross National Income per capita at $240 for the same year. The Economist Intelligence Unit (EIU) cited GDP figures of $4 billion for 2000 and $4.1 billion for 2001. The Central Intelligence Agency estimated GDP for 2000 at $10.1 billion using the purchasing power parity method (calculations that account for exchange rate changes and the purchasing power of local currency), and estimated exports at $7.8 billion for 2000. Humanitarian conditions are grim. According to U.N. estimates, about 3.1 million Angolans – about a quarter of the population – have been displaced since the collapse of the Lusaka peace agreement in 1998. Insecurity is widespread, meaning that the majority of rural people, 85% of whom are subsistence producers, cannot tend to food crops, and face destitution. Severe hunger, even near the capital, reportedly increased in 2001, and land mines are widespread. The U.N. has reported moderate amelioration of socio-economic conditions in some areas, but displacements elsewhere continue. High inflation, at 268% by December 2000, down from 437% in May 2000, fell to 80.23% during the first ten months of 2001; the annual average for 2001 was estimated by the EIU to be 115%. Accurate evaluations of the Angolan government's budget are difficult to produce, due to recent changes in the national accounts system, and a history of off-the-books spending. In July 2000, the World Bank authorized a credit of $33 million to enhance social programs and poverty reduction. Several World Bank affiliates are active in Angola.", "Oil production, which accounts for over 40% of Angola's GDP and an estimated 85% of state revenues (see Table 1 ), is the engine of the Angolan economy, but it is not well integrated with other economic sectors. Angola's known oil reserves are large (between 5.4 and 7 billion barrels of proven oil reserves, and possibly as many as 12 billion according to one estimate), but much of it is located in deep-water, making extraction costs high. Exxon holds rights to a recently confirmed, large oil field known as Block 15, one among several recent discoveries. Chevron, TotalFinaElf, and Texaco, ExxonMobil, and BP are among of the largest foreign investors in Angola. Some analysts claim that state oil revenues are a source of large black-budget spending and extensive corruption. Non-governmental organizations, such as Global Witness, have pressured oil companies to maintain transparency in their dealings with the Angolan government. In February 2001, the oil firm BP reportedly announced it would disclose the financial terms of certain of its dealings with the government. The latter was reportedly displeased by the action, and reproached the firm in a sharply worded letter that warned that BP's production sharing agreements with Angola would be subject to possible termination if the terms of the firm's agreements with Angola were revealed.", "Diamonds are another key Angolan export. While much less valuable than Angola's oil production, diamonds are believed to have played an important role in government financing of the war. For UNITA they have played a crucial role in financing that organization's military and logistical operations. Diamonds are found throughout Angola, but are notably abundant in the northeast of the country, in Lunda Norte and Lunda Sul provinces. Angolan diamonds are primarily gem-quality; the proportion of industrial grade diamonds has comprised between 10 and 15% of total diamond production in recent years, with the balance made up of near-gem and gem quality stones. Total production for 2000 has been estimated at just over $740 million, up from estimated 1999 production totals of between $400 million and $618 million. The volume of production may be higher than these figures indicate because extensive smuggling of Angolan diamonds takes place.\nIn order to comply with U.N. Resolution 1173, the Angolan government has instituted a diamond marketing and certificate of origin system designed to allow the government to guarantee that UNITA diamonds do not enter into officially-sanctioned export channels; to cut off sources of funding for UNITA; to deter diamond smuggling; and to increase government tax revenues. Under the system, the majority of Angolan diamonds are sold through a single company, the Angola Selling Corporation (Ascorp), a joint venture between Sodiam UEE, a company owned by the Angolan government and two private foreign investors. The U.N. Monitoring Mechanism on Sanctions against UNITA, which monitors the effectiveness of the implementation of Angola-related U.N. sanctions, reports that between $1 million and $1.2 million worth of diamonds are illegally exported from Angola each day. Illicit exports are estimated to total between $350 million to $420 million annually. The Mechanism attributed an estimate of between 25% and 30% of such trade to UNITA; the balance exits the country through a wide variety of channels.", "In April 2000, Angola and the International Monetary Fund (IMF) signed a nine-month Staff Monitored Program (SMP), which technically expired in June 2001. The arrangement was later extended in the form of Article IV consultations. The agreement provided for external monitoring of the Angolan economy by the IMF and a contracting firm of the state budget, central bank, and Sonangol, the state oil firm. It also included a special oil revenue audit, dubbed an \"Oil Diagnostic,\" the purpose of which was \"to assist the Government in increasing transparency with respect to the revenues from petroleum production and building managerial capacity for monitoring and forecasting the amount and flows of those revenues.\" The monitoring program obligated the government to implement economic reforms – including transparency, higher social spending, reduced extra-budgetary spending, and increased privatization of state firms – prior to possible consideration of a formal loan agreement and rescheduling of Angola's approximate $10.38 billion debt. Implementation of the monitoring agreement was reportedly uneven, and in February 2002, the IMF announced that it would not sign onto an economic program to be monitored by Fund staff, thus paving the way for IMF loans to Angola. The IMF found that:\n[d]espite a massive increase in oil and diamond-related income over the past three years, Angola continues to face pressing economic and social problems. ... The budgetary situation appears to have deteriorated further during the last quarter of 2001 and in early 2002, when the government used almost all of its deposits at the central bank, and the bank itself lost about half of its foreign exchange reserves.\nThe IMF noted that in discussions with the Angolan government leading up to the decision not to pursue a full-fledged lending program, and in relation to the transparency of government operations, key IMF concerns:\ncentered on the need to identify and eliminate or include in the treasury account all extra-budgetary and quasi-fiscal expenditures; record and transfer to the treasury all revenues, including the total amount of signature oil bonuses; ensure that all foreign currency receipts and government revenues, including Sonangol receipts, are channeled through the central bank as mandated by the law; eliminate all subsidy and tax arrears to and from Sonangol; publish data on oil and other government revenues and expenditures, as well as on external debt; and conduct independent financial audits of the 2001 accounts of Sonangol and of the central bank.\nPresident Dos Santos reportedly told a Voice of America interviewer that the \"policing\" of the Angolan economy by the IMF is not acceptable to the government. He is said to have charged that the IMF had acted \"incorrectly\" in its relationship with Angola. He also rejected charges of widespread corruption in the country and criticized the IMF for focusing its attention on loans made against future national oil production. He reportedly emphasized that such loans were controlled by Angola – acting as sovereign state that controls its own finances – and not the IMF. Dos Santos also reportedly cancelled scheduled meetings with the IMF and World Bank, a move that may indicate deteriorating relations with the two institutions.\nAccording to the U.S. State Department, in 2000, 40% of the national budget, equivalent to 22% of Gross Domestic product, was spent on defense. This proportion appears to be changing, as the government seeks to create the conditions for a transition to peace. In mid-December 2001, Angola's parliament approved a 2002 national \"transition\" budget of $5.8 billion, of which 68% will be funded by oil revenues. The budget allocates 11% to defense, security and public order; education and health receive36% and 28% respectively , and 21% percent will go to social security and welfare; 10% goes to housing and public works, including energy and water supplies, and 5% supports cultural projects.", "Control of the state's oil and diamond wealth, and of political power, is reportedly highly concentrated within the presidency, the cabinet of ministers, and a small military and business elite with close ties to the government, while the vast majority of the population lives in penury. The concentration of wealth and power, according to numerous allegations by critics and analysts, both results from and has helped engender an extensive culture of large-scale corruption within the national leadership, as well as widespread petty corruption within society at large. The leadership's wealth is said to be derived from portions of the revenues from the sale of national oil reserves, oil extraction rights, the sale of diamonds, lucrative weapons deals, and control of state corporations and regulatory agencies. Leaders in control of state institutions and attendant access to public sector assets, legal powers, and services support, in turn, a subsidiary network of political clients. State workers, businessmen, commercial licensees, professionals, family members, and others depend on the top leadership for jobs, income, contracts, or freedom to operate various enterprises, according to at least one scholar. The effect is the creation of a top-down, tiered system of patronage and a network of mutual interest and economic inter-dependence that critics say accumulates national wealth at the expense of the broader public. The presidency, known as the Futungo de Belas – the White House of Angola – reportedly exerts political influence through the Eduardo dos Santos Foundation (FESA, after its Portuguese acronym), in addition to controlling political patronage networks that operate through state institutions of government.\nThe expenditure of large portions of Angola's oil revenues is alleged to regularly take place off-budget. In the process, large sums are believed to be misappropriated by well-connected officials. Examples of transactions that are allegedly subject to manipulation include the payment of signature bonuses (advance payments associated with the right to bid on contracts), operations licensing fees, loans that use future oil production as collateral, and spot sales of oil outside of regular contractual arrangements.\nCritics assert that national security concerns associated with the long-running war have provided both a rationale and political cover for a lack of governmental accountability and transparency in relation to national accounts, and associated corruption. The nature of Angola's oil assets have also insulated the oil economy and its proceeds from both the war and from the oversight and influences of civil society and political opposition. Reserves are primarily found off-shore, foreign firms undertake the majority of extractive operations, and oil sector contracts are controlled and allocated by MPLA-controlled institutions of government, leaving little scope for local Angolan policy or business participation within the oil sector. In recent years revenue has reportedly been used to fund debt repayment, military expenses, and the country's extensive network of patron-client relationships. Smaller proportions have generally been allocated to economic development, social services, and reconstruction of infrastructure destroyed by the war, although the most recent budgets reportedly include increased funding for these areas.", "The Angolan government has repeatedly and vigorously rejected charges that it is corrupt. It recently accused its critics of ignoring \"the courageous reforms, including measures to ensure transparency, that the government has introduced under extremely adverse conditions.\" It has focused much of its criticism on the NGO Global Witness, which has produced numerous documents that describe in detail alleged patterns of oil-related state corruption, some in cooperation with foreign firms, in Angola. The government has called Global Witness's most recent report \"bogus research \" that is part of an \"insidious campaign\" designed \"to befuddle the Angolan and the international public, and slander the government of Angola.\" The report, it asserted, \"amounts to nothing more than conjectures about the production and marketing of Angolan oil, and the acquisition of resources for the defence of the country, to which any sovereign state is entitled.\" The government has also recently repeated previous denials of assertions by critics that it had been party to corrupt oil-based weapons deals with politically-connected weapons brokers and financiers, labeling them \"groundless.\"It stated that the government had not entered into deals with French companies for the acquisition of war materiel, and denied that such materiel has ever been acquired through France.\nTo bolster its denials of corruption, the government cites its implementation of a range of transparency and accountability-enhancing measures. Such measures, the government asserts,\ninclude the external auditing of the National Bank of Angola's accounts; the diagnosis of the petroleum sector by an international company selected by means of a World Bank-supervised tender; the external auditing of the accounts of Sonangol [the National Angolan Fuel Company], Endiama [Angola National Diamond Enterprise] and affiliates; and the establishment of an Audit Court. Such measures reflect a firm commitment of the Angolan authorities to the best forms of good governance, and the unwavering political will to create in Angola a new era of transparency, governance, and political accountability by state officials and agents.\nIn April 2002, the government also announced the opening of a tax office that will monitor and combat tax evasion, reform public finances, and serve as a best practices model and training school for tax inspectors. It also points to the recent creation of the National Reconstruction Service, a civil institution being established to absorb demobilized government army and UNITA forces, whose labor will be used to clear land mines and repair roads, railways, and other infrastructure.", "", "On February 26, 2002, President Bush met at the White House with President dos Santos, together with the Presidents of Botswana and Mozambique. According to a White House release, Mr. Bush stated that:\nI urged President dos Santos to move quickly toward achieving a cease-fire in Angola. And we agreed that all parties have an obligation to seize this moment to end the war, and develop Angola's vast wealth to the benefit of the Angolan people. President dos Santos has it within his power to end 26 years of fighting by reaching out to all Angolans willing to lay down their arms. Angolans deserve no less.\nThe United States has actively supported efforts to implement the Lusaka Protocol, to which the United States is an observer, and has provided significant humanitarian assistance to Angola (see Appendix ). In recent years, U.S. policy toward Angola has supported the government, and condemned UNITA's war effort, while at the same time backing political and economic reform. In early October 2001, the new U.S. Ambassador, Christopher William Dell, reiterated these positions, and vowed to work with government, churches, and civil organizations to build a strong democracy. In January 2002, Principal Deputy Assistant Secretary, William Bellamy, reportedly met with Angolan government officials and members of civil society during a visit to Angola that focused on strengthening U.S.-Angolan bilateral relations; assessing the status of current Angolan political and economic reforms; and prospects for peace in the context of the Lusaka Protocol.\nIn late April 2001, President Bush reportedly sent a letter to President dos Santos urging that Angola implement transparent governance. U.S. Assistant Secretary of State for African Affairs Walter Kansteiner recently re-emphasized President Bush's call for increased transparency, according to an April 9, 2002 Reuters news report. Kansteiner was quoted as stating that:\nThe whole international community wants to see Angola move to better economic policies including transparency... They [the Angolan government] need to out all of their revenue on budget. They have a fair amount of revenue that's off budget and that's problematic... You're not going to get economic change or growth if you lose, say, 25 percent of your revenue stream.", "Congress has long monitored developments in Angola. Congressional attention has focused primarily on conflict resolution and the amelioration of conflict-related humanitarian conditions in Angola and the surrounding sub-region. In the 1970s and 1980s, much debate focused on the delivery of covert aid and military assistance to Angola. In the 107 th and 106 th Congresses, the issue of conflict diamonds has drawn particular congressional attention. Angola, along with Sierra Leone and the Democratic Republic of Congo, has been the subject of several hearings and legislative proposals focusing on ways to end trade in diamonds that fund conflict. In March 2001, Rep. Alcee Hastings introduced H.Con.Res. 16 , which condemns the assassination of Congolese President Laurent Kabila and urges Angola, as a party to the Lusaka Peace Accord and as a foreign government involved in the Congolese conflict, to abide by the Accord and support a transition to peace and stability in the Democratic Republic of the Congo. In the 106 th Congress, Rep. Maxine Waters introduced H.Res. 390 , which called for Angolan and international efforts to end the Angolan conflict and to ensure the delivery of humanitarian assistance to alleviate human suffering in Angola.", "Officials of the State Department's Bureau of African Affairs have stated support for a relationship between the United States and Angola that is structured by U.S. investment in the Angolan oil industry; assurance of U.S. access to Angolan oil exports; and U.S. support for a resolution of the Angolan conflict. Angola has provided between 3.5% and 5% of U.S. oil supplies in most recent years; the proportion varies depending on fluctuations in world market prices and supplies, and according to whether volume or value is measured. The exposure of the Export-Import Bank (Ex-Im Bank) totaled over $141 million in FY 2001, down from over $150 million in FY 2000. The Overseas Private Investment Corporation (OPIC) has also offered political risk insurance and other financial backing to projects in Angola – notably a political risk insurance contract of up to $200 million in 1998. The United States has also supported World Bank and other multilateral projects in Angola.\nU.S. officials have expressed support for the efforts of U.S.-Africa business forums, such as the Corporate Council on Africa and the U.S.-Angolan Chamber of Commerce, an independent, non-profit organization of businesses that promotes bilateral trade and investment. The Chamber, formed in 1990, has over sixty-five corporations, associations, and individuals as members. To promote trade, investment and Angolan economic development, the Chamber sponsors trade missions to Angola, represents private sector views to both governments, hosts bi-lateral exchanges, and promotes trade and investment opportunities in both countries. During his February 2002 U.S. visit, President dos Santos addressed the Corporate Council on Africa and the United States-Angola Chamber of Commerce. He highlighted the role played by U.S. private sector investment in achieving economic growth in Angola, commended U.S. government efforts to help end the Angolan war, and stressed Angola's role as a growing supplier of oil to the United States. He observed that as a non-Organization of the Petroleum Exporting Countries (OPEC) oil exporter, Angola plays a role in contributing to U.S. energy security. He also called attention to U.S. investment in Angola's non-oil industries, in such areas as agriculture, fisheries and manufacturing, and financial services, and predicted that U.S. investment opportunities would rise as Angola undertakes anticipated post-war construction.\nSome observers maintain that U.S. Angola policy has tended to dis-proportionately focus on the maintenance of strong bilateral business ties. Such concerns, they contend, have forestalled or superseded more forceful U.S. advocacy of Angolan governmental and economic reforms, and greater equity in the distribution of income derived from Angola's national resources among its overwhelmingly poor population. U.S. policy makers contend, however, that the United States has advocated reform by, for example, pushing for the IMF to undertake the Oil Diagnostic, and they note that the United States has been among the leading donors of emergency assistance to Angola in recent years.", "U.S. assistance to Angola provides emergency and humanitarian relief to Angola's displaced and war-affected populations, and supports capacity building and service provision in the health, agricultural, and educational sectors. USAID health sector programming supports immunization efforts; malaria and HIV/AIDS prevention; maternal and child health; nutritional support and supplemental feeding; access to clean water and sanitation; and the provision of prosthetic devices for persons injured by land mines. USAID funds a range of efforts to strengthen civil society that focus on increasing participatory decision-making and enhancing the ability of civil organizations to communicate and organize, and to undertake public advocacy and education campaigns. It also supports private sector growth capacity-building projects; smallholder agriculture; and land tenure reform. U.S. assistance to Angola has also included support for the removal of land mines – totaling $9.34 million from FY 1997 through FY 2001 – and for international military education and training.", "" ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 3, 2, 3, 3, 3, 3, 3, 3, 3, 3, 1, 2, 1, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h2_full h1_full", "h2_full", "h2_full", "", "h0_title h1_title", "h1_full", "h1_full", "h0_title", "h0_full", "", "h0_full", "", "", "", "", "", "h2_full", "", "", "", "", "h1_title", "", "", "", "", "h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What was signed on April 4, 2002?", "How did a prior law help promote peaceful relations?", "What event triggered the passing of this agreement?", "How is UNITA currently organized?", "What did dos Santos indicate in 2001?", "How might de Santos return to the political sphere?", "Why has the Angolan government been labeled authoritarian?", "How does Angola handle international relations?", "How did Angola's 1992 election end?", "What series of events did this kickstart?", "What occurred as a result of a period of instability?", "How did UNITA fund its war efforts?" ], "summary": [ "A permanent cease-fire agreement between the Angolan government and its long-time military adversary, the National Union for the Total Independence of Angola (UNITA) was signed on April 4, 2002. The accord provides for the demobilization of UNITA's forces, and for their integration into a unified national military.", "Under a separate law passed prior to ratification of the accord, UNITA's armed forces will receive a general amnesty for wartime offenses committed against the state and Angolan people.", "The agreement followed the death of Jonas Savimbi, the founder and long-time leader of UNITA, who was killed in a government ambush in February, 2002 in eastern Angola. Savimbi's death raised the prospect of possible realignments within the UNITA organization or of changes in its leadership.", "The current de facto political leader of the former Savimbi-led wing of UNITA is General Paulo \"Gato\" Lukamba, the UNITA secretary-general and head of UNITA's Administrative Affairs commission.", "Eduardo dos Santos, Angola's current President and leader of the ruling Popular Liberation Movement of Angola (MPLA), indicated in 2001 that he would step down prior to elections that may be held in late 2002 or in 2003.", "Dos Santos has designated no clear successor, and some analysts believe that he may yet stand as a presidential candidate.", "The Angolan government has been labeled authoritarian by many observers because of its sometimes harsh repression of domestic political opponents and journalists, and for curtailing public expression and the opportunity of its citizens to change their government.", "Angola has been engaged militarily in several neighboring countries in recent years.", "The country's first and only national election was held in 1992, following a peace accord between the government and UNITA; it ended in an aborted run-off election and a return to civil war.", "International pressure on UNITA to return to peace talks grew. In 1993, the United Nations (U.N.) imposed an oil and arms embargo on UNITA. Peace talks ensued, culminating in a renewed cease-fire agreement in accord with the Lusaka Protocol. A U.N. peacekeeping operation was deployed, but the Lusaka accord was never fully implemented.", "A period of instability ensued, and by late1998 Angola again faced full-scale civil war. The government attacked UNITA strongholds in central Angola. UNITA launched counterattacks; it had seized much territory by mid-1999, including many diamond-rich zones. The U.N. imposed further sanctions on UNITA. The MPLA claimed many military successes in 1999-2002, but UNITA carried out many attacks across Angola during the same period.", "UNITA was able to fund its operations by selling diamonds and obtaining arms, in violation of U.N. sanctions against it." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 0, -1, -1, -1, 0, 1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Background", "FRA's Train Horn Rule", "Requirements for Establishing Quiet Zones", "Impacts of the Rule", "Continuing Issues", "Preemption of Local Decision-Making", "Federal Funding for Grade-Crossing Safety Improvements", "The Role of Motorists in Grade-Crossing Collisions" ], "paragraphs": [ "", "On June 24, 2005, 11 years after Congress directed the Federal Railroad Administration (FRA) to issue a regulation on the sounding of train horns at grade crossings, FRA's Rule on the Use of Locomotive Horns at Highway-Rail Grade Crossings took effect. The train horn rule requires that locomotive horns be sounded at all public highway-rail grade crossings, except where there is no significant risk to persons, where supplementary safety measures fully compensate for the absence of the warning provided by the horn, or where sounding the horn as a warning is not practical. The rule implemented a congressional mandate in Title III, Section 302, of P.L. 103-440 (codified as 40 U.S.C. 20153). FRA exempted the Chicago region from the rule, pending a re-analysis of grade-crossing accident data for that area. The Chicago area includes 45% of the nationwide population FRA estimated to be potentially affected should pre-existing bans on sounding train horns at road crossings (\"whistle bans\") be eliminated as a result of this regulation.\nThe FRA train horn rule preempted roughly 2,000 existing state and local whistle bans. The rule allows communities to establish \"quiet zones\" where the sounding of locomotive horns can be banned, provided that the risk of grade-crossing collisions is below a certain level or that the community provides safety measures that compensate for the absence of the warning provided by the train horn. In some cases communities may establish quiet zones without making any safety improvements; in other cases, communities will be required to make safety improvements to grade crossings in order to obtain FRA approval to establish a quiet zone.", "The United States has approximately 250,000 highway-rail at-grade crossings. Collisions at these intersections are typically responsible for nearly 40% of all railroad-related deaths. The vast majority of grade-crossing collisions are caused by motorists, and the vast majority of injuries and deaths resulting from these collisions are experienced by motorists.\nReducing the number of injuries and deaths resulting from grade-crossing collisions has been a federal concern for decades. Congress has provided more than $4.1 billion since 1974 specifically for grants to states to reduce the risks of grade crossings, and reducing risks at public grade crossings is an eligible expense under several federal highway funding programs. This funding has resulted in the installation of around 30,000 active warning devices at grade crossings, and the closing of many other crossings, since 1974.\nBoth the number and rate of incidents and deaths at grade crossings have declined significantly over time. Between 1994 and 2003, the decade prior to publication of the FRA interim final rule, the number of annual highway-rail grade-crossing incidents fell from 4,892 to 2,909 (-41%), and the annual number of deaths in these incidents fell from 626 to 325 (-48%). These decreases occurred in spite of growth in both train and auto traffic. According to the Inspector General of the Department of Transportation, the primary sources of the reduction in grade-crossing collisions in the decade prior to the new rule were the permanent closing of about 41,000 grade crossings and the installation of active warning signals (flashing lights and automatic gates) at about 4,000 grade crossings.\nThe number of deaths from grade-crossing collisions has declined by around 30% since the train horn rule took effect, from 358 in 2005 to around 250 annually since 2009 (see Figure 1 ). There has also been a significant decline in most other types of highway deaths since 2005. The number of vehicle miles traveled each year has fallen due to high gasoline prices and a sluggish economy. It is not certain that the recent decline in grade-crossing deaths will persist if driving activity resumes its historical growth rate.\nThe train horn rule was prompted by industry consolidation since the 1980s, which led to a reduction in railroad track mileage and heavier use of the remaining network. The increasing number of train movements on lines that remained in use, combined with growing sensitivity on the part of communities toward noise levels in the environment, resulted in a number of communities banning the sounding of train horns at intersections. In 1984 the state of Florida authorized local communities to ban the sounding of horns by intrastate railroads at night at intersections equipped with flashing lights and bells, crossing gates, and signs warning motorists that trains' horns would not be sounded at night. By 1989, Florida communities had banned the nighttime use of train horns at 511 of 600 eligible intersections.\nA 1990 FRA study found that there were almost three times as many collisions after the bans were established, while the daytime collision rates were virtually unchanged. FRA concluded that banning the sounding of train horns at grade crossings created a safety risk. The agency issued an emergency order in 1991 ending train horn bans in Florida. In the two years after that order, night-time collision rates dropped to near pre-ban levels.\nThe Florida study led FRA to do a similar nationwide study. That study, published in 1995, identified 2,122 public grade crossings where train horn bans had been in place at some time between 1988 and 1994 (not counting the 511 crossings in the Florida study). It concluded that crossings with train horn bans \"averaged 84% more collisions than similar crossings with no bans.\"\nIn response to the evidence of increased risk of injuries and death from bans on the use of train horns at intersections, Congress increased the availability of federal funding to install automatic warning gates at crossings. In FY2000, for example, the Federal Highway Administration (FHWA) made $155 million available specifically for grade-crossing safety, and an additional $368 million of federal highway safety funding was available for states to use on grade-crossing improvements, at their discretion. In addition, in 1994 Congress mandated that FRA regulate the use of train horns at intersections, requiring their use except in certain situations at FRA's discretion. FRA's 2005 train horn rule implemented that congressional mandate.", "FRA describes the rule as \"a safety rule that implements as well as minimizes the potential negative impacts of a Congressional mandate to blow train whistles and horns at all public crossings.\" It requires that locomotive horns be sounded at public highway-rail grade crossings, while providing exceptions to this requirement. The regulation preempts state and local train whistle bans.\nThe rule did not establish a new safety standard. FRA noted that prior to publication of the rule, train horns were already being sounded at more than 98% of public grade crossings; thus, the rule formalized an already prevailing industry standard. The majority of the text of the rule deals with exceptions to the requirement that train horns be sounded at all public grade crossings, and particularly with procedures for establishing quiet zones. The terms of the exceptions are intended to balance the risk of removing one safety measure (the sounding of the train horn) by adding other safety measures. However, under some circumstances communities can ban the sounding of train horns at grade crossings without additional safety improvements, where adequate safety features are already in place or where the risk of accidents is below one of the thresholds established in the regulation.", "In permitting exceptions to the law requiring the sounding of train horns at crossings, FRA sought \"to ensure that quiet zones, while providing for quiet at grade crossings, also continue to provide the level of safety for motorists and rail employees and passengers that existed before the quiet zones were first established, or in the alternative, the level of safety provided by the average gated public crossing where locomotive horns are routinely sounded.\" Thus, the rule seeks to compensate for the risk that silencing train horns at grade crossings will lead to additional train-vehicle collisions by generally requiring additional safety measures.\nThe minimum requirement for a quiet zone is that every public highway-rail grade crossing in the proposed quiet zone corridor must have flashing lights and gates that control traffic over the crossing. There are three alternatives available to a community wanting to establish a quiet zone:\nThe community can institute supplementary safety measures at each public crossing in the quiet zone. These measures, specified in the rule, physically reduce the risk of motorists being involved in a collision with a train at a grade crossing. They may include closing the crossing to highway traffic permanently or during the hours when the whistle ban is in effect; making it more difficult for motorists to drive around a lowered gate by blocking approach lane(s) to the crossing; installing a four-quadrant gate system such that gates block both approach and departure lanes from the crossing; or installing a median that prevents a motorist from swerving out of an approach lane that is blocked by a lowered gate. If the accident risk for the quiet zone is less than or equal to the national average risk of accidents at grade crossings equipped with flashing lights and automatic gates where train horns are sounded, known as the \"Nationwide Significant Risk Threshold,\" the community can establish a quiet zone without implementing additional safety measures. Otherwise, the community must use alternative measures to reduce the level of risk to the national average, including a systematic program of monitoring and enforcing traffic laws at crossings; a public education and awareness campaign about the risks of grade-crossing accidents; photo enforcement; or any of the supplementary safety measures specified above. The community can implement safety measures that reduce the risk of grade-crossing collisions in the quiet zone, as measured by an FRA index, to no more than the level of risk prior to creation of the quiet zone.\nQuiet zones that are qualified by the second criterion, comparison to the national average risk of grade-crossing accidents, must be reviewed each year. The average itself is recalculated each year, so a quiet zone that qualified by having a risk below the nationwide average may fall out of compliance if the nationwide average declines. In such a case, a community would be required to implement additional safety measures or to eliminate the quiet zone.\nCommunities may get a proposed quiet zone approved in two ways. The quiet zone may qualify for automatic FRA approval, without detailed review, if it meets the first or third condition listed above. If the community qualifies a quiet zone under the second condition, FRA must conduct a full review of its risk-reduction measures before granting approval.", "FRA estimated that 66% of the approximately 2,000 whistle ban crossings in existence at the time the rule was finalized could qualify for conversion to quiet zones without any improvements, while the remaining 34% would require supplementary or alternative safety measures to maintain their existing ban. The Chicago area, which is currently exempt from the rule, represents roughly 385 of the approximately 2,000 existing whistle bans. As of April 2013, FRA reports having received 549 applications for quiet zones.\nFRA estimated that prior to the issuance of the regulation 9.4 million people were affected by train horn noise, and the agency estimated that the rule would eliminate the existing noise impact on 3.4 million of those people by reducing the loudness of train horns, reducing the amount of time they are sounded, and by leading to the establishment of quiet zones. On the other hand, elimination of pre-rule whistle bans would expose people in those areas to increased noise levels; assuming a worst-case situation in which no quiet zones were established after the rule took effect (i.e., all existing whistle bans were eliminated), FRA estimated that 445,611 persons would experience increased noise levels due to train horns sounding at all public highway-rail grade crossings. Of that number, 46% of those people were in one state (Illinois), and 34% of the total were in a single county (Cook County, IL).\nFRA asserted that the rule would reduce existing train horn noise levels over time through limiting the maximum sound level for train horns to 110 decibels and limiting the duration of sounding horns at grade crossings to no more than 15-20 seconds. Prior to the rule, locomotive horns did not have a maximum noise level; many operated at 111 decibels. Also, prior to the rule, the standard industry practice was for locomotive engineers to begin sounding the train horn one-quarter mile from the intersection. If a train was going less than 45 miles per hour, as trains often do in heavily populated areas with numerous grade crossings, the train horn would have been sounded for longer than 20 seconds.", "Several of the issues that contributed to the protracted rulemaking process for the train horn rule may continue to be of interest to Congress.", "During the adoption process in 2003-2005, many local governments asserted that the train horn rule was an unfair preemption of their authority. Many claimed that the basic responsibility for deciding when a whistle ban is justified should reside with local government. FRA acknowledged that whistle bans established prior to the rule reflected a policy choice made by local communities in weighing the risks of grade-crossing accidents against the quality of life of residents. FRA observed that it was mandated by Congress to require the sounding of train horns at intersections to promote public safety, and that its regulations sought to minimize the potential negative impacts of that mandate.", "Federal funding is available to reduce the risk of grade-crossing collisions. The primary source of this funding is FHWA grant programs, which normally provide funds to state departments of transportation to be spent according to state priorities, within general federal guidelines. Some programs are intended specifically to reduce hazards at railway-highway grade crossings; in other programs, reducing grade-crossing hazards is one among many eligible uses of funding. See Table 1 for a list of potential federal funding sources.\nAt the time FRA adopted the train horn rule, the federal government maintained a large number of surface transportation funding programs, many of them narrowly tailored to specific goals established by Congress. However, FRA emphasized that funding the improvements necessary to establish quiet zones would be principally a state and local obligation, because \"it is unlikely that most improvements undertaken under this Rule would withstand the priority ranking requirement for safety projects under Federal-aid highway programs.\" FRA observed that federal grade-crossing risk reduction funding \"is subject to strict requirements for ranking the priority of projects on a State-wide basis,\" based on anticipated accident reduction benefits, the anticipated cost and effectiveness of warning device options, and the availability of funding. As establishing a quiet zone may produce little or no improvement in the level of safety at grade crossings, since any safety improvements provided are compensating for the increase in risk from banning the sounding of train horns, FRA pointed out that any improvements may be \"approximately neutral with respect to safety\" and would therefore have difficulty qualifying for federal funding.\nIn 2012, Congress reauthorized federal surface transportation programs. In the legislation, Congress consolidated many separate highway grant programs into a much smaller number of programs with broad scope. This consolidation reduced the number of programs for which grade-crossing safety is an eligible expense, but did not reduce the overall amount of funding for which grade-crossing safety is an eligible expense. Also, Congress left intact the Railway-Highway Crossings Program, which provides money specifically for grade-crossing safety. As noted in Table 1 , states can also use their federal Highway Safety Improvement Program and Surface Transportation Program funds to improve the safety of grade crossings. But states typically have many highway projects competing for these funds. Priorities for funds received under these programs are set by metropolitan planning organizations and state departments of transportation, and projects must be in a state's statewide transportation improvement program or a metropolitan planning organization's transportation improvement program to be eligible for federal funding.\nThese plans typically include far more projects than can be funded with current resources. Thus, to receive funding, a grade-crossing improvement project would have to be high on the list of priorities in a state's transportation improvement plan or in a metropolitan planning organization's transportation improvement plan; otherwise, the project, although listed in the plan, might have such a low priority that it might not receive funding for years, if ever. In the past, Members of Congress used earmarks to direct funds to specific transportation projects; currently, earmarking is constrained, but even if a project were to be earmarked, it would have to be in a state or metropolitan transportation improvement plan to be eligible for federal funding.\nDuring the FRA rulemaking process, commenters raised objections to federal funding for establishing quiet zones, because establishing a quiet zone is a quality-of-life improvement, not a safety improvement. Some commenters criticized the rule on the grounds that it would reduce safety overall by leading states to divert funding away from higher-risk crossings to pay for improvements required to maintain existing whistle bans at lower-risk crossings. They asserted that this process would tend to divert resources from improving those crossings in rural areas where active safety technologies (such as warning lights and gates) have not yet been installed, to crossings in urban areas that already have warning lights and gates but which may have to implement additional safety measures to preserve whistle bans. As noted above, FRA asserted that the requirements of the federal grade-crossing safety grant program should limit such diversion.", "Most public highway-rail grade-crossing collisions are due to risky behavior or poor judgment on the part of motorists. In many cases, motorists fail to stop at grade crossings when the warning signal is activated, and in some cases they even drive around activated warning gates. In light of this, FRA received many comments on the rule arguing that residents of communities should not be subject to the noise of train horns in an effort to protect irresponsible people from the consequences of their actions. In addition to noting that the sounding of train horns was mandated by Congress, FRA asserted that \"it is appropriate to protect even the unwise from the consequences of their misdeeds where those consequences are especially severe—and where society as a whole may bear the burden of those consequences.\" The agency also noted that grade-crossing accidents caused by irresponsible drivers often harm innocent victims, such as passengers in those drivers' cars, railroad employees and passengers, other drivers, and people living nearby." ], "depth": [ 0, 1, 1, 1, 2, 1, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "h0_full h2_full h1_full", "h0_full", "", "h2_full", "h2_title h1_title", "", "h2_full h1_full", "" ] }

{ "question": [ "Why did numerous US communities impose bans on the sounding of train whistles at grade crossings in the 1970s?", "What did a 1990 FRA study of train whistle bans reveal?", "How did Congress respond to the results of this study?", "How has the number of deaths from grade-crossing collisions changes thanks to the train horn rule?", "Why might this decline be unrelated to the train horn rule?", "How do fatality statistics reflect this change?", "How does the train horn rule affect whistle bans?", "How does the train horn rule affect quiet zones?", "How are grade-crossing improvements funded?", "How are requests for such funding processed?" ], "summary": [ "Numerous communities across the United States imposed bans on the sounding of train whistles at highway-rail grade crossings beginning in the late 1970s to address complaints and concerns of nearby residents about noise from train whistles.", "In 1990, a Federal Railroad Administration (FRA) study of train whistle bans in Florida showed a positive correlation between nighttime whistle bans and the number of accidents at highway-rail crossings.", "In 1994, partially in response to the FRA study, Congress enacted the Swift Rail Development Act (P.L. 103-440), which directed FRA to issue a regulation on the sounding of train horns at grade crossings.", "The number of deaths from grade-crossing collisions has declined by around 30% since the train horn rule took effect.", "However, grade-crossing fatalities were already declining prior to adoption of the rule, and there has also been a significant decline in most other types of highway deaths since 2005. The impact of the rule on highway fatalities is thus unclear.", "In 2012, there were 271 grade-crossing fatalities.", "The rule preempts all state and local laws dealing with bans on the sounding of locomotive horns at crossings (\"whistle bans\"), affecting roughly 2,000 bans in 260 localities.", "Communities may create \"quiet zones\" in which the sounding of locomotive horns is banned (except in an emergency); in some cases, these new quiet zones may not require any safety improvements by the community, but in other cases communities will have to provide safety improvements in order to establish a quiet zone. As of April 2013, FRA had received 549 notifications from communities that had established, or intended to establish, a quiet zone.", "Grade-crossing improvements to reduce the risk of accidents or to implement quiet zones are eligible expenses under several federal highway programs.", "Selection of projects for such funding is generally made by state highway administrations, subject to federal approval." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 0, -1, 0, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "Background", "The Role and Economic Value of Bees", "Bee Population Trends", "Factors Affecting Bee Health", "Effects of Bee Losses on Agriculture and Ecosystems", "Specific Roles and Responsibilities of USDA and EPA in Addressing Bee Health Issues", "Selected USDA Agencies Conduct Monitoring, Research and Outreach, and Conservation to Protect Bees, but Limitations Exist within Those Efforts", "USDA Agencies Increased Honey Bee Colony Monitoring in 2015 but Have Not Worked with Federal Partners to Coordinate a Native Bee Monitoring Plan", "Monitoring Honey Bees", "Monitoring Other Managed Bees", "Monitoring Wild, Native Bees", "USDA Bee Research and Outreach Have Focused Primarily on Honey Bee Health, but Limitations in Its Research Information System Hinder Efforts to Track Research Projects", "FSA and NRCS Have Taken Actions That Promote Bee Habitat Conservation, but Limitations Could Hinder the Agencies’ Conservation Efforts", "FSA and NRCS Have Taken Many Actions That Promote Bee Habitat Conservation", "Limitations in Research, Tracking Acres of Pollinator Habitat, and Evaluation Could Hinder the Agencies’ Conservation Efforts", "EPA Has Taken Some Steps to Address Pesticide Threats to Bees, but Potential Threats Remain", "EPA Revised the Label Requirements for Certain Pesticides and Has Proposed Revisions to Label Requirements for Additional Pesticides Known to Be Acutely Toxic", "EPA Has Encouraged Beekeepers and Others to Report Bee Kill Incidents Potentially Associated with Pesticides", "EPA Has Encouraged State and Tribal Governments to Voluntarily Develop Plans to Protect Managed Bees from Pesticides", "EPA Has Revised Its Guidance for Assessing Risks to Bees Posed by New and Existing Pesticides, but Limitations Remain", "EPA’s Risk Assessment Guidance Potentially Calls for More Study of the Effects of New and Existing Pesticides on Honey Bees", "EPA’s Risk Assessment Guidance Allows for Tiered Studies in Making Registration Decisions for New Pesticides and New Uses for Existing Pesticides", "EPA’s 2014 Risk Assessment Guidance Relies Largely on Honey Bees as a Surrogate for Other Bee Species", "EPA’s June 2014 Guidance Does Not Call for the Agency to Assess the Risks That Pesticide Mixtures May Pose to Bees", "Applying EPA’s New Risk Assessment Guidance Will Likely Extend the Agency’s Reviews of Registered Pesticides, and EPA Has Not Revised Review Schedules", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Stakeholders’ Views on Efforts USDA and EPA Should Make to Further Protect Bees", "Appendix III: Bee Health Stakeholders We Interviewed", "Name of stakeholder Laurie Davies Adams", "Name of stakeholder Dudley Hoskins", "Appendix IV: Comments from the Department of Agriculture", "Appendix V: Comments from the Environmental Protection Agency", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "This section provides information on the role and economic value of bees, bee population trends, factors affecting bee health, effects of bee losses on agriculture and ecosystems, and the roles and responsibilities that USDA’s ARS, FSA, NASS, NIFA, and NRCS, and EPA have played with respect to addressing bee health issues.", "Pollinators—including honey bees, other managed bees, and wild, native bees—are critical to our nation’s economy, food security, and environmental health. Honey bees—nonnative insects introduced to the United States in the 1620s by early settlers—are the most recognizable pollinators of hundreds of ecologically and economically important crops and plants in North America. In 2014, USDA reported that crops pollinated by honey bees directly or indirectly account for up to one-third of the U.S. diet. The most recent study on the value of pollinators to U.S. food and agriculture was published in 2012 and estimated that, as of 2009, the total value of crops that were directly dependent on honey bee pollination, including almonds, apples, and cherries, was almost $12 billion. The study estimated that, also as of 2009, the total value of crops that were indirectly dependent on bees, such as hay, sugar beets, asparagus, and broccoli, was more than $5 billion. In addition, according to a 2015 USDA-NASS report, honey bees produced more than $385 million worth of honey in 2014.\nApproximately 1,500 to 2,500 commercial U.S. beekeepers manage honey bee colonies, according to an estimate by the American Beekeeping Federation. Many commercial beekeepers travel across the country to provide pollination services for farmers’ crops and to support honey production. According to the 2014 USDA report, in 2012, almonds, sunflowers, canola seed, apples, cherries, and watermelons were among the top crops that were sources of pollination service fee revenue for beekeepers. About 1.6 million honey bee colonies—approximately 60 to 75 percent of all U.S. commercial honey bee colonies—provide pollination services to California’s almond orchards early each spring. Figure 1 shows the estimated acreage of crops for which beekeepers provide pollination services and the location of summer feeding grounds for commercially managed bees.\nIn addition to honey bees, certain managed bees and wild, native bees also provide valuable pollination services. Whereas honey bees comprise an estimated 98 percent of managed bees in the United States, other managed bee species—including bumble bees, alfalfa leafcutting bees, and orchard mason bees—comprise the remaining 2 percent, according to a representative of the Pollinator Stewardship Council. These other managed bees pollinate alfalfa, almonds, apples, cherries, and tomatoes. Wild, native bee species may also pollinate agricultural crops. In 2009, crops directly and indirectly dependent on pollination by other managed bees; wild, native bees; and other insects were valued at almost $10 billion according to the 2012 study of the value of pollinators to U.S. food and agriculture. In addition, a 2007 National Research Council study found that wild, native bees provide most of the pollination in natural plant communities, which contributes to valuable ecosystem services, including water filtration and erosion control.", "According to the White House Task Force’s 2015 Pollinator Research Action Plan, in 2006, some beekeepers in the United States began to notice unusually high mortality among their honey bee colonies over the winter months. From 2006 to 2014, beekeepers who responded to the Bee Informed Partnership’s nongeneralizable national survey of managed honey bee colony losses reported that an average of about 29 percent of their bee colonies died each winter. Those losses exceeded the approximately 13 to 19 percent winter loss rate that beekeepers indicated in the surveys were acceptable. Furthermore, when winter losses are combined with losses at other times of the year, total annual losses can be higher. For example, a preliminary report from the Bee Informed Partnership indicated that beekeepers who responded reported total annual losses of more than 40 percent of colonies from April 2014 through March 2015. Whereas nongeneralizable data on short-term losses in honey bee colonies are available, the status of other managed bees and most of the wild, native bee species in the United States is less well-known.", "According to the White House Task Force’s strategy and research action plan, intensive public and private research in the United States and abroad over the past 8 years has shown that no single factor is responsible for the general problems in pollinator health, including the loss of honey bee colonies or declines in other bee populations. The task force stated that bee health problems are likely caused by a combination of stressors. Some of these stressors, in no particular order, include habitat loss, degradation, and fragmentation, including reduced availability of sites for nesting and breeding; poor nutrition, due in part to decreased availability of high quality and pests (e.g., the mite Varroa destructor) and disease (e.g., viral, bacterial, and fungal diseases); pesticides and other environmental toxins; and migratory stress from long-distance transport.", "Continued losses of honey bees; other managed bees; and wild, native bees threaten agricultural production and the maintenance of natural plant communities. Commercial beekeepers are concerned that honey bee colony losses could reach an unsustainable level for the industry. According to a 2014 USDA report, the cost of honey bee almond pollination services is believed to have risen in connection with the increased cost of maintaining hives in the midst of industry-wide overwintering losses. Officials we interviewed from a commercial beekeeping organization said that, for beekeepers, meeting the growing demand for pollination services in agricultural production has become increasingly difficult, particularly as a result of bee colony losses. Although the number of managed honey bee colonies has been relatively consistent since 1996, ranging from about 2.4 to 2.7 million colonies, the level of effort by the beekeeping industry to maintain colony numbers has increased, according to the White House Pollinator Health Task Force’s strategy. For example, beekeepers face increasing production costs, which include sugar, protein, medications, and miticides (chemicals that kill the mites that can infest bee hives). Furthermore, when winter colony losses are high, beekeepers may compensate for these losses by splitting one colony into two, supplying the second colony with a purchased queen bee and supplemental food to build up colony strength. Using this method, the commercial honey beekeeping industry has generally been able to replenish colonies lost over the winter, but at a cost. These increased maintenance costs can result in increased rental fees for farmers renting the hives.", "Five USDA agencies within the scope of our review—NASS, ARS, NIFA, FSA, and NRCS—as well as EPA have specific roles and responsibilities with respect to addressing bee health issues.\nUSDA has surveyed beekeepers in the United States since the late 1930s to determine the number of honey bee colonies and the amount of honey produced. The survey, now conducted by NASS, is called the Bee and Honey Inquiry. NASS maintains a list of beekeeping operations in the nation and has been surveying beekeepers in all states except Alaska since the 1970s to gather data on honey bee colonies, including the number of colonies producing honey, total pounds of honey produced, and total value of production by state for a production year.\nARS, USDA’s largest research agency, conducts research within several of its laboratories that could protect bee health. NIFA, USDA’s primary agency providing research grants to universities, provides competitive grants to conduct research related to bee health and to disseminate the results through the Cooperative Extension System. CRIS, which is managed by NIFA, contains information on ARS and NIFA research and outreach. CRIS provides documentation and reporting for agricultural, food science, human nutrition, and forestry research, education and extension activities for USDA, including those related to bee health.\nFSA and NRCS oversee conservation programs that, among other things, help provide habitat for bees. FSA administers the Conservation Reserve Program (CRP), which implements long-term rental contracts with farmers to voluntarily remove certain lands from agricultural production and to plant species that will improve environmental health and quality, such as improving forage plantings for bees and other pollinators. The long-term goal of the program is to reestablish valuable land cover to help improve water quality, prevent soil erosion, and reduce loss of wildlife habitat. NRCS administers the Environmental Quality Improvement Program (EQIP), which implements short- to long-term contracts with farmers to voluntarily implement practices to conserve natural resources and deliver environmental benefits, such as created wildlife habitat, which may benefit bees. In addition, NRCS administers components of the Agricultural Conservation Easement Program, in which plantings may benefit bees or other pollinators. NRCS has primary responsibility for providing to landowners the technical assistance needed to plant the pollinator-friendly habitats. NRCS assists farmers through a network of staff at headquarters, state, and county offices. In addition to supporting overall pollinator habitat across the nation, FSA and NRCS are focusing CRP and EQIP pollination resources on five upper Midwest states (Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin) that are home to a significant percentage of honey bee colonies during the summer months.\nUnder FIFRA, EPA is responsible for regulating pesticides, including those used on crops and other plants and those used by beekeepers to combat bee pests. As part of this responsibility, EPA reviews applications from pesticide manufacturers seeking to obtain a registration for new pesticides or new uses of existing pesticides. Under FIFRA, pesticide registrants are required to report to EPA any information related to known adverse effects to the environment caused by their registered pesticides. In addition, the Food Quality Protection Act of 1996 amended FIFRA to require that EPA begin a review of the registrations of all existing pesticide active ingredients. As further amended in 2007 by the Pesticide Registration Improvement Renewal Act, FIFRA requires all reviews be completed by October 2022. According to EPA’s website, the FIFRA requirement applies to about 1,140 pesticides. EPA has chosen to review the registration of all of these pesticides in about 740 “cases.” A case may cover more than one pesticide active ingredient that are closely related in chemical structure and toxicological profile. The Pesticide Registration Improvement Act of 2003 (PRIA) amended FIFRA to require that EPA issue annual reports containing a review of its progress in carrying out its responsibilities for reviewing new and registered pesticides.\nOther agencies, including some within USDA, also have programs related to bee health. For example, USDA’s Forest Service has conducted some research and monitoring and conserves habitat to protect bee populations. The U.S. Geological Survey (USGS) within the Department of the Interior (Interior) has monitored wild, native bee populations. Interior’s National Park Service and the National Science Foundation have also funded research on bee health, and Interior’s Bureau of Land Management is making changes to land-management programs by incorporating native, pollinator-friendly plants in its management practices.", "Five selected USDA agencies conduct monitoring, research and outreach, and conservation to protect bees, but limitations within those efforts hamper the agencies’ ability to protect bee health. In 2015, USDA agencies increased honey bee colony monitoring to better estimate honey bee colony losses nationwide, but as a co-chair of the White House Pollinator Health Task Force with EPA, the department has not worked with task force partners to coordinate a native bee monitoring plan. In addition, USDA has conducted and funded research and outreach, primarily by ARS and NIFA, on the health of different categories of bees, including honey bees and, to a lesser extent, other managed and wild, native bees, but CRIS, which tracks USDA-funded research and outreach, is not currently designed to enable tracking or searching of projects by bee category. Furthermore, USDA’s FSA and NRCS have increased funding and taken other actions to promote bee habitat, but neither agency has a method to count all of the acres that landowners have restored or enhanced to benefit bees and other pollinators, and limitations in their evaluation of those actions may hinder their conservation efforts.", "USDA agencies have taken some actions to increase monitoring of honey bees, other managed bees, and wild, native bees, but USDA, which co- chairs the White House Pollinator Health Task Force with EPA, has not worked with its partners on the task force to coordinate a native bee monitoring plan.", "In April 2015, NASS, which conducts USDA bee surveys, initiated colony loss surveys to provide quarterly estimates of honey bee colony losses in the United States. NASS officials told us that the results of these surveys will improve data on colony losses from prior USDA-funded surveys. According to the task force’s strategy, federal agencies plan to use data from these surveys to assess progress toward the strategy’s goal of reducing winter honey bee colony losses to no more than 15 percent by 2025. USDA has conducted surveys of beekeepers in the United States to track the number of honey bee colonies in the country since the late 1930s, but those surveys have not gathered beekeepers’ observations or data about bee health problems.\nBefore NASS’s new surveys, NIFA provided most of the funding for the Bee Informed Partnership to survey beekeepers about colony losses and honey bee health from 2006 through 2015. The surveys showed that, on average, about 29 percent of respondents’ honey bee colonies have been dying over the winter, but the results cannot be generalized beyond the survey respondents. The partnership has used a variety of methods to reach out to all beekeepers in the country and in recent years received responses from over 6,000 beekeepers. However, the partnership has not calculated or estimated response rates to the surveys and has not reported whether nonrespondents might differ from the respondents in terms of survey answers. Because of this, the results cannot represent beekeepers in general.\nIn a letter to the Office of Management and Budget (OMB) commenting on the new NASS survey, the partnership stated that NASS is well- equipped to take over the honey bee colony loss surveys with its new quarterly and annual surveys. According to NASS officials, improvements will be possible in the new NASS surveys in part because NASS maintains a comprehensive list of beekeepers from which it can select a random sample. According to an agency document and official, the quarterly survey will capture data from beekeeping operations with five or more colonies, and operations with fewer than five colonies will receive one annual survey in December. NASS officials said that their estimates of U.S. colony losses during 2015 will be available in May 2016. NASS has also added questions to the annual Bee and Honey Survey on the costs associated with colony maintenance, which may include costs associated with colony losses.\nIn addition, USDA’s Animal and Plant Health Inspection Service (APHIS) has coordinated a national survey of honey bee pests and diseases annually since 2009 with the University of Maryland and ARS. However, that survey does not provide estimates of colony losses in the United States.", "According to NASS officials, NASS does not conduct surveys to estimate populations or colony losses of other managed bees, such as bumble bees, alfalfa leafcutting bees, and orchard mason bees, because NASS does not consider them to be within the scope of their responsibilities for farm livestock commodities. USDA’s ARS and NIFA conduct and fund limited monitoring activities in agricultural settings to estimate populations and health issues for these other types of managed bees. However, the research action plan established as a priority engaging NASS in collecting data on the commercial sales of nonhoney bee pollinators to understand the economic value of alternative pollinators. To address this priority, NASS included in a new survey on the cost of pollination—which largely focuses on honey bees—questions on the cost to agricultural producers for products such as wildflowers and pollination by other managed bees and native bees. NASS began data collection for this new survey in December 2015.", "USDA agencies, including ARS and NIFA, have conducted and supported limited monitoring of wild, native bees, according to USDA documents and officials. For example, one NIFA-funded project at Pennsylvania State University begun in 2010 seeks to establish baseline biodiversity and abundance data for native bees in and adjacent to Pennsylvania orchards, determine which species are pollinators, and quantify their relative significance and economic importance, according to the project summary in CRIS. In addition, in 1997, ARS’s laboratory in Logan, Utah, began monitoring wild, native bees in parks, forests, and other areas in the United States as part of their efforts to develop alternative pollinators for U.S. agriculture, according to ARS scientists. In one project, ARS has annually conducted surveys of bumble bee populations for 5 to 8 years at five sites in Nevada, Oregon, and Utah. The goal is to provide insight into natural population dynamics of native bees in native habitat and identify bumble bee population trends by species on the basis of 10 years of surveys. According to the project description, bumble bee declines have been documented over the last decade, but long-term studies of bumble bee community dynamics are lacking, and such monitoring will help determine whether a fluctuation in a bumble bee population is a natural cycle or something unusual.\nIn its 2007 report on the status of pollinators, the National Research Council stated that wild, native bees are arguably the most important and least studied groups of pollinators. The report recommended establishing a baseline for long-term monitoring, and a coordinated federal approach with a network of long-term pollinator-monitoring projects that use standardized protocols and joint data-gathering interpretation. The report also stated that pollinator monitoring programs in Europe have effectively documented declines in pollinator abundance, but there is no comparable U.S. monitoring program. Stakeholders from pesticide manufacturing, university research, and conservation/environmental groups we interviewed said that USDA should take additional actions to monitor wild, native bees because current monitoring is insufficient and will not facilitate provision of trends in these bee populations. Stakeholders from some groups suggested that USDA and other agencies, such as USGS, should coordinate federal monitoring efforts. A stakeholder from a university said that USDA should develop a coordinated assessment policy for native bees to provide information on their status because, without such a policy, agencies will not know which species are declining, endangered, or extinct.\nThe 2014 presidential memorandum on pollinators called for the White House Task Force to assess the status of native bees and other pollinators. The subsequent White House Task Force strategy and research action plan state that native bees are affected by habitat loss and degradation, and that there is strong evidence, for some species, that such factors have led to population declines. For example, the research action plan states that collapses in bumble bee species have been statistically documented, but little is known about trends for wild, native bees, most of which are solitary, rather than social, bees. The research action plan also states that (1) the scope of native bee monitoring is limited by available funding, (2) assessments of native bees’ status rely on disparate historical collection data and limited contemporary surveys, and (3) a survey of bees in various ecosystems is needed to determine the status of native pollinators.\nThe White House Task Force’s research action plan identified several priority actions, with corresponding lead and support agencies responsible for different aspects of the monitoring. For example, the research action plan identifies ARS, USGS, and the Fish and Wildlife Service as three of the lead agencies for the priority actions to develop baseline status data and to assess trends in pollinator populations. And the research action plan identifies NIFA, NASS, the National Science Foundation, the Forest Service, and the National Park Service as primary support agencies for these priority areas. Although the research action plan identifies which agencies have responsibility for monitoring pollinators, it does not identify the development of a mechanism, such as a monitoring plan, to coordinate the efforts of those agencies related to native bees. As of September 2015, USDA did not have plans to work with task force members to coordinate development of such a mechanism for wild, native bees. Some officials said that USDA has not coordinated with other task force agencies to develop a wild, native bee monitoring plan because they were developing the broader task force strategy. The research action plan also does not define and articulate the common outcome or identify specific roles and responsibilities for each lead or support agency. Key practices for agency collaboration that we identified in an October 2005 report call for agency staff to work together across agency lines to define and articulate the common federal outcome or purpose they are seeking to achieve that is consistent with their respective agency goals and mission. Another key practice we identified calls for collaborating agencies to work together to define and agree on their respective roles and responsibilities, including how the collaborative effort will be led.\nIn addition, we identified, in a February 2014 report, key practices for agency collaboration that call for establishing shared outcomes and goals that resonate with, and are agreed upon, by all participants and are essential to achieving outcomes in interagency groups. Furthermore, although the research action plan mentions stakeholders and partnerships, it does not articulate how they will be included in addressing priority actions related to monitoring native bees. In September 2012, another key practice we identified calls for ensuring that the relevant stakeholders have been included in the collaborative effort. This collaboration can include other federal agencies, state and local entities, and private and nonprofit organizations. By developing a mechanism, such as a monitoring plan for wild, native bees that would (1) establish roles and responsibilities of lead and support agencies and their shared outcomes and goals and (2) obtain input from relevant stakeholders, there is better assurance that a coordinated federal effort to monitor bee populations will be effective. One senior USDA official stated that coordinating with the other task force agencies to develop a wild, native bee monitoring plan would be very important for gathering data to show the status of wild, native bees in the future. Key USDA and USGS officials with bee-related management responsibilities agreed that developing such a monitoring plan would help them establish a consistent approach across their agencies. The officials also said that USDA and other agencies should establish a team of federal scientists to coordinate the development of a federal monitoring plan for wild, native bees that would establish monitoring goals and standard methods and involve state and other stakeholders. Some USDA and USGS officials said that without a team to coordinate a monitoring plan, individual agency efforts may be ineffective in providing the needed information on trends in wild, native bees in the United States.", "USDA has conducted and funded research and outreach, primarily by ARS and NIFA, on the health of different categories of bees, including honey bees and, to a lesser extent, other managed and wild, native bees, but CRIS, which tracks USDA-funded research and outreach, does not currently facilitate tracking or searching of projects by bee category. ARS’s honey bee projects have focused on projects for many health concerns. For example, the ARS laboratory in Baton Rouge, Louisiana, has focused for many years on breeding honey bees that are resistant to Varroa mites. Also, ARS’s laboratory in Beltsville, Maryland, has conducted research to develop management strategies for diagnosing and mitigating disease, reducing the impacts of pesticides and other environmental chemicals, and improving nutrition. ARS’s laboratory in Logan, Utah, is identifying how farmers may use different pollinators, including managed and wild, native bees. This research includes developing methods for mass production, use, and disease control for a selection of bees.\nARS scientists have regularly disseminated the results of their research at national, regional, state, and local bee-related conferences and events. ARS officials have also conducted outreach at meetings to provide information to commodity growers, such as the Almond Board of California. One ARS scientist noted that he had attended 27 state and other types of beekeeper meetings over the past 5 years. Another ARS scientist told us that he spends about 25 percent of his time conducting outreach with beekeepers. In addition, ARS scientists have published dozens of articles summarizing their research results in scientific journals.\nFrom fiscal year 2008 through fiscal year 2015, ARS obligated $88.5 million for projects focused on bee health and $1.6 million for projects on the effect of pollination by different types of bees on crop or plant production. Of the $88.5 million obligated, our analysis determined that $72.6 million was for projects primarily focused on honey bee health, an additional $6.3 million was for projects with a combined focus on the health of honey bees and other bees, and $9.6 million was for projects focused only on other managed bees or wild, native bees. According to ARS officials, all ARS funding for research on wild, native bees has been for the purpose of developing new uses for managed bees in commercial agriculture.\nUnlike ARS, which itself conducts research, NIFA provides funds for research through grants. For fiscal years 2008 through 2014, NIFA’s competitive grants for research on bee health were largely focused on honey bees, with some efforts focused on managed and wild, native bees. For example, NIFA obligated funds for a 2012 grant to a team of scientists and outreach specialists at Michigan State University, the University of California-Davis, and other institutions that works with growers to develop best practices for pollinator habitat enhancement and farm management practices to bolster managed and wild, native bee populations. The project is examining the performance, economics, and farmer perceptions of different pollination strategies in various fruit and vegetable crops, according to the project website. These strategies include complete reliance on honey bees, farm habitat manipulation to enhance suitability for native bees, and use of managed, native bees alone or in combination with honey bees.\nFor fiscal years 2008 through 2014, NIFA obligated $29.9 million on competitive grant projects focused primarily or partially on bee health, and $11.6 million on projects focused on pollination effectiveness. Of the $29.9 million, our analysis of individual grant project objectives and descriptions determined that NIFA provided $16.7 million to projects on honey bee health, $9.8 million to projects on the health of honey bees and other bees, and $3.4 million to projects on the health of wild, native bees.\nIn addition to funding competitive grants, NIFA provides support for bee research at land-grant institutions through capacity grants to the states on the basis of statutory formulas. From fiscal year 2008 through fiscal year 2014, these institutions expended $10.7 million in NIFA grants for research related to bees. Furthermore, state institutions have used NIFA capacity grants to support bee-related extension and education activities through the Cooperative Extension System, such as teaching best management practices to beekeepers, according to an agency budget official. However, because NIFA and its partners do not track capacity grant funding related to extension activities by subject, we were not able to determine the amount of extension funding dedicated to bee-related activities. In addition, according to estimates by the Economic Research Service, overall research funding has declined in inflation-adjusted dollars, from 1980 to 2014, which may have resulted in a reduction in the number of cooperative extension bee specialists. According to NIFA officials, about 28 bee specialists are currently supported by the Cooperative Extension System in the United States and its territories. That number has declined from an estimated 40 extension bee specialists in 1986, largely due to funding reductions. In addition, according to NIFA officials, the reduction in extension funding may have reduced expertise in related areas, including Integrated Pest Management (IPM), which focuses on long-term prevention of pests or their damage through a combination of techniques, such as biological control, habitat manipulation, modification of cultural practices, and use of resistant varieties, paired with monitoring to reduce unnecessary pesticide applications. IPM extension agents routinely advise farmers on alternatives to pesticides and pesticide application methods that reduce risk to bees and other pollinators.\nUSDA’s CRIS provides overall funding data and descriptions of bee- related research and outreach but does not facilitate tracking projects and funding by the categories of bees addressed by the White House Task Force’s strategy and research action plan. In addition, the research action plan identifies key research needed to fill knowledge gaps for honey bees; other managed bees; wild, native bees; and other pollinators. However, the three categories for bees and other pollinators used in CRIS to code USDA projects are “honey bees,” “bees, honey and other pollinators,” and “other pollinators,” so that bee-related research projects that could help fill the identified knowledge gaps may not be easily identified in CRIS. For example, NIFA guidance on reviewing certain competitive grant applications states that national program leaders must check CRIS to determine if the proposed work has already been funded by NIFA or ARS and to ensure that it is not unnecessarily repeating work not yet published. In addition, ARS guidance directs the agency’s scientists to search CRIS for potentially duplicative projects when preparing project plans. Because projects may have multiple objectives, it would be time-consuming to readily identify and track completed and ongoing bee-related research by category of bee. Both the NIFA staff and the researchers would have to search the codes for the up to three different CRIS categories and then review the descriptions and the multiple objectives for all projects with those codes.\nBy updating the categories of bees in CRIS to reflect the categories of bees discussed in the White House Task Force’s strategy and research action plan, USDA could increase the accessibility and availability of information about USDA-funded research on bees. Senior USDA officials said that CRIS would be more useful within the department and to others seeking to identify bee-related research projects and project funding by topic if USDA revised it to indicate the categories of pollinators that are consistent with the research action plan. ARS and NIFA officials agree improvements to CRIS could help managers track research spending over time by the categories of bees identified in the research action plan. One NIFA official estimated that revisions to CRIS could be done cost- effectively using minimal staff time.", "FSA and NRCS have taken many actions to promote bee habitat conservation since 2008, but limitations in research, tracking of pollinator habitat, and evaluation of the agencies’ conservation efforts could hinder those efforts.", "The Farm Bill of 2008 authorized USDA to encourage the use of conservation practices that benefit native and managed pollinators and required that USDA review conservation practice standards to ensure the completeness and relevance of the standards to, among other things, native and managed pollinators. In August 2008, and again in May 2015, NRCS in partnership with the Xerces Society and San Francisco State University published guidance identifying several conservation programs, including CRP, EQIP, and NRCS’s Conservation Stewardship Program (CSP) that could be used to promote pollinators on working lands. This guidance identified 37 practices to create or enhance pollinator habitat by providing more diverse sources of pollen and nectar, and shelter and nesting sites, among other things.\nAccording to FSA and NRCS officials, CRP and EQIP are the largest USDA private land conservation programs benefiting pollinators. Participants voluntarily sign up or enroll in FSA or NRCS conservation programs and in specific practices within those programs. As of August 2015, FSA had over 132,000 acres enrolled in pollinator-specific CRP practices, with a remaining allocation of 67,000 acres that could be enrolled under these practices. In 2014, FSA announced an additional $8 million in incentives to enhance CRP cover crops to make them more pollinator-friendly. FSA is offering incentives to CRP participants in the five states that are home to most honey bee colonies during the summer—Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin—to establish pollinator habitat. According to an FSA official, because CRP participants began to implement habitat enhancements in fiscal year 2015, FSA does not yet have information on the number of acres of habitat established. Also, within CRP, the State Acres for Wildlife (SAFE) initiative allows agricultural producers to voluntarily enroll acres in CRP contracts for 10 to 15 years. In exchange, producers receive annual CRP rental payments, incentives, and cost-share assistance to establish, improve, connect, or create higher-quality habitat. As of November 2015, the SAFE initiative was providing pollinator habitat in Michigan, Ohio, and Washington. For example, the goal of the Michigan Native Pollinators SAFE project is to enroll 2,500 acres of enhanced habitat over the next 5 years to benefit native pollinators.\nIn addition, in fiscal year 2014, NRCS provided more than $3.1 million in technical and financial assistance to EQIP participants in the five states that are home to most honey bee colonies during the summer to implement conservation practices that would provide pollinator habitat. This funding led to over 220 contracts with participants to establish about 26,800 acres of pollinator habitat, according to NRCS data. NRCS made $4 million available in fiscal year 2015 through EQIP for honey bee habitat. NRCS also funds other conservation programs that can benefit bees and other pollinators. For example, the CSP provides financial and technical assistance for participants whose operations benefit pollinators. From 2012 through 2014, 17,500 acres were enrolled in one beneficial CSP practice intended to improve habitat for pollinators and other beneficial insects. Another CSP practice for grazing management may benefit pollinators, but the acreage that benefits pollinators is unknown, according to an NRCS official. In addition, NRCS offices in several states, including Montana and South Dakota, seek to benefit pollinators with upland habitat restoration funded by the Wetlands Reserve Program.\nNRCS and FSA have taken steps to provide information to field offices, agricultural producers, and others that is useful for pollinator habitat conservation programs. For example, in collaboration with the Xerces Society and academic partners, NRCS has revised and expanded lists of plants that benefit bees and technical guidance for conserving pollinator forage. The NRCS Conservation Innovation Grants program has supported several projects across the country designed to demonstrate the value of habitat for pollinators, as well as to expand and improve NRCS’s capacity to establish and monitor high-quality bee forage sites. The task force’s strategy notes that FSA is working collaboratively with NRCS to promote the use of more affordable, pollinator-friendly seed mixes on CRP land. Some NRCS Plant Materials Centers—which evaluate plants for conservation traits and make them available to commercial growers who provide plant materials to the public—have pollinator forage demonstration field trials under way to determine and demonstrate the effectiveness of forage planted for pollinators. In addition, FSA, NRCS, and Interior’s USGS and Fish and Wildlife Service have funded a website that provides information on plant-pollinator interactions to help agencies improve pollinator seed mixes for programs such as CRP and EQIP, according to a USGS official. USGS manages this website, known as the Pollinator Library, to provide information on the foraging habitat of pollinating insects with the goal of improving their habitat. The Pollinator Library is to help users determine which flowers that various insects, including native bees, prefer. The website includes a search feature so users can determine, for example, what types of pollinators have been found on different plant species, by state and land type (such as CRP land). Knowing which flowers pollinators prefer is useful to agencies creating seed mixes for CRP and EQIP habitat enhancement efforts.", "While USDA agencies have taken steps to improve bee habitat, according to USDA officials and documents, limitations related to (1) research on bee habitat and forage, (2) tracking acres of restored or enhanced pollinator habitat, and (3) evaluating NRCS and FSA conservation efforts, could hinder conservation efforts.\nResearch on Habitat and Forage As part of the task force’s strategy and research action plan, federal officials evaluated completed research and determined that additional research on bee forage and habitat is needed to support NRCS, FSA, and other entities’ conservation efforts. The task force’s research action plan notes that there is much more to learn about the relationships between plants and pollinators, including identifying habitat with the greatest potential for pollinator benefits; developing locally-adapted plant mixes to provide resources for pollinators throughout the year; designing a means for properly collecting, processing, storing, and germinating sufficient seeds for restoration; and developing new concepts and techniques to understand how to establish a broad mix of plants required for restoration based on different factors—e.g., cost-effectiveness and site properties.\nIn addition, the research action plan identifies priority research actions for federal agencies. For example, one priority action is developing a science-based plant selection decision support tool to assist land managers. According to the research action plan, this tool would help land managers use the most effective and affordable plant materials currently commercially available for pollinator habitat in wildland, agricultural, or urban areas. The strategy for carrying out this action in 2 to 3 years, according to the research action plan, is to identify existing science capacity to produce the decision-support tool. The research action plan identifies ARS, NRCS, and USGS as able to provide collaborative leadership for this action within the Plant Conservation Alliance (PCA). Another priority action is developing a system for monitoring the use of native plant materials. According to the research action plan, the strategy for this action is within 2 years to develop an interagency, online, searchable database to collect and analyze relevant data efficiently (e.g., species, plant material type, location, acreage, year, establishment, impacts on pollinators) to evaluate the use of native plant materials. The research action plan identifies ARS and NRCS as sharing collaborative leadership within the PCA for this action with the U.S. Forest Service and Interior’s USGS and Bureau of Land Management.\nTracking Acres of Restored and Enhanced Pollinator Habitat In response to the June 2014 presidential memorandum on pollinators, the task force established an overarching goal on pollinator habitat acreage of restoring and enhancing 7 million acres of land for pollinators over the next 5 years through federal actions and public-private partnerships. Under the task force’s strategy, USDA agencies, including FSA and NRCS, are to contribute to this goal. FSA and NRCS are able to track acres of pollinator habitat restored and enhanced under pollinator- specific initiatives and practices, according to agency officials. However, they are unable to track acres on which landowners implement practices for other conservation purposes, such as for erosion control, improved water quality, or wildlife habitat, that may also have an additional benefit for pollinators, according to agency officials. According to FSA and NRCS officials, developing a method for tracking most acres with conservation practices benefiting pollinators will be time-consuming and may require some form of estimation. For example, according to FSA officials, the agency may be able to estimate acres of pollinator habitat using information it has on the types of plants landowners have planted. Nevertheless, by developing an improved method, within available resources, to track conservation program acres that benefit pollinators, FSA and NRCS would be better able to measure their contribution to restoring and enhancing the acres called for by the task force strategy’s goal. Both agencies agreed that developing an improved method for tracking acres on which pollinator habitat has been restored or enhanced would provide valuable information. As of November 2015, the agencies had begun to discuss and consider methods they might use to track acres on which pollinator habitat has been restored or enhanced but had yet to develop an improved method.\nEvaluating FSA and NRCS Conservation Efforts USDA has funded two evaluations of the effectiveness of FSA and NRCS conservation efforts related to pollinator habitat. First, in 2013, FSA and NRCS began jointly supporting a USGS study to evaluate the effect of CRP and EQIP plantings on honey bee health and productivity in five Midwestern states—Michigan, Minnesota, North Dakota, South Dakota, and Wisconsin. According to a January 2015 USGS progress report, the monitoring will quantify the effect USDA conservation lands have on honey bee health and productivity. For example, USGS is comparing the health of honey bee colonies in areas dominated by row crops with the health of colonies located in areas with significant CRP and pasture acreage. The evaluation has begun to show which weeks or months may have a shortage of blooming forage. USGS plans to expand this evaluation in 2016 to additional sites in Michigan and Wisconsin and add a demonstration project to monitor the effect of CRP and EQIP plantings on orchards, according to a USGS official. Information generated from this USGS evaluation will be used to improve pollinator seed mixes for CRP and EQIP, according to FSA and NRCS officials. Second, in 2014, the Pollinator Partnership, under a cooperative agreement with NRCS, issued an independent evaluation of how NRCS field offices were promoting, implementing, monitoring, and documenting pollinator habitat efforts in conservation programs in several states. This evaluation concluded, among other things, that NRCS field offices were eager to support pollinators, but agency staff needed additional expertise to advise landowners how to implement effective conservation practices. However, NRCS has not conducted an evaluation to show where there may be gaps in expertise and how they might be filled; for example, whether the gaps should be filled through additional formal training for staff or through the informal learning that occurs when field staff, using technical assistance funding, monitor the field work to determine which plants are thriving and attracting bees.\nAccording to NRCS officials, headquarters’ evaluations of pollinator habitat have been limited, in part, because the agency has been focused on implementing the plantings. The NRCS National Planning Procedures Handbook directs an evaluation of the effectiveness of the implemented plan to ensure it is achieving its objectives. The officials said that increased evaluation would be helpful because, while each state office has a biologist and other conservation experts, including partner biologists from nonprofit organizations, there are gaps in technical expertise on pollinator habitat available to some field offices. As a result, some field offices have less ability to effectively plan and monitor pollinator habitat. One university stakeholder suggested that NRCS ensure that each of the approximately 30 states with a significant need for pollinator habitat has a native bee expert. NRCS officials said an evaluation of field office efforts to restore or enhance bee habitat could help identify where expertise gaps occur. Another NRCS official said that the agency could survey its staff to gather their views on the need for additional training or expertise. In addition, one NRCS official said that on-site evaluation of the success of the pollinator habitat is important to understanding the effectiveness of the technical assistance.\nNRCS officials also said that additional evaluation is needed to determine if technical assistance funding is adequate to support conservation planning efforts for different pollinator habitats across the country. NRCS funding for technical assistance enables field staff to develop conservation plans for landowners and to assess the implementation of those plans. NRCS’s financial assistance funding to landowners helps pay to implement conservation plans. If technical assistance funding is too low, the effectiveness of conservation efforts may be compromised, according to NRCS officials. As total funding for NRCS conservation programs has increased, the percentage available for technical assistance has decreased relative to financial assistance. In 2014, funding for technical assistance was proportionally half of what it was in 2002, relative to the amount of financial assistance that it supported in terms of conservation planning and monitoring. Specifically, according to NRCS officials, for every dollar provided for financial assistance in 2002, about $1.22 went to technical assistance. However, in 2014, for every dollar provided for financial assistance, about 59 cents was provided for technical assistance. According to USDA officials, the reduced percentage of funding devoted to technical assistance has resulted in NRCS field office staff having less time to plan for and ensure the quality of conservation efforts, including pollinator habitat, because the staff must spend more time in the office managing contracts and ensuring that all financial assistance dollars are obligated. By increasing evaluation of its habitat conservation efforts, including gaps in expertise and technical assistance funding available to field offices, USDA could better ensure the effectiveness of its efforts to restore and enhance bee habitat plantings across the nation.", "EPA has taken steps to address pesticide threats to bees, but potential threats remain. Among other steps, in 2013, EPA revised the label requirements for certain pesticides and in 2015, proposed revisions for certain additional pesticides that are acutely toxic in an effort to reduce bees’ exposure. Since at least 2009, EPA has encouraged beekeepers and others to report bee kill incidents potentially associated with pesticides, but agency officials and others point to challenges to accurate reporting and data collection on these incidents. EPA has also encouraged state and tribal governments to voluntarily develop plans to work with farmers and beekeepers to protect bees from pesticides. EPA has revised its guidance for assessing the risks new and existing pesticides pose to bees, but there are limitations to the approach, including a lack of data on pesticides’ risks to nonhoney bees and risks that pesticide mixtures pose to bees. Changes to EPA’s risk assessment approach will likely extend its schedules for reviewing the registrations of some existing pesticides—including many that are known to be toxic to bees—as the agency gathers and reviews additional data on risks to bees. However, EPA has not revised the publicly available work schedules for pesticides currently under review.", "In August 2013, EPA directed the registrants of four pesticides in a class of chemicals known as neonicotinoids to submit an amendment to revise the labels of products containing those pesticides that were registered for outdoor use on plant foliage. Neonicotinoids are insecticides that affect the central nervous system of insects, causing paralysis and death. Pesticide labels contain directions for use and warnings designed to reduce exposure to the pesticide for people and nontarget organisms, including beneficial insects such as bees. It is unlawful to use any pesticide in a manner inconsistent with its labeling. In proposing the label changes, EPA cited the possible connection between acute exposure to particular pesticides and bee deaths. EPA called for the labels to have a pollinator protection box (also called a “bee advisory box”) and new language outlining the directions for the products’ use, in addition to any restrictive language that may already be on the product labels. The agency directed the registrants to submit revisions to their product labels with EPA’s prescribed language no later than September 30, 2013, and told the registrants that it anticipated that the new product labels would be in place in 2014.\nThe new language for the pollinator protection box warns of the threat the pesticide poses to bees and other pollinators and instructs the user to follow the new directions for use. The directions for use restrict the use of the pesticide on crops and other plants at times when bees are foraging on those plants. More specifically, the directions generally prohibit foliar use, or use on leaves, until flowering is complete, and all petals have fallen from the plants. However, the new directions for use allow for exceptions to the prohibition under certain conditions, which vary, depending on whether or not managed bees are on-site to provide contract pollination services.\nIn November 2014, EPA staff told us the label changes to the four neonicotinoids had led to confusion for pesticide users and resentment by some stakeholder groups, but that the agency planned to address these concerns through additional label changes for those and other pesticides that are acutely toxic to bees. In particular, according to EPA officials, pesticide users found that new label language, in some instances, contradicted other parts of the label or was poorly defined. In May 2015, EPA requested public comments on a proposal to make label changes restricting the use of some products containing acutely toxic pesticides on pollinator-attractive crops when managed bees are present for the purpose of providing pollination services, saying that “clearer and more consistent mandatory label restrictions could reduce the potential exposure to bees from pesticides categorized as acutely toxic to bees.” The deadline for public comments on EPA’s proposal was June 29, 2015. Subsequently, that deadline was extended to August 28, 2015. According to EPA officials, as of October 2015, the agency was in the process of reviewing more than 100,000 comments on the label proposal; in part due to the number of comments, the officials said they could not estimate when the agency will finalize the proposal.", "Since at least 2009, EPA has encouraged beekeepers and others to voluntarily report bee kill incidents—that is, when bees in or near a hive are killed by a suspected exposure to a pesticide, according to agency officials. EPA records reports of bee kills that may have been associated with pesticide use in its Ecological Incident Information System (EIIS) database on adverse pesticide incidents. When EPA receives reports of bee kill incidents, according to agency officials, it considers a range of evidence to evaluate the probability that a specific pesticide was the cause. The evidence could include information about pesticide use near the incident, the known toxicity of the pesticides used in the area, and physical or observational evidence associated with the affected bees. After considering the evidence, EPA categorizes the likelihood that a specific pesticide was associated with the bee kill as highly probable, probable, possible, unlikely, or unrelated. In total, the EIIS data include 306 unique bee kill incidents occurring from 1974 through 2014 and another 90 incidents with no associated year. Of this total of 396 incidents, EPA found sufficient evidence to categorize 201 as highly probable or probable. The 201 incidents were associated with 42 pesticides. (The EIIS data show that 3 bee kill incidents were highly probable or probable but name no specific pesticide.)\nAccording to agency officials, EPA encourages the public to report incidents to their state lead agency (typically the state’s department of agriculture) so that such incidents can be properly investigated. Recognizing that some members of the public may not feel comfortable with reporting to their state officials, EPA’s website and the “bee advisory boxes” added to certain pesticide labels identify additional options for the public to voluntarily report bee kill incidents. These include reporting through beekill@epa.gov, an e-mail address monitored by EPA’s Office of Pesticide Programs or to report incidents to the National Pesticide Information Center. In addition, EPA enters into cooperative agreements with states. Through these agreements, EPA may delegate certain authority to states to cooperate in enforcing FIFRA. One condition of the cooperative agreement is that states must report information on all known or suspected pesticide incidents involving pollinators to beekill@epa.gov and send a copy to the relevant EPA regional office. EPA stores data on incident reports from the public, the National Pesticide Information Center, and the states in its EIIS database.\nSeveral factors may contribute to underreporting of bee kill incidents, according to EPA staff and others we interviewed. According to officials from EPA and beekeeping and environmental organizations, beekeepers may be reluctant to report bee kills to state agencies or to EPA for one or more of three reasons. First, beekeepers may want to avoid conflicts with farmers with whom they have an arrangement for providing pollination services or for obtaining access to forage for honey production, even if the farmer’s pesticide application practices may have contributed to the incident. Second, beekeepers may want to avoid investigations that may suggest the beekeeper’s hive management practices—specifically, the use of miticides or other pesticides to combat hive pests—contributed to the incident. Third, according to a senior EPA official in the Office of Pesticide Programs, some beekeepers believe that submitting reports in the past has not resulted in a positive response from regulatory authorities and, therefore, is not worth the effort.\nAccording to the senior EPA official, other challenges exist that may make bee kill incident reports inaccurate. For example, beekeepers may not be able to frequently monitor their colonies, so incidents may not be discovered for several days; the passage of time may hamper a conclusive investigation. Honey bees forage over an extensive range. Therefore, it may be difficult to determine to which crops and pesticides they have been exposed. Finally, according to the EPA official, the states have increasingly limited budgets to support bee colony inspection programs and pesticide incident inspection programs in general, and may not be able to fully investigate reported incidents.\nIn addition to the voluntary incident reports from beekeepers and others, FIFRA requires that pesticide registrants report factual information they are aware of concerning adverse effects associated with their products— including the death of nontarget organisms such as bees. The information reported by a registrant is known as a FIFRA 6(a)(2) Incident Report. However, according to EPA staff, FIFRA 6(a)(2) reports are not particularly useful in providing details on bee kills because FIFRA and its implementing regulations do not require registrants to identify bees as the species harmed by a pesticide. Instead, bees are recorded within a larger category of “other nontarget” organisms. In addition, registrants do not need to report individual incidents involving “other nontarget” organisms when they occur. Instead, registrants can “aggregate” incidents that occur over a 90-day period and report those aggregated data to EPA 60 days after the end of the 90-day period. While these FIFRA reporting requirements apply generally to pesticide registrants, as we noted earlier, EPA modified its requirements for the registrants of four neonicotinoid pesticides. In its July 22, 2013, letter notifying the registrants of its plans to modify the pesticides’ labels to be more protective of bees, EPA also instructed the registrants to report bee kill incidents within 10 days of learning of the incident and that information on bee kills must not be aggregated, regardless of the number of individual pollinators involved in any incident.", "In response to a directive from the June 2014 presidential memorandum on pollinators, EPA has encouraged state and tribal environmental, agricultural, and wildlife agencies to voluntarily develop managed pollinator protection plans (protection plans) that focus on improved communication between farmers and beekeepers regarding the use of pesticides and the proximity of managed bees. EPA is working with two organizations to encourage states and tribes to implement the protection plans: (1) the State-FIFRA Issues, Research, and Evaluation Group (SFIREG) and (2) the Tribal Pesticide Program Council. In December 2014, SFIREG issued draft guidance for state lead agencies for the development and implementation of state protection plans. According to the guidance, the scope of the plans is limited to managed bees not providing contracted pollination services at the site of application. As such, the protection plans are intended to reduce pesticide exposure to bees that are adjacent to, or near a pesticide treatment site where bees can be exposed via drift or by flying to and foraging in the site of application. According to SFIREG’s draft guidance, many of the strategies to mitigate the risk of pesticide exposure to managed pollinators are also expected to reduce the risk to native bees and other pollinators. The voluntary protection plans would supplement EPA’s proposal to make label changes restricting the use of acutely toxic pesticides, described above, to protect managed bees that are under pollination contracts between farmers and beekeepers. According to the task force’s strategy, one of the key elements of the state protection plans are the metrics that will be used to measure their effectiveness in reducing honey bee losses. Those metrics, according to the strategy, may differ across states and tribes.\nBecause the development of the protection plans is voluntary, EPA will not approve or disapprove them, and measures of the plans’ effectiveness will be state- or tribe-specific, according to agency officials. According to EPA officials, as of January 2016, seven states had protection plans in place: Arkansas, California, Colorado, Florida, Iowa, Mississippi, and North Dakota, while all but a few of the other states had protection plans in some stage of development. In addition, EPA provided funding for a November 2015 training program to address tribal pollinator protection plans. Stakeholders we interviewed who commented on this topic generally supported EPA’s efforts to encourage pollinator protection plans. Stakeholders’ views on protection plans are summarized in appendix II.", "In June 2014, EPA issued guidance advising the agency’s staff to consider requiring pesticide registrants to conduct additional studies on the risks that new or existing pesticides may pose to bees and bee colonies for pesticides going through the registration or registration review processes. The 2014 guidance formalized interim guidance issued in 2011. EPA summarized the need for the risk assessment guidance in a 2012 White Paper to the FIFRA Scientific Advisory Panel that noted that the lack of a clear, comprehensive and quantitative process for evaluating pesticide exposure and subsequent risk to bees from different routes of exposure was a major limitation. The guidance may result in registrants conducting additional studies on the toxicity of new and existing pesticides on honey bees. It also allows for several methods of characterizing pesticide risk. However, EPA’s 2014 risk assessment guidance relies largely on honey bees as a surrogate for other bee species. In addition, the guidance does not call for EPA to assess the risks that pesticide mixtures may pose to bees.", "EPA’s June 2014 guidance calls for agency staff to consider requiring pesticide applicants or registrants to conduct additional studies on the toxicity of their pesticides to honey bees. The guidance applies to EPA’s review of new pesticide registration applications and its ongoing review of existing registrations. EPA has used, and continues to use, a three-tiered approach for assessing the risks that pesticides may pose to bees (and other organisms). That is, the agency may require additional studies—in Tiers II and III—from pesticide applicants or registrants, depending on the results of any Tier I studies that it required. Therefore, under the June 2014 guidance, EPA staff are to consider a range of studies that examine different life stages of honey bees (adult and larval), different types of toxicity (acute and chronic), and different types of exposure to pesticides (contact and oral). Studies may be conducted in laboratories on individual bees (Tier I), as “semi-field” tests of small colonies (Tier II), or as field tests of whole colonies (Tier III). EPA may also consider other lines of evidence, including open scientific literature and incident reports.\nAnother aspect of assessing the risk of pesticides is deciding which chemicals within a pesticide product are to be studied. EPA’s June 2014 guidance addresses this issue but leaves it to the discretion of agency staff. Specifically, EPA’s June 2014 guidance states that toxicity data using the end-use product may be needed if data suggest that a typical end-use product is potentially more toxic than the active ingredient, and bees may come directly in contact with the product. The guidance also calls for agency staff to consider the effects that systemic pesticides applied to seeds or in the soil may have on honey bees. Systemic pesticides applied to plants and soil can move through the plant to other plant tissues, potentially contributing to quantities of pesticide residues in pollen and nectar.\nEPA regulations identify three honey bee studies as required, or conditionally required, and EPA’s 2014 guidance suggests additional bee toxicity studies that agency staff might consider requiring. EPA staff we interviewed acknowledged that additional steps are needed to establish study guidelines, but said that the agency has the authority under FIFRA to require and review any studies that it deems necessary to determine whether a pesticide will have unreasonable adverse effects. In addition, as of October 2015, EPA had not yet issued guidelines for the new types of studies that registrants may be required to submit. However, in July 2015, EPA announced on its website that it was considering a proposal within 12 months that would update and codify the data requirements needed to characterize the potential risks of pesticides to bees and other pollinators. In the meantime, registrants may conduct three of the additional studies—acute adult oral toxicity, acute larval toxicity, and semi-field testing with whole colonies—using guidelines developed by the Organization for Economic Cooperation and Development (OECD). EPA officials told us that, as of October 2015, formal guidelines did not exist for chronic toxicity testing with adult bees and chronic toxicity testing with bee larvae but said that EPA is contributing to international efforts to develop formal guidelines, including draft guidelines on chronic toxicity with bee larvae. In addition, the task force’s strategy stated that standardized guidelines may not be developed for field studies (Tier III) because “these studies are intended to address specific uncertainties identified in lower tier tests.” Instead, according to agency officials, EPA will have to agree on specific Tier III protocols proposed by the pesticide applicant or registrant for particular pesticides.", "EPA’s June 2014 risk assessment guidance for honey bees allows the agency to use tiered studies in reviewing registration applications for new pesticides and new uses for existing pesticides. EPA’s review of registration applications for four pesticides—cyantraniliprole, oxalic acid, sulfoxaflor, and tolfenpyrad—provides examples of how the agency’s use of its 2011 interim and 2014 final guidance and its call for bee-related studies can vary. Because EPA’s risk assessment approach for this guidance is a tiered one, the agency staff uses its discretion when requiring registrants to conduct toxicity studies. For example, EPA approved oxalic acid for a new use as a miticide to combat Varroa mites in bee hives without requiring its own Tier II or Tier III studies. According to EPA staff, the agency relied on existing data from Canada that shows the pesticide has low acute toxicity and is effective at killing Varroa mites without harming bee colonies. For the other three pesticides, which were registered before the 2014 final guidance was issued, EPA reviewed varying numbers and types of studies but did not require all of the types of studies described in the new risk assessment guidance. However, EPA decided, on the basis of the studies that were done, to place restrictions on the pesticides’ use in order to reduce bees’ exposure. For example, EPA did not require Tier III studies for sulfoxaflor but used the results of Tier I and Tier II studies as the basis for reducing the amount of the insecticide that was allowed to be applied per acre under the pesticide’s 2013 registration. In addition, cyantraniliprole and tolfenpyrad are among the acutely toxic pesticides covered by EPA’s May 2015 proposal to make label changes restricting the use of acutely toxic pesticides.\nA finding from study results that a pesticide is toxic to bees (or other organisms) does not necessarily mean that EPA will disapprove an application for registration. Under FIFRA, throughout the tiered process, EPA considers whether mitigation measures (e.g., changes to application rates, the timing of applications, or the number of applications) are sufficient to reduce exposure to a level at which risk estimates are below levels for concern, while also taking the benefits from using the pesticide into consideration.", "While EPA’s June 2014 pesticide risk assessment approach provides for the inclusion of data on additional bee species where available, it relies primarily upon data from honey bees as a surrogate for all bee species. However, other bee species may be affected differently by pesticides. EPA acknowledges in its guidance that there are limitations to using honey bees as surrogates but maintains that honey bees can provide information relevant to other species, and that adequate, standardized tests are not yet available for other species. EPA is involved in international efforts to develop standardized tests for other bee species and has been directed by the task force’s strategy with researching risk assessment tools for nonhoney bee species. However, EPA does not have a schedule for expanding the risk assessment process to other bee species. Stakeholders we interviewed from farming, commercial beekeeping, university, and conservation/environmental groups said EPA should expand its risk assessment process to include testing the effects of pesticides on pollinators other than the honey bee, including other commercial, or managed, and wild, native bees. Several of these stakeholders specified that EPA should develop testing models and guidelines for other types of bees, such as solitary and bumble bees.\nEPA’s September 2012 White Paper attributed the agency’s focus on honey bees to two factors: (1) honey bees are considered the most important pollinator in North America from a commercial and ecological perspective and (2) standardized tests on the effects of chemicals are more developed for honey bees than for other managed bee species, such as the alfalfa leafcutting and orchard mason bees. However, the White Paper also noted that there are an estimated 4,000 species of wild, native bees in North America and more than 20,000 worldwide. These wild, native bees also provide important pollination services. Other managed and wild, native bee species may be exposed to pesticides through different routes, at different rates, or for different durations than honey bees, all of which may influence the effects of pesticides. The White Paper concluded that there was a clear need for a process to assess risks to species other than honey bees, owing to potential differences in sensitivity and exposure compared to honey bees. While noting the importance of assessing risks to diverse bee species, the White Paper also cited a 2012 European Food Safety Authority conclusion that published laboratory, semi-field, and open field test methods for other species (i.e., bumble bees, orchard mason bees, leafcutting bees, and alkali bees) needed further development.\nIn its December 2012 review of EPA’s White Paper, the FIFRA Scientific Advisory Panel recommended that EPA require testing on at least one additional species to address the goal of protecting diversity. The FIFRA panel stated that alfalfa leafcutting bee and orchard mason bees are the easiest to include for Tier I testing, adding that these bees are commercially available in large numbers and would be fairly easy to use for higher-tiered tests. In addition, the panel noted that bumble bees are also available commercially, and considerable research is available on how to raise them, so they would be useful for Tier II tests, although with limitations. EPA’s June 2014 risk assessment guidance stated that, as the science evolves, methods and studies using other bee species may be considered and incorporated into risk assessments.\nThe task force’s strategy stated that uncertainty is created by relying on honey bees as a surrogate and stated the agency was working with regulatory counterparts through the OECD to ensure the development of standardized testing methods to address this uncertainty. In that regard, the task force’s research action plan directs EPA to develop appropriate assessment tools for sublethal effects of pesticides, adjuvants, and combinations of pesticides on the fitness, development, and survival of managed and wild pollinators (i.e., honey bees and other bees). The task force’s strategy states that a metric for progress in meeting the strategy’s directives will be the extent to which standardized guidelines are developed and implemented for evaluating potential risks to bees other than honey bees. According to the strategy, these studies will be critical for determining the extent to which honey bees serve as reasonable surrogates for other species of bees. However, the strategy and the research action plan do not identify how or when EPA is to ensure that adequate test protocols are incorporated into the risk assessment process. According to EPA officials, it would not be reasonable for the strategy to dictate a timeline or for EPA to commit to one given the absence of appropriations to support the development of test guidelines. Instead, these officials said that EPA is working with the OECD and other international bodies to develop test guidelines for other species of bees.\nAccording to OECD documents, progress has been made in developing guidelines to assess the acute contact and oral toxicity of pesticides to individual bumble bees. The documents state that the results of validation testing for the guidelines (known as ring tests) are expected to be reported by late 2015 or early 2016. However, it is not clear when EPA could incorporate them into its risk assessment process, and guidelines for other bee species would take additional time to develop. Regardless, EPA has the authority under FIFRA to require pesticide registrants to submit data on the toxicity of pesticides on other bee species using methods that meet the agency’s approval. By developing a plan for obtaining data from pesticide registrants on the effects of pesticides on nonhoney bee species, including other managed or wild, native bees, into its risk assessment process, EPA could increase its confidence that it is reducing the risk of unreasonable harm to these important pollinators, consistent with the task force’s strategy and research action plan.", "EPA’s June 2014 risk assessment guidance calls for the agency to assess the risks that individual pesticides may pose to bees but not for the assessment of the risks from combinations of pesticide products or combinations of pesticide products with other chemicals. Farmers sometimes mix pesticide products for a single application to reduce the number of times they have to spray their fields. These combinations of pesticide products are known as tank mixtures. Beekeepers have raised concern that these mixtures of pesticide products may have synergistic effects on bees, meaning that the effect of the combination is greater than the sum of the effects of the individual pesticides. The Pollinator Stewardship Council reported on its website in 2014 that beekeepers attributed bee kill incidents to pesticides that acted in combination with each other to increase their collective toxicity. In addition, farmers may mix pesticide products with adjuvants, or chemicals to enhance the pesticides’ effectiveness. University researchers have also reported that combining certain pesticide products with other products can synergistically increase the overall toxicity to bees. Stakeholders we interviewed from commercial bee groups, universities, and conservation/ environmental groups suggested that EPA require companies to conduct toxicity studies on pesticide tank mixtures as part of its risk assessment process. According to agency officials, EPA has taken some steps to expand the scope of its risk assessment to include mixtures of pesticides, but challenges remain, as discussed below.\nEPA registers an individual pesticide after assessing the risks the pesticide poses to human health or the environment when used according to its directions for use. EPA also assesses the risks posed by combinations of pesticides that the applicant intends to be used as a registered combination. Otherwise, EPA does not assess the risks of tank mixtures of pesticides or combinations of pesticides and other chemicals such as adjuvants that farmers or others may use. According to EPA officials, the use restrictions that apply to tank mixtures of pesticides are, instead, based on the most restrictive elements of the individual pesticides’ labels.\nIn EPA’s September 2012 White Paper, the agency stated that “with respect to mixtures, while multiple stressors and the interactive effects of pesticides and/or other environmental stressors are important issues, they will not be examined at this time.” However, the task force’s strategy recognized the risks that pesticide mixtures may pose and called for EPA to develop appropriate tools to assess the sublethal effects of pesticides, adjuvants, and combinations of pesticides with other products on the fitness, development, and survival of managed and wild pollinators.\nSenior EPA officials told us in October 2015 that they agreed that tank mixtures of registered pesticides pose potential risks to bees. However, they said that there was no reliable process for assessing mixtures and that, given the number of possible permutations that may occur in tank mixing, it was difficult to imagine how EPA could reasonably commit to such an effort. EPA officials also said that the use of tank mixes may change over time and by location as farmers respond to different pest outbreaks, and that the agency does not know how it would identify commonly used mixtures. However, according to stakeholders we interviewed, sources for data on commonly used or recommended mixtures are available. These sources include the California Department of Pesticide Regulation—which has an extensive data base on pesticide use—the pesticide industry, farmers, pesticide application companies, and extension agents.\nAt the same time, EPA officials noted that the agency is working with the Fish and Wildlife Service and the National Marine Fisheries Service on assessing the risks of pesticides to threatened and endangered species such as salmon, including the risk posed by mixtures of pesticides. They said the agencies’ effort could eventually be relevant to EPA’s guidance for assessing pesticide risks to bees. EPA and the other agencies subsequently developed joint interim scientific approaches for assessing the risks of pesticides to threatened and endangered species. With respect to pesticide mixtures, the agencies’ document on interim approaches stated that risks associated with pesticide mixtures will largely be considered qualitatively rather than quantitatively. A related agency document states that long-term future work includes establishing a quantitative approach for assessing risks of mixtures but provides no time frames for doing so. We acknowledge that EPA’s work with other agencies on pesticide risks to threatened and endangered species may eventually contribute to its risk assessments for bees, but the effects of that work remain to be seen. By identifying the pesticide mixtures that farmers and pesticide applicators most commonly use on agricultural crops, EPA would have greater assurance that it could assess those mixtures to determine whether they pose greater risks than the sum of the risks posed by the individual pesticides.\nAccording to senior EPA officials, if the agency has information about certain combinations being used regularly, it could require that pesticide registrants provide testing data on those combinations. If an assessment of commonly-used pesticide mixtures found synergistic effects on bees, FIFRA authorizes EPA to take regulatory actions to reduce risks, such as requiring label language warning of those effects.", "Amendments to FIFRA require that EPA complete its reviews of all pesticide active ingredients registered as of October 1, 2007, by October 2022. Applying EPA’s new risk assessment guidance to its review of registered pesticides will add time to the posted review schedules for some individual pesticides, and EPA has not revised these schedules. As discussed, EPA’s revised risk assessment guidance for bees calls for the agency to consider requiring registrants to conduct additional studies on their pesticide’s effect on bees. According to EPA documents and officials, the agency is now applying the new guidance to registered pesticides that are in the review process, as well as to new pesticides. Deciding what studies are needed, requesting the data from registrants, waiting for the studies to be conducted, and analyzing the study data will add time to EPA’s review of some pesticides’ risks to bees. The director of EPA’s Pesticide Re-Evaluation Division and other senior officials told us in April 2015, and confirmed in October 2015, that the agency was in the process of deciding what additional bee studies, if any, will be needed for specific individual pesticides. They could not estimate how long it will take to make those decisions but said a large number of pesticides for which EPA had begun a registration review prior to issuing its risk assessment guidance in June 2014 could require data on bees. The number of pesticides affected by the new risk assessment guidance is, therefore, likely to be substantial, according to EPA officials. In its annual PRIA implementation report, EPA reported to Congress in March 2015 that by September 30, 2014, it had begun the review process for 528 pesticide cases and prepared final work plans for 491 of those cases. The final work plans identify the studies the agency is requiring the registrant to conduct and show the agency’s estimated schedule for completing a registration review. Of the 491 cases with final work plans, EPA had issued registration review decisions for 105 cases by the end of fiscal year 2014. According to EPA officials, as of September 30, 2015, the agency had increased the number of reviews begun to 612 pesticide cases, had prepared final work plans for 580 pesticides cases, and had issued 155 interim and final registration review decisions.\nAccording to the EPA division director, if EPA determines through registration review that additional data are necessary to make the necessary findings, the agency must obtain approval from the Office of Management and Budget (OMB) to request the data from registrants that use a particular active ingredient in their products. He added that, if EPA decides that registrants need to do additional studies on bees, it will need to obtain another approval from OMB for the new data. Once OMB approves the request, the required risk assessment studies on bees may take registrants from one to several years to conduct. The division director said that EPA was concerned that the number of pesticides needing new bee test data could overwhelm the supply of qualified testing laboratories, which could delay the start and completion of those studies. In its written comments on a draft of this report, EPA said that it had more recently learned that laboratories are building capacity to conduct these studies. However, the conduct of honey bee studies is confined to a limited window within the year, typically from April through August.\nThe final work plans for most of the pesticide cases for which EPA had begun registration review were developed and posted to the www.Regulations.gov website before EPA adopted its revised risk assessment guidance for bees in June 2014. According to EPA officials, those work plans may therefore not reflect the types of studies that are now called for by the new guidelines or the estimated schedules for completing the registration reviews. Work plans that EPA posted after the June 2014 risk assessment guidance, on the other hand, may better reflect the types of studies that are called for by the new guidance.\nTo examine the effect that EPA’s revised risk assessment guidance has had on its review of individual pesticide registrations, we selected eight registered pesticides associated with bee kill incidents reported in EPA’s EIIS database. The work plans for these pesticides (amitraz, carbaryl, chlorpyrifos, coumaphos, malathion, and three neonicotinoid pesticides— clothianidin, imidacloprid, and thiamethoxam)—could provide information on how EPA’s new risk assessment process will affect registration review, although we found the full effect is not yet clear. The director of the Pesticide Re-Evaluation Division explained that the work plans EPA has posted at www.Regulations.gov for amitraz, carbaryl, chlorpyrifos, coumaphos, and malathion are out of date because EPA has not yet decided what additional data on the effects of the pesticides on bees the agency will ask registrants to submit. However, EPA staff told us that the work plans for the three neonicotinoid pesticides—which predate the June 2014 risk assessment guidance—more closely reflect the guidance and call for additional studies on bees. EPA staff said that they were aware of the need for more bee studies for those pesticides as the agency developed its 2014 guidance.\nWhile the new guidance is likely to affect many pesticide reviews, EPA officials told us that the agency does not plan to revise the review schedules in work plans that have already been posted. The officials said that doing so would place a significant burden on agency staff and detract from their ability to conduct registration reviews. Instead, EPA officials said that the agency would annually announce for which pesticides it expected to have preliminary risk assessments available for public review in that year. In keeping with that plan, the May 2015 task force’s strategy included a list of 58 registration review preliminary risk assessments that EPA said would be open for public comments during 2015. Unlike the posted work plans for pesticides undergoing registration review, the announcement in the strategy did not estimate when the reviews of the 58 pesticides would be complete or identify what studies EPA has determined will be required. We understand that it may be challenging for agency staff to revise the review schedules in work plans that have already been posted. However, given that EPA is working to determine what studies will be required, it may soon be able to determine the studies it would require of registrants. By disclosing in its annual PRIA implementation reports which registration reviews have potentially inaccurate schedules and when it expected those reviews to be completed, EPA could provide Congress and the public with accurate information about the schedules for completing the registration reviews, thereby increasing understanding of EPA’s progress toward meeting the October 2022 deadline for completing all registration reviews.\nAs required by FIFRA as amended by PRIA and subsequent legislation, EPA’s PRIA implementation reports contain data on the number of cases opened and closed in a particular fiscal year and cumulatively since the start of registration review in 2007. EPA has reported on its website that it expects to open 70 or more new registration review dockets annually through fiscal year 2017. Although the reports do not estimate the number of reviews EPA expects to close each year as it moves toward the 2022 deadline, the agency wrote in its fiscal year 2014 PRIA implementation report that it continued to open dockets for new registration review cases at the pace that must be maintained in order to finish reviews in 2022. EPA has estimated that the average time it will take to complete a registration review is about 6 years and that the agency has completed an average of less than 20 per year. However, the new risk assessment guidance for bees may increase the average time needed for reviews, raising questions about EPA’s ability to complete its registration reviews by 2022. EPA officials said that they are planning to assign additional agency staff to work on these registration reviews.", "USDA and EPA have taken numerous actions to protect the health of honey bees and other species of bees, thereby supporting agriculture and the environment. Even with these efforts, honey beekeepers continue to report rates of colony losses that they say are not economically sustainable. Although data on the size of nonhoney bee populations (other managed bees and wild, native bees) are lacking, there is concern that these bee species also need additional protection. Finding solutions to address the wide range of factors that may affect bee health, including pests, disease, reduced habitat and forage, and pesticide exposure, will be a complex undertaking that may take many years and require advances in science and changes in agricultural and land use practices.\nMonitoring honey bees and other bee species is critical to understanding their population status and threats to their health. The task force’s research action plan on bees and other pollinators identified monitoring of wild, native bees as a priority and directed agencies in USDA and the Department of the Interior to take leading and supporting roles. However, the research action plan did not establish a mechanism, such as a monitoring plan, that would establish participating agencies’ roles and responsibilities, establish common outcomes and goals, and obtain input from states and other stakeholders on native bees. By working with other key agency stakeholders, USDA can help agencies understand their respective roles, focus on the same goals and outcomes, and better solicit input from external stakeholders.\nThe task force’s strategy also includes a plan for extensive research on issues important to honey bees; other managed bees; wild, native bees; and other pollinators. USDA’s ARS and NIFA have funded and continue to fund research on these three categories of bees. While the ability to identify research projects by bee category is key to tracking projects conducted to implement the task force’s research action plan, USDA’s CRIS database does not currently reflect these categories. This limitation hinders users’ ability to search for or track completed and ongoing bee research. Updating the CRIS database to include the three bee categories would increase the accessibility and availability of information about USDA-funded research on all bees.\nIn addition, the task force’s strategy established a governmentwide goal of restoring and enhancing 7 million acres of habitat for bees and other pollinators. USDA’s NRCS and FSA are supporting efforts to improve habitat to help meet the strategy’s goal. It is not yet clear, however, how the agencies will determine which acres count toward this goal because USDA cannot currently track all acres on which conservation practices have restored or enhanced bee habitat as part of the effort to achieve the strategy’s goal. Without an improved method, USDA cannot accurately measure its contribution to the strategy’s goal. In addition, NRCS, which provides technical assistance to landowners implementing conservation practices, has conducted limited evaluation of the effectiveness of those efforts. NRCS’s National Planning Procedures Handbook calls for the agency to evaluate its conservation practices, including the technical assistance provided to landowners. According to one evaluation, agency staff need additional expertise to effectively advise landowners on how to conserve pollinator habitat. However, NRCS has not evaluated which locations have gaps or identified methods for filling the gaps. Such methods could include providing additional training or time to conduct technical assistance through which staff can learn which practices are working and which are not. By increasing the evaluation of its habitat conservation efforts to include identifying gaps in expertise and technical assistance, USDA could better ensure the effectiveness of its efforts to restore and enhance bee habitat plantings across the nation.\nMoreover, EPA has expanded its assessment of pesticides for their risks to honey bees. EPA generally uses data on pesticides’ risks to honey bees as a surrogate for risks to nonhoney bee species but stated that having data on those species would help meet the goal of protecting bee diversity. The task force’s research action plan calls for EPA to develop tools for assessing risks to a variety of bee species, including nonhoney bee species, such as other managed or wild, native bees. EPA is collaborating with international counterparts to develop standardized guidelines for how to study the effects of pesticides on other bee species. FIFRA authorizes EPA to require pesticide registrants to submit data from tests on nonhoney bee species using methods that meet EPA’s approval. By developing a plan for obtaining data from pesticide registrants on pesticides’ effects on nonhoney bee species until the standardized guidelines are developed, EPA could increase its confidence that it is reducing the risk of unreasonable harm to these important pollinators.\nFurthermore, EPA does not assess the risks that mixtures of pesticides and other chemicals may pose to bees. Depending on the chemicals involved, a mixture may pose a greater risk to bees than the sum of the risks from exposure to individual pesticides. The task force’s research action plan generally called for research on the effects mixtures of pesticides can have on bees and, in particular, directed EPA to develop appropriate assessment tools for sublethal effects of pesticides, adjuvants, and combinations of pesticides with other products on the health of managed and wild pollinators. However, EPA does not have data on commonly used mixtures and does not know how it would identify them. By identifying the mixtures that farmers and pesticide applicators most commonly use on agricultural crops, EPA would have greater assurance that it could assess those mixtures to determine whether they pose greater risks than the sum of the risks posed by the individual pesticides and, if appropriate, take regulatory action.\nAs directed by FIFRA, EPA began a review of all pesticide active ingredients registered as of October 1, 2007, in fiscal year 2007 and is required to complete it by October 2022. EPA’s review has been affected by the changes to its risk assessment process that call for pesticide registrants to submit additional bee-related data for some pesticides. As a result, the agency’s posted schedules for reviewing the registration of pesticides may be inaccurate because the schedules do not reflect requests for additional data. However, EPA has not posted revised schedules. Accurate information about the agency’s estimated schedule would help Congress and the public better understand EPA’s progress toward meeting the October 2022 deadline for completing all registration reviews.", "We are making four recommendations to the Secretary of Agriculture and three recommendations to the Administrator of EPA.\nTo improve the effectiveness of federal efforts to monitor wild, native bee populations, we recommend that the Secretary of Agriculture, as a co- chair of the White House Pollinator Health Task Force, coordinate with other Task Force agencies that have monitoring responsibilities to develop a mechanism, such as a federal monitoring plan, that would (1) establish roles and responsibilities of lead and support agencies, (2) establish shared outcomes and goals, and (3) obtain input from relevant stakeholders, such as states.\nTo increase the accessibility and availability of information about USDA- funded research and outreach on bees, we recommend that the Secretary of Agriculture update the categories of bees in the Current Research Information System to reflect the categories of bees identified in the White House Pollinator Health Task Force’s research action plan.\nTo measure their contribution to the White House Pollinator Health Task Force strategy’s goal to restore and enhance 7 million acres of pollinator habitat, we recommend that the Secretary of Agriculture direct the Administrators of FSA and NRCS to develop an improved method, within available resources, to track conservation program acres that contribute to the goal.\nTo better ensure the effectiveness of USDA’s bee habitat conservation efforts, we recommend that the Secretary of Agriculture direct the Administrators of FSA and NRCS to, within available resources, increase evaluation of the effectiveness of their efforts to restore and enhance bee habitat plantings across the nation, including identifying gaps in expertise and technical assistance funding available to field offices.\nTo better ensure that EPA is reducing the risk of unreasonable harm to important pollinators, we recommend that the Administrator of EPA direct the Office of Pesticide Programs to develop a plan for obtaining data from pesticide registrants on the effects of pesticides on nonhoney bee species, including other managed or wild, native bees.\nTo help comply with the directive in the White House Pollinator Health Task Force’s strategy, we recommend that the Administrator of EPA direct the Office of Pesticide Programs to identify the pesticide tank mixtures that farmers and pesticide applicators most commonly use on agricultural crops to help determine whether those mixtures pose greater risks than the sum of the risks posed by the individual pesticides.\nTo provide Congress and the public with accurate information about the schedules for completing the registration reviews for existing pesticides required under FIFRA, we recommend that the Administrator of EPA disclose in its PRIA implementation reports, or through another method of its choosing, which registration reviews have potentially inaccurate schedules and when it expects those reviews to be completed.", "We provided a draft of this report to USDA and EPA for review and comment. USDA and EPA provided written comments on the draft, which are presented in appendixes IV and V, respectively. In its written comments, USDA said that it agreed, in large part, with the four recommendations relevant to the department in the draft report and that progress with regard to the recommendations would improve protection for pollinators, especially bees. In its written comments, EPA said that it agreed with the three recommendations relevant to the agency in the draft report and that it has actions under way to implement the three recommendations.\nIn its written comments, USDA described actions it has taken or could take to implement our first recommendation that the Secretary of Agriculture, as a co-chair of the White House Pollinator Health Task Force, coordinate with other task force agencies that have monitoring responsibilities to develop a mechanism, such as a federal monitoring plan, that would (1) establish roles and responsibilities of lead and support agencies, (2) establish shared outcomes and goals, and (3) obtain input from relevant stakeholders, such as states. USDA noted that while it would be impossible to monitor all of the approximately 4,000 species of bees in North America, it would be informative for agencies to survey changes in the distributions of a common set of sentinel, or indicator, bee species. The agency also described some of the monitoring methods that it plans to use or that could be used by USDA, the Department of the Interior, and other collaborators. In doing so, USDA noted that identifying native bee species can be very difficult (even to those trained in biology and museum curators) and that possible remedies will be explored, including the development of a universal field guide or apps that would facilitate bee identification efforts.\nUSDA also described steps that it plans to take to implement our second recommendation that the Secretary of Agriculture update the categories of bees in CRIS to reflect categories of bees identified in the White House Task Force’s research action plan. USDA states that the discrepancy between the government-wide effort and current classifications needs to be reconciled to capture efforts of research, education, and extension projects as they work to address threats to bee health. While USDA states that the CRIS categories can be changed relatively quickly, it also states that the efficacy of the changes varies, depending on whether they are made for historical project data or for future project reports. USDA describes the additional staff time needed to analyze and recode projects manually in CRIS and that adding new classifications would affect current projects and would require analysis to determine if changes will affect trend reporting of the budget. USDA also states that a strategy will be needed to increase awareness of the new classifications for project directors and other scientists who may choose to change to the more specific bee classifications for their projects. The agency then describes the process by which changes are made to research classifications in CRIS, saying that if the CRIS Classification Board approves changes to CRIS when it meets in the spring of 2016, NIFA would address relevant changes at that time.\nUSDA generally agreed with our third recommendation that the Secretary of Agriculture direct the Administrators of FSA and NRCS to develop an improved method, within available resources, to track conservation program acres that contribute to the goal of restoring and enhancing habitat for pollinators. USDA said that since November 2015, FSA has had a method for estimating acres of pollinator habitat associated with Conservation Reserve Program practices. In addition, according to USDA, NRCS is exploring options to develop a method for tracking acres on which conservation practices are planned and applied to benefit pollinators.\nUSDA generally agreed with our fourth recommendation that the Secretary of Agriculture direct the Administrators of FSA and NRCS to, within available resources, increase evaluation of the effectiveness of their efforts to restore and enhance bee habitat plantings across the nation, including gaps in expertise and technical assistance funding available to field offices. USDA said that it would expand and deepen its studies on the impact of conservation cover on honey bee and other pollinator health, diversity, and abundance as its budget allows.\nEPA agreed with our first recommendation that the Office of Pesticide Programs develop a plan for obtaining data from pesticide registrants on the effects of pesticides on nonhoney bee species, including other managed or wild, native bees. In addition, EPA described actions that it is taking in collaboration with other parties to develop methods for testing the effects of pesticides on nonhoney bee species. We also noted many of these actions in the report.\nEPA agreed with our second recommendation that the Office of Pesticide Programs identify pesticide mixtures that farmers and pesticide applicators most commonly use on agricultural crops to help determine whether those mixtures pose greater risks than the sum of the risks posed by the individual pesticides. EPA noted that there is opportunity to identify some commonly used tank mixtures. At the same time, EPA commented on our use of the term “unregistered mixtures.” In our draft report, we intended for the term “unregistered mixtures” to mean combinations of registered pesticides that EPA has not registered for use in combination. However, we agree with EPA that the term “unregistered mixtures” might cause confusion and revised the draft, replacing that term with the term “tank mixtures.”\nEPA agreed with our third recommendation that the agency provide Congress and the public with accurate information about the schedules for completing the registration reviews for existing pesticides required under FIFRA. However, rather than agreeing to disclose this information in its PRIA implementation reports, EPA committed to creating a public website containing this information by April 2016. We agree that a public website could be a suitable method for accomplishing the intent of our recommendation.\nUSDA and EPA also 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 appropriate congressional committees, the Secretary of Agriculture, the Administrator of EPA, 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 morriss@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 examines (1) the bee-related monitoring, research and information dissemination, and conservation efforts of selected U.S Department of Agriculture (USDA) agencies and (2) the Environmental Protection Agency’s (EPA) efforts to protect bees through its regulation of pesticides.\nTo examine USDA’s monitoring, research and outreach, and conservation efforts with respect to bees, we focused on the National Agricultural Statistics Service (NASS), which surveys honey beekeepers; the Agricultural Research Service (ARS) and National Institute of Food and Agriculture (NIFA), which are the two largest USDA research agencies; and the Natural Resources Conservation Service (NRCS) and Farm Service Agency (FSA), which oversee conservation programs. To examine bee monitoring activities, we analyzed the methodology that NASS and the Bee Informed Partnership are using for their monitoring efforts related to their surveys of honey bee colony losses. We also reviewed the White House Task Force plans for wild, native bee monitoring by a variety of federal agencies to determine whether a means of federal coordination had been established. We also reviewed our prior body of work on interagency collaboration, as agencies within USDA carry out work related to bee monitoring in conjunction with other agencies; from that work, we selected practices that were related to challenges that we or agency officials identified and used the practices to assess interagency collaboration at USDA concerning bee monitoring. In addition, we reviewed ARS and NIFA documents related to monitoring projects and interviewed ARS and U.S. Geological Survey officials and university researchers participating in monitoring projects.\nTo examine bee-related research and outreach, we analyzed USDA project funding data for ARS and NIFA for fiscal years 2008 through 2015 and for fiscal years 2008 through 2014, respectively, to identify the types of bees addressed by the projects. We selected fiscal year 2008 as the starting point to reflect 2008 Farm Bill initiatives; data from fiscal years 2015 and 2014 were the most recent data available for ARS and NIFA, respectively. We evaluated the reliability of these data by comparing agency-provided data with data found in USDA’s website for its Current Research Information System (CRIS) and reviewing the agencies’ management controls to ensure the data’s reliability. We determined that the data are sufficiently reliable for the purposes of this report. We also reviewed how ARS and NIFA categorize research data in USDA’s CRIS database and compared the CRIS categories to those used in the task force strategy and research action plan. We interviewed ARS and NIFA officials in headquarters and in three bee laboratories regarding research and outreach projects being conducted and the usefulness of the CRIS bee categories.\nTo examine bee-related activities in two key USDA agencies with conservation programs, we collected data from NRCS and FSA on bee habitat acres established in 2014 and 2015 for two honey bee initiatives and associated agency funding. We evaluated the reliability of these data by reviewing the agencies’ management controls for the systems maintaining the data to ensure the data were sufficiently reliable for the purposes of this report. We also reviewed NRCS and FSA guidance and other documents on bee habitat, as well as evaluations of the NRCS technical assistance efforts. In particular, we reviewed an evaluation by the Pollinator Partnership of NRCS’s technical assistance efforts and examined the agency’s response to conclusions about the level of bee habitat conservation expertise within the agency. We interviewed FSA and NRCS officials to discuss strengths and weaknesses of their pollinator habitat efforts, particularly related to evaluation and technical assistance.\nTo examine EPA’s efforts to protect bees, we gathered information on its regulation of pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). In particular, we obtained documents from, and conducted interviews with, officials in EPA’s Office of Pesticide Programs (OPP). OPP carries out EPA’s responsibilities for regulating the manufacture and use of all pesticides (including insecticides, herbicides, rodenticides, disinfectants, sanitizers, and more) in the United States. Specifically, we reviewed EPA’s decisions in 2014 to modify the labels of pesticide products containing neonicotinoid active ingredients. We also reviewed EPA’s 2015 proposal to modify the labels of pesticides the agency has determined to be acutely toxic to bees. We also gathered information about pesticides that have been associated with bee kill incidents from 1974 through 2014, as indicated by reports in EPA’s Ecological Incident Information System (EIIS). To assess the reliability of the EIIS data, we discussed with EPA officials the methods by which the agency collects and assesses the EIIS data and determined that, while they had limitations, they were sufficiently reliable for the purpose of identifying pesticides potentially associated with bee kills. Furthermore, we reviewed documents and interviewed agency officials regarding EPA’s efforts to encourage states to develop voluntary “managed pollinator protection plans.”\nIn addition, we reviewed the agency’s 2011 interim and 2014 final guidance for assessing the risks that pesticides pose to bees and examined how the agency has applied the new guidance to particular pesticides. We also reviewed an EPA “White Paper” on risk assessment the agency submitted to the FIFRA Scientific Advisory Panel for comment, as well as the panel response. To learn more about how the agency has used its 2014 risk assessment guidance when reviewing the registration of existing pesticides, we selected 10 pesticides shown by EPA’s EIIS database to be associated with bee kills. When EPA receives reports of bee kill incidents, according to agency officials, it considers the evidence provided and categorizes the likelihood that a specific pesticide was associated with the bee kill as highly probable, probable, possible, unlikely, or unrelated. We assigned to those certainties a score of 4, 3, 2, 1, or 0, respectively, and multiplied the number of incidents for each pesticide by the certainty score. Using the product of those calculations, we identified the 10 pesticides associated with the largest number of bee kill incidents and weighted by EPA’s degree of certainty. The 10 pesticides, in alphabetical order, are amitraz, carbaryl, chlorpyrifos, clothianidin, coumaphos, imidacloprid, malathion, methyl parathion, parathion, and thiamethoxam. However, 2 of the pesticides, parathion and methyl parathion, have been cancelled by their registrants and, therefore, are no longer subject to EPA’s registration review process. For the remaining 8 pesticides, we reviewed EPA’s final work plans and other documents related to the agency’s registration review process and interviewed agency officials to determine what effect the new risk assessment guidance had on the registration review process.\nWe reviewed data and interviewed agency officials about the status of EPA’s pesticide registration and registration review programs. The data included the number of pesticide “cases” for which EPA had started the registration review process from the beginning of fiscal year 2007 through the end of fiscal year 2015, the number of cases with final work plans completed, and the number of case reviews that EPA has completed. We selected these time frames because EPA began the registration review process required by FIFRA in fiscal year 2007, and the most recent data available from the agency were through the end of fiscal year 2015. To assess the reliability of the data on registration reviews provided directly to us by EPA’s OPP, we compared them to data in EPA implementation reports to Congress required by FIFRA and found them sufficiently reliable for our reporting purposes.\nTo address both objectives, we gathered stakeholders’ views on what efforts, if any, USDA and EPA could take to protect bee health. Specifically, we interviewed stakeholders from the following types of organizations or entities: general farming, including conventional and organic farming; commodity farmers whose crops are pollinated by managed bees; commercial beekeepers; pesticide manufacturers; state governments; universities; and conservation/environmental protection. We developed a list of candidate stakeholders by asking for suggestions from knowledgeable federal officials and others knowledgeable about bee health and through our review of relevant literature. USDA and EPA officials reviewed our list of candidate stakeholders and made suggestions. We also obtained advice from a member of the National Academy of Sciences with extensive experience on bee and pollinator research about how to achieve a balanced list of stakeholders with varied expertise and knowledge. Appendix II presents a summary of stakeholders’ views on USDA and EPA efforts to protect bees.\nWe conducted 35 interviews with stakeholders. A total of 50 individuals participated in the interviews because, in some instances, more than one person represented a stakeholder organization. See appendix III for the names of the individuals we interviewed, their title, affiliation, and type of stakeholder organization.\nTo ensure we asked consistent questions among all the identified stakeholders, we developed an interview instrument that included questions about the stakeholders’ expertise and experience regarding bees, their knowledge of relevant USDA and EPA activities to protect bee health, and their views on suggestions for efforts, if any, (1) USDA’s ARS, NIFA, or NRCS should make with regard to bee-related research and information dissemination; (2) other USDA agencies should make to protect bee health; or (3) EPA should make to protect bee health. With the exception of the university research scientists, the stakeholders represented their organizations’ views. After completing the interviews, we conducted a content analysis of the stakeholders’ responses, whereby we organized their comments into relevant categories. Because we used a nonprobability sample of stakeholders, their views cannot be generalized to all such stakeholder organizations but can be illustrative. In addition, the views expressed by the stakeholders do not represent the views of GAO. Further, we did not assess the validity of the stakeholders’ views on what efforts USDA and EPA should make to protect bee health.\nWe conducted this performance audit from October 2014 to February 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 presents stakeholders’ views regarding suggested efforts the U.S. Department of Agriculture (USDA) and Environmental Protection Agency (EPA) should make to further protect bee health. Stakeholders provided these views in interviews. Specifically, we interviewed a nonprobability sample of stakeholders from 35 of the following types of organizations or entities: general farming, including conventional and organic farming; commodity farmers whose crops are pollinated by managed bees; commercial beekeeping; pesticide manufacturing; state government; university research; and conservation/environmental protection.\nIn our interviews, we asked stakeholders for their familiarity with agency efforts to protect bee health as well as for their views on suggestions for any efforts the agencies should make to further protect bee health. The information in table 1 provides a summary of stakeholders’ views on commonly-cited topics and indicates the types of stakeholder groups that expressed those views.", "", "The IPM Institute of North America, Inc.\nAssistant Extension/Research Professor of Entomology Commercial Director of Beeologics Monsanto Company Project Apis m.", "Assistant Professor of Entomology University of Maryland Board Member and Past President Western Alfalfa Seed Growers Project Apis m.", "", "", "", "", "In addition to the individual named above, Anne K. Johnson, (Assistant Director), Kevin Bray, Ross Campbell, John Delicath, Ashley Hess, Meredith Lilley, Beverly Peterson, and Leigh White made key contributions to this report. Barbara El Osta, Karen Howard, Ying Long, Perry Lusk, Jr, Anne Rhodes-Kline, Dan Royer, Kiki Theodoropoulos, and Walter Vance also made important contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 3, 3, 3, 2, 2, 3, 3, 1, 2, 2, 2, 2, 3, 3, 3, 3, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h3_title", "h0_full h3_full", "h3_full", "", "", "", "h0_full h1_full", "h0_full", "", "", "h0_full", "", "h1_title", "", "h1_full", "h2_full", "", "", "", "h2_full", "", "", "", "h2_full", "", "h1_full", "h0_full h2_full h1_full", "h0_full h3_full h2_full", "h4_full", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How is the USDA involved in the protection of bees?", "What limitations hamper the USDA's abilities to protect bees?", "What might have contributed to the USDA's failure to efficiently protect bees?", "What key practices does previous GAO work recommend?", "How might the development of a clear mechanism benefit the USDA?", "How did the USDA respond to this suggestion?", "What does the USDA fund research and outreach on?", "How did the 2008 Farm Bill increase USDA conservation efforts?", "How might the effectiveness of these initiatives be limited?", "How could the USDA ensure that these initiatives are successful?", "What steps has the EPA taken to protect bees from pesticide-related risks?", "What further steps does the task force strategy call for?", "What hinders the EPA's ability to assess the risks posed by pesticide mixtures?", "What steps could the EPA take to assess the use of pesticide mixtures?", "How could identifying the most commonly used mixtures benefit the EPA's efforts?", "Why are bees valuable to the agriculture industry?", "What concerning trend in bee populations have researchers documented?", "What steps have been taken to protect bees?", "What was GAO asked to review?", "What does this report examine?", "How did GAO collect data for this report?" ], "summary": [ "The U.S. Department of Agriculture (USDA) conducts monitoring, research and outreach, and conservation that help protect bees, but limitations in those efforts hamper the department's ability to protect bee health.", "For example, USDA has increased monitoring of honey bee colonies managed by beekeepers to better estimate losses nationwide but does not have a mechanism in place to coordinate the monitoring of wild, native bees that the White House Pollinator Health Task Force's May 2015 strategy directs USDA and other federal agencies to conduct. Wild, native bees, which also pollinate crops, are not managed by beekeepers and are not as well studied.", "USDA officials said they had not coordinated with other agencies to develop a plan for monitoring wild, native bees because they were focused on other priorities.", "Previous GAO work has identified key practices that can enhance collaboration among agencies, such as clearly defining roles and responsibilities.", "By developing a mechanism, such as a monitoring plan for wild, native bees that establishes agencies' roles and responsibilities, there is better assurance that federal efforts to monitor bee populations will be coordinated and effective.", "Senior USDA officials agreed that increased collaboration would improve federal monitoring efforts.", "USDA also conducts and funds research and outreach on the health of different categories of bee species, including honey bees and, to a lesser extent, other managed bees and wild, native bees.", "Consistent with the task force strategy and the 2008 Farm Bill, USDA has increased its conservation efforts on private lands to restore and enhance habitat for bees but has conducted limited evaluations of the effectiveness of those efforts.", "For example, a USDA-contracted 2014 evaluation found that agency staff needed additional expertise on how to implement effective habitat conservation practices, but USDA has not defined those needs through additional evaluation.", "By evaluating gaps in expertise, USDA could better ensure the effectiveness of its efforts to restore and enhance bee habitat plantings across the nation. USDA officials said that increased evaluation would be helpful in identifying where gaps in expertise occur.", "The Environmental Protection Agency (EPA) has taken steps to protect honey bees and other bees from risks posed by pesticides, including revising the label requirements for certain pesticides, encouraging beekeepers and others to report bee deaths potentially associated with pesticides, and urging state and tribal governments to voluntarily develop plans to work with farmers and beekeepers to protect bees. EPA also issued guidance in 2014 that expanded the agency's approach to assessing the risk that new and existing pesticides pose to bees.", "The task force strategy also calls for EPA to develop tools to assess the risks posed by mixtures of pesticide products.", "EPA officials agreed that such mixtures may pose risks to bees but said that EPA does not have data on commonly used mixtures and does not know how it would identify them.", "According to stakeholders GAO interviewed, sources for data on commonly used or recommended mixtures are available and could be collected from farmers, pesticide manufacturers, and others.", "By identifying the pesticide mixtures that farmers most commonly use on crops, EPA would have greater assurance that it could assess those mixtures to determine whether they pose greater risks than the sum of the risks posed by individual pesticides.", "Honey bees and other managed and wild, native bees provide valuable pollination services to agriculture worth billions of dollars to farmers.", "Government and university researchers have documented declines in some populations of bee species, with an average of about 29 percent of honey bee colonies dying each winter since 2006.", "A June 2014 presidential memorandum on pollinators established the White House Pollinator Health Task Force, comprising more than a dozen federal agencies, including USDA and EPA.", "GAO was asked to review efforts to protect bee health.", "This report examines (1) selected USDA agencies' bee-related monitoring, research and outreach, as well as conservation efforts, and (2) EPA's efforts to protect bees through its regulation of pesticides.", "GAO reviewed the White House Task Force's national strategy and research action plan, analyzed data on USDA research funding for fiscal years 2008 through 2015, reviewed EPA's guidance for assessing pesticides' risks to bees, and interviewed agency officials and stakeholders from various groups including beekeepers and pesticide manufacturing companies." ], "parent_pair_index": [ -1, 0, 1, -1, 3, 4, -1, 0, 1, 1, -1, 0, 1, 1, 3, -1, 0, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Employment Conditions of Military Spouses", "DOD Employment Assistance Programs and Other Efforts to Help Military Spouses", "DOD Has Initiated Programs and Is Developing Guidance for Collaboration", "DOD Currently Cannot Measure the Effectiveness of Its Programs, but Efforts Are Underway", "Two Hiring Mechanisms Can Provide Advantages to Military Spouses Seeking Federal Employment", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Objective 1: Identifying DOD Efforts", "Objective 2: Identifying DOD’s Steps to Assess Effectiveness", "Objective 3: Identifying Federal Hiring Mechanisms", "Appendix II: DOD’s Spending on Military Spouse Employment Programs", "Appendix III: Comments from the Department of Defense", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Among the 1.4 million active duty servicemembers in fiscal year 2011, over half (57 percent) were married, according to DOD’s data. More than 90 percent of the spouses of active duty servicemembers were women. Recent studies have found that among those in the labor force, being a military spouse is correlated with a higher unemployment rate, compared to civilian spouses. In addition, among those employed, being a military spouse is correlated with a lower wage on average, relative to civilian spouses. Researchers have posited several possible reasons for this. First, military spouses tend to be a younger group than civilian spouses, as well as more likely to be caring for young children. As a result, a larger proportion of military spouses are more likely to be at the beginning of their careers compared to civilian spouses, and a larger proportion have childrearing responsibilities that may make obtaining or maintaining a job more challenging. Second, military spouses move more often than civilian spouses as a whole, which may make it more difficult to retain jobs and develop careers. Some have also speculated that employers may be less willing to hire military spouses than other populations, for example, if they are concerned that military spouses will relocate. Third, demanding work schedules for the servicemembers may mean that spouses bear a larger share of childrearing or other family responsibilities, particularly when servicemembers are deployed. One recent study controlled for many of these characteristics and found that they explained some, though not all, of the correlation between being a military spouse and having a higher unemployment rate and lower average wage, relative to civilian spouses.", "Recognizing the challenges that military spouses face in beginning or maintaining a career, DOD has historically had efforts to help military spouses obtain employment. The military services have operated employment assistance programs at military installations since the 1980s. While these programs serve spouses, they also serve many other populations in the military community, including dependent children, active duty servicemembers, active Reserve and National Guard members, DOD civilian personnel, servicemembers transitioning to civilian life, wounded warriors, and DOD retirees (see fig. 1). These programs assist in a variety of ways, including providing referrals to job openings, job fairs, one-on-one employment counseling, and workshops on resume writing, networking, entrepreneurship, and other topics. These programs are often located at military installations’ family centers, where a variety of “family readiness services” are provided. These services may include relocation assistance (e.g., providing information on housing, child care, and schooling options), non-medical counseling, financial education and counseling, deployment assistance (e.g., educating servicemembers and their families about challenges they may face and services to help them cope), services for family members with special needs, child abuse and domestic violence prevention and response, emergency family assistance, and transition assistance to help servicemembers separating from the military and their families to reenter the civilian workforce.\nOver the years, the Congress and the executive branch have sought to enhance the employment assistance provided to military spouses. In 2001, Congress directed DOD to examine its spouse employment programs and develop partnerships with private-sector firms to provide for improved job portability for spouses, among other things. A study we conducted in 2002 discussed a number of efforts DOD was making, including holding a “spouse employment summit” to identify needed actions, establishing partnerships with private-sector employers, and seeking the Department of Labor’s assistance to resolve issues with different state residency and licensing requirements for particular occupations. More recently, in 2008, Congress authorized DOD to establish programs to assist spouses of active duty servicemembers in obtaining the education and training required for a degree, credential, education prerequisites, or professional license that expands employment and portable career opportunities. Congress also authorized DOD to establish a pilot program to help military spouses secure internships at federal agencies by reimbursing agencies for the costs associated with the first year of employment of an eligible spouse. In 2011, the administration issued a report identifying commitments federal agencies made to help military spouses obtain employment. In that report, DOD committed to expanding an employer partnership program that the Army initiated in 2003 to the other military services, improving employment counseling, and providing financial assistance to help certain spouses obtain further education.", "Since 2009, DOD has established three programs targeted to military spouses to help them obtain employment: (1) the Military Spouse Career Advancement Accounts (MyCAA) tuition assistance program; (2) the Military Spouse Employment Partnership (MSEP), which connects military spouses with employers; and (3) the Military Spouse Career Center, consisting of a call center and a website through which spouses can obtain counseling and information. These three programs comprise DOD’s Spouse Education and Career Opportunities (SECO) initiative (see fig. 2). DOD has two goals for its SECO programs: (1) reduce unemployment among military spouses and (2) close their wage gap with civilian spouses.\nMilitary Spouse Career Advancement Accounts (MyCAA): DOD created the MyCAA program to help spouses obtain further education and training toward a portable career. To enroll in this program, spouses must identify the course of study they want to pursue, develop an educational plan, and apply to DOD for tuition assistance. The tuition funds must be used for education or training toward a portable career field, defined by DOD and the Department of Labor as a high-growth, high-demand career field that is likely to have job openings near military installations. Since its inception in 2009, there have been several changes to the program’s eligibility criteria and benefits. After a pilot period, DOD established that any spouse of an active duty servicemember could participate in the program and could receive up to $6,000 in tuition funds for any continuing education, including educational programs to obtain certificates and licenses, as well as bachelor’s and advanced degrees. Due to concerns about rising costs and enrollment requests, however, DOD (1) tightened the eligibility criteria to target the program to spouses of junior servicemembers, (2) reduced the benefit amount to $4,000, and (3) restricted the funds’ use to the attainment of certificates and licenses for portable careers, not for bachelor’s or advanced degrees. In our site visits and interviews with advocacy groups, some felt that the program should be expanded to allow spouses to obtain higher-level degrees or enable more spouses to use the program. DOD officials said that MyCAA’s revised criteria reflects the original intent of the program and ensures fiscal sustainability. In fiscal year 2011, DOD spent approximately $55 million on the MyCAA program; however, MyCAA’s expenditures have fluctuated as the program has changed. Specifically, DOD’s spending increased in the first 2 years after it was launched, and then declined 70 percent in its third year, after DOD changed the eligibility criteria, benefit amount, and types of training or educational programs for which the funds could be used (see appendix II for further information on MyCAA expenditures). According to a DOD official, approximately 125,000 spouses received MyCAA tuition assistance from October 2008 to May 2012.\nMilitary Spouse Employment Partnership (MSEP): DOD created MSEP in 2011 as an expansion of an Army program to connect spouses from all services to employment opportunities at Fortune 500 companies, nonprofits, and government agencies. Specifically, MSEP establishes partnerships with employers who pledge to offer spouses transferrable, portable career opportunities. Any spouse interested in working for these employers then registers for MSEP and accesses MSEP’s web-based portal. The MSEP portal allows spouses to search for job openings posted by participating employers, build their resume, and apply for jobs. Currently, MSEP is partnering with more than 125 companies, according to DOD. In fiscal year 2011, DOD spent $1.2 million on the MSEP program for the contractors that operate and enhance the web-based portal and work with employers (see appendix II for further information on MSEP expenditures).\nMilitary Spouse Career Center (the Career Center): The Career Center consists of a call center, through which spouses can speak with employment counselors, and a website with employment information. The counselors at the call center and the website provide assistance with spouses’ general employment needs, such as exploring career options, resume writing, interviewing, and job search. In addition, the Career Center helps spouses learn about and navigate DOD’s other spouse employment programs. For example, spouses interested in MyCAA may speak with a counselor at the Career Center to help them develop their education plan, which is a requirement for receiving MyCAA benefits. Until recently, the Career Center was part of DOD’s Military OneSource, which provides information and referral to services for servicemembers and their families. Information has not been available on the amount spent on the Career Center because expenditure data for the center was not separated from Military OneSource expenditures. DOD has recently separated the Career Center from Military OneSource.\nIn addition to the three SECO programs, spouses can also receive employment assistance from the long-standing programs operated at military service installations. The services’ programs also provide counseling to spouses and information about DOD’s spouse employment programs, but they differ from the Career Center in that they are provided in-person. For example, some of the activities offered for spouses at installations we visited in the Washington, D.C. area include an annual spouse job fair, a dress-for-success workshop with stylists at a department store, and a spouse support group with guest speakers, such as MSEP representatives. DOD officials explained that they created the Career Center to supplement the services’ programs, which may not have been fully meeting the needs of all spouses. The military services’ programs are available only during business hours and may not be accessible to spouses who do not live on a military installation. In contrast, any military spouse may access the Career Center, 24 hours a day, 7 days a week. Furthermore, DOD officials noted that installations vary in the level of employment assistance they provide to spouses. For example, some of the services’ employment assistance programs are staffed by generalists who provide other types of counseling as well, and many of the services’ programs also serve other members of the military community, such as servicemembers and retirees. In contrast, the Career Center is staffed by counselors with specialized knowledge in employment services, and the counselors are focused specifically on assisting military spouses. With the Career Center, spouses who do not feel that the employment assistance programs at their local installation are meeting their needs have an alternative resource they can turn to.\nThe creation of the new SECO programs has had many benefits, according to advocacy group representatives, program staff, and spouses we interviewed. Officials and spouses agreed that these programs help address unique challenges faced by military spouses, such as frequent relocation to installations with varying services offered. For example, a spouse we spoke with explained how she spoke with a Career Center counselor to identify job opportunities in a rural installation and applied for MyCAA tuition assistance upon relocating to another installation. Additionally, one official with a spouse group praised MSEP for connecting spouses with private sector job opportunities throughout the nation.\nHowever, with the establishment of the new SECO programs overlaid on the services’ existing programs, program staff, spouses, and advocacy groups we spoke with expressed some confusion and noted gaps in coordination:\nA representative from an advocacy group noted that the information spouses are provided about the various employment programs is inconsistent across installations and websites, and the names and terminology used for the programs also varies. This may make it confusing for spouses as they move and seek assistance in different locations.\nThe advocacy group representatives also said that while the various programs refer spouses to other programs, spouses may not be provided information to help them make the best use of other programs. For example, they said that staff at the services’ employment assistance programs may refer spouses to the Career Center website but do not inform them about the breadth of services that Career Center counselors can provide. As a result, some spouses may not be aware of the various types of assistance that the Career Center can offer. With regard to MSEP, the representatives said that counselors at the Career Center and the services’ employment assistance programs refer spouses to the MSEP web portal but do not provide them with further guidance on how they can effectively use the portal to obtain a job with an MSEP partner.\nAn advocacy group representative and program managers we spoke with indicated that the various programs’ websites may not be easy to navigate or find. For example, a representative from an advocacy group noted that the Career Center website has good information, but it is difficult for spouses to find it within the Military OneSource website. A program manager at one installation said that some spouses have had difficulty finding the MyCAA website. Another program manager said that the Career Center website does not have links to local installations’ employment assistance programs.\nAdditionally, during our site visits and interviews, we heard about some issues that have been created by having two different programs—the Career Center and the military services’ employment assistance programs—that appear to offer some similar services. Specifically, we heard the following accounts about how often spouses are referred to the Career Center, instances where spouses have been referred back and forth between the two programs, and potential duplication of efforts:\nA program manager at one installation noted that she would not refer spouses to the Career Center unless she was unable to handle the workload.\nA program manager at one installation said that she refers spouses to the Career Center when she believes the type or level of services they need would be better provided by Career Center counselors. However, she said, in several cases, those spouses have been referred back to her.\nAt a different installation, a program manager said that she encourages her staff to refer spouses to the Career Center because of the quality of services offered. However, she also noted that because the Career Center provides some of the same services as her office (e.g., counseling and help with resume writing and interviewing skills), there is a potential duplication of effort. She said that it would be acceptable to her if her office no longer provided those employment services that the Career Center can provide and instead, focused on delivering other services spouses need.\nDOD has taken some steps to help spouses navigate among the various programs. Its guidance for its family readiness programs, which the military services’ employment assistance programs are one part of, directs military services’ staff to assess a spouse’s need for SECO services and identify opportunities to refer spouses to other services that support their well-being. In addition, DOD officials said they recently established a policy to ensure that MyCAA participants were referred to the other SECO programs. Beginning in early 2012, spouses who want to enroll in MyCAA are expected to speak with a counselor at the Career Center first and also register for MSEP.\nHowever, DOD does not currently have guidance describing its overall strategy and how its various programs should coordinate to help spouses obtain employment. According to DOD officials, DOD is in the process of developing such guidance to provide direction on SECO programs and address coordination and referral among the various programs. To do so, DOD has convened an advisory group that includes representatives from all of the services. As DOD develops its new guidance, our prior work on enhancing and sustaining collaboration may be helpful. We identified the following eight practices that can help sustain collaboration across organizational boundaries: 1. Define and articulate a common outcome. 2. Establish mutually reinforcing or joint strategies. 3. Identify and address needs by leveraging resources. 4. Agree on roles and responsibilities. 5. Establish compatible policies, procedures, and other means to operate across agency boundaries. 6. Develop mechanisms to monitor, evaluate, and report on results. 7. Reinforce agency accountability for collaborative efforts through agency plans and reports. 8. Reinforce individual accountability for collaborative efforts through performance management systems.\nWhile all of these are relevant to DOD’s spouse employment programs, two are particularly relevant because of the issues raised in our site visits and interviews: (1) agreeing on roles and responsibilities, and (2) establishing compatible policies, procedures, and other means to operate across agency boundaries. The concerns about duplication of effort and referrals back and forth between the Career Center and the military services’ programs may indicate that the roles and responsibilities of the two programs may not be sufficiently clear or defined. Similarly, the inconsistencies and gaps in collaboration may indicate a need to establish compatible policies, procedures, or other operational means, for example, common names and terminology for the programs and new procedures or mechanisms to ensure spouses are informed about the programs that can help them.", "DOD is not yet able to measure the overall effectiveness of its spouse employment programs in achieving the goals of reducing unemployment among military spouses and the wage gap with civilian spouses. Additionally, DOD only has limited information on the performance of its individual programs. DOD is aware of these limitations and is taking steps to assess the programs’ effectiveness and develop a more robust performance monitoring system.\nTo assess effectiveness of the three SECO programs, DOD is planning on contracting with a research organization to conduct a long-term evaluation. DOD officials would like the research organization to examine whether the programs have affected spouses’ unemployment rates and their wage gap with civilian spouses, as well as determine whether the programs have had an effect on servicemembers’ retention in the military and the families’ financial well-being. It is too soon to tell whether this evaluation will be able to measure these possible outcomes and also demonstrate whether the outcomes can be attributed to DOD’s spouse employment programs. DOD officials anticipate establishing the contract for this evaluation in fiscal year 2013.\nIn the meantime, DOD is conducting limited monitoring of the performance of two of its spouse employment programs. First, DOD monitors the number of spouses hired by employers participating in MSEP. Second, DOD tracks the percentage of courses funded by MyCAA tuition assistance that spouses complete with a passing grade.\nDOD’s performance monitoring is limited for several reasons. First, DOD has no performance measures for the Career Center. Second, DOD’s data on the MSEP program are of questionable reliability because they derive from an informal, nonstandardized process. Specifically, the data on the number of spouses hired by employers participating in MSEP are collected primarily by Army program managers through informal contacts with spouses. These informal methods create the potential that DOD is not obtaining reliable data. For example, if program managers vary in the questions they ask spouses, information spouses provide may be inconsistent. Moreover, by using data primarily from Army program managers, DOD is missing information from spouses of servicemembers in the Air Force, Marine Corps, and Navy who are working at MSEP employers. Finally, DOD’s performance measure for MyCAA—showing that more than 80 percent of courses funded with MyCAA tuition assistance were completed with passing grades in fiscal year 2011—may be a useful interim measure for monitoring how the funds are being used. However, this does not show whether the MyCAA funds are helping spouses obtain employment or increase their earnings.\nDOD recognizes the need to improve its performance monitoring for its spouse employment programs and is taking steps to improve the data it collects on its individual programs:\nFor the Career Center, DOD is planning to ask the contractor who runs the call center to follow up with spouses who use the center’s services and ask them about their employment situation. DOD officials said that these follow-ups could be used to obtain information on employment outcomes of spouses who used the center, as well as those who used MyCAA and MSEP programs, since the call center also provides counseling to spouses using those programs.\nFor MSEP, DOD is planning to implement new procedures to collect data from participating employers on the number of military spouses they hire. Spouses hired by an MSEP employer will self-identify to the employer that they are a military spouse. Employers will then report to DOD the number of spouses they hired through a reporting mechanism in the MSEP web portal.\nFor MyCAA, DOD has established methods to obtain data on when spouses complete their planned programs of study and the educational degrees they have obtained due to MyCAA funding.\nDOD’s web-based portal for MyCAA now asks spouses to report to DOD when they are taking a class that will complete their planned program of study. It also asks schools to report when a spouse has obtained a certificate or degree.\nDOD has also identified four measures that it would like to track, including three broader measures related to the SECO programs’ goals and one measure for MyCAA: (1) spouses’ unemployment rate, (2) the wage gap between military and civilian spouses, (3) spouses’ ability to maintain their jobs or similar jobs after relocation, and (4) the change in earnings among MyCAA participants. DOD has been conducting a survey of spouses biennially to obtain information on military spouses’ unemployment rate, and it will be fielding a new survey in late 2012 to obtain updated information. DOD does not yet have processes for collecting data on a regular basis on the three other measures it is considering.\nAs DOD continues to develop its performance monitoring system, our previous work on developing effective performance measures may be helpful. Specifically, we identified nine key attributes of successful performance measures (see table 1). No set of performance measures is perfect, and a performance measure that lacks a key attribute may still provide useful information. However, these attributes can help identify areas for further refinement. For example, one of the attributes calls for covering core program activities. As we noted above, DOD does not have a performance measure for the Career Center, and thus its measures do not cover all of its core program activities intended to support military spouse employment. DOD’s performance measure for MSEP has also been lacking the attribute of reliability, since DOD has not had a standardized process for collecting the data. Reliability refers to whether standard procedures for collecting data or calculating results can be applied to the performance measures so that they would likely produce the same results if applied repeatedly to the same situation. Another key attribute that may be relevant is limiting overlap. There is potential for overlap if DOD has performance measures that track employment outcomes for each of the three SECO programs, but military spouses often use more than one program. For example, if many spouses who use MSEP also use the Career Center, a measure on the number of spouses who obtained employment through MSEP could overlap with a measure to track spouses’ employment through the Career Center, since the two measures would capture employment attainment for many of the same individuals.\nBecause DOD has multiple employment programs that military spouses may use, our work on practices for enhancing and sustaining collaboration, which we discussed above, may offer some helpful insights as DOD refines its performance monitoring system. Specifically, we noted that developing mechanisms for monitoring, evaluating, and reporting on results of collaborative efforts can help agencies identify areas for improvement. We also stated that agencies can use their strategic and annual performance plans as tools to drive collaboration and establish complementary goals and strategies for achieving results.", "The federal government has two hiring mechanisms targeted specifically to military spouses seeking federal jobs. The first mechanism—a noncompetitive hiring authority for military spouses—is available to any federal agency. The second—DOD’s Military Spouse Preference (MSP) program, which allows DOD to give military spouses preference in hiring for civilian or nonappropriated fund positions—applies only to DOD. These two mechanisms can increase a military spouse’s chances of obtaining federal employment, but they do not guarantee that spouses will obtain the jobs they apply for. DOD provides general information to military spouses on these mechanisms through the Career Center’s website and the military services’ employment assistance programs. Civilian personnel offices at local installations may provide more detailed information and also inform spouses about how to apply for DOD and other federal job openings.\nThe noncompetitive authority, which became effective in late fiscal year 2009, allows any federal agency the option of hiring qualified military spouses into the competitive service without going through the competitive examination process. In other words, this authority allows eligible military spouses to be considered separately from other candidates, meaning that military spouses do not have to compete directly against other candidates as is the case under the competitive examination process. To be considered for a position under this authority, military spouses applying for federal jobs indicate in their applications that they would like to be considered and include documentation verifying their eligibility. According to OPM, the purpose of the noncompetitive authority is to minimize disruptions in military families due to permanent relocations, disability, and deaths resulting from active duty service. Agencies can use the noncompetitive authority to hire: (1) spouses who are relocating because of their servicemember’s orders for up to 2 years after the relocation, (2) widows or widowers of servicemembers killed during active duty, and (3) spouses of active duty servicemembers who retired or separated from the military with a 100 percent disability.\nThe extent to which use of this authority results in employment of a military spouse depends on a variety of factors. First, federal hiring managers have the discretion whether to consider candidates under this authority for a job vacancy. Second, if the hiring manager chooses to consider candidates under this authority, the hiring manager is not required to select a qualified military spouse, and the manager can ultimately decide to select a qualified candidate other than a military spouse. This authority allows for eligible military spouses to be considered and selected for federal jobs, but it does not provide a hiring preference over other qualified applicants. Federal agencies may also consider using noncompetitive appointment authorities or hiring mechanisms for other populations, such as those for veterans, people with disabilities, and federal employees who lost their jobs due to downsizing or restructuring.\nOPM officials told us that they conduct oversight of this authority as part of their general oversight of federal agencies’ human capital systems. OPM officials said that thus far, they have found no irregularities in agencies’ use of this hiring mechanism. OPM officials also said they have provided technical assistance and briefings to federal agencies and stakeholders on this authority and other ways to support military families, such as using authorities for hiring veterans.\nFederal agencies hired about 2,000 military spouses using this hiring authority in the first 2 years of implementation, with more hired in the second year (about 1,200 in fiscal year 2011 and about 800 in fiscal year 2010). The approximately 1,200 military spouses hired in fiscal year 2011 represented about 0.5 percent of all federal hires that year. For context, spouses of active duty servicemembers represented 0.4 percent of the working-age population in 2010. DOD has been the primary user of this authority, hiring 94 percent of all military spouses hired under the authority. OPM officials said this was likely due to military spouses’ greater familiarity with DOD, and that DOD is more likely than other agencies to have job openings where military spouses are located.\nDOD’s Military Spouse Preference (MSP) program provides military spouses priority in selection for DOD positions. The MSP includes two hiring mechanisms—one for spouses seeking DOD civilian positions, and one for spouses seeking DOD nonappropriated fund positions. With regard to the mechanism for DOD civilian positions, the MSP provides hiring preference to qualified spouses for DOD positions if the spouse is among persons determined to be best qualified for the position. The other mechanism provides military spouses with preference in hiring for nonappropriated fund positions below a certain pay level. Nonappropriated fund positions within DOD include those paid for by funds generated from services provided, such as at exchanges, recreation programs, and child care centers on military installations. To be considered for a position under the MSP program, military spouses must register for MSP, provide supporting documentation, and identify which types of jobs they would be willing or able to perform based on their backgrounds and geographic location. When a spouse’s qualifications and desired job characteristics match a job opening, the spouse must submit his or her application through MSP.\nAs with the noncompetitive authority, the extent to which this authority is used depends on several factors. MSP only applies to civilian jobs at DOD that a hiring manager chooses to fill through a competitive process, which generally means that the hiring manager is to consider more than one candidate for the position and select the best-qualified candidate based on job-related criteria. The characteristics of the job opening (location, type, level) must also match the criteria indicated by the spouse when he or she registered for MSP. In addition, the spouse must be among the best qualified applicants for the job. Furthermore, according to DOD officials, the agency also uses hiring preferences for other populations who may have a higher priority than the spouse, such as DOD employees whose positions were recently eliminated. If the registered MSP spouse is determined to be among the best qualified applicants, and if there are no other best qualified candidates with a higher priority preference, the hiring manager must select the military spouse for the job. For nonappropriated fund jobs, the MSP program only applies to jobs below a certain pay level. A DOD official said that these positions generally have relatively high turnover rates, so spouses often do not need to use the MSP to obtain the job.\nDOD’s civilian personnel office oversees the MSP and other preference programs, and officials said that they have found no irregularities in MSP use. DOD’s civilian personnel office also tracks the number of spouses who register for MSP and are placed into jobs on a monthly basis. While these are useful measures of program activity, DOD officials said that they do not provide information on whether the agency is making sufficient use of MSP. Examining sufficiency of MSP use would require a study that takes into account the many complex factors that affect MSP, including how many vacancies DOD had at spouses’ locations, how many vacancies matched the types of jobs spouses identified in their registration as being qualified for, how the qualifications of spouses who applied compared to those of other candidates, and whether other candidates for the position were eligible for special hiring mechanisms as well, such as noncompetitive appointments. DOD officials indicated that such an analysis would be challenging to conduct, and DOD has not attempted a comprehensive study. Nonetheless, DOD officials we spoke with felt that the MSP program had helped a large number of spouses obtain jobs.\nOver the 10-year period of fiscal years 2002 to 2011, a total of about 12,500 military spouses were placed in civil service jobs through the MSP, according to DOD’s data. This number includes both new hires and conversions of DOD employees. The numbers have fluctuated from year to year in this time period, from a low of 890 to a high of 1,722. DOD officials said that the fluctuations likely correspond with overall DOD hiring levels. With regard to nonappropriated fund jobs, DOD does not consistently track the number of spouses hired through the MSP, but overall, about 26,000 military spouses were employed by DOD in nonappropriated fund jobs as of June 2012. This represented 19 percent of all employees in these jobs.", "While DOD is at an early stage of implementing its new spouse employment programs, it has an opportunity to ensure that a well- coordinated structure is in place to deliver employment services to spouses, and that its system for monitoring performance is well-designed. Specifically, through its advisory group, DOD has the potential to include program stakeholders in a meaningful effort to support spouses and military families, while also ensuring effective delivery of services and addressing potential areas of duplication. As its advisory group moves forward with developing guidance on spouse employment programs, DOD has an opportunity to incorporate practices that can enhance and sustain coordination, including agreeing on roles and responsibilities for both SECO and the military services to provide employment assistance to spouses. Without guidance that incorporates key collaboration practices, DOD may miss opportunities to ensure all spouses consistently receive high quality employment assistance from SECO and the military services and can navigate smoothly from program to program, while avoiding duplication of efforts.\nWith regard to its performance monitoring, DOD has taken steps in the right direction by exploring options to collect outcome data and planning for a long-term evaluation. However, as DOD works to identify the performance measures it will use to conduct ongoing monitoring of its programs and report its progress to policymakers, DOD can benefit by considering attributes of successful performance measures. These include ensuring that it uses reliable data and that its performance measures enable it to monitor all of its key program activities and their planned outcomes. Without integrating successful elements of performance measurement into its evaluation efforts, DOD runs the risk that it will not collect sufficient and accurate information to determine if DOD funds are being used in the most effective way to help military spouses obtain employment.", "To enhance collaboration among the various entities involved in delivering employment services to military spouses and to better monitor the effectiveness of these services, we recommend that the Secretary of Defense take the following actions: consider incorporating key practices to sustain and enhance collaboration when developing and finalizing its spouse employment guidance, such as agreeing on roles and responsibilities and developing compatible policies and procedures. consider incorporating key attributes of successful performance measures when developing and finalizing performance measures, such as ensuring reliability of the data used in the measures and covering key program activities.", "We provided a draft of this report to the Secretary of Defense and the Director of OPM for review and comment. In DOD’s written comments, which are reproduced in appendix III, DOD partially concurred with our recommendations. DOD said that in general, our report correctly addresses the issues concerning collaboration and performance measure development. DOD also provided technical comments, which we incorporated as appropriate. OPM had no comments.\nDOD partially concurred with our recommendation to consider incorporating key collaboration practices to sustain and enhance collaboration when developing and finalizing its spouse employment guidance. While DOD said it looked forward to incorporating collaboration practices as the SECO program matures, DOD stated that it has already taken initial action in this area. For example, DOD cited the advisory group it created, as well as partnerships developed with various organizations. Our report recognizes DOD’s efforts. However, these initial actions do not directly address the particular area highlighted in our recommendation—developing and finalizing guidance for its spouse employment programs. As we state in our report, the programs under the SECO initiative are new and there are some gaps in coordination. Thus, we continue to believe that incorporating key collaboration practices into the guidance that DOD is developing, such as agreeing on roles and responsibilities, would be beneficial. This could help ensure that the various entities involved in DOD’s multiple spouse employment programs work cohesively and avoid duplicating efforts while helping military spouses seamlessly navigate across the programs.\nDOD also partially concurred with our recommendation to consider incorporating key attributes of successful performance measures when developing and finalizing its performance measures. DOD said that it looks forward to improving performance measurement but that it has already taken steps to incorporate key attributes of successful performance measures. For example, DOD said it is developing employment data collection for military spouses directly from MSEP partners and anticipates completion by winter of 2013. We recognize DOD’s efforts to collect additional data. However, because DOD is in the early stages of this process, we continue to believe that it can benefit from incorporating attributes of successful performance measures as it further develops its performance monitoring system.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Director of OPM, and other interested parties. The report is also available at no charge on the GAO website at www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-7215 or at sherrilla@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff members who made key contributions in this report are listed in appendix IV.", "We addressed the following research objectives in this study: 1. What efforts has DOD recently made to help military spouses prepare for and obtain employment? 2. What steps has DOD taken to assess the effectiveness of these programs? 3. What hiring mechanisms exist to help military spouses obtain federal jobs?", "We identified DOD’s recent efforts to help military spouses prepare for and obtain employment by interviewing DOD officials and reviewing literature and documents, including DOD websites, reports, program descriptions, strategic planning documents, and guidance. We focused on identifying programs that would be a primary resource for military spouses to enhance their job skills and increase their employability, identify job opportunities, and/or help them obtain employment. We did not include in our review programs that may have an employment focus but generally did not serve spouses of active duty servicemembers, nor did we include programs that may target military spouses but had a primary focus other than employment. We developed a preliminary list of programs that included the three programs under DOD’s Spouse Education and Career Opportunities (SECO) initiative, as well as the employment assistance programs that the military services have long operated. We shared our list with DOD officials, who agreed with our assessment that these are the primary programs that provide employment services to spouses. Our first objective is focused primarily on the three new SECO programs, but we note that spouses can also use the military services’ employment assistance programs, and we discuss coordination across the SECO and military services’ programs.\nAs we identified the programs to examine, we conducted further interviews with officials involved in each of DOD’s spouse employment programs, both at DOD headquarters and with each of the military services (Air Force, Army, Marine Corps, and Navy). We requested more detailed information, such as on the programs’ purposes, budgets, services they provide, and coordination. In examining coordination among the programs, we consulted GAO’s prior work that identified practices that can help federal agencies enhance and sustain collaboration.\nTo obtain additional perspectives, we interviewed two advocacy groups who support military families, and we visited employment assistance programs at three military installations in the Washington-D.C. area. These installations are: Fort Meade (Army and Navy programs), Joint Base Andrews (Air Force), and Henderson Hall (Marine Corps). During our visits to these installations, we spoke with local program officials, and we spoke to military spouses in three of the four services. The information we obtained from these installations is not generalizable.", "To identify the steps DOD has taken to assess the effectiveness of its spouse employment programs, we interviewed DOD officials to obtain information on how DOD is currently measuring effectiveness, as well as its plans to conduct evaluations or collect data on performance. We also reviewed documents DOD provided, including internal and external reports, strategic planning documents, and descriptions of existing and potential performance measures. In assessing DOD’s performance measures, we consulted with GAO’s prior work that identified attributes of successful performance measures and described requirements for reporting on performance under the Government Performance and Results Act, as amended. We also assessed the reliability of the data used for DOD’s performance measures by interviewing officials knowledgeable about the data and reviewing relevant documents. Based on our work, we determined that the data used for the performance measure on the Military Spouse Employment Program are of questionable reliability, and we discuss this in our report.", "We identified the hiring mechanisms intended to help military spouses obtain federal employment by interviewing officials at OPM and DOD and reviewing relevant federal laws, regulations, executive orders, and guidance. Our interviews and the documents also provided information on the processes for how these mechanisms can be used.\nTo obtain data on the number of spouses hired through one of these mechanisms, the noncompetitive authority, we analyzed data from OPM’s Central Personnel Data File (CPDF), a database of federal employees. We present data for fiscal years 2010 and 2011, since the authority was implemented in late fiscal year 2009. We reviewed the reliability of the data by interviewing OPM officials, conducting electronic testing, and reviewing relevant documents. We determined that the data were sufficiently reliable for our purposes. The information we present from our analysis of the CPDF is on the number of individuals hired under the noncompetitive authority for military spouses. It does not include military spouses hired by federal agencies without using this authority, and as such does not represent the total number of military spouses hired by federal agencies. Data are not available in the CPDF to identify the total number of military spouses hired by federal agencies.\nOn the other hiring mechanism that we examined, the Military Spouse Preference (MSP) program, DOD’s civilian personnel office provided us with data on the number of spouses placed into civil service positions, including both hires and conversions. We assessed the reliability of this data by reviewing relevant documents and interviewing DOD officials on the processes through which the data are input and validated. We determined that the data were sufficiently reliable for our purposes. With regard to the number of spouses hired into nonappropriated fund positions using the MSP, DOD officials noted that such data are not collected in a consistent manner by the military services’ nonappropriated fund offices so we do not present these data. DOD’s Defense Manpower Data Center provided us with data on the number of spouses in nonappropriated fund positions overall, and we present this information in our report for context.", "Table 2 provides information on DOD’s expenditures on the two military spouse employment programs for which data were available—MyCAA and MSEP. Data were not available on how much was spent on the Career Center because the center was included in DOD’s broader contract for Military OneSource. According to a DOD official, DOD intends to have an overall SECO budget that encompasses the three spouse employment programs for fiscal year 2013. Data were also unavailable on how much DOD spends on spouse employment activities on local installations because the resources used for military services’ employment programs are embedded in broader budget categories, such as base operations and support.", "", "", "", "In addition to the contact named above, Lori Rectanus (Assistant Director), Keira Dembowski, and Yunsian Tai made significant contributions to this report. Also contributing to this report were James Bennett, David Chrisinger, Brenda Farrell, Cynthia Grant, Joel Green, Yvonne Jones, Kirsten Lauber, Kathy Leslie, Benjamin Licht, Trina Lewis, James Rebbe, Sarah Veale, and Gregory Wilmoth." ], "depth": [ 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title h4_title h3_title", "h3_full", "h0_full h3_full h4_full", "h0_full", "h1_full", "h3_full h2_full", "h1_full", "", "", "h4_full", "h4_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What steps has the DOD recently taken to help military spouses obtain employment?", "What are the DOD's goals for these programs?", "What alternative support programs could military spouses make use of?", "What issues has GAO discovered with the DOD's military spouse support programs?", "What steps has the DOD taken to alleviate this issue?", "What steps is DOD taking to improve its monitoring of military spouse employment programs?", "What steps does DOD plan to take to measure effectiveness?", "How is DOD's ability to monitor performance limited?", "How does DOD plan to improve its performance monitoring?", "What hiring mechanisms does the federal government have in place to support military spouses?", "What are the shortcomings of these hiring mechanisms?", "What results have these hiring mechanisms yielded?", "What challenges do military spouses face in maintaining a career?", "Why is the employment of military spouses important?", "What steps has DOD taken to help military spouses maintain a career?", "What does the National Defense Authorization Act for Fiscal Year 2012 ask of GAO?", "What does this report examine?", "How did GAO collect data for this report?" ], "summary": [ "The Department of Defense (DOD) has recently created three new programs to help military spouses obtain employment: (1) the Military Spouse Career Advancement Accounts (MyCAA) tuition assistance program, (2) the Military Spouse Employment Partnership (MSEP), which connects military spouses with employers, (3) and the Military Spouse Career Center, consisting of a call center and a website for military spouses to obtain counseling and information.", "DOD's goals for these programs are to reduce unemployment among military spouses and close their wage gap with civilian spouses.", "Aside from these new programs, military spouses can also use employment assistance programs that the military services have long operated on DOD installations.", "However, GAO's site visits and interviews indicate that there may be gaps in coordination across the various programs that result in confusion for military spouses.", "Currently, DOD does not have guidance describing its overall strategy and how all of its programs should coordinate to help military spouses obtain employment, but DOD is in the process of developing such guidance.", "DOD is not yet able to measure the overall effectiveness of its military spouse employment programs and its performance monitoring is limited, but DOD is taking steps to improve its monitoring and evaluation.", "To determine whether its programs have been effective in reducing unemployment among military spouses and closing their wage gap with civilian spouses, DOD is planning to contract with a research organization for a long-term evaluation.", "With regard to its performance monitoring for these programs, DOD has performance measures for MSEP and MyCAA, but has no measures for the Career Center. In addition, reliability of the data is questionable on the MSEP performance measure because DOD's data are derived from an informal and inconsistent process. DOD's other measure--the percentage of courses funded by MyCAA tuition assistance that military spouses complete with a passing grade--is a useful interim measure for monitoring how the funds are being used, but it does not provide information on whether the funds help military spouses obtain employment.", "DOD has efforts underway to improve its performance monitoring, including identifying additional measures it would like to track and collecting additional data on participants' employment and educational outcomes.", "The federal government has two hiring mechanisms that can provide military spouses who meet the eligibility criteria with some advantages in the federal hiring process. The first mechanism--a non-competitive authority--allows federal agencies the option of hiring qualified military spouses without going through the competitive process. The second mechanism--DOD's Military Spouse Preference program--provides military spouses priority in selection for certain DOD jobs.", "These hiring mechanisms can increase a military spouse's chances of obtaining federal employment, but they do not guarantee that military spouses will obtain the job they apply for.", "In fiscal year 2011, agencies used the noncompetitive authority to hire about 1,200 military spouses, which represented approximately 0.5 percent of all federal hires that year. Military spouses represented 0.4 percent of the working-age population in 2010. With regard to the Military Spouse Preference program, DOD has placed about 12,500 military spouses into civil service jobs in the past 10 years, which includes both new hires and conversions of DOD employees.", "The approximately 725,000 spouses of active duty servicemembers face challenges to maintaining a career, including having to move frequently.", "Their employment is often important to the financial well-being of their families.", "For these reasons, DOD has taken steps in recent years to help military spouses obtain employment. Moreover, the federal government has hiring mechanisms to help military spouses obtain federal jobs.", "The National Defense Authorization Act for Fiscal Year 2012 requires GAO to report on the programs that help military spouses obtain jobs.", "This report examines: (1) DOD's recent efforts to help military spouses obtain employment, (2) DOD's steps to assess effectiveness of these efforts, and (3) the hiring mechanisms to help military spouses obtain federal jobs.", "GAO conducted interviews with DOD, the Office of Personnel Management, and two advocacy groups; conducted site visits; analyzed relevant data; and reviewed relevant documents, laws, and regulations." ], "parent_pair_index": [ -1, 0, 0, 0, 3, -1, 0, 0, 2, -1, 0, 0, -1, 0, 0, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "IRS Management of RRP", "The Return Review Program Aims to Detect, Select, and Prevent Invalid Refunds More Accurately and Efficiently", "Detection: RRP Uses Multiple Data Sources and Predictive Models, Among Other Techniques, to Detect Suspicious Returns", "Selection: RRP Filters Select Suspicious Returns for Further Action or Review", "Prevention: RRP Freezes Selected Returns and Improves Detection and Enforcement Efforts Across IRS", "IRS Routinely Monitors RRP’s Performance and Adapts RRP to Improve Detection and Address Evolving Fraud Threats", "IRS Evaluates and Updates RRP Each Year", "Prior to the Filing Season, IRS Tests RRP and Establishes Selection Criteria", "During the Filing Season IRS Monitors and Adapts RRP", "As IRS Continues to Develop the Return Review Program, Additional Opportunities Exist to Improve Enforcement", "IRS Plans to Expand RRP Capabilities to Further Prevent Invalid Refunds", "IRS Has Not Fully Considered Opportunities to Improve Data Available to RRP", "IRS Has Not Fully Considered Opportunities to Use RRP to Improve Other Tax Enforcement Activities", "Conclusions", "Matter for Congressional Consideration", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Return Review Program Investment Summary", "Appendix II: Comments from the Internal Revenue Service", "Appendix III: GAO Contact and Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Noncompliance, including fraud, does not have a single source, but occurs across different types of taxes and taxpayers. It includes unintentional errors as well as intentional evasion, such as intentionally underreporting income, intentionally over-reporting expenses, and engaging in abusive tax shelters or frivolous tax schemes. IRS uses many approaches to address noncompliance, from sending notices to taxpayers to conducting complex audits. Many of these approaches can be burdensome to IRS and to taxpayers since they may occur years after taxpayers file their return.\nWe have long highlighted the importance of strong preventive controls for detecting fraud because preventing payment of invalid refunds is easier and more cost-effective than trying to recover revenue through the pay- and-chase model of audits. IRS uses pre-refund compliance checks to confirm taxpayers’ identities, quickly and efficiently correct some clerical and mathematical errors, and detect possible fraud and noncompliance. As shown in figure 1, RRP analyzes individual tax returns claiming refunds and identifies characteristics predictive of IDT and other refund fraud before IRS issues refunds for those returns.\nIRS reported that between January 2015 and November 2017, RRP prevented the issuance of more than $6.51 billion in invalid refunds. As of March 30, 2018, IRS reports spending about $419 million developing and operating RRP. For fiscal year 2019, IRS requested $106 million to operate and further develop RRP.", "According to IRS, RRP supports data, analytical, and case processing activities conducted by employees working in revenue protection, accounts management, taxpayer communications, and criminal prosecution. IRS employees from across these areas coordinate to oversee the development and operation of the system (see fig. 2).\nFour IRS divisions work with IRS’s Information Technology (IT) organization and Office of Research, Applied Analytics, and Statistics (RAAS) to develop, maintain, and operate RRP. The Wage and Investment (W&I) division leads the management of RRP with IRS’s IT offices. W&I’s audit programs cover mainly refundable credits claimed on individual income tax returns and the division develops policy and guidance for RRP and other pre-refund programs that detect suspicious returns. Coordinating with other IRS divisions, W&I and IT update RRP as needed to reflect any new business rules or changes to existing business rules, for example. The Large Business and International division provides RRP with business requirements specific to large corporations. The Criminal Investigation division reviews and analyzes tax returns throughout the filing season to identify fraudulent patterns and trends to incorporate into RRP. The Small Business and Self-Employed division audits individual and business tax returns to detect misreporting. RAAS leads development of some of RRP’s predictive models and IDT filters.", "As IRS’s primary pre-refund system for detecting IDT and other refund fraud, RRP performs three major activities (see fig. 3).", "According to IRS, RRP uses advanced analytic techniques and evaluates data from various sources to assign multiple scores to individual returns claiming refunds. The scores are based on characteristics of IDT and other refund fraud known to IRS. Higher fraud scores indicate the return’s greater potential for refund fraud. IRS officials told us that RRP’s design helps IRS identify increasingly sophisticated tax fraud. RRP’s analytic techniques include the following:\nPredictive models. IRS develops many different models that help detect emerging fraud, outliers, and taxpayer behavior inconsistencies in returns claiming refunds. These models also mine data and help IRS seek out patterns predictive of IDT and other refund fraud. For example, a model may use a combination of existing variables from the 1040 individual tax return, such as tax credits claimed and income.\nBusiness rules. RRP contains over 1,000 rules (a “yes” or “no” outcome) developed by IRS to flag returns for evidence of anomalous behavior. For example, RRP uses a business rule to distinguish between returns for which it has received an associated Form W-2, Wage and Tax Statement (W-2), from those which it has not.\nClustering. RRP uses a tool that reveals patterns and relationships in masses of data allowing RRP to identify clusters of returns that share traits predictive of schemes and refund fraud. For example, IRS could use clustering to identify groups of returns that share the same geographic location, among other traits. According to IRS, this technique was developed to automate certain aspects of Criminal Investigation’s identification of fraud schemes.\nA number of systems connect to RRP and provide additional taxpayer data or third-party information for RRP to analyze. RRP contains taxpayers’ prior three years’ filing history and third parties—employers, banks, and others—file information returns to report wages, interest, and other payment information to taxpayers and IRS. For example, the Social Security Administration sends W-2s to IRS. The W-2 information is loaded regularly into RRP, along with other information returns, to validate wage and income information reported on individual returns claiming refunds—a process IRS calls systemic verification.", "RRP has filters that combine results from the analytic techniques to automatically make a selection decision and then a treatment decision before the return can move to the next processing step and a refund can be issued. Returns not selected by RRP continue through the pipeline process.\nSelection decision. Returns with fraud scores above thresholds— and meeting other criteria set by IRS management—will automatically be selected by RRP filters for further action or review. According to IRS, the agency’s capacity to review selected returns is part of the automated selection decision, as are other criteria that weigh the cost and risk to IRS. IRS reports that for the 2017 filing season, RRP selected 857,438 returns as potential IDT refund fraud and 219,210 returns as potential other refund fraud. This is less than 1 percent of almost 158 million individual returns filed that year.\nTreatment decision. RRP automatically assigns selected returns to the appropriate treatment based on the characteristics of IDT or other refund fraud RRP detected. Examples of treatments include the following: Identity theft refund fraud. Returns selected by an IDT filter are automatically assigned for treatment in the Taxpayer Protection Program. IRS notifies taxpayers that they must authenticate their identity before IRS will process the return or issue a refund. Taxpayers can verify their identity by calling an IRS telephone center, visiting a Taxpayer Assistance Center, or in some cases, authenticating online or via mail. If the taxpayer does not respond to the letter or fails to authenticate, the return is confirmed to be IDT refund fraud.\nOther refund fraud. If a return is selected by one of RRP’s non- identity theft filters, RRP automatically assigns the return, based on the characteristics of fraud identified, to the Integrity and Verification Operations (IVO) function within W&I’s Return Integrity and Compliance Services office for further action or review. For example, RRP may select a return as potential refund fraud because it is missing verification of income for a refundable tax credit, such as the Earned Income Tax Credit. IVO tax examiners may then, for example, contact employers to confirm the income and withholding amounts reported on the return.\nFrivolous returns. RRP selects returns that contain certain unsupportable arguments to avoid paying taxes or reduce tax liability. If IRS determines these returns to be frivolous, the taxpayer may be subject to penalty. RRP assigns potentially frivolous returns to IVO for review and to notify the taxpayer.\nNon-workload returns. RRP’s non-workload filters select returns that, according to IRS, score just below the thresholds for RRP’s other filters described above. IRS officials told us that RRP loops these returns for additional scoring and detection.", "RRP supports IRS’s efforts to prevent issuing invalid refunds in the following ways:\nFreezing refunds. RRP connects directly to IRS’s systems for processing individual tax returns and issues transaction codes directly to the Individual Master File depending on the type of refund fraud RRP detected. IRS reports that for the 2017 filing season, RRP prevented IRS from issuing about $4.4 billion in invalid refunds. Of that amount, $3.3 billion was attributed to IDT refund fraud and $1.1 billion to other refund fraud.\nWhen RRP selects a return as potential IDT refund fraud, RRP will simultaneously assign the return for treatment and issue a transaction code telling IRS’s processing systems to freeze the refund until the case is resolved. As a result, IRS can protect the refund until the review is complete or a legitimate taxpayer has authenticated his or her identity, at which point IRS will release the return.\nIf RRP’s non-identity theft filters select the return because of characteristics predictive of other refund fraud, RRP issues a transaction code to freeze the return for 14 days while IVO examiners have the opportunity to screen the return. After 14 days, the return automatically resumes processing and the refund may be released. Accordingly, IRS officials told us that RRP prioritizes IDT treatment and if a return is selected by both IDT and other refund fraud filters, RRP will automatically assign the return to the Taxpayer Protection Program and freeze the refund.\nIRS officials told us that when RRP’s non-workload filters select a return, RRP will issue a transaction code that delays the payment of the refund associated with the return for 1 week. According to IRS officials, this delay provides IRS an opportunity to manually review returns that contain suspicious characteristics.\nIncorporating treatment results. IRS integrates the results from each return review into its analytic techniques to improve RRP’s detection ability and accuracy on an ongoing basis. For the 2018 filing season, IRS officials told us they were able to add functionality that uses real-time case feedback data to automatically improve the accuracy of some of RRP’s IDT fraud filters. IRS officials can also change RRP’s selection criteria or filters during the filing season based on emerging fraud or workload concerns.\nDetailed data and analysis. With RRP, all available taxpayer information is linked together and available for analysis and queries by IRS employees for post-refund enforcement activities, such as criminal investigations. RRP creates and distributes a report with the results of RRP’s clustering analysis to analysts in Criminal Investigation. IRS employees are also able to search RRP and analyze data relevant to their specific enforcement activities. Criminal Investigation officials told us they use RRP reports to identify suspicious returns that were not selected by RRP and flag them for further post-refund review.", "As the primary system for detecting IDT and other refund fraud and preventing IRS from paying invalid refunds, RRP is an integral part of IRS’s ability to process returns during the filing season. Therefore, monitoring and evaluation activities that rely on quality information to identify, analyze, and respond to changes—such as emerging fraud trends—are critical to ensure that RRP is operating effectively. Federal standards for internal control and the Fraud Risk Framework highlight the importance of monitoring and incorporating feedback on an ongoing basis so the system remains aligned with changing objectives, environments, laws, resources, and risks. Consistent with these practices, IRS follows an industry-standard process to conduct a range of monitoring and evaluation activities for RRP throughout the year (see fig. 4).", "According to IRS officials, each year beginning in February, IRS evaluates and updates RRP to improve detection and accuracy for the next filing season. A leading practice in the Fraud Risk Framework is for managers to use the results of monitoring, evaluations, and investigations to improve fraud prevention, detection, and response. A more accurate RRP helps IRS use its resources more effectively. For example, if RRP automatically detects fraudulent returns previously identified by manual processes or post-refund enforcement activities, IRS can redirect those enforcement resources to identifying new and emerging fraud schemes. Further, as RRP selects fewer legitimate returns as suspicious, IRS employees are able to devote more of their time to identifying fraudulent returns.\nIRS officials stated that to improve RRP’s accuracy, IRS incorporates information about all refund fraud and noncompliance detected by other enforcement activities into RRP’s detection tools. IRS also uses information from its research efforts and external entities, as described below.\nOther enforcement activities. These activities include the Fraud Referral and Evaluation program, where, according to IRS, analysts manually review select tax returns that scored just below RRP’s selection thresholds. Another enforcement activity is the Dependent Database, a pre-refund screening system that identifies potential noncompliance related to the dependency and residency of children. IRS staff told us they evaluate refund fraud detected by the Dependent Database and Fraud Referral and Evaluation program that RRP missed and update RRP’s analytic techniques for the next year. Third, investigators in Criminal Investigation told us that they work with other IRS offices to incorporate new and emerging refund fraud patterns, such as those identified as a result of external data breaches, into RRP’s detection tools. To ensure that the updates are operating effectively, IRS staff track the percentage of invalid returns that RRP automatically selected that were previously detected by other IRS processes.\nIRS research. IRS officials stated that the agency uses information from a number of research efforts to inform updates or adaptations to RRP. For example, for the 2018 filing season, IRS changed RRP’s filters and selection criteria to automatically select returns that IRS held manually in 2017. IRS officials told us they made these changes after researching taxpayer behavior in noncompliant claims of the Earned Income Tax Credit and Additional Child Tax Credit during the 2017 filing season.\nThird-party information. IRS collaborates with external entities to strengthen IRS’s defenses against paying invalid refunds. IRS officials told us they use information from their collaborative efforts to update RRP’s detection tools for the upcoming filing season. These efforts include the External Leads Program, where participating financial institutions provide leads to IRS regarding deposits of suspicious refunds, and the Opt-In Program, a voluntary program where participating financial institutions flag and reject refunds issued by IRS via direct deposit if they find that certain characteristics do not match. IRS reported that in 2017, banks recovered 144,000 refunds with a value of $204 million. IRS has also used information from the Security Summit to improve RRP’s detection of IDT refund fraud. The Security Summit is a partnership between IRS, the tax preparation industry, and state departments of revenue to improve information sharing around IDT refund fraud. For the 2017 filing season, IRS incorporated a number of data elements into RRP’s detection tools that were identified by the Security Summit.\nIRS also incorporates legislative changes into RRP for the upcoming filing season. IRS officials told us in March 2018 that they are working to determine all the updates and changes they need to make to RRP’s analytic techniques for the 2019 filing season to ensure that RRP will make appropriate selections in accordance with Pub. L. No. 115-97, “An act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”", "Between September and December each year, IRS tests RRP to ensure that the system’s updated detection tools meet objectives to increase detection and accuracy for the upcoming filing season. A key factor is setting RRP’s thresholds used to trigger if a return will be selected by RRP. For a given set of rules and criteria, as a threshold is lowered, the number of returns that RRP selects as suspicious will increase, including both fraudulent and legitimate returns. During this testing period, IRS officials determine appropriate threshold settings for RRP given IRS’s fraud detection objectives and IRS resources available to review selected returns. IRS management uses this process to inform its risk tolerance and fraud risk profile. According to the Fraud Risk Framework, effective managers of fraud risks use the program’s fraud risk profile to help decide how to allocate resources.\nIRS officials told us they test RRP’s analytic techniques and filters by running a random sample of prior-year returns through numerous iterations using different settings. This testing produces various outcomes. According to documents we reviewed and IRS officials, IRS management evaluates the outcomes using the following measures:\nSelection volume: the number of returns that RRP selects as potentially fraudulent and requiring further action or review by IRS analysts and examiners to confirm the return as fraudulent or legitimate. IRS uses this measure to gauge the workload resulting from certain combinations of settings in RRP.\nAccuracy: the percent of selected returns confirmed to be legitimate (the false detection rate). IRS uses this measure to evaluate the effect RRP’s settings may have on legitimate taxpayers whose refund may be delayed because their return was inaccurately selected.\nRevenue protected: the value of refunds associated with returns selected by RRP that IRS confirmed to be fraudulent. This measure can provide an estimate of RRP’s return on investment based on different combinations of settings in RRP.", "After IRS updates RRP and establishes selection criteria, RRP is ready to operate during the filing season. To ensure that RRP is performing as expected, IRS managers collect and analyze performance reports, meet weekly during the filing season, and adapt RRP to address emerging fraud or make other adjustments. We reviewed the various reports produced by RRP and IRS staff and determined that the information is reliable, relevant, and timely, as required by federal standards for internal control. IRS officials told us that daily reports highlighting RRP’s selections are helpful, especially during the first weeks of the filing season, to ensure that systems are operating effectively.\nConsistent with federal standards for internal control and the Fraud Risk Framework, we found that RRP is designed to be flexible and adaptive, and IRS can adjust RRP during the filing season to respond to emerging threats or other concerns. IRS officials told us they made several adjustments to RRP during the 2017 filing season: IRS adjusted the selection thresholds for one of RRP’s IDT filters after observing that the number of selections was exceeding projections, resulting in more selections than IRS officials expected and possibly a higher rate of legitimate returns being incorrectly selected. According to IRS officials, adjusting selection thresholds takes approximately 24 hours. To respond to an external data breach, for example, IRS officials told us they might lower RRP’s selection thresholds so that RRP selects more returns for review.\nIRS reported that it disabled a rule that it determined was incorrectly selecting legitimate tax returns. IRS officials told us they could address selection errors or respond to new or emerging fraud patterns by modifying RRP’s analytic techniques, such as its business rules and models. According to IRS officials, these types of changes require approval of the business rules governance board and take, on average, 10 business days.\nAccording to IRS documents we reviewed, early in the 2017 filing season, IRS discovered that RRP did not issue appropriate transaction codes to the Individual Master File to freeze about 11,000 returns selected as potential IDT refund fraud. As a result, some of these returns posted and refunds may have been issued incorrectly. IRS told us they fixed this error within 3 days of identifying it.", "", "IRS plans to continue developing RRP to expand its capabilities to detect refund fraud on business and partnership returns, as well as on individual returns that improperly claim nonrefundable tax credits. According to IRS, continued development of RRP will automate previously manual processes, eliminate duplicative efforts, and achieve greater efficiency.\nBusiness returns and partnership returns. IRS officials told us in January 2018 that they are currently working to develop rules, models, and filters in RRP to detect noncompliance and fraud in business and partnership returns. According to IRS, identity thieves have long used stolen business information to create and file fake W- 2s along with fraudulent individual tax returns. However, identity thieves are now using this information to file fraudulent business returns. In May 2018, IRS reported a sharp increase in the number of fraudulent business and partnership returns in recent years.\nNonrefundable tax credits. IRS plans to develop models and rules in RRP to detect refund fraud on individual returns that improperly claim nonrefundable tax credits. A nonrefundable tax credit is limited to the taxpayer’s tax liability, which means the credit can be used to offset tax liability, but any excess of the credit over the tax liability is not refunded to the taxpayer. Examples of nonrefundable credits include the Child Tax Credit, Foreign Tax Credit, and Mortgage Interest Credit. According to IRS officials, IRS currently relies on a number of systems, including the Dependent Database, to screen returns for noncompliance associated with tax credits.\nIRS’s management of other major investments will affect the agency’s ability to realize the full potential of RRP’s current and planned capabilities because RRP interfaces with numerous legacy systems. For example, RRP obtains taxpayer information from the Individual Master File, which IRS has been working to replace with a modern database, the Customer Account Data Engine 2 (CADE 2). According to IRS, CADE 2 will provide RRP with additional taxpayer history data and more frequent data updates, improving RRP’s detection capabilities. However, as we reported in June 2018, IRS delivered only 46 percent of planned scope for CADE 2 during the time period we reviewed and paused a number of CADE 2 projects. As of June 2018, a completion date is uncertain.\nRRP’s effectiveness is limited by the system’s dependence on a legacy case management system. In 2015, IRS approved plans to implement an enterprise-wide case management system to consolidate and replace over 60 legacy systems IRS currently uses. IRS reports a number of limitations with the current systems, including redundancies between systems and limited visibility between programs. However, IRS encountered challenges with the investment, and in 2017 IRS paused development activities. As of June 2018, IRS is working to acquire another product to serve as the platform for IRS’s enterprise-wide case management system.\nOur prior work has identified actions that Congress could take that would improve IRS’s ability to administer the tax system and enforce tax laws. These actions could also improve IRS’s ability to further leverage RRP’s capabilities. For example, in August 2014 we suggested that Congress provide the Secretary of the Treasury with the regulatory authority to lower the threshold for requiring employers to electronically file W-2s from 250 returns annually to between 5 to 10 returns, as appropriate. Under current law, employers who file 250 or more W-2s annually are required to file W-2s electronically, while those who file fewer may opt to file on paper. Without this change, some employers’ paper W-2s are unavailable to RRP for matching before IRS issues refunds due to the additional time the Social Security Administration needs to process paper forms. Lowering the threshold would help IRS use RRP to verify returns before issuing refunds. This proposed change has been included in H.R. 5444. As of June 2018, H.R. 5444 passed the House and was being considered by the Senate Finance Committee.\nWe have also suggested that Congress grant IRS broader math error authority, with appropriate safeguards against misuse of that authority, to correct taxpayer errors during tax return processing. IRS officials told us that this type of corrective authority would allow IRS to develop more efficient treatments for returns selected by RRP with obvious errors. Although the Consolidated Appropriations Act, 2016 gave IRS additional math error authority, it is limited to certain circumstances. Giving IRS broader math error authority or correctible error authority with appropriate controls would enable IRS to correct obvious noncompliance, would be less intrusive and burdensome to taxpayers than audits, and would potentially help taxpayers who underclaim tax benefits to which they are entitled. As of June 2018, Congress had not provided Treasury with such authority.", "IRS has additional opportunities to improve data available to RRP to enhance RRP’s detection and accuracy. As described above, RRP’s analytic techniques depend on taxpayer data and information from numerous IRS systems and external entities. RRP’s access to useful and timely information enables IRS to more fully utilize RRP’s analytic techniques to detect suspicious returns, leading to more accurate selection and treatment decisions. Given RRP’s importance to IRS’s mission, it is critical that IRS considers and addresses risks that could affect the accuracy and effectiveness of RRP’s detection and selection activities.\nAccording to the Office of Management and Budget, risks include not only threats but also opportunities that could affect an agency’s ability to achieve its mission. IRS and Congress have previously considered opportunities and taken steps to enhance some data made available to RRP. For example: IRS expanded RRP’s use of relevant data from electronically filed returns and information returns. For example, as mentioned previously, IRS incorporated a number of data elements identified through the Security Summit into RRP. In 2016 and 2017, IRS used these data elements to develop additional business rules and models specific to electronically filed returns. IRS also expanded RRP analytic techniques to incorporate data from Forms 1099-MISC, which taxpayers may use to report non-employee compensation.\nConsistent with our prior reporting, in 2015 Congress enacted legislation to help IRS prevent invalid refunds associated with IDT and other refund fraud. This change allows IRS more time to use RRP to match wage information to tax returns and to identify any inconsistencies before issuing refunds. Since 2017, employers have been required to submit W-2s to the Social Security Administration by January 31, about 1 to 2 months earlier than in prior years. The act also required IRS to hold refunds for all taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit. In 2018 we made recommendations that IRS fully assess the benefits and costs of using existing authority to hold additional taxpayer refunds as well as extending the date for releasing those refunds until it can verify wage information. IRS outlined a number of actions it plans to take to address these recommendations. Taking these actions could prevent IRS from issuing millions of dollars in invalid refunds annually.\nIRS officials told us that they are taking steps to enhance RRP’s ability to detect fraudulent returns filed using prisoners’ Social Security numbers. To do this, IRS is working to load updated prisoner data into RRP more frequently and developing additional business rules. The Treasury Inspector General for Tax Administration (TIGTA) has reported that refund fraud associated with prisoner Social Security numbers is a significant problem for tax administration, accounting for IRS’s issuance of potentially fraudulent refunds worth tens of millions of dollars in 2015.\nBased on our prior work, we found that there may be additional opportunities for IRS to enhance RRP by improving data made available to it:\nMaking W-2 information available more frequently. In January 2018, we reported that IRS’s ability to verify information on tax returns early in the filing season was affected by limitations with its IT systems. IRS receives and maintains information return data, including W-2 and 1099-MISC forms, through the Information Return Master File (IRMF) system. IRMF then makes the data available to RRP for systemic verification, the automated process that uses W-2s to verify that taxpayers accurately reported their income and other information on their tax returns. IRS receives the W-2 data from the Social Security Administration daily—up to 25 million W-2s per day— but only loads the data into IRMF and RRP weekly. According to IRS, to add new information returns to IRMF, IRS staff need to reload all existing information at the same time. As employers and financial institutions send more documents to IRS during the filing season, reloading IRMF can take 3 days or more because updates take more time as IRMF’s file increases in size, ultimately containing billions of information returns.\nIRS officials told us that having W-2s available for analysis sooner would benefit RRP detection and selection of fraudulent returns. In addition, matching W-2 information can also provide sufficient assurance of a valid return, even if characteristics of the return might otherwise raise suspicion. According to our analysis of RRP data for the 2017 filing season, matching available W-2s resulted in RRP excluding 367,027 electronically filed returns that RRP otherwise would have selected as suspicious. Having W-2 information loaded more frequently and available for RRP’s systemic verification helps IRS improve its use of limited enforcement resources by more accurately identifying fraudulent returns and excluding legitimate returns.\nAs of April 2018, IRS officials had drafted but not yet approved a work request to send IRMF data to RRP daily between January and March during the 2019 filing season. In preparing the draft request, IRS officials told us they are assessing how frequently the agency can efficiently load data into IRMF as the filing season progresses. Federal standards for internal control require federal managers to analyze and address risks to agency objectives. As noted previously, risks include not only threats but also opportunities. Leading practices in fraud risk management further state that managers should take into account external risks that can impact the effectiveness of fraud prevention efforts. Until IRS makes incoming employer W-2s available to RRP more frequently, IRS will not address an opportunity to expand the use of RRP’s systemic verification process to more accurately detect and select invalid refund returns for additional action.\nMaking more information available electronically from returns filed on paper. RRP’s analytic techniques could be strengthened if the program had electronic access to additional information from filers of paper returns. While about 90 percent of individual taxpayers file their returns electronically, over 19 million taxpayers filed on paper in 2017. To control costs, IRS transcribes a limited amount of information provided by paper filers into its computer databases. This practice limits the amount of information readily available for enforcement and other tax administration activities that rely on digitized information. We also reported that according to IRS officials, digitizing and posting more comprehensive information provided by paper filers could facilitate enforcement efforts, expedite contacts for faster resolution, reduce handling costs, and increase compliance revenue.\nIn October 2011 we found that IRS considered a number of options to make more information from paper returns available electronically, including increasing manual transcription, optical character recognition technology, and barcoding technology. An optical character recognition system would read text directly from all paper returns using optical scanners and recognition software and convert the text to digital data. A 2-D bar code is a black and white grid that encodes tax return data allowing IRS to scan the bar code to digitize and import the data into IRS’s systems, such as RRP. We recommended in 2011 that IRS determine whether and to what extent the benefits of barcoding would outweigh the costs. In response to our recommendations, in 2012 IRS updated an earlier evaluation of implementing barcoding technology for paper returns. The agency estimated that implementing and using barcoding technology over a 10-year period from fiscal years 2015 to 2025 would yield about $109 million in benefits, compared to about $13 million in costs—a substantial return on investment. IRS estimated benefits based on anticipated reductions in staff hours dedicated to the coding, editing, transcription, and error resolution functions of paper return processing.\nHowever, because of statutory limitations, a legislative change is necessary to require individuals, estates, and trusts to print their federal income tax returns with a scannable bar code. In each of its congressional justifications for fiscal years 2012 to 2016, IRS requested that Congress require returns prepared electronically but filed on paper include a scannable code printed on the return. The National Taxpayer Advocate made a similar legislative proposal in 2017. As of June 2018, Congress had not taken action on the proposal.\nIn addition to barcoding, there are other technologies IRS could use to digitize more information from paper returns to further improve tax administration and enforcement activities. However, as of June 2018, IRS had not taken any additional steps to further evaluate the costs and benefits of digitizing individual return information, taking into consideration new technology or additional benefits associated with RRP’s enhanced enforcement capabilities.\nIRS’s strategic plan identifies expanding the agency’s use of digitized information as a key activity toward its goal to increase the efficiency and effectiveness of IRS operations. Updating and expanding its 2012 analysis of the costs and benefits of digitizing returns to consider any new technology or additional benefit to RRP would provide IRS managers and Congress with valuable information to implement the most cost-effective options for making additional, digitized information available for enforcing and administering taxes. This information could help IRS make progress toward its mission by improving RRP’s detection and selection of suspicious returns. In addition, greater efficiency in the paper return transcription process could free additional resources for enforcement and administration activities.", "IRS has not yet evaluated the costs and benefits of expanding RRP to improve other tax enforcement activities, such as compliance checks or audits, for returns not claiming refunds. All individual returns (Forms 1040) are loaded into RRP as part of return processing. However, RRP is used to prevent IRS from paying invalid refunds as part of IRS’s pre- refund enforcement activities and, therefore, according to IRS officials, RRP has been limited to detecting and selecting individual returns claiming refunds. Currently, IRS does not use RRP to support other enforcement activities that detect misreporting or noncompliance on individual tax returns not claiming refunds, which also contribute to the tax gap—the difference between taxes owed and what are paid on time.\nUnderreporting of income represents the majority of the tax gap, with the average annual underreporting of individual income tax on both refund and non-refund returns for tax years 2008 to 2010 estimated by IRS to be about $264 billion or 57 percent of the total gross tax gap of $458 billion.\nGiven the large amount of revenue lost each year due to underreporting, it is important that IRS consider opportunities to improve its enforcement efforts and promote compliance. IRS’s enforcement of tax laws helps fund the U.S. government by collecting revenue from noncompliant taxpayers and, perhaps more importantly, promoting voluntary compliance by giving taxpayers confidence that others are paying their fair share.\nAccording to IRS officials, RRP has benefited IRS’s pre-refund enforcement activities by enhancing detection of IDT and other refund fraud, providing more cost-effective treatment, and enhancing data analytics for improved enforcement. Based on this review of RRP’s capabilities and our prior work on tax enforcement and administration, we identified a number of activities and processes that could be improved and enhanced if IRS expanded RRP to analyze returns not claiming refunds, in addition to returns with refunds. For example:\nEnhanced detection and selection of potential noncompliance.\nIRS reported that RRP significantly enhanced its detection of IDT and other refund fraud over prior systems. In January 2018 we recommended—and IRS outlined planned actions—that IRS assess the benefits and costs of additional uses and applications of W-2 data for pre-refund compliance checks, such as underreporting, employment fraud, and other noncompliance. Underreporting occurs when a taxpayer underreports income or claims unwarranted deductions or tax credits. As previously noted, underreporting accounts for the largest portion of the tax gap. To detect underreporting by individuals, after the filing season and after refunds have been issued, IRS uses its Automated Underreporter (AUR) program to electronically match income information reported to IRS by third parties, such as banks and employers, against information that taxpayers report on their tax returns. During our review, we found that this process of matching income information is similar to RRP’s pre- refund systemic verification process that occurs during return processing, but only applies to returns claiming refunds. IRS should consider expanding RRP’s capabilities to use RRP as a platform to perform AUR matching on all individual returns during return processing and post-processing, as more information returns are available for matching. In May 2018, IRS officials told us that, in response to our January 2018 recommendation, IRS is assessing the possibility of using RRP to perform some AUR checks. However, until IRS expands RRP to analyze returns not claiming refunds, these compliance checks will not cover all potential underreporting.\nDuring this review of RRP, we also found that IRS could implement predictive models of noncompliance in RRP to select returns for audits. Audits are an important enforcement tool for IRS to identify noncompliance in reporting tax obligations and to enhance voluntary reporting compliance. IRS’s Small Business and Self-Employed (SB/SE) division conducts audits of individual taxpayers after the return has been processed. SB/SE staff review the returns identified for potential audit by various processes. One of these audit selection processes is a computer algorithm—discriminant function (DIF)—that uses models to score all individual returns (with and without refunds) for their likelihood of noncompliance, an indicator of their audit potential. The DIF models are developed from a unique data set and include variables IRS has found to be effective in predicting the likelihood that a return would have a significant tax change if audited. The additional information available in RRP, such as taxpayer history, has the potential to improve the DIF models and therefore the DIF scoring. IRS officials told us that they plan to examine opportunities to use RRP for some SB/SE audit selection processes, such as incorporating DIF scoring into RRP. However, as of April 2018 IRS had not taken any action.\nMore efficient and effective treatment of potentially noncompliant returns. IRS reported that RRP automated and streamlined many of IRS’s selection and treatment processes for preventing the issuance of invalid refunds. Using RRP to improve IRS’s detection and selection of potentially noncompliant returns during return processing could lead IRS to consider treatment options, such as soft notices, that engage taxpayers earlier, to help IRS and taxpayers resolve issues more quickly. A soft notice does not always require a response from the taxpayer; instead, it provides information about a potential error and asks taxpayers to review their records. Consequently, soft notices can be more efficient than other treatments, such as telephone calls or in-person interactions. This treatment option is consistent with IRS’s strategic objective to reduce the time between filing and resolution of compliance issues. One strategy IRS highlights to achieve this objective is to review and refine IRS’s risk-based systems, like RRP, to detect potential issues early.\nCurrently, IRS’s enforcement activities, including SB/SE audits and AUR, occur after the return has been processed and the filing season ends. For example, AUR begins matching information returns to individual tax returns in July after the filing season has ended, and according to TIGTA, routinely identifies more than 20 million individual tax returns with discrepancies each year. In 2013 we reported that IRS took on average, over 1 year—2 years in some cases—to notify taxpayers about discrepancies. These delays are a challenge for IRS and the taxpayer. For example, when additional tax is owed, as time passes taxpayers may be less likely, or less able, to pay the original debt owed and any associated penalties that may have accrued since the time of filing. Taxpayers may also be less likely to have the relevant tax records needed to respond to IRS questions. Notifying taxpayers earlier of a potential error could help bring them into compliance more effectively than other enforcement options.\nWe found that IRS could also expand RRP’s capabilities to use RRP to identify and generate soft notices for taxpayers that do not pay taxes owed at the time of return processing. IRS does not contact electronic filers with an unpaid tax balance until mid-May, weeks after the April payment deadline. This treatment option could help IRS collect taxes owed and also help taxpayers by making them aware of payment options earlier and allowing them to avoid interest and penalties. IRS officials agreed that it is more likely to recover any debt owed if the taxpayer is notified earlier.\nEnhanced data analytics for improved enforcement. Just as IRS is using RRP data and reporting capabilities to better target resources for enforcement activities associated with refund returns, we found that IRS could increase its access to useful data if it expanded RRP to analyze returns not claiming refunds. For example, using RRP’s enhanced data analytics, including access to multiple data sources, IRS could better identify characteristics of other types of noncompliance to improve detection and enforcement. This approach is consistent with IRS’s strategic goal to advance data analytics to inform decision making and improve operational outcomes. Officials from IRS’s Office of Research, Applied Analytics, and Statistics told us that RRP is a valuable data source for research on IDT and other refund fraud. However, until IRS expands RRP to analyze and score individual returns not claiming refunds, IRS will be limited in its ability to use RRP’s data analytics to help IRS address other types of noncompliance and fraud.\nEvaluating the costs and benefits of expanding RRP to analyze individual returns not claiming refunds to support other tax enforcement activities is consistent with the goals and objectives outlined in IRS’s Strategic Plan to encourage compliance through tax administration and enforcement and increase operational efficiency and effectiveness. IRS has identified and implemented opportunities to expand RRP to better detect IDT and other refund fraud in individual and business returns. However, until IRS evaluates the costs and benefits of expanding RRP to support other enforcement activities, IRS may be missing opportunities to realize operational efficiencies by streamlining the detection and treatment of other types of noncompliance and fraud. Additionally, IRS may be missing an opportunity to promote voluntary compliance with tax laws and make progress toward closing the estimated $458 billion average annual gross tax gap.", "Noncompliance, including tax fraud, has been a long-standing challenge for IRS. More recently, IDT refund fraud has emerged as a costly and evolving threat to taxpayers and the tax system. As part of IRS’s effort to strategically address these challenges, RRP provides opportunities for IRS to operate more efficiently, increase taxpayer compliance, and combat refund fraud. IRS has plans to continue developing and enhancing RRP, including analyzing business returns for fraud. However, IRS has not fully examined opportunities to improve the availability of information that RRP’s analytic tools rely on.\nThese opportunities include examining the costs and benefits of making more information from paper returns available electronically and making W-2 information available to RRP for income verification more frequently. Until IRS conducts such analyses, the agency will be missing opportunities to improve RRP’s detection and accuracy and prevent paying invalid refunds. These evaluations can also inform Congress’s decisions on requiring scannable codes on some printed tax returns, as well as issues we highlighted in our previous work, including lowering the e-file threshold for employers filing W-2s and expanding IRS’s correctible error authority. Congressional action on these issues would help IRS better leverage RRP’s capabilities.\nFurther, RRP has the potential to improve tax enforcement in other areas such as underreporting and audit selection if IRS can successfully expand RRP’s detection and selection capabilities to analyze individual tax returns, including those not claiming refunds, for fraud and noncompliance. Earlier detection of anomalies and notification can increase compliance and collection rates.", "Congress should consider legislation to require that returns prepared electronically but filed on paper include a scannable code printed on the return. (Matter for Consideration 1)", "We are making the following five recommendations to IRS.\nThe Commissioner of Internal Revenue should increase the frequency at which incoming W-2 information is made available to RRP. (Recommendation 1)\nThe Commissioner of Internal Revenue should update and expand a 2012 analysis of the costs and benefits of digitizing returns filed on paper to consider any new technology or additional benefits associated with RRP’s enhanced enforcement capabilities. (Recommendation 2)\nBased on the assessment in recommendation 2, the Commissioner of Internal Revenue should implement the most cost-effective method to digitize information provided by taxpayers who file returns on paper. (Recommendation 3)\nThe Commissioner of Internal Revenue should evaluate the costs and benefits of expanding RRP to analyze individual returns not claiming refunds to support other enforcement activities. (Recommendation 4)\nBased on the assessment in recommendation 4, the Commissioner of Internal Revenue should expand RRP to support identified activities. (Recommendation 5)", "We provided a draft of this report to the Commissioner of Internal Revenue for review and comment. In its written comments, which are summarized below and reprinted in appendix II, IRS agreed with our five recommendations stating that it is taking action to address them and will provide a more detailed corrective action plan.\nIRS agreed with our recommendations aimed at improving information available to RRP to enhance detection of fraudulent returns. IRS stated that it is evaluating the frequency at which W-2 data is made available to RRP and options for digitizing returns filed on paper. IRS further noted that it is evaluating other associated information provided to RRP for detection. As stated earlier, efforts to improve RRP’s detection and accuracy will protect additional federal revenue.\nIRS agreed with our recommendations to evaluate options for expanding RRP to improve tax enforcement and compliance. IRS stated that its objective is to make RRP the primary detection system for pre- and post- refund processing across the agency.\nIRS stated that to expand RRP to analyze returns not claiming refunds, a legislative change requiring all information returns to be filed electronically will be necessary to achieve maximum benefit from RRP. In this report, we highlight legislative issues from our prior work, including lowering the e-file threshold for employers filing W-2s and expanding IRS’s correctible error authority, to help IRS better leverage RRP’s capabilities. However, we are confident that even under current conditions, IRS could use RRP to further improve compliance and its enforcement efforts. For example, with the current electronic filing requirements, RRP could help IRS detect and resolve individual underreporting earlier in the process.\nIRS stated its intention to collaborate with GAO and other organizations to determine appropriate actions after assessing the results of its analyses.\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 Commissioner of Internal Revenue, 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 have any questions about this report, please contact me at (202) 512- 9110 or mctiguej@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 key contributions to this report are listed in appendix III.", "The Return Review Program (RRP) is one of the Internal Revenue Service’s (IRS) major information technology investments. IRS began developing RRP in 2009 to improve its ability to detect fraudulent returns. In October 2016, RRP replaced IRS’s legacy system, the Electronic Fraud Detection System (EFDS) as IRS’s primary fraud detection system. IRS originally planned for RRP to be operating by 2014 because IRS had determined that by 2015 EFDS would not be reliable. However, in 2014, IRS paused RRP’s development to reconsider RRP’s capabilities within IRS’s strategic fraud detection goals. The year-long pause delayed EFDS replacement and retirement until 2016. RRP operated as IRS’s primary system for detecting identity theft and other refund fraud beginning with the 2017 filing season. Figure 5 is a timeline of IRS’s development of RRP.", "", "", "", "In addition to the contact named above, Neil Pinney (Assistant Director), Margaret M. Adams (Analyst-in-Charge), Michael Bechetti, Mark Canter, Pamela Davidson, Robert Gebhart, James A. Howard, Jesse T. Jordan, Paul Middleton, Sabine Paul, J. Daniel Paulk, and Bradley Roach, made significant contributions to this report." ], "depth": [ 1, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "", "", "h0_title h1_title", "", "h0_full", "h1_full", "h1_full", "h2_full", "", "h2_full", "", "", "", "", "" ] }

{ "question": [ "From what sources could the IRS collect more information electronically?", "What alternative approaches has the IRS considered?", "What did the IRS request from Congress?", "What methods/programs could the IRS apply in order to improve tax enforcement activities?", "To what extent does invidudual underreporting affect tax revenue?", "Why is a cost-benefit analysis of RRP important?", "What specific recommendations and suggestions has GAO made to Congress and the IRS vis-á-vis strengthening tax enforcement nationwide? How has the IRS responded with these recommendations?", "How did the IRS respond to these recommendations?" ], "summary": [ "IRS could collect more information electronically from paper filers.", "One approach IRS evaluated in 2012 is to digitize some paper returns using barcoding technology, but it has not updated that analysis or expanded it to consider other digitizing technologies.", "IRS requested that Congress require that returns prepared electronically but filed on paper include a scannable code printed on the return, but Congress had not done so as of May 2018.", "IRS could apply RRP's capabilities to improve other tax enforcement activities, such as audit selection or underreporting detection.", "Individuals' underreporting of tax liabilities accounts for hundreds of billions in lost tax revenue.", "Until IRS evaluates the costs and benefits of expanding RRP to analyze returns not claiming refunds, IRS will not have the information needed to make decisions that could help streamline processes for detecting and treating additional types of noncompliance and fraud.", "GAO suggests Congress consider legislation to require that returns prepared electronically but filed on paper include a scannable code. GAO is also making five recommendations to IRS, including that IRS take action to make incoming W-2s available to RRP more frequently, update and expand a 2012 analysis of the costs and benefits of digitizing returns filed on paper, evaluate the costs and benefits of expanding RRP to analyze returns not claiming refunds, and take any appropriate action based on those evaluations.", "IRS agreed with GAO's recommendations." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, -1, 0 ], "summary_paragraph_index": [ 7, 7, 7, 8, 8, 8, 9, 9 ] }

{ "title": [ "", "A Primer on Desalination", "Recent Congressional Consideration", "Federal Desalination Research", "Research Agenda", "Evolution of Federal Research Funding", "Desalination Adoption in the United States", "Energy Concerns and Responses", "Reducing Energy Intensity To Reduce Cost Uncertainties", "Renewable and Alternative Energy Opportunities", "Health and Environmental Concerns", "Evolving Drinking Water Guidelines", "Concentrate Disposal Challenges and Alternatives", "Concluding Remarks" ], "paragraphs": [ "", "Interest in using desalination technologies to treat seawater, brackish water, wastewaters, and contaminated sources has increased globally and in the United States, as costs have fallen and pressure to develop drought-proof water supplies has grown. Adoption of desalination, however, remains constrained by financial, environmental, regulatory, and social factors. At issue is the role Congress establishes for the federal government in desalination, particularly in desalination research and development and the federal regulatory environment for desalination projects. Also of congressional interest is what role desalination may play in meeting water demands.\nDesalination processes generally treat saline or impaired waters to produce a stream of freshwater, and a separate, saltier stream often called waste concentrate or brine . The availability and regulation of disposal options for waste concentrate can limit adoption in some locations; this is a particular challenge for large-scale inland facilities. For seawater desalination, the impacts of intake facilities on marine life also often are raised as concerns.\nDesalination's attractions are that it can create a new source of freshwater from otherwise unusable waters, and that this source may be more dependable and drought-proof than freshwater sources that rely on annual or multi-year precipitation, runoff, and recharge rates. Another significant application of desalination technologies is for treatment of contaminated waters or industrial water or municipal wastewater. Some communities and industries use desalination technologies to produce drinking water that meets federal standards, to treat contaminated water supplies to meet disposal requirements, or to reuse industrial wastewater. Many of the technologies developed for desalination also can produce high-quality industrial process water. For many of these applications, there may be few technological substitutes that are as effective and reliable as desalination technologies.\nThere are multiple desalination methods. Two common categories of desalination technologies—thermal (e.g., distillation) and membrane (e.g., reverse osmosis)—are the most common, with reverse osmosis technologies dominating in the United States. For more information on traditional and emerging technologies, see Appendix A .\nDesalination treatment costs have dropped in recent decades, making the technology more competitive with other water supply augmentation and treatment options. Electricity expenses vary from one-third to one-half of the cost of operating desalination facilities. A rise in electricity prices could reverse the declining trend in desalination costs; similarly, drops in electricity costs improve desalination's competitiveness. Costs and cost uncertainties remain among the more significant challenges to implementing large-scale desalination facilities, especially seawater desalination plants. Desalination's energy intensity also raises concerns about the greenhouse gas emissions emitted and desalination's usefulness as part of a climate change adaptation strategy. Substantial uncertainty also remains about the environmental impacts of large-scale desalination facilities. Social acceptance and regulatory processes also affect the technologies' adoption and perceived risks. Research and additional full-scale facilities may resolve uncertainties, alleviate concerns, and contribute to cost reductions and options for mitigating environmental impacts.\nTo date, the federal government primarily has supported research and development, some demonstration projects, and select full-scale facilities (often through congressionally directed spending). The federal government also may support construction of municipal desalination facilities through loans or other credit assistance provided through programs of the U.S. Environmental Protection Agency (EPA). For most municipal desalination facilities, local governments or public water utilities (often with state-level involvement and federal construction loans) have been responsible for planning, testing, building, and operating desalination facilities, similar to their responsibility for treating freshwater drinking water supplies.\nDuring recent Congresses, legislative proposals have identified a range of different potential federal roles in desalination. Desalination issues before the 114 th Congress may include how to focus federal research to produce results that provide public benefits, at what level to support desalination research and projects, and how to provide a regulatory context that protects the environment and public health without unnecessarily disadvantaging these technologies.", "The 113 th Congress authorized a new federal credit assistance program, the Water Infrastructure Finance and Innovation Act (WIFIA, 33 U.S.C. §3901), as part of P.L. 113-121 . The portion of the program administered by EPA may be used in financing a range of water projects, including desalination projects.\nThe Water Desalination Act of 1996, as amended (42 U.S.C. §10301), authorized the main desalination research and demonstration outreach program of the Department of the Interior, which is carried out by the Bureau of Reclamation. The 112 th Congress extended through FY2013 its annual authorization of appropriations at $3 million. Bills in the 113 th Congress proposed another extension, but the 113 th Congress did not extend the authorization of appropriations. Although an extension was not enacted, the 113 th Congress provided appropriations for these desalination research and demonstration activities (e.g., $1.75 million for FY2015) and for operation and maintenance of the Department of the Interior's operation of the Brackish Groundwater National Desalination Research Facility ($1.15 million for FY2015).", "", "Several reports since 2000 have aimed to inform the path forward for U.S. desalination research. The first was the 2003 Desalination and Water Purification Technology Roadmap produced by the Bureau of Reclamation and Sandia National Laboratories at the request of Congress. The National Research Council then reviewed the roadmap in a 2004 report, Review of the Desalination and Water Purification Technology Roadmap , which called for a strategic national research agenda. To this end, the National Research Council (NRC) convened a Committee on Advancing Desalination Technology. That NRC committee published its own assessment in 2008, Desalination: A National Perspective . The NRC concluded that research should focus on reducing desalination costs and that substantial further cost savings were unlikely to be achieved through incremental advances in the commonly used technologies, like reverse osmosis. Consequently, the report recommended that federal desalination research funding be targeted at long-term, high-risk research not likely to be attempted by the private sector that could significantly reduce desalination costs. It also recommended a line of research on minimizing or mitigating the environmental impacts of desalination. The NRC specifically identified for federal investment research that had potential for widespread benefit and that the private sector had little willingness to perform. (See \"National Research Council 2008 Desalination Research Recommendations\" box for more details.)\nIn 2010, the Water Research Foundation, WateReuse Foundation, and Sandia National Laboratories published a report on how to implement the 2003 roadmap. The report identified research agendas for a range of topics—membrane and alternative technologies, concentrate management, and institutional issues such as energy cost reduction and regulatory compliance.", "No single federal agency has responsibility for all federal desalination and membrane research; instead numerous agencies and departments are involved in research based on their specific missions. In FY2005, FY2006, and FY2007, federal desalination research totaled $24 million, $24 million, and $10 million, respectively. (These are the most recent comprehensive data on federal desalination funding.) The Bureau of Reclamation was responsible for half or less of that spending at $12 million, $11 million, and $4 million, respectively. Other agencies and departments with spending on desalination research included the Army, National Science Foundation, Office of Naval Research, U.S. Geological Survey, and four of the Department of Energy's National Laboratories. Sandia National Laboratory has had the largest role among the national laboratories. In FY2005 and FY2006, much of the federal desalination research was congressionally directed to specific sites and activities. The level of funding fell after FY2006, when the appropriations process began to include less congressionally directed spending.\nThe optimal level and type of federal support for desalination research is inherently a public policy question shaped by factors such as fiscal priorities and views on the appropriate role of the federal government in research, industry development, and water supply. Federal support for desalination research raises questions, such as what should be the respective roles of federal agencies, academic institutions, and the private sector in conducting research and commercializing the results, and should federal research be focused on basic research or promoting the use of available technologies? In addition to federal and private research activities, some states, such as California and Texas, also have supported desalination research.\nIn 2008, the National Research Council recommended a federal desalination research level of roughly $25 million, but recommended that the research be targeted strategically, including being directed at the research activities described above. The NRC drew the following conclusion:\nThere is no integrated and strategic direction to the federal desalination research and development efforts. Continuation of a federal program of research dominated by congressional earmarks and beset by competition between funding for research and funding for construction will not serve the nation well and will require the expenditure of more funds than necessary to achieve specified goals.\nNo recent authoritative estimate of all federal desalination spending is available. Data for Reclamation indicate a reduction in federal desalination spending. Reclamation's desalination funding has declined from $11 million in FY2006 to between $2 million and $4 million in recent years, with FY2015 funding at $3 million. While some traditional avenues for federal desalination research may be receiving less support, new avenues of support may be opening. Two of these are the Advanced Research Projects Agency-Energy (ARPA-E) and the National Science Foundation's Urban Water Engineering Research Center, which was initiated in 2011.", "Desalination and membrane technologies are increasingly investigated and used as an option for meeting municipal and industrial water supply and water treatment demands. The nation's installed desalination capacity has increased in recent years, reflecting the technology's growing competitiveness and applications and increasing demands for reliable freshwater supplies. As of 2005, approximately 2,000 desalination plants larger than 0.3 million gallons per day (MGD) were operating in the United States, with a total capacity of 1,600 MGD. This represents more than 2.4% of total U.S. municipal and industrial freshwater withdrawals, not including water for thermoelectric power plants. Two-thirds of the U.S. desalination capacity is used for municipal water supply; industry uses about 18% of the total capacity.\nMunicipal use of desalination for saline water and wastewater treatment in the United States expanded from 1990 to 2010; the number of facilities rose from 98 facilities with a total capacity of 100 MGD in 1990 to 324 facilities with 1,100 MGD of capacity in 2010. By 2010, 32 states had municipal desalination facilities. Florida, California, and Texas have the greatest installed desalination capacity and account for 68% of the municipal desalination facilities. Florida dominates the U.S. capacity, with the facility in Tampa being a prime example of large-scale desalination implementation (see box); however, Texas and California are bringing municipal plants online or are in advanced planning stages. Several other efforts also are preliminarily investigating desalination for particular communities, such as Albuquerque.\nThe saline source water that is treated using desalination technologies varies largely on what sources are available near the municipalities and industry with the demand for the water. In the United States, only 7% of the existing desalination capacity uses seawater as its source. More than half of U.S. desalinated water is from brackish sources. Another 25% is river water treated for use in industrial facilities, power plants, and some commercial applications. Globally, seawater desalination represents 60% of the installed desalination capacity.\nWhile interest in obtaining municipal water from desalination is rising in the United States, desalination is expanding most rapidly in other world regions, often in places where other supply augmentation options are limited by geopolitical as well as natural conditions, such as arid conditions with access to seawater. The Middle East, Algeria, Spain, and Australia are leading in the installation of new desalination capacity, with Saudi Arabia and the United Arab Emirates leading in annual production of desalinated water. Roughly 98% of the desalination capacity worldwide is outside of North America, with 65% in the Middle East.", "", "The cost of desalination for municipal water remains a barrier to adoption. Like nearly all new freshwater sources, desalinated water comes at substantially higher costs than existing municipal water sources.\nMuch of the cost for seawater desalination is for the energy required for operations; in particular, the competitiveness of reverse osmosis seawater desalination is highly dependent on the price of electricity. Reverse osmosis pushes water through a membrane to separate the freshwater from the salts; this requires considerable energy input. Currently the typical energy intensity for seawater desalination using reverse osmosis with energy recovery devices is 3-7 kilowatt-hours of electricity per cubic meter of water (kWh/m 3 ). The typical energy intensity of brackish reverse osmosis desalination is less than seawater desalination, at 0.5-3 kWh/m 3 , because the energy required for desalination is a function of the salinity of the source water.\nUncertainty in whether electricity prices will rise or fall creates significant uncertainty in the cost of desalinated water. If electricity becomes more expensive, less electricity-intensive water supply options (which may include conservation, water purchases, and changes in water pricing) become comparatively more attractive.\nCost-effectively reducing desalination's energy requirements could help reduce overall costs. In recent decades, one of the ways that desalination cost reductions were achieved was through reduced energy requirements of reverse osmosis processes. Now the energy used in the reverse osmosis portion of new desalination facilities is close to the theoretical minimum energy required for separation of the salts from the water. Therefore, although there still is some room for energy efficiency improvements in using desalination as a water supply, dramatic improvements are not likely to be achieved through enhancements to standard reverse osmosis membranes. Instead energy efficiency improvements are more likely to come from other components of desalination facilities, such as the pretreatment of the water before it enters the reverse osmosis process, enhanced facility and system design, or the use and development of a new generation of technologies (see Appendix A ).\nFor example, energy efficiency advances in the non-membrane portions of water systems and the use of energy recovery technologies are reducing energy use per unit of freshwater produced at desalination facilities. Pumps are responsible for more than 40% of total energy costs at a desalination facility. Energy efficiency advances in a type of pump that is useful for smaller applications (called a positive displacement pump) have made desalination more cost-effective for some applications and locations and less sensitive to electricity price increases.\nThe Affordable Desalination Collaboration is an example of combining federal, state, local, private, and other financial resources to support research; funding from these sources was combined to build and operate a demonstration plant at the U.S. Navy's Desalination Test Facility in Port Hueneme, California. The plant tests the combined use of commercially available reverse osmosis technologies, energy recovery devices and practices, and other energy-efficient technologies to reduce the energy inputs required for seawater and brackish desalination. According to the researchers involved, the energy-efficient demonstration facility has the equivalent energy input per unit of freshwater produced as water imports into southern California from northern California and the Colorado River.\nWhile this research is an example of reducing energy demand, other efforts are looking to substitute the type of energy used for desalination from fossil fuels to renewable energy or waste heat. The use of desalination as a climate change adaptation strategy is questioned because of its potential fossil fuel intensity relative to other adaptation and water supply options. Electricity price uncertainty and emissions considerations have driven some desalination proponents to investigate renewable energy supplies and co-location with power plants and industrial facilities to reduce electricity requirements and costs.", "The extent to which desalination technologies can be coupled with intermittent renewable or geothermal electric generation, use off-peak electricity or waste heat, and operate in areas of limited electric generation or transmission capacity but with renewable energy resources is increasingly receiving attention. Desalinating more water when wind energy is available (which requires facilities that can operate with a variable water inflow) and storing the treated water for when water is demanded can almost be viewed as a means of electricity storage and reduction of peak demand. Efforts to jointly manage water and energy supply and demand and to integrate renewable energy with desalination may bolster support for desalination. The first large-scale photovoltaic-powered reserve osmosis seawater desalination facility is in Saudi Arabia, with multiple additional facilities planned in the country before 2018. Concern over declining aquifer levels in Saudi Arabia was one driver for these investments. With demand for desalination increasing in energy-importing countries like India, China, and small islands, there may be particularly strong interest in facilities combining desalination with renewable energy. Some research also is being directed at opportunities for direct solar distillation desalination technologies, particularly smaller-scale production units in solar-abundant remote areas with available land and low-cost labor.", "From a regulatory, oversight, and monitoring standpoint, desalination as a significant source of water supply is relatively new in the United States, which means the health and environmental regulations, guidelines, and policies regarding its use are still being developed. Existing federal, state, and local laws and policies often do not address unique issues raised by desalination. This creates uncertainty for those considering adopting desalination and membrane technologies.\nEnvironmental and human health concerns often are raised in the context of obtaining the permits required to site, construct, and operate the facility and dispose of the waste concentrate. A draft environmental scoping study for a facility in Brownsville, TX, identified up to 26 permits, approvals, and documentation requirements for construction and operation of a seawater desalination facility. According to the Pacific Institute's report Desalination, With a Grain of Salt , as many as 9 federal, 13 state, and additional local agencies may be involved in the review or approval of a desalination plant in California. For example, during the Corps' process for issuing a seawater desalination facility permits for placing structures in waterways and dredging and filling in navigable waters, the U.S. Coast Guard would consult with the Army Corps of Engineers on whether an intake facility would be a potential navigation hazard and the National Oceanic and Atmospheric Administration would consult on whether intake facilities and discharge of waste concentrate may affect marine resources.\nAs previously noted, most states do not have policies and guidance specifically for desalination facilities, and instead deal with each project individually. California, through its State Water Resources Control Board, is working toward statewide guidance in order to improve statewide consistency in review and permitting of seawater desalination facilities.\nSome of the regulatory requirements are not seen as particularly onerous; others may be seen as challenging depending on the location and size of the facility. Some stakeholders view the current permit process as a barrier to adoption of desalination. Other stakeholders argue that rigorous review and permitting is necessary because of the potential impact of the facilities on public health and the environment. Particular attention often is paid during permitting to the impingement and entrainment of aquatic species by intake structures for coastal and estuarine desalination facilities and the disposal of waste concentrate.", "While the quality of desalinated water is typically very high, some health concerns remain regarding its use as a drinking water supply. The source water used in desalination may introduce biological and chemical contaminants to drinking water supplies that are hazardous to human health, or desalination may remove minerals essential for human health.\nFor example, boron, which is an uncommon concern for traditional water sources, is a significant constituent of seawater and can also be present in brackish groundwater extracted from aquifers comprised of marine deposits. Boron levels after basic reverse osmosis of seawater commonly exceed current World Health Organization health guidelines and the U.S. Environmental Protection Agency (EPA) health reference level. While the effect of boron on humans remains under investigation, boron is known to cause reproductive and developmental toxicity in animals and irritation of the digestive tract, and it accumulates in plants, which may be a concern for agricultural applications. Boron can be removed through treatment optimization, but that treatment could increase the cost of desalted seawater.\nEPA sets federal standards and treatment requirements for public water supplies. In 2008, EPA determined that it would not develop a maximum contaminant level for boron because of its rare occurrence in most groundwater and surface water drinking water sources; EPA has encouraged affected states to issue guidance or regulations as appropriate. Most states have not issued such guidance. Therefore, most U.S. utilities lack clear guidance on boron levels in drinking water suitable for protecting public health. The National Research Council recommended development of boron drinking water guidance to support desalination regulatory and operating decisions; it recommended that the guidance be based on an analysis of the human health effects of boron in drinking water and other sources of exposure.\nSimilarly, the demineralization (particularly the removal of the essential minerals calcium and magnesium) by desalination processes also can raise health concerns. This has prompted researchers to promote the remineralization of desalinated water prior to the water entering the distribution system in communities that are highly dependent on desalinated water. Another health-related concern is the extent to which microorganisms unique to seawater and algal toxins may pass through reverse osmosis membranes and enter the water supply, and how facilities may need to be operated differently when these organisms and algal toxins are present. Algal toxins are a consideration for desalination facilities in locations affected or potentially affected by harmful ocean algal blooms that can produce a range of substances, including neurotoxins (e.g., domoic acid). How to effectively manage desalination facilities in order to avoid public health threats from algal blooms is an emerging area of interest and research.\nSome of the coastal facilities contemplated in the United States would treat estuarine water. Estuarine water, which is a brackish mixture of seawater and surface water, has the advantage of lower salinity than seawater. The variability in the quality and constituents in estuarine water, as well as the typical surface water contaminants (e.g., infectious microorganisms, elevated nutrient levels, and pesticides), may complicate compliance of desalinated estuarine water with federal drinking water standards.", "Unlike desalination treatment costs, concentrate disposal costs generally have not decreased. For inland brackish desalination, significant constraints on adoption of the technologies are the uncertainties and the cost of waste concentrate disposal. For coastal desalination projects, the concentrate management options are often greater because of surface water disposal opportunities. EPA is authorized to manage the disposal and reuse of desalination's waste concentrate. The disposal option selected largely is determined by which alternatives are appropriate for the volumes and specific characteristics of the concentrate and the cost-effectiveness of the alternatives, which is largely shaped by the proximity of the disposal option and the infrastructure, land, and treatment investments required.\nThe dominant concentrate disposal options for municipal desalination facilities are surface and sewer disposal; in 26 of the 32 states with municipal desalination facilities, only surface and sewer discharge are used for concentrate disposal. Surface water disposal of waste concentrate is permitted on a project-specific basis based on predicted acute and chronic effects on the environment. Inland surface water disposal is particularly challenging because of the limited capacity of inland water bodies to be able to tolerate the concentrate's salinity. Limited amounts of concentrate also may be sent through sewer systems with large-volume wastewater treatment facility. As of 2010, deep well injection for municipal concentrate disposal had been used primarily in Florida. For injection, EPA generally classifies waste concentrate as an industrial waste, thus requiring that the concentrate be disposed of in deep wells appropriate for industrial waste. Desalination proponents argue that desalination's concentrate is sufficiently different from most industrial waste that it should be reclassified to increase the surface and injection well disposal opportunities. Some states have made efforts to promote the beneficial use of waste concentrate (e.g., use as liquids in enhanced oil and gas recovery) and facilitate its disposal including land application techniques. Notwithstanding these state efforts, land application and evaporation ponds are seldom and decreasingly used disposal options. While states can have such policies and programs in place, federal environmental regulations administered by EPA for the most part define the regulatory context of concentrate disposal.", "Desalination and membrane technologies are playing a growing role in meeting water supply and water treatment needs for municipalities and industry. The extent to which this role further expands depends in part on the cost-effectiveness of these technologies and their alternatives. Desalination's energy use, concentrate disposal options, and environmental and health concerns are among the top issues shaping the technology's adoption. How to focus federal desalination research and support to produce results that provide public benefits, and how to provide a regulatory context that protects the environment and public health without unnecessarily disadvantaging these technologies, are among the desalination issues before the 114 th Congress.\nAppendix A. Traditional and Emerging Desalination Technologies\nThere are a number of methods for removing salts from seawater or brackish groundwater to provide water for municipal and agricultural purposes. The two most common processes, thermal distillation and reverse osmosis, are described below; their descriptions are followed by descriptions of some of the more innovative and alternative desalination technologies. The earliest commercial plants used thermal techniques. Improvements in membrane technology have reduced costs, and membrane technology is less energy-intense than thermal desalination (although it is more energy-intense than most other water supply options). Reverse osmosis and other membrane systems account for nearly 96% of the total U.S. desalination capacity and 100% of the municipal desalination capacity.\nReverse Osmosis\nReverse osmosis forces salty water through a semipermeable membrane that traps salt on one side and lets purified water through. Reverse osmosis plants have fewer problems with corrosion and usually have lower energy requirements than thermal processes.\nExamples of how research advances in the traditional desalination technologies of reverse osmosis have the potential for improving the competitiveness and use of desalination are: nanocomposite and nanotube membranes and chlorine resistant membranes. Nanocomposite membranes appear to have the potential to reduce energy use within the reverse osmosis process by 20%, and nanotube membranes may yield a 30%-50% energy savings.\nMembranes are susceptible to fouling by biological growth (i.e., biofouling), which reduces the performance of the membranes and increases energy use. The most widely used biocide is chlorine because it is inexpensive and highly effective. The most common membranes used in reverse osmosis, however, do not hold up well to exposure to oxidizing agents like chlorine. Advancements in chlorine resistant membranes would increase the resiliency of membranes and expand their applications and operational flexibility.\nDistillation\nIn distillation, saline water is heated, separating out dissolved minerals, and the purified vapor is condensed. There are three prominent ways to perform distillation: multi-stage flash, multiple-effect distillation, and solar distillation. In general, distillation plants require less maintenance and pretreatment before the desalination process than reverse osmosis facilities.\nWhile solar distillation is an ancient means for separating freshwater from salt using solar energy, research into improving the technology is increasing. In large part the interest stems from the potential application for the technology to supply freshwater to small remote settlements where saline supplies are the only source and power is scarce or expensive.\nInnovative and Alternative Desalination Processes\nCapacitive Deionization\nCapacitive deionization desalinates saline waters by absorbing salts out of the water using electrically charged porous electrodes. The technology uses the fact that salts are ionic compounds with opposite charges to separate the salts from the water. The limiting factor for this technology is often the salt absorption capacity of the electrodes. Flow-through capacitive deionization shows promise for energy-efficient desalination of brackish waters.\nElectrodialysis\nElectrodialysis and capacitive deionization technologies depend on the ability of electrically charged ions in saline water to migrate to positive or negative poles in an electrolytic cell. Two different types of ion-selective membranes are used—one that allows passage of positive ions and one that allows negative ions to pass between the electrodes of the cell. When an electric current is applied to drive the ions, fresh water is left between the membranes. The amount of electricity required for electrodialysis, and therefore its cost, increase with increasing salinity of feed water. Thus, electrodialysis is less economically competitive for desalting seawater compared to less saline, brackish water.\nForward Osmosis\nForward osmosis is an increasingly used but relatively new membrane-based separation process that uses an osmotic pressure difference between a concentrated \"draw\" solution and the saline source water; the osmotic pressure drives the water to be treated across a semi-permeable membrane into the draw solution. The level of salt removal can be competitive with reverse osmosis, and forward osmosis membranes may be more resistant to fouling than reverse osmosis membranes. A main challenge is the selection of a draw solute; the solute needs to either be desirable or benign in the water supply, or be easily and economically separated out. Research is being conducted on whether a combination of ammonia and carbon dioxide gases or polymers can be used in the draw solution, and on the effects of marine biology on the membranes. The attractiveness of forward osmosis is that when combined with industrial or power production processes that produce waste heat, its electricity requirements can be significantly less than for reverse osmosis. Potential disadvantages of forward osmosis are a lower quantity of freshwater per unit of water treated and a larger quantity of brine requiring disposal.\nFreezing Processes\nFreezing processes involve three basic steps: (1) partial freezing of the feed water in which ice crystals of fresh water form an ice-brine slurry; (2) separating the ice crystals from the brine; and (3) melting the ice. Freezing has some inherent advantages over distillation in that less energy is required and there is a minimum of corrosion and scale formation problems because of the low temperatures involved. Freezing processes have the potential to concentrate waste streams to higher concentration than other processes, and the energy requirements are comparable to reverse osmosis. While the feasibility of freeze desalination has been demonstrated, further research and development remains before the technology will be widely available.\nIon Exchange\nIn ion exchange, resins substitute hydrogen and hydroxide ions for salt ions. For example, cation exchange resins are commonly used in home water softeners to remove calcium and magnesium from \"hard\" water. A number of municipalities use ion exchange for water softening, and industries requiring extremely pure water commonly use ion exchange resins as a final treatment following reverse osmosis or electrodialysis. The primary cost associated with ion exchange is in regenerating or replacing the resins. The higher the concentration of dissolved salts in the water, the more often the resins need to be renewed. In general, ion exchange is rarely used for salt removal on a large scale." ], "depth": [ 0, 1, 2, 1, 2, 2, 1, 2, 3, 3, 2, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "", "h3_title", "", "h3_full", "h0_full h2_title h1_full", "", "", "", "h2_full h1_title", "h1_full", "", "h0_full h2_full h1_full" ] }

{ "question": [ "How are desalination and membrane technologies used in the United States?", "How much of a part do desalination facilities play in municipal/industrial freshwater use?", "What is the main issue for Congress vis-à-vis their role in supporting desalination?", "What specific desalination issues would be brought up before the 114th Congress?", "What are the end results and by-products of desalination?", "What is the relationship between a specific community and the type of water it desalinates?", "What is the most common method of desalination? How does it work?", "In what ways is reverse osmosis used?", "How is the wider adoption of desalination constrained?", "How has the cost of desalination changed over time? How will it change in the future?", "What are the complexities of implementing desalination with regards to how much electricity the process uses?", "How could a desalination plant impact the environment? As a result, what does it take to construct a desalination facility?", "What is being done to ameliorate the issues currently affecting the implementation of desalination?", "For what reasons does the federal government involve itself in desalination research?", "What is the role of local governments in desalination?", "What about private entities?", "What are some of the interests/qualms some Members have with desalination?" ], "summary": [ "In the United States, desalination and membrane technologies are used to augment municipal water supply, produce high-quality industrial water supplies, and reclaim contaminated supplies (including from oil and gas development).", "Approximately 2,000 desalination facilities larger than 0.3 million gallons per day (MGD) operate in the United States; this represents more than 2% of U.S. municipal and industrial freshwater use.", "At issue for Congress is what should be the federal role in supporting desalination and membrane technology research and facilities.", "Desalination issues before the 114th Congress may include how to focus federal research, at what level to support desalination research and projects, and how to provide a regulatory context that protects the environment and public health without disadvantaging desalination's adoption.", "Desalination processes generally treat seawater or brackish water to produce a stream of freshwater, and a separate, saltier stream of water that requires disposal (often called waste concentrate).", "Many states (e.g., Florida, California, and Texas) and cities have investigated the feasibility of large-scale municipal desalination. Coastal communities look to seawater or estuarine water, while interior communities look to brackish aquifers.", "The most common desalination technology in the United States is reverse osmosis, which uses permeable membranes to separate freshwater from saline waters.", "Many communities and industries use membranes to remove contaminants from drinking water, treat contaminated water for disposal, and reuse industrial wastewater. For some applications, there are few competitive technological substitutes.", "Wider adoption of desalination is constrained by financial, environmental, and regulatory issues.", "Although desalination costs have dropped in recent decades, significant further decline may not happen with existing technologies.", "Electricity expenses represent one-third to one-half of the operating cost of many desalination technologies. The energy intensity of some technologies raises concerns about greenhouse gas emissions and the usefulness of these technologies for climate change adaptation.", "Concerns also remain about the technologies' environmental impacts, such as saline waste concentrate management and disposal and the effect of surface water intake facilities on aquatic organisms. Construction of desalination facilities, like many other types of projects, often requires a significant number of local, state, and federal approvals and permits.", "Emerging technologies (e.g., forward osmosis, capacitive deionization, and chlorine resistant membranes) show promise for reducing desalination costs. Research to support emerging technologies and to reduce desalination's environmental and human health impacts is particularly relevant to future adoptions of desalination and membrane technologies.", "The federal government generally has been involved primarily in desalination research and development (including for military applications), some demonstration projects, and select full-scale facilities.", "For the most part, local governments, sometimes with state-level involvement, are responsible for planning, testing, building, and operating desalination facilities.", "Some states, universities, and private entities also undertake and support desalination research.", "While interest in desalination persists among some Members, especially in response to drought concerns, efforts to maintain or expand federal activities and investment are challenged by the domestic fiscal climate and differing views on federal roles and priorities." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, -1, 2, -1, 0, 0, -1, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "SBA Has Implemented One of the Three Changes Made by the 2015 NDAA", "SBA Has Not Fully Addressed Deficiencies in Oversight and Program Implementation", "Federal Contracts to WOSB Set-Asides Remain Relatively Small", "GAO Contact and Acknowledgments" ], "paragraphs": [ "Federal agencies conduct a variety of procurements that are reserved for small business participation through small business set-asides. These set-asides can be for small businesses in general, or they can be specific to small businesses that meet additional eligibility requirements in the Service-Disabled Veteran-Owned Small Business, Historically Underutilized Business Zone (HUBZone), 8(a) Business Development (8(a)), and WOSB programs. The WOSB program enables federal contracting officers to identify and establish a sheltered market, or set- aside, for competition among women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB) in certain industries. WOSBs can receive set-asides in industries in which SBA has determined that women-owned small businesses are substantially underrepresented. To determine these industries, SBA is required to conduct a study to determine which North American Industry Classification System (NAICS) codes are eligible under the program and to report on such studies every 5 years.\nAdditionally, businesses must be at least 51 percent owned and controlled by one or more women who are U.S. citizens to participate in the WOSB program. The owner must provide documents demonstrating that the business meets program requirements, including a document in which the owner attests to the business’s status as a WOSB or EDWOSB. According to SBA, as of early October 2018, there were 13,224 WOSBs and 4,488 EDWOSBs registered in SBA’s online certification database. SBA’s Office of Government Contracting administers the WOSB program by, among other things, promulgating regulations and conducting eligibility examinations of businesses that receive contracts under a WOSB or EDWOSB set-aside. According to SBA, as of October 2018, there were two full-time staff within the Office of Government Contracting whose primary responsibility was the WOSB program.\nInitially, the program’s statutory authority allowed WOSBs to be self- certified by the business owner or certified by an approved third-party national certifying entity as eligible for the program. Self-certification is free, but some third-party certification options require businesses to pay a fee. Each certification process requires businesses to provide signed representations attesting to their WOSB or EDWOSB eligibility. Businesses must provide documents supporting their status before submitting an offer to perform the requirements of a WOSB set-aside contract. In August 2016, SBA launched certify.sba.gov, which is an online portal that allows firms participating in the program to upload required documents and track their submission and also enables contracting officers to review firms’ eligibility documentation. According to the Federal Acquisition Regulation, contracting officers are required to verify that all required documentation is present in the online portal when selecting a business for an award. In addition, businesses must register and attest to being a WOSB in the System for Award Management, the primary database of vendors doing business with the federal government.\nIn 2011, SBA approved four organizations to act as third-party certifiers. According to SBA data, these four third-party certifiers completed a total of about 3,400 certifications in fiscal year 2017.\nIn 2014 we reviewed the WOSB program and found a number of deficiencies in SBA’s oversight of the four SBA-approved third-party certifiers and in SBA’s eligibility examination processes, and we made related recommendations for SBA. In addition, in 2015 and 2018 the SBA Office of Inspector General (OIG) reviewed the WOSB program and also found oversight deficiencies, including evidence of WOSB contracts set aside for ineligible firms. In both reports, the SBA OIG also made recommendations for SBA. Further, in July 2015, we issued GAO’s fraud risk framework, which provides a comprehensive set of key components and leading practices that serve as a guide for agency managers to use when developing efforts to combat fraud in a strategic, risk-based way.", "As of early May 2019, SBA had implemented one of the three changes that the 2015 NDAA made to the WOSB program—sole-source authority. The two other changes—authorizing SBA to implement its own certification process for WOSBs and requiring SBA to eliminate the WOSB self-certification option—had not been implemented. The 2015 NDAA did not require a specific time frame for SBA to update its regulations. SBA officials have stated that the agency will not eliminate self-certification until the new certification process for the WOSB program is in place, which they expect to be completed by January 1, 2020.\nIn September 2015, SBA published a final rule to implement sole-source authority for the WOSB program (effective October 2015). Among other things, the rule authorized contracting officers to award a contract to a WOSB or EDWOSB without competition, provided that the contracting officer’s market research cannot identify two or more WOSBs or EDWOSBs in eligible industries that can perform the requirements of the contract at a fair and reasonable price. In the final rule, SBA explained that it promulgated the sole-source rule before the WOSB certification requirements for two reasons. First, the sole-source rule could be accomplished by simply incorporating the statutory language into the regulations, whereas the WOSB certification requirements would instead require a prolonged rulemaking process. Second, SBA said that addressing all three regulatory changes at the same time would delay the implementation of sole-source authority.\nAs of early May 2019, SBA had not published a proposed rule for public comment to establish a new certification process for the WOSB program. Previously, in October 2017, an SBA official stated that SBA was about 1–2 months away from publishing a proposed rule. However, in June 2018, SBA officials stated that a cost analysis would be necessary before the draft rule could be sent to the Office of Management and Budget for review. In response to the SBA OIG recommendation that SBA implement the new certification process, SBA stated that it would implement a new certification process by January 1, 2020. Further, in June 2018, SBA officials told us that they were evaluating the potential costs of a new certification program as part of their development of the new certification rule. On May 3, 2019, SBA officials explained that they expected to publish the proposed rule within a few days.\nIn December 2015, SBA published an advance notice of proposed rulemaking to solicit public comments to assist the agency with drafting a proposed rule to implement a new WOSB certification program. In the notice, SBA stated that it intends to address the 2015 NDAA changes, including eliminating the self-certification option, through drafting regulations to implement a new certification process. The advance notice requested comments on various topics, such as how well the current certification processes were working, which of the certification options were feasible and should be pursued, whether there should be a grace period for self-certified WOSB firms to complete the new certification process, and what documentation should be required.\nThree third-party certifiers submitted comments in response to the advance notice of proposed rulemaking, and none supported the option of SBA acting as a WOSB certifier. One third-party certifier commented that such an arrangement is a conflict of interest given that SBA is also responsible for oversight of the WOSB program, and two certifiers commented that SBA lacked the required resources. The three third-party certifiers also asserted in their comments that no other federal agency should be allowed to become an authorized WOSB certifier, with one commenting that federal agencies should instead focus on providing contracting opportunities for women-owned businesses. All three certifiers also proposed ways to improve the current system of third-party certification—for example, by strengthening oversight of certifiers or expanding their number. The three certifiers also suggested that SBA move to a process that better leverages existing programs with certification requirements similar to those of the WOSB program, such as the 8(a) program. In the advance notice, SBA asked for comments on alternative certification options, such as SBA acting as a certifier or limiting WOSB program certifications to the 8(a) program and otherwise relying on state or third-party certifiers.", "SBA has not fully addressed deficiencies we identified in our October 2014 report, and these recommendations remain open. First, we reported that SBA did not have formal policies for reviewing the performance of its four approved third-party certifiers, including their compliance with their agreements with SBA. Further, we found that SBA had not developed formal policies and procedures for, among other things, reviewing the monthly reports that certifiers submit to SBA. As a result, we recommended that SBA establish comprehensive procedures to monitor and assess the performance of the third-party certifiers in accordance with their agreements with SBA and program regulations.\nIn response to our October 2014 recommendation, in 2016 SBA conducted compliance reviews of the four SBA-approved third-party certifiers. The compliance reviews included an assessment of the third- party certifiers’ internal certification procedures and processes, an examination of a sample of applications from businesses that the certifiers deemed eligible and ineligible for certification, and an interview with management staff. SBA officials said that SBA’s review team did not identify significant deficiencies in any of the four certifiers’ processes and found that all were generally complying with their agreements. However, one compliance review report described “grave concerns” that a third- party certifier had arbitrarily established eligibility requirements that did not align with WOSB program regulations and used them to decline firms’ applications. SBA noted in the report that if the third-party certifier failed to correct this practice, SBA could terminate the agreement. As directed by SBA, the third-party certifier submitted a letter to SBA outlining actions it had taken to address this issue, among others.\nIn January 2017, SBA’s Office of Government Contracting updated its written Standard Operating Procedures (SOP) to include policies and procedures for the WOSB program, in part to address our October 2014 recommendation. The 2017 SOP discusses what a third-party-certifier compliance review entails, how often the reviews are to be conducted, and how findings are to be reported. The 2017 SOP notes that SBA may initiate a compliance review “at any time and as frequently as the agency determines is necessary.” In March 2019, SBA provided an updated SOP, which includes more detailed information on third-party compliance reviews, such as how SBA program analysts should prepare for the review. However, the updated SOP does not provide specific time frames for how frequently the compliance reviews are to be conducted.\nIn addition, in April 2018, SBA finalized a WOSB Program Desk Guide that discusses how staff should prepare for a compliance review of a third-party certifier, review certification documents, and prepare a final report. In March 2019, SBA provided GAO with an updated WOSB Program Desk Guide that contains information comparable to that in the 2018 version. Both Desk Guides do not describe specific activities designed to oversee third-party certifiers on an ongoing basis.\nPer written agreements with SBA, third-party certifiers are required to submit monthly reports that include the number of WOSB and EDWOSB applications received, approved, and denied; identifying information for each certified business, such as the business name; concerns about fraud, waste, and abuse; and a description of any changes to the procedures the organizations used to certify businesses as WOSBs or EDWOSBs.\nIn our October 2014 report, we noted that SBA had not followed up on issues raised in the monthly reports and had not developed written procedures for reviewing them. At that time, SBA officials said that they were unaware of the issues identified in the certifiers’ reports and that the agency was developing procedures for reviewing the monthly reports but could not estimate a completion date. In interviews for our March 2019 report, SBA officials stated that SBA still does not use the third-party certifiers’ monthly reports to regularly monitor the program. Specifically, SBA does not review the reports to identify any trends in certification deficiencies that could inform program oversight. Officials said the reports generally do not contain information that SBA considers helpful for overseeing the WOSB program, but staff sometimes use the reports to obtain firms’ contact information. SBA’s updated 2019 SOP includes information on reviews of third-party certifier monthly reports, but it does not contain information on how staff would analyze the reports or how these reports would inform SBA’s oversight of third-party certifiers and related compliance activities, such as eligibility examinations. On May 3, 2019, SBA officials stated that, earlier in the week, they had initiated monthly meetings with the third-party certifiers. SBA officials explained that they intended to continue holding these monthly meetings to discuss best practices and potential issues related to the approval and disapproval of firms and to improve collaboration.\nAlthough SBA has taken steps to enhance its written policies and procedures for oversight of third-party certifiers, it does not have plans to conduct further compliance reviews of the certifiers and does not intend to review certifiers’ monthly reports on a regular basis in a way that would inform its oversight activities. SBA officials said that third-party certifier oversight procedures would be updated, if necessary, after certification options have been clarified in the final WOSB certification rule. However, ongoing oversight activities, such as regular compliance reviews, could help SBA better understand the steps certifiers have taken in response to previous compliance review findings and whether those steps have been effective. In addition, leading fraud risk management practices include identifying specific tools, methods, and sources for gathering information about fraud risks, including data on trends from monitoring and detection activities, as well as involving relevant stakeholders in the risk assessment process. Without procedures to regularly monitor and oversee third-party certifiers, SBA cannot provide reasonable assurance that certifiers are complying with program requirements and cannot improve its efforts to identify ineligible firms or potential fraud. Further, it is unclear when SBA’s final rule will be implemented. As a result, we maintain that our previous recommendation should be addressed—that is, that the Administrator of SBA should establish and implement comprehensive procedures to monitor and assess the performance of certifiers in accordance with the requirements of the third-party certifier agreement and program regulations.\nSBA also has not fully addressed deficiencies we identified in our October 2014 report related to eligibility examinations. We found that SBA lacked formalized guidance for its eligibility examination processes and that the examinations identified high rates of potentially ineligible businesses. As a result, we recommended that SBA enhance its examination of businesses that register for the WOSB program to ensure that only eligible businesses obtain WOSB set-asides. Specifically, we suggested that SBA should take actions such as (1) completing the development of procedures to conduct annual eligibility examinations and implementing such procedures; (2) analyzing examination results and individual businesses found to be ineligible to better understand the cause of the high rate of ineligibility in annual reviews and determine what actions are needed to address the causes, and (3) implementing ongoing reviews of a sample of all businesses that have represented their eligibility to participate in the program.\nSBA has taken some steps to implement our recommendation, such as including written policies and procedures for WOSB program eligibility examinations in an SOP and a Desk Guide. However, SBA does not collect reliable information on the results of its annual eligibility examinations. According to SBA officials, SBA has conducted eligibility examinations of a sample of businesses that received WOSB program set-aside contracts each year since fiscal year 2012. However, SBA officials told us that the results of annual eligibility examinations—such as the number of businesses found eligible or ineligible—are generally not documented. As a result, we obtained conflicting data from SBA on the number of examinations completed and the percentage of businesses found to be ineligible in fiscal years 2012 through 2018. For example, based on previous information provided by SBA, we reported in October 2014 that in fiscal year 2012, 113 eligibility examinations were conducted and 42 percent of businesses were found to be ineligible for the WOSB program. However, during our more recent review, we received information from SBA indicating that 78 eligibility examinations were conducted and 37 percent of businesses were found ineligible in fiscal year 2012. In addition, SBA continues to have no mechanism to look across examinations for common eligibility issues to inform the WOSB program. As we noted in 2014, by not analyzing examination results broadly, the agency is missing opportunities to obtain meaningful insights into the program, such as the reasons many businesses are deemed ineligible.\nFurther, SBA still conducts eligibility examinations only of firms that have already received a WOSB award. In our October 2014 report, we concluded that this sampling practice restricts SBA’s ability to identify potentially ineligible businesses prior to a contract award. SBA officials said that while some aspects of the sample characteristics have changed since 2012, the samples still generally consist only of firms that have been awarded a WOSB set-aside. Restricting the samples in this way limits SBA’s ability to better understand the eligibility of businesses before they apply for and are awarded contracts, as well as its ability to detect and prevent potential fraud.\nWe recognize that SBA has made some effort to address our previous recommendation by documenting procedures for conducting annual eligibility examinations of WOSB firms. However, leading fraud risk management practices state that federal program managers should design control activities that focus on fraud prevention over detection and response, to the extent possible. Without maintaining reliable information on the results of eligibility examinations, developing procedures for analyzing results, and expanding the sample of businesses to be examined to include those that did not receive contracts, SBA limits the value of its eligibility examinations and its ability to reduce ineligibility among businesses registered to participate in the WOSB program. These deficiencies also limit SBA’s ability to identify potential fraud risks and develop any additional control activities needed to address these risks. As a result, the program may continue to be exposed to the risk of ineligible businesses receiving set-aside contracts. In addition, in light of these continued deficiencies, the implementation of sole-source authority without addressing the other changes made by the 2015 NDAA could increase program risk. For these reasons, we maintain that our previous recommendation that SBA enhance its WOSB eligibility examination procedures should be addressed.\nSBA has also not addressed previously identified issues with WOSB set- asides awarded under ineligible industry codes. In 2015 and 2018, the SBA OIG reported instances in which WOSB set-asides were awarded using NAICS codes that were not eligible under the WOSB program, and our analysis indicates that this problem persists. Specifically, our analysis of data from the Federal Procurement Data System–Next Generation (FPDS–NG) on all obligations to WOSB program set-asides from the third quarter of fiscal year 2011 through the third quarter of fiscal year 2018 found the following:\n3.5 percent (or about $76 million) of WOSB program obligations were awarded under NAICS codes that were never eligible for the WOSB program;\n10.5 percent (or about $232 million) of WOSB program obligations made under an EDWOSB NAICS code went to women-owned businesses that were not eligible to receive awards in EDWOSB- eligible industries; and\n17 of the 47 federal agencies that obligated dollars to WOSB program set-asides during the period used inaccurate NAICS codes in at least 5 percent of their WOSB set-asides (representing about $25 million).\nAccording to SBA officials we spoke with, WOSB program set-asides may be awarded under ineligible NAICS codes because of human error when contracting officers are inputting data in FPDS–NG or because a small business contract was misclassified as a WOSB program set-aside. Rather than review FPDS–NG data that are inputted after the contract is awarded, SBA officials said that they have discussed options for working with the General Services Administration to add controls defining eligible NAICS codes for WOSB program set-aside opportunities on FedBizOpps.gov—the website that contracting officers use to post announcements about available federal contracting opportunities. However, SBA officials said that the feasibility of this option was still being discussed and that the issue was not a high priority. Additionally, as of November 2018, the WOSB program did not have targeted outreach or training that focused on specific agencies’ use of NAICS codes, and SBA officials did not identify any targeted outreach or training provided to specific agencies to improve understanding of WOSB NAICS code requirements (or other issues related to the WOSB program). On May 6, 2019, an SBA official provided information that SBA has initiated a review to determine federal agencies’ use of ineligible NAICS codes and that SBA plans to share the findings with agencies and also provide training to procurement center representatives.\nCongress authorized SBA to develop a contract set-aside program specifically for WOSBs and EDWOSBs to address the underrepresentation of such businesses in specific industries. In addition, federal standards for internal control state that management should design control activities to achieve objectives and respond to risks, and that management should establish and operate monitoring activities to monitor and evaluate the results. Because SBA does not review whether contracts are being awarded under the appropriate NAICS codes, it cannot provide reasonable assurance that WOSB program requirements are being met or identify agencies that may require targeted outreach or additional training on eligible NAICS codes. As a result, WOSB contracts may continue to be awarded to groups other than those intended, which can undermine the goals of and confidence in the program.", "While federal contract obligations to all women-owned small businesses and WOSB program set-asides have increased since fiscal year 2012, WOSB program set-asides remain a small percentage. Specifically, federal dollars obligated for contracts to all women-owned small businesses increased from $18.2 billion in fiscal year 2012 to $21.4 billion in fiscal year 2017. Contracts awarded to all women-owned small businesses within WOSB-program-eligible industries also increased during this period—from about $15 billion to $18.8 billion, as shown in figure 1. However, obligations under the WOSB program represented only a small share of this increase. In fiscal year 2012, WOSB program contract obligations were 0.5 percent of contract obligations to all women- owned small businesses for WOSB-program-eligible goods or services (about $73.5 million), and in fiscal year 2017 this percentage had grown to 3.8 percent (about $713.3 million) (see fig. 1).\nIn summary, the WOSB program aims to enhance federal contracting opportunities for women-owned small businesses. However, as of early May 2019, SBA had not fully implemented comprehensive procedures to monitor the performance of the WOSB program’s third-party certifiers and had not taken steps to provide reasonable assurance that only eligible businesses obtain WOSB set-aside contracts, as recommended in our 2014 report. Without ongoing monitoring and reviews of third-party certifier reports, SBA cannot ensure that certifiers are fulfilling their requirements, and it is missing opportunities to gain information that could help improve the program’s processes. Further, limitations in SBA’s procedures for conducting and analyzing eligibility examinations inhibit its ability to better understand the eligibility of businesses before they apply for and potentially receive contracts, which exposes the program to unnecessary risk of fraud. Also, since SBA does not expect to finish implementing the changes in the 2015 NDAA until January 1, 2020, these continued oversight deficiencies increase program risk. As a result, we maintain that our previous recommendations should be addressed.\nIn addition, SBA has not addressed deficiencies related to WOSB program set-asides being awarded under ineligible industry codes. Although SBA has updated its training and outreach materials for the WOSB program to address NAICS code requirements, it has not developed a process for periodically reviewing FPDS–NG data, and has yet to provide targeted outreach or training to agencies that may be using ineligible codes. As a result, SBA is not aware of the extent to which individual agencies are following program requirements and which agencies may require targeted outreach or additional training. Reviewing FPDS–NG data would allow SBA to identify those agencies (and contracting offices within them) that could benefit from such training. Without taking these additional steps, SBA cannot provide reasonable assurance that WOSB program requirements are being met.\nAs such, we made one recommendation in our March 2019 report to SBA. We recommended that SBA develop a process for periodically reviewing FPDS–NG data to determine the extent to which agencies are awarding WOSB program set-asides under ineligible NAICS codes, and take steps to address any issues identified, such as providing targeted outreach or training to agencies making awards under ineligible codes. As of May 2019, this recommendation remains open.\nChairman Golden, Ranking Member Stauber, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.", "If you or your staff have any questions about this testimony, please contact William Shear, Director, Financial Markets and Community Investment at (202) 512-8678 or shearw@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 are Andrew Pauline (Assistant Director), Tarek Mahmassani (Analyst in Charge), and Jennifer Schwartz.\nOther staff who made key contributions to the report cited in the testimony were Allison Abrams, Pamela Davidson, Jonathan Harmatz, Tiffani Humble, Julia Kennon, Rebecca Shea, Jena Sinkfield, Tyler Spunaugle, and Tatiana Winger.\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, 1, 1 ], "alignment": [ "h2_full h1_full", "h0_full h1_full", "h2_full", "h0_full", "" ] }

{ "question": [ "What changes were made to the Women-Owned Small Business Program?", "What aspects of the WOSB remain unchanged?", "What was the third change in the NDAA?", "Why was the WOSB program created?", "What criteria must a firm meet in order to participate in the WOSB program?", "What changes have been made to the WOSB program?", "What did GAO examine in their March 2019 report?", "How did GAO collect information for this report?" ], "summary": [ "The Small Business Administration (SBA) has implemented one of the three changes to the Women-Owned Small Business (WOSB) program authorized in the National Defense Authorization Act of 2015 (2015 NDAA). In September 2015 SBA published a final rule to implement sole-source authority (to award contracts without competition), effective October 2015.", "As of early May 2019, SBA had not eliminated the option for program participants to self-certify that they are eligible to participate, as required by the 2015 NDAA.", "SBA officials stated that the agency intended to address the third change made by the 2015 NDAA (meaning implement a new certification process for the WOSB program).", "In 2000, Congress authorized the WOSB program, allowing contracting officers to set aside procurements to women-owned small businesses in industries in which they are substantially underrepresented.", "To be eligible to participate in the WOSB program, firms have the option to self-certify or be certified by a third-party certifier.", "However, the 2015 NDAA changed the WOSB program by (1) authorizing SBA to implement sole-source authority, (2) eliminating the option for firms to self-certify as being eligible for the program, and (3) allowing SBA to implement a new certification process.", "For that report, GAO examined (1) the extent to which SBA has addressed the 2015 NDAA changes, (2) SBA's efforts to address previously identified deficiencies, and (3) use of the WOSB program.", "GAO reviewed relevant laws, regulations, and program documents; analyzed federal contracting data from April 2011 through June 2018; and interviewed SBA officials, officials from contracting agencies selected to obtain a range of experience with the WOSB program, and the three (out of four) private third-party certifiers that agreed to meet with GAO." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, -1, 0 ], "summary_paragraph_index": [ 2, 2, 2, 0, 0, 0, 1, 1 ] }

{ "title": [ "", "Background: Recent Federal Support", "Can Marine Highways Deliver Tangible Benefits?", "Short-Distance Ferries", "Upriver Inland Port", "Characteristics of a Sustainable Container-on-Barge Service", "Prospects for Federally Funded COB Services", "Coastal Feeder Service", "Growth Prospects for Marine Highway Services", "Vessel and Port Technology", "Issues for Congress", "The Harbor Maintenance Tax", "The Jones Act" ], "paragraphs": [ "", "For at least a decade, policymakers have been discussing the potential to shift freight from roads to rivers and coastal waterways as a means of mitigating highway congestion. While U.S. waterways carry substantial amounts of bulk commodities, such as grain, coal, and fuel oil, they are seldom used to transport containerized cargo between points within the lower 48 states. Trucks, which carry most domestic container shipments, and railroads, which carry a large proportion of containers imported or exported by sea, offer much faster transit. Yet, at a time when many highways and rail lines are congested, a parallel river or coastal waterway may be little used.\nWith passage of the Energy Independence and Security Act of 2007 ( P.L. 110-140 , specifically Subtitle C, 121 Stat. 1760), Congress pushed for greater use of marine transportation by requiring the Department of Transportation's (DOT's) Maritime Administration (MARAD) to identify waterways that could potentially serve as \"short sea\" shipping routes. Subsequently, in the National Defense Authorization Act for FY2010 ( P.L. 111-84 , specifically section 3515, 123 Stat. 2724), Congress authorized federal grants for financially viable short sea routes covering up to 80% of total project cost. In April 2010, MARAD issued a final rule implementing the program, along with the following explanation:\nIn recent years, it has become increasingly evident that the Nation's existing road and rail infrastructure cannot adequately meet our future transportation needs. Land based infrastructure expansion opportunities are limited in many critical bottleneck areas due to geography or very high right-of-way acquisition costs. This is particularly severe in urban areas where there are additional concerns about emissions from transportation sources.\nMARAD uses the term \"marine highways\" instead of \"short sea\" shipping to convey the purpose of the program, which is to mitigate landside freight bottlenecks. For this reason, projects relating to waterborne shipment of dry and liquid bulk products and oversize cargo too large to fit into a container are not eligible, as these products already move on waterways. Also, freight ferry service to an island without a bridge is ineligible, because no roadway congestion would be relieved. As specified by Congress, shipments to or from Mexico do not qualify, nor do shipments to or from Canada, except those across the Great Lakes. Project eligibility requires a demonstration of public benefits and long-term sustainability without future federal operational support.\nDOT has provided grants to several existing or prospective domestic container shipping services, not only under the Marine Highway initiative but also the Transportation Investment Generating Economic Recovery (TIGER) grant program and the Congestion Mitigation Air Quality Improvement Program (CMAQ), as indicated in Table 1 . Relative to DOT's total budget, the amount of funding is small and could be viewed as seed money for exploring the feasibility of marine highways. The funding recipients are public entities, and can be states, metropolitan planning organizations, or port authorities, which must find other funding sources to cover a share of a project's total projected cost. These entities are encouraged to develop public/private partnerships with vessel owners and operators, truck and rail carriers, and shippers. These projects represent departures from the federal government's traditional role in domestic marine transportation, which has involved financing navigation infrastructure but generally has not provided vessel operating grants or funds for landside marine terminal infrastructure, such as wharves and cranes.", "A prevailing perception is that the slow speed of barges and the additional cargo transfer costs at ports deter use of marine highways. The fact that few containers are transported on such expansive internal U.S. waterway systems as the Mississippi River (including the Illinois, Ohio, and Missouri Rivers) and the Great Lakes suggests that there are deterrents. However, there are also highly specific conditions under which barges might be an attractive option for container shippers. A brief survey of existing and defunct domestic waterborne container services points to specific circumstances in which this could occur. Three market segments can be identified and described as (1) short-distance ferries, (2) upriver inland container-on-barge (COB), and (3) coastal feeder services.", "Sometimes the shortest distance between two points happens to be over water. A ferry can be a particularly attractive alternative for freight if the overland route requires travel through a heavily congested area. The ferry across Lake Michigan between Ludington, MI, and Manitowoc, WI, which avoids the longer route around the south end of the lake through Chicago, is one example. Another is a ferry across Long Island Sound that allows trucks to travel between Long Island and New England without taking the longer route over bridges in New York City. These ferries carry both cars and trucks. Tellingly, a ferry service between Rochester, NY, and Toronto, Canada, over Lake Ontario did not stay in business for long, in part because it did not save truckers much time compared to the highway route.\nThe advantage of a truck ferry service is that the transition from land to water and back to land is seamless: the truck drives onto the ferry and then off again, with no separate cargo handling required. Truck ferries demonstrate that marine highways can be successful. However, the geography of the contiguous United States presents few opportunities for cross-waterway ferries.", "Another potential market for marine highways can be identified as upriver inland feeder ports. Several coastal hub ports have satellite ports located upriver that could serve as potential inland container staging areas. Examples are Albany, NY; Richmond, VA; Memphis, TN; Sacramento and Stockton, CA; and Lewiston, ID.\nAll of these river routes have railroads that parallel them. While river barges carry substantial amounts of lower-value cargoes in bulk and typically offer a lower rate than the railroads, the marine highway concept is predicated on diverting containerized cargo, typically the higher-value cargoes. Shippers of high-value goods are typically willing to pay more for faster transport. Railroads carry about 12 million truck trailers and containers annually, roughly equivalent to the number of containers imported by sea and equivalent to the number of trucks that cross into the United States from Canada and Mexico. Intermodal rail becomes more competitive as shipment distance increases (starting at distances of at least 500 to 750 miles), because as distance increases, the cost differential between truck and rail widens while the transit time differential narrows. COB services may be more competitive with trucks for shipment distances under 500 miles or so.\nThe experiences of two defunct upriver inland port services and those of a successful service are helpful in assessing whether this type of marine highway can be successful. The Port Authority of New York and New Jersey began to look for other means of moving containerized cargo to and from its hinterland in order to bypass road, bridge, and tunnel congestion in and around New York City. In April 2003, in cooperation with the port, Columbia Coastal Transport began offering the Albany Express Barge service, a COB service up the Hudson River to the Port of Albany. The service received $5.3 million in federal CMAQ funding, as well as state and local funding, which allowed the barge to undercut the trucking rate by 10%. Upriver to Albany, the barge carried containers loaded mainly with bulk commodities such as logs and silicon, while on the downriver trip it carried primarily empty containers. In addition to the longer transit time (12 to 18 hours by barge versus three hours by truck), the barge sailed only once per week. By the time it ceased operating in February 2006, the barge service had transported a total of 8,486 containers (loaded and empty), or fewer than 30 containers per voyage.\nIn contrast to the Albany service, the Columbia-Snake River System (465 miles) has a long-established COB service, operating since 1975. Along this river system, containers are loaded with forest products at Lewiston, ID; hay cubes at Pasco, WA; and refrigerated potato and meat products at Boardman, OR. The containers are transferred to oceangoing ships at a marine terminal in Portland, OR, and exported to Asia. The trans-Pacific container carriers offer the barge service as part of a through route, meaning that their customers do not have to make separate arrangements for the barge leg. Three barge operators compete for this cargo and in combination provide frequent service. Barge travel time from Lewiston, ID, to Portland is about 51 hours, versus truck travel time of about eight hours, but the cost of barge transport is roughly 25% less. The container-on-barge services are profitable because the barges carrying containers are included in tows alongside barges carrying petroleum, grain, and other bulk cargoes; container barges would not be profitable as a stand-alone service.\nBased somewhat on a similar business model, COB service operated between Memphis and New Orleans on the Mississippi River from 2004 to 2009. Baled cotton (a highly seasonal product) as well as lumber and glucose were loaded in containers and shipped to New Orleans for export on containerships. Barge transit took five days, compared to truck transit of six hours. The service has been discontinued, apparently for lack of northbound cargo. The same carrier tried to establish COB service between Memphis and Louisville, but this also failed.", "The experiences of the Albany, Columbia-Snake, and Memphis COB operations point to important considerations in judging the viability of marine highways on inland waterways. One is that COB services cater to shippers of lower value, intermediate, or unfinished goods. This is made possible by the significant U.S. containerized trade imbalance. Historically, containerized imports have exceeded exports by a wide margin, especially in the trans-Pacific trade. Exporters can take advantage of otherwise empty containers that are being repositioned to Asia and Europe. Grain exporters, for example, traditionally loaded their commodities in bulk into railcars or barges at inland points and transferred them in bulk to oceangoing vessels at ports, but 6% of U.S. grain exports to Asia moved in containers in 2009. This bolstered demand for COB services. Without the trade imbalance, U.S. exporters of lower-value goods would probably find it too expensive to ship by container, and they would not require container-on-barge services for the inland portion of their export shipments.\nShippers of lower-value goods generally are willing to trade off faster transit times for significantly lower rates (20% to 30% lower is suggested by one study). They also tend to ship heavier cargoes for which over-the-road weight limits (restricting the weight of cargo inside a container or trailer to 44,000 lbs.) keep them from loading containers to their physical capacity (over 60,000 lbs). Container shipment becomes more viable if a shipper is located on the water, not requiring a truck trip to the river terminal. In addition to the cargo transfer costs, each carrier has overhead (fixed) costs that it must recover from each shipment regardless of its distance. Therefore, a shipment involving multiple carriers (for instance, a trucker on one or both ends of a barge movement) will carry more overhead costs than a single-carrier shipment.\nCOB services may also be more successful if they follow the railroads' example and sell their service to truckers, ocean carriers, or freight arrangers (middlemen) rather than directly to shippers. Many shippers of containerized cargo are used to contracting with just one carrier, which is responsible for door-to-door service even if the transport involves multiple modes. These shippers could be reluctant to arrange for individual legs of a shipment themselves.\nAccess to backhaul traffic is also important to economic viability, as the Albany and Memphis examples show. The Memphis service may not have been able to capture northbound import loads from New Orleans because import containers tend to be loaded with higher-value manufactured goods whose shippers attach a high value to time; these shippers would rather pay more for rapid truck or rail transportation than pay less for slow and infrequent barge transportation. Also, the New Orleans-Memphis container route faces stiff competition from the Houston-Memphis route. Houston is a preferred container port to New Orleans due to its proximity to the ocean and its more frequent containership service, and containers destined for Memphis can be transshipped by rail or truck from Houston with little or no loss of time. In the case of the Albany COB service, there may have been little available southbound container traffic to New York because the region is not a large producer of agricultural or natural resource commodities for which barge service might be competitive.\nAs is the case with intermodal rail, shipment density is important to the viability of marine highways. Sufficient volume is necessary so that the water carrier can provide enough service frequency to compete with trucking's scheduling flexibility. If container barges can be incorporated into tows of bulk commodities, customers can be offered more frequent service, which may lead to greater demand.", "The lessons learned from the above services shed light on the prospects for the COB services that have received grant funding. As indicated in Table 1 , the James River 64 Express barge hopes to expand its service. At the Port of Richmond, VA, container volume has plummeted because the port recently lost the one regularly scheduled transatlantic container line that provided direct service. However, former customers of this line that still require Richmond service may use the James River 64 Express Barge service as a replacement. Unlike the Albany barge service, this may provide the Richmond barge service with a relatively diverse base of customers. Companies producing tobacco products, paper, and quarry stone, all headquartered in Richmond, have expressed interest in the service. The service is predicated on highway, tunnel, and bridge congestion in the Norfolk area. As of August 2010, the James River barge was carrying 100 to 200 containers per week, and has been able to carry loaded containers in both directions. The river transit takes 12 hours while the truck transit takes two hours.\nThe $30 million in federal funding for the Ports of Stockton and West Sacramento is to promote barge connections with the Port of Oakland. There is no current container service at these upriver ports to build upon. The business plan for the proposed services involves the transfer of cargo between international marine containers and larger domestic containers in Stockton and West Sacramento. The contents of three 40-foot international marine containers can be loaded into just two 53-foot domestic containers. Consequently, some importers and exporters find it economical to pay the additional cost of transferring the cargo between equipment sizes at a warehouse (referred to as \"cross docking\") in the vicinity of the coastal port so that they can pay for the cost of moving just two rather than three containers overland. For these shippers, the inland transport leg is broken up into two segments: trucking the international container between the seaport and the warehouse where the cross docking occurs, and moving the domestic container between this warehouse and the final U.S. destination/origin. Thus, additional cargo handling operations, often the deterrent to COB service, are essentially negated because these shippers are already choosing an additional transloading step in order to utilize larger domestic containers.\nA distinguishing feature of the Port of Oakland is that it is an important gateway for containerized exports to Asia. For this reason, it tends to have a relatively balanced flow of import and export containers. However, many of the container cargoes exported through Oakland are temperature controlled agricultural products such as meat. These are time-sensitive, high-value goods that typically move overland by truck because of their high service demands; intermodal rail has not been able to capture much of this cargo even for long-distance shipments. Although, as indicated above, an exporter of refrigerated products uses Columbia-Snake COB services, perishables are not generally considered good candidates for the proposed California barge services.\nThe Tenn-Tom COB project is also a new service. The service originates at the Port of Mobile, where a new container terminal opened in December 2008. The other terminus is the Port of Itawamba in northeast Mississippi. One expected customer is the furniture industry near the Port of Itawamba. These companies' imports from Asia currently move through the West Coast to Memphis via intermodal rail and then to the factories by truck. Another potential user is Weyerhaeuser, which has two plants in the region and exports to Europe and Asia by truck through the ports of Charleston and Savannah. One hurdle for the new service is that the ports these two potential customers currently use offer much more frequent sailings to Asia and Europe than Mobile does.\nAs indicated in Table 1 , the new ports being constructed on the Mississippi River at Granite City, IL, and Cates Landing, TN, are not solely targeting shippers of containerized cargo. These new ports are hoping to attract any cargo, including shippers of bulk commodities. The literature on these projects does not specifically describe potential container shipping customers nor the origins and destinations of cargo traveling through the ports.", "A third type of marine highway runs between ports along the coast. The cross-Gulf COB service between Brownsville, TX, and Port Manatee, FL, is the only coastal service that received federal funding. The water route between these two ports is about 600 miles shorter than the land route. In 2009, its first year of service, it carried the equivalent of 3,000 containers, or roughly 60 containers per week. The service caters to overweight cargo from Monterrey, Mexico, and, according to the carrier, provides savings of up to $1,000 per container shipment compared with the trucking alternative. It has also been able to find some backhaul cargo.\nAnother Gulf of Mexico coastal operator, Osprey Lines, used to provide weekly service between Houston and Tampa with a stop at New Orleans on the return trip. It converted an offshore supply vessel, the Sea Trader , for container carriage. The Sea Trader capitalized on poor rail service between Texas and Florida and the reluctance of truckers to serve this market. However, scheduled coastwise service proved unviable because of a lack of westbound cargo. Ports located on the peninsular part of Florida, like Tampa, primarily serve local markets, and finding backhaul cargo to New Orleans and Houston proved difficult. Osprey Lines currently serves only the Houston-New Orleans route, and only when cargo is available rather than on a regularly scheduled basis.\nAlong the West Coast, Matson Navigation provided weekly container shuttle service between Los Angeles, Oakland, and Vancouver, Canada, from mid-1994 to the end of 2000. Unlike most marine highway services in recent years, Matson used a containership in this service. However, when a containership in its Hawaii service had to be replaced, Matson chose the shuttle vessel as the replacement. The shuttle service was only marginally profitable, and rather than acquire another vessel for the service, Matson contracted with a railroad to shuttle the containers.\nColumbia Coastal Transport, the company that operated the COB service between the Port of New York and New Jersey and Albany, currently offers twice-weekly service between Norfolk and Baltimore. Its experience suggests that there may be a market for marine highways between hub ports and nearby ports that trans-oceanic containerships prefer to skip. Containership owners prefer to keep their expensive vessels moving by minimizing the number of port calls and avoiding ports that involve lengthy bay or river transits, like Baltimore. Columbia Coastal's barges provide feeder service to Baltimore for international containerships calling at Norfolk. The service carries almost 2,000 containers per week. It formerly offered a similar feeder service between Boston and New York, but abandoned it in August 2010 because more international container vessels began calling at Boston directly.\nThe enlarged Panama Canal will accommodate larger containerships from 2015. There may be more opportunities for feeder services along the Atlantic and Gulf coasts if more large containerships from Asia call directly at East and Gulf Coast hub ports rather than unloading their cargo at Pacific Coast ports.", "Marine highway services, with the exception of those across the Great Lakes, cater primarily to the domestic portion of international containerized freight shipments. Domestic shipments are much less likely to use marine highways because, even with highway congestion, shippers are accustomed to relatively consistent on-time performance. Importers and exporters of containerized freight, on the other hand, are accustomed to delays routinely caused by weather, customs, and labor unrest here or overseas. In the context of an ocean voyage lasting two or three weeks, a one- or two-day delay is not unexpected or calamitous.\nIn addition, a significant portion of domestic truck freight is carried in truck trailers rather than in containers that can be detached from their chassis. Barge services can carry truck trailers, but doing so is relatively inefficient, as trailers, unlike containers, cannot be stacked.\nThese factors severely limit the potential universe of truck traffic that marine highways could divert from the highways. International shipments account for less than one-tenth of total truck tonnage. The vast majority of the trucks contributing to highway congestion are serving routes or carrying products for which short-sea transport is not a viable alternative, or else are not designed to haul detachable ocean shipping containers.", "Technological developments have been instrumental in helping railroads compete to carry truck trailers and containers. Proponents of marine highways have suggested that similar developments might occur in the maritime sector, with changes in port or vessel technologies potentially driving down the cost of short-sea shipping. Funding technological development could be an option for promoting marine highways.\nOne such technology is \"fast ferries,\" ships with speeds of 40 knots or greater, which have been proposed as a way to make coastal shipping more attractive. However, the fuel costs of these vessels could be prohibitive. For shippers, transit time on short-sea routes is much more a function of service frequency than of vessel speed: the need to wait one or two days for a scheduled vessel departure more than cancels out any gain from a faster vessel.\nAnother technological approach would be renewed emphasis on roll-on/roll-off (Ro/Ro) vessels, which have ramps to allow trucks to drive on and off, leaving just the trailer on the vessel. Ro/Ro vessels first came into wide use during World War II, and at various times have been used for coastal shipping. The advantage of Ro/Ros is that they do not require expensive gantry cranes to load and unload containers and can be loaded or unloaded quickly. However, because the containers or truck trailers carried on the ships have wheels attached, they cannot be stacked on the ship or in the port, making the Ro/Ro concept much less space efficient.\nRegardless of ship type, the Matson experience on the West Coast suggests that the capital costs of a dedicated ship can be a difficult hurdle, even in the U.S. coastal container market with the largest volume. Perhaps for this reason, U.S. coastal shipping services typically use oceangoing barges, with a tug either pulling or pushing the barge tow, rather than self-propelled containerships. Crew size requirements are based on the tonnage of a vessel, which in the case of tug and barges is the tonnage of the tug, not the barge. For this reason, tug-and-barge combinations offer substantial savings in crewing costs, requiring crews of six to eight instead of 20 to 23 for self-propelled vessels.\nThe lesson of avoiding high capital costs seems also to be relevant to cargo-handling equipment in ports. Rather than more expensive gantry cranes, reach stackers appear to be the prevalent means of loading and unloading container barges. A reach stacker is similar to a large fork lift but is mounted with a crane instead of a lift. Reducing cargo handling costs at ports is key to marine highway development.", "The main issue for Congress with respect to short-sea shipping is whether federal investment in marine highways will produce public benefits that outweigh the costs.\nAs the above analysis suggests, marine highways may be commercially viable in certain circumstances. In many instances, however, they have succeeded in capturing only a negligible share of container shipments along a given route. There are questions, therefore, whether marine highways will divert enough trucks to provide public benefits commensurate with their costs. For instance, at the height of its service, the Albany Express Barge was diverting 10 trucks a day. To put this number in perspective, the Port of New York and New Jersey handles, on average, about 10,000 containers per day.\nMost of the marine highway services that have received federal grants are carrying, or seem likely to carry, no more than a few thousand containers annually. On a per truck basis, therefore, the federal cost of diversion is likely to be in the neighborhood of several hundred dollars. Using the example of Albany Express Barge again, the $5.3 million of federal funding provided for this service enabled the transportation of 8,486 containers over the service's three-year life. This equates to a federal outlay of $625 per container, which is in the neighborhood of what a shipper would pay for trucking a container between New York and Albany. Thus, the federally supported project roughly doubled the nation's freight bill for these container movements.", "Another means of promoting short-sea shipping would be to repeal the existing harbor maintenance tax as it pertains to containerized domestic shipments, although the tax remains largely unenforced with respect to domestic shippers. The harbor maintenance tax, enacted in 1986, is essentially a federal port use charge intended to recover some of the costs incurred by the U.S. Army Corps of Engineers to operate and maintain waterside infrastructure in coastal and Great Lakes ports. These costs consist mostly of dredging navigation channels, but also maintaining breakwaters and jetties and operating several locks. (The harbor maintenance tax does not recover the Corps of Engineers' costs associated with the infrastructure of the inland waterway system, which is funded from a separate barge fuel tax. )\nThe harbor maintenance tax is assessed at 0.125% of shipment value ($1.25 per $1,000 of shipment value) on imported waterborne and domestic cargo. It is not assessed on waterborne exports, as a 1998 Supreme Court decision found this tax on exports to be unconstitutional. In addition to the amount of the tax, some have claimed that the administrative burden of payment on the part of the shipper discourages would-be waterborne shippers. While highway users also pay federal user charges (taxes on diesel fuel, new truck equipment, and truck weight charges), shippers do not pay these taxes directly; motor carriers do.\nWaterborne importers pay the harbor maintenance tax as part of the Customs clearance process upon arrival of the shipment, while domestic shippers pay the tax on a quarterly basis. Domestic shippers are charged only once for each shipment, not at both ports. However, if imported goods are offloaded from a vessel at one port and then shipped to another U.S. port on a different vessel, such as a feeder ship or barge, the tax would be assessed at both ports. The tax thus discourages domestic water shipment of import and export containers.\nThe tax could also be particularly cumbersome for domestic vessel operators carrying containers of mixed cargo assembled by consolidators, because these typically hold shipments from multiple customers. Before using a marine highway, the vessel operator would need to assure that each shipper was advised that it would be subject to the tax.\nIn the 111 th Congress, bills were introduced that would have exempted containerized domestic shipments from paying the harbor maintenance tax. However, according to preliminary estimates by the Corps of Engineers, only about 10% of what is potentially owed is being collected from domestic shippers. The Corps also estimates that waterborne shippers pay about 10% of the federal cost of providing navigation infrastructure, either through the harbor maintenance tax or the barge fuel tax. This compares with highway user fees (including truck-specific taxes and fees) that cover most of the federal cost of highway infrastructure and railroads, which by and large privately finance their infrastructure. Thus, legislation that further reduces the financial burden on waterway users raises equity and economic efficiency issues with respect to competing modes.", "A long-standing U.S. law commonly referred to as the Jones Act (46 U.S.C. § 55102) requires that only American-built, -owned, and -crewed vessels can operate between two U.S. ports. The law dates back to 1920 and was enacted on the grounds that a domestic maritime industry is necessary for national and economic security.\nIf not for the Jones Act, domestic containers could be shipped between U.S. coastal ports on existing services provided by international carriers. Foreign containerships carrying U.S. imports and exports already sail frequently between U.S. ports, providing an almost continuous conveyor belt of vessel space along each coast. These ships typically call at three or four ports along a coastal region, and since they generally unload a good portion of the ship's cargo at the first port call, they would have empty space to carry domestic containers to the other U.S. ports on their schedule. However, because they are not in compliance with the Jones Act, these vessels are not allowed to pick up shipments in one U.S. port and unload them at another.\nSince the construction cost of U.S.-flag deepwater cargo ships is generally believed to be three or four times that of ships in the world market, the Jones Act may be a significant barrier to domestic shipping in oceangoing vessels. As of year-end 2008 (latest data available), there were 42 active Jones Act-compliant ships suitable for deepwater marine highway service, including 27 containerships and 15 Ro-Ro ships. Of these, 29 (70%) were built before 1984 and thus approaching the end of their useful lives, normally 20 to 25 years for saltwater vessels. The United States is the only industrialized nation that has a domestic build requirement for domestic shipping, and no such requirement exists for other U.S. freight modes. The use of barges in marine highway services is also subject to Jones Act requirements, but the additional construction and manning costs may be less significant than is the case with oceangoing ships." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h2_full h1_title", "", "h2_title", "h2_full", "", "", "h2_full h1_full", "", "h3_full", "h3_full", "h3_full" ] }

{ "question": [ "For what reason would a change of freight traffic from roads to river/coastal waterway be necessary?", "What are waterways carryings right now?", "What are roadways being used for?", "Given the current use of waterways, how could one state their current level of busyness?", "What steps are being taken by Congress to vet marine highways?", "What was the selection criteria for the highway selection?", "What is the prevailing perception associated with the speed of coastal/river navigation?", "How might these marine highways attract truck freight?", "What is the potential of a transfer from road to marine highways, as stated in a review of the successes and failures of the few marine highway services currently operating in the contiguous United States?", "What can one conclude about these findings?", "What is one solution at Congress's disposal to spur marine highway development?", "How would this repealing affect the equity of some environments?", "What else is currently hindering marine highway development?" ], "summary": [ "Policymakers have been discussing the potential for shifting some freight traffic from roads to river and coastal waterways as a means of mitigating highway congestion.", "While waterways carry substantial amounts of bulk commodities (e.g., grain and coal), seldom are they used to transport containerized cargo (typically finished goods and manufactured parts) between points within the contiguous United States.", "Trucks, which carry most of this cargo, and railroads, which carry some of it in combination with trucks, offer much faster transit.", "Yet, at a time when many urban highways are congested, a parallel river or coastal waterway may be little used.", "With passage of the Energy Independence and Security Act of 2007 (P.L. 110-140) and the National Defense Authorization Act for FY2010 (P.L. 111-84), Congress moved this idea forward by requiring the Department of Transportation (DOT) to identify waterways that could potentially serve as \"marine highways\" and providing grant funding for their development.", "DOT has selected several marine highways for grant funding totaling about $80 million. To be eligible, a marine highway must be an alternative to a congested highway or railroad and be financially viable in a reasonable time frame.", "The prevailing perception is that coastal and river navigation is too slow to attract shippers that utilize trucks and that the additional cargo handling costs at ports negate any potential savings from using waterborne transport.", "While there are other significant obstacles as well, under highly specific circumstances, marine highways might attract truck freight. Freight corridors characterized by an imbalance in the directional flow of container equipment; shippers with low value, heavy cargoes, and waterside production facilities; and connections with coastal hub ports over medium distances may be suitable for container-on-barge (COB) or coastal shipping services. It also appears that marine highways are more suitable to international rather than domestic shippers because the former have lower service expectations.", "A review of the successes and failures of the few marine highway services currently operating in the contiguous United States, as well as those that have failed in the past, indicates that the potential market is limited.", "One can question, therefore, whether marine highways will divert enough trucks to provide public benefits commensurate with their costs.", "Congress may also consider repealing a port use charge, the harbor maintenance tax, for containerized domestic shipments as a means of spurring marine highway development.", "The Jones Act is arguably another potential statutory hindrance to marine highway development, particularly coastal highways. This act requires that all domestic shipping be carried in U.S. built ships. Critics claim the act raises the cost of domestic shipping to such a degree that it cannot compete with truck and rail.", "The Jones Act is arguably another potential statutory hindrance to marine highway development, particularly coastal highways. This act requires that all domestic shipping be carried in U.S. built ships. Critics claim the act raises the cost of domestic shipping to such a degree that it cannot compete with truck and rail." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, -1, -1, 0, -1, 2, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 2, 2, 3, 3, 3, 3, 3 ] }

{ "title": [ "Background", "DOE Has Performed About $2 Billion of Work under the WFO Program Annually, but the Amount and Sponsors of Work Varied Among Laboratories", "Amount of Work Performed under the WFO Program Has Been About $2 Billion Annually", "Type, or Sponsors, of WFO Projects Performed Varied by Laboratory", "DOE Has Not Ensured That WFO Program Requirements Are Consistently Met", "DOE Has Relied on Laboratories’ Determinations That WFO Projects Meet Requirements for Approval", "DOE Has Not Ensured That Cost Recovery Procedures for WFO Projects Are in Place", "DOE Did Not Consistently Conduct Required Annual WFO Program Reviews", "DOE Does Not Produce the Required Annual Summary Report on Project Activities", "DOE Has Not Measured WFO Program Performance against Established Objectives", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: List of the 17 Department of Energy (DOE) National Laboratories", "National Laboratory Ames Laboratory", "Appendix III: Department of Energy National Laboratory Work for Others Costs and Total Costs, as Measured in Costs Incurred, in Fiscal Year 2012", "Appendix IV: Comments from the Department of Energy", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "DOE program offices manage the department’s 17 national laboratories and support the department’s diverse missions, as follows:\nThe Office of Science oversees 10 national laboratories and, for fiscal year 2012, received appropriations of more than $4.3 billion to operate these laboratories. The Office of Science is the nation’s single largest funding source for basic research in the physical sciences, supporting research in energy sciences, advanced scientific computing, and other fields.\nNNSA oversees 3 national laboratories and, for fiscal year 2012, received appropriations of more than $4.6 billion to operate these laboratories. NNSA helps support understanding of the physics associated with the safety, security, and reliability of nuclear weapons and maintains core competencies in nuclear weapons science, technology, and engineering.\nThe Office of Nuclear Energy oversees 1 laboratory and received appropriations for fiscal year 2012 totaling more than $1 billion to operate this laboratory. The primary mission of the Office of Nuclear Energy is to advance nuclear power as a resource capable of meeting the nation’s energy, environmental, and national security needs by resolving technical, cost, safety, proliferation resistance, and security barriers.\nThe Office of Fossil Energy oversees 1 laboratory and received appropriations for fiscal year 2012 totaling more than $551 million to operate this laboratory. The Office of Fossil Energy’s primary mission is to ensure reliable fossil energy resources for clean, secure, and affordable energy while enhancing environmental protection.\nThe Office of Energy Efficiency and Renewable Energy oversees 1 laboratory and received appropriations for fiscal year 2012 totaling over $271 million to operate this laboratory. The Office of Energy Efficiency and Renewable Energy’s mission is to develop solutions for energy-saving homes, buildings, and manufacturing; sustainable transportation; and renewable electricity generation.\nThe Office of Environmental Management oversees 1 laboratory and, for fiscal year 2012, received appropriations of about $7.6 million to operate this laboratory. The Office of Environmental Management is responsible for cleaning up hazardous wastes left from decades of nuclear weapons research and production.\nSee figure 1 for the locations of the laboratories managed by the various program offices. DOE also maintains individual site offices that provide federal oversight at 16 of the 17 laboratories. In addition, DOE’s field CFOs are responsible for overseeing financial activities at each location.For a complete list of DOE’s national laboratories and more information on each, see appendix II.\nDOE’s WFO program aims to provide benefits to organizations such as U.S. companies or academic institutions that have work performed at the laboratories and to the national laboratories as well. For example, according to a 2011 DOE report to Congress, the WFO program helps to leverage DOE investment in the laboratories by further developing technical expertise for accomplishing critical tasks needed to fulfill DOE’s mission priorities. Furthermore, according to the DOE report, the WFO program can also help the national laboratories to retain highly trained scientists and engineers in support of DOE and national priorities by, for example, providing opportunities for them to stay engaged during times when mission critical work has slowed.\nAccording to officials from DOE and laboratories and DOE documentation, a potential WFO project begins when an entity desiring to have work performed becomes aware of the capabilities available at a laboratory. Entities can become aware of these capabilities in a number of different ways, including as a result of networking by laboratory researchers and scientists, by responding to funding opportunity announcements of other federal agencies, or through information posted on the laboratories’ public websites. Once a potential project has been identified, representatives of the entity (i.e., the sponsor) and the laboratory begin to negotiate the work to be performed and the estimated costs. When the laboratory and sponsor have agreed to the terms of work, DOE site officials review the proposed WFO agreement. Finally, if the terms are approved by DOE and the sponsor has provided certification of funding or advance payment for the work, a DOE contracting officer certifies that the requirements have been met for the laboratory to conduct the work.\nDOE’s WFO order establishes DOE policy and requirements for accepting, authorizing, and administering such work. This order applies to work for all non-DOE entities except the Department of Homeland Security (DHS), which is covered by a separate order, and is not considered to be WFO work. In addition, under the WFO order, each site office is responsible for establishing its own procedures and processes for the review and approval of work performed under WFO agreements and for conducting periodic reviews of laboratory policies and procedures for negotiating and administering WFO projects. Requirements for establishing prices and charges for materials and services sold or provided to outside entities either directly or through the department’s M&O contracts are established through DOE’s pricing order, including for the WFO program.", "The total amount of work performed under the WFO program, as measured by costs incurred for WFO projects, has remained relatively constant over the last 5 fiscal years overall, but the amount of WFO work performed and the sponsors of the work varied widely among the laboratories.", "In fiscal years 2008 through 2012, DOE performed about $2 billion of work annually under the WFO program, as measured by costs incurred (see fig. 2). Although the amount of work performed under the WFO program has remained relatively constant over the last 5 years, it has declined slightly relative to total work performed at the laboratories during this period. From fiscal year 2008 through fiscal year 2011, total work performed at the laboratories increased from $12.0 billion to $17.1 billion and fell to $16.3 billion in fiscal year 2012. As a result, the proportion of WFO performed as a percentage of total work performed declined from 17 percent in fiscal year 2008 to about 13 percent in fiscal year 2012. In fiscal year 2012, more than 6,500 WFO projects were carried out at DOE’s laboratories.\nDuring the period we reviewed, each of DOE’s 17 national laboratories performed some work on WFO projects, with some laboratories involved in significantly more WFO activities than others. In fiscal year 2012, the amount of work performed by the laboratories on WFO projects ranged from about $1.5 million at the National Energy Technology Laboratory to over $803 million at the Sandia National Laboratories. The proportion of WFO activities relative to all work at the laboratories also varied widely. Specifically, work performed on WFO projects as a percentage of total work performed at the laboratories ranged from less than 1 percent at the National Energy Technology Laboratory to nearly 33 percent at the Sandia National Laboratories (see table 1).\nAccording to DOE officials, the variation in the amount of WFO performed is due in large part to differences in the core mission capabilities of each laboratory. For example, Sandia National Laboratories has extensive expertise in systems engineering, a capability that is heavily utilized by other federal agencies. According to the officials, other laboratories’ capabilities are less in demand and, therefore, less WFO work is performed at these laboratories.", "DOE’s laboratories carried out a variety of WFO projects for many different sponsors, but the majority of the work was for other federal agencies—in particular, the Department of Defense (DOD). Of the $2.1 billion in work performed on WFO projects in fiscal year 2012, over $1.8 billion, or about 88 percent, was for other federal agencies, with DOD sponsoring about $1.5 billion, or 71 percent of the work performed (see fig. 3). The majority of the work performed under the program for DOD for fiscal year 2012 was carried out at six national laboratories—Idaho, Lawrence Livermore, Los Alamos, Oak Ridge, Pacific Northwest, and Sandia. The type of work sponsored by DOD included a variety of projects. For example, Pacific Northwest National Laboratory has developed a software technology for the Air Force that performs, among other things, automatic topical analysis and organization of large collections of documents graphically. The laboratory is training the Air Force on applying the software to a diverse set of Air Force data to help analysts extract information to better identify potential uses for emerging technologies. In another example, the Idaho National Laboratory has applied its expertise in the area of laser decontamination of surfaces to develop and deploy a laser cleaning system for the Army. The objective of the project is to develop a system to, among other things, remove chemical agent residues from contaminated surfaces and equipment so that equipment can be reused, reduce personnel exposure risks, and reduce secondary waste streams.\nOther federal agencies also sponsored a variety of WFO projects in fiscal year 2012, such as climate change and energy efficiency research conducted at the Lawrence Berkeley National Laboratory for the Environmental Protection Agency, and plutonium production research conducted at the Idaho National Laboratory for the National Aeronautics and Space Administration’s (NASA) space exploration program. For more information on the amount and type of work carried out at each laboratory, see appendix III.\nNonfederal entities sponsored $251.5 million, or 12 percent, of the WFO performed at the laboratories in fiscal year 2012. Sponsors and types of projects included the following:\nState and local governments. For example, officials in Sonoma County, California, entered into an agreement with the Lawrence Berkeley National Laboratory to conduct research on local rivers and dams to better understand the natural riverbed processes that occur as a function of dam and pumping operations, including sedimentation and evolution of biomass. These processes can lead to clogging of the riverbed, which in turn can limit the ability to pump water from beneath the riverbed as is needed for subsequent distribution as drinking water in the county. Under the current phase of this WFO project, the laboratory is using its hydrological, geochemical, and biological tools and expertise to quantify the riverbed clogging mechanisms and to represent them in a computer model.\nColleges and universities. For example, researchers at the University of Chicago studied the structures of proteins and, in particular, how proteins in lung cancer patients are affected by certain drugs. These researchers set up a WFO agreement with Argonne National Laboratory, under which the laboratory drew upon its extensive protein sequence database and its research capabilities to assist the university in analyzing, modeling, detecting, and characterizing proteins in lung cells. Under this agreement, Argonne National Laboratory also updated and maintained a database of protein structures that will be accessible to the broad biology community.\nPrivate industry. For example, GE Global Research, a private research laboratory, has entered into a WFO agreement with Lawrence Livermore National Laboratory to help refine wind prediction and control capabilities at wind farms. Under this agreement, the laboratory is evaluating high-resolution wind farm modeling tools in natural terrain using high-performance computers to run wind simulation and forecasting models.\nForeign entities. For example, following the events at the Fukushima Daiichi Nuclear Power Station resulting from the earthquake and tsunami in March 2011, Tokyo Electric Power Company (TEPCO) entered into a WFO agreement with the Savannah River National Laboratory and the Pacific Northwest National Laboratory. The laboratories were to evaluate and define the scope of work for TEPCO to accomplish a number of tasks including the prevention of underground water contamination and the treatment and disposal of nuclear waste. The laboratories each drew upon their expertise in these areas to develop a schedule for how the work could proceed and to identify the necessary equipment, materials, facilities, personnel, and the costs to perform the work.", "DOE has not ensured that WFO program requirements are consistently met. Specifically, DOE has not ensured compliance with requirements for the approval of WFO projects, cost recovery, program reviews, and annual reporting.", "According to DOE’s WFO order, WFO projects must meet specific DOE requirements, including being consistent with or complementary to DOE’s missions and those of the laboratories, not hindering those missions, and not placing the laboratories in direct competition with the domestic private sector. A DOE contracting officer or other authorized DOE designee is required to determine whether a proposed WFO project has met all of these requirements before approving or certifying the work. These determinations may not be delegated to the laboratories. However, DOE officials from site offices at 8 of the 17 laboratories told us that the laboratories provide written justification in the WFO package to support, or determine, that some or all of the requirements are met and that the DOE officials have often accepted the laboratories’ determinations without taking steps to independently verify them. DOE officials cited various reasons for relying on the laboratories to make the determinations. For example, an official from one site office told us that he relies on the laboratory’s determination that WFO projects are consistent with the mission. He explained that he does not believe that the laboratory would accept work that would be inconsistent with its mission. Similarly, an official at another DOE site office explained that she relies on the laboratory’s determination that the work cannot be performed by the private sector because she believes the laboratory staff are better informed about the capabilities available in the private sector. By relying on the laboratories’ determinations without taking steps to independently verify the information, DOE does not have assurances that the WFO projects selected meet DOE’s requirements. The DOE Office of Inspector General has identified the WFO program as a priority area and is reviewing laboratories with major WFO programs to determine whether they meet internal control and compliance requirements established by DOE.", "DOE’s pricing order requires that the department charges for the full cost of materials and services provided to external organizations, including the amounts charged for work under the WFO program. DOE has not ensured, however, that all laboratories have formal, written procedures for developing WFO project budgets or charging costs to ongoing projects, two important steps for recovering the full costs of materials and services provided.procedures for developing WFO project budgets and charging costs to projects that include, among other things, detailed instructions on the types of costs to include in a WFO project budget and specific instructions for calculating the costs and for ensuring that the costs of the work are charged to the sponsor. However, while the remaining laboratories did provide a description of their WFO budget development and cost charging processes, five of these laboratories had limited written procedures or tools in place for these processes. For example, one laboratory had a template that could be used to prepare a WFO budget but did not have detailed, written requirements or procedures for using this tool. The remaining seven laboratories did not provide any formal, written procedures to guide the development of WFO project budgets or the charging of costs. Without detailed, written guidance, DOE may not be able to ensure that its cost recovery requirements are consistently met.\nSpecifically, five laboratories have detailed, written In addition, DOE field CFOs do not always review costs charged to WFO projects in accordance with DOE’s pricing order, which requires that DOE’s field CFOs conduct biennial reviews of the pricing of materials and services and other costs charged to WFO projects at the laboratories. Under the pricing order, the reviews are required to include steps to ensure that (1) prices charged conform to the requirements of OMB Circular A-25 and departmental pricing policy or other legislative authority, as applicable; (2) adequate documentation exists for prices established for materials and services; and (3) exceptions to the full cost recovery requirements were limited to those authorized in the order. The reviews are intended to provide assurance to the department’s CFO that the full cost of the work, including all applicable direct and indirect costs, is charged to the sponsor of each WFO project. We requested DOE’s most recent biennial review reports of WFO project pricing for each of the 17 laboratories. Reviews for 16 of the 17 laboratories were provided. These reviews were conducted by the seven field CFOs that oversee the laboratories and covered fiscal years 2010 and 2011. We found that 6 of the 16 reviews did not include steps to ensure that prices for WFO projects conformed to DOE requirements. For example, in order to ensure that adequate documentation exists for prices established for materials and services charged to sponsors of WFO projects, reviewers need to examine pricing documentation for a sample of WFO projects. Reports for 6 reviews indicated that, for a sample of WFO projects, pricing documentation for overhead and administrative costs was examined, but the reports did not provide evidence that documentation to support direct costs—such as labor and materials—was examined. Furthermore, one biennial pricing review was conducted by the laboratory instead of by the DOE field CFO, as required, and no details on the review steps were provided in the report. Reports for 9 of the 16 reviews indicated that a sample of WFO projects was reviewed. Reviewing a sample of WFO projects can provide useful information, such as identifying errors in costs charged to those projects. For example, 2 of the reviews that included an examination of a sample of WFO project documentation identified errors in general and administrative costs charged to WFO projects that resulted in either undercharges or in overcharges to the sponsor. In the case of undercharges, DOE paid part of the sponsor’s cost of the WFO project. In the case of overcharges, the sponsor subsidized a portion of DOE’s mission work. The DOE Office of Inspector General has also identified errors related to the charging of general and administrative costs to WFO projects in their audits of WFO programs at the laboratories. For example, a 2013 review at Lawrence Berkeley National Laboratory found that costs of administering WFO projects were allocated in part to other DOE projects, resulting in estimated $400,000 in project costs that the sponsor did not reimburse to the laboratory.", "DOE’s WFO order requires each DOE program office to annually review the WFO program at each of its laboratories to ensure compliance with WFO policies and procedures. The order does not specify what the reviews should include. As a result, the program offices varied in what they consider to be their annual review. For example, DOE Office of Science program officials explained that they believe their annual WFO planning efforts with the laboratories fulfill the program review requirements in the WFO order. Specifically, each of the Office of Science laboratories develops a plan that contains a section that summarizes the laboratory’s WFO portfolio and discusses the WFO strategy for the future. DOE Office of Science officials told us that, as part of this process, each federal site office manager provides a review of the laboratory’s ongoing WFO program operations and proposed WFO funding level that includes a statement about the adequacy of the laboratory’s management and oversight of WFO activities. However, these plans were primarily focused on planning for WFO project work to be performed in the future and were not reviews to ensure compliance with WFO policies and procedures. NNSA officials told us that they had performed annual reviews of their WFO program since 2008; however, in response to our request for information, they provided one briefing from 2012 that focused on improving the WFO agreement processing times.\nProgram officials also conducted reviews of WFO policies and procedures at 6 of the 16 site offices. However, officials from the Office of Science told us that these reviews were not conducted to satisfy the annual review requirement in the WFO order because they focused on the site offices’ WFO policies and procedures rather than laboratories’ policies and procedures. Specifically, as of May 2013, Office of Science program officials conducted a total of six reviews—one at each of 6 site offices— since 2008. These generally consisted of a review of WFO program policy and procedure documents at the site offices including flow charts, forms, and correspondence. Each of the six reviews identified areas of concern within the WFO programs. For example, one program office review reported that the laboratory was dependent on funds from a single WFO project to support a major DOE program. The review cautioned that if the WFO project was discontinued, it could create a detrimental financial burden on the laboratory in the future, which is not consistent with DOE’s requirement to avoid doing so. In addition, four of the reviews found deficiencies related to WFO program documentation or procedures. For example, one review reported that a DOE site office WFO program procedural guide was out of date and did not reflect all relevant DOE policy requirements or current DOE site office operating procedures. Although the reviews were not conducted to satisfy the annual review requirement in the WFO order, the reviews appeared to include useful information about the WFO program that was not included in the annual laboratory planning processes, which were focused on future WFO efforts. No program office reviews were conducted at the other 10 site offices.", "DOE’s WFO order also requires that the DOE headquarters CFO prepare an annual summary report of WFO activities performed at its laboratories. DOE headquarters officials told us they have not produced this report in the past several years because the requirement to produce it is an outdated requirement that was put into place to facilitate data collection before the implementation of DOE’s current financial system. The officials said that they plan to eliminate this requirement. They also said that they have made better use of their limited program resources by choosing to fulfill requests for WFO project data from Congress and others on a case- by-case basis. For example, in the Conference Report to accompany the Energy and Water Development and Related Agencies Appropriations Act of 2010, DOE was directed to submit an annual report on the status of its WFO activities. DOE officials provided the requested information on WFO activities; however, this information might have already been available if DOE had prepared the annual summary report as required by the WFO order. In addition, other DOE programs regularly need and collect WFO project data that could be provided by the annual summary report if it had been prepared in accordance with the order. For example, DOE’s technology transfer coordinator has been collecting data on nonfederal WFO project activities from each of the laboratories since 2001 for inclusion in the Department of Commerce’s annual report on technology transfer. Choosing to report data on a case-by-case basis, rather than in an annual report, may make it difficult for those providing oversight and for some users of the data. This is because the data are not readily available, requiring DOE to generate it, which is time-consuming and, because depending on how the data are generated, they may not be comparable across laboratories or over time.", "DOE has not measured the extent to which WFO program objectives are being met, even though DOE site offices are required under the WFO order to measure their laboratories’ WFO program performance. Some DOE site offices and laboratories have taken steps to evaluate WFO program processes, but these steps are not consistent across the laboratories, generally do not address the program objectives in the WFO order, and do not incorporate key attributes of successful performance measures.\nDOE’s WFO order requires that DOE site offices establish performance goals and measures to assess field performance of the WFO program at the laboratories they oversee, including the effectiveness and impact of WFO program processes and improvements.President directed each agency with a federal laboratory to establish Moreover, in 2011, the performance goals, measures, and evaluation methods related to technology transfer. Although the presidential memo does not specifically mention the WFO program, an objective of the program is to transfer technology originating at DOE facilities to industry for further development or commercialization. We found that, although some DOE site offices and laboratories have taken steps to evaluate the performance of the WFO program, these steps do not directly address the WFO program objectives. Moreover, DOE site offices’ and laboratories’ efforts to evaluate the WFO programs are focused on reviewing processes; including tracking the number of WFO agreements and improving timeliness of project selection and approval, rather than developing goals and measures for assessing performance against WFO program objectives.\nAccording to our discussions with officials from DOE headquarters and site offices and laboratory representatives, efforts to evaluate the performance of the WFO program at the laboratories include the following:\nAssessing customer satisfaction or other qualitative measures.\nOfficials from 4 of the 17 laboratories told us that they have some mechanisms in place to collect qualitative information about WFO projects, such as customer satisfaction. This information is shared with DOE site officials. For example, officials at one laboratory send surveys to sponsors to assess customer satisfaction after the completion of WFO projects. Another laboratory reports to DOE on success stories about WFO projects once they are complete.\nTracking the number of WFO agreements. Officials from 6 of the 17 laboratories told us that they track the amount of or have set targets related to the number of WFO agreements in place.\nEvaluating WFO agreement processing times. Officials from 6 of the 17 laboratories told us that they have goals to streamline the WFO agreement process, as measured by the time it takes from initiation to approval of a WFO agreement. In addition, in 2009 DOE commissioned a study of the time it takes to process WFO agreements across the laboratories and identified best practices for streamlining that process. Moreover, in 2011 NNSA commissioned a similar study of processing time for WFO and other interagency agreements at the 3 laboratories that it oversees.\nWe have previously reported on the nine attributes most often associated with successful performance measures, which are summarized in table 2.\nOur analysis shows, however, that the steps DOE and the laboratories have taken to evaluate performance did not include some of these key attributes. For example, while customer satisfaction surveys or other qualitative measures, such as success stories gathered by the laboratories, may provide some useful information and indicate areas for improvement, customer satisfaction is not included in the WFO order as a program goal. Furthermore, the performance measures do not directly link with the WFO program goals or objectives such as providing access to DOE laboratories to accomplish goals that may be otherwise unattainable by federal agencies and nonfederal entities. Without such linkage, DOE and decision makers may not have the needed information to track the program’s progress in meeting its objectives. Additionally, some WFO qualitative measures such as customer satisfaction may lack clarity and a measurable target, making it difficult to compare performance across laboratories. These types of qualitative measures also may not meet the key attribute of objectivity due to the potential for bias or other manipulation, depending on how the information is gathered and assessed. Other efforts to measure the performance of the program—specifically, the number of WFO agreements in place and WFO agreement processing time—both provide some helpful information but do not include all key attributes of successful performance measures. For example, tracking the number of agreements is clear and measurable and provides some information about the number of WFO projects at a laboratory. However, without linkage to the program’s objectives, measuring the number of agreements in place does not capture the program’s effectiveness in meeting the program’s objectives laid out in the WFO order, such as maintaining core competencies and enhancing the science and technology base at the laboratories.\nAs we have reported,the ability to track the progress they are making toward their mission and objectives. We also have found that performance measures can create powerful incentives to influence organizational and individual behavior. Our analysis indicates that site office and laboratory performance measures lack these key attributes. In addition, DOE headquarters officials told us that there are no performance measures to assess the WFO program’s performance against WFO program objectives across all laboratories. The officials said that this is because the WFO program is decentralized, and laboratories are managed individually. performance measures provide organizations with Recent external and internal reviews of the DOE laboratories have recommended that clear performance measures are needed to measure laboratory WFO program performance against the WFO program objectives. In January 2013, the National Academy of Public Administration (NAPA) reported that while DOE officials at the laboratories have measures to assess DOE funded work; these measures do not always apply to non-DOE funded work such as work performed NAPA also noted that DOE’s decentralized under the WFO program. approach to managing the WFO program raised questions about DOE’s ability to oversee the program as a whole. NAPA recommended that DOE include measures for WFO work performed in its evaluations of laboratory performance. Similarly, in 2012, a working group set up by DOE headquarters to oversee efforts at the laboratories to share technology with non-DOE entities, reported concerns that measures did not exist to evaluate the impact and success of WFO work activities in achieving program objectives. DOE officials told us that, because WFO agreements are unique to each laboratory, they do not believe it is appropriate to develop one set of measures for all laboratories and that they have no plans to do so. However, without measures that apply to all laboratories, it is difficult to compare performance across laboratories in meeting overall program objectives.\nNAPA, U.S. Department of Energy: Positioning DOE’s Labs for the Future: A Review of DOE’s Management and Oversight of the National Laboratories (Washington, D.C.: January 2013). NAPA was established in 1967 and chartered by Congress as an independent, nonpartisan organization to evaluate, analyze, and make recommendations on the nation’s most critical and complex public management, governance, policy and operational challenges.", "DOE laboratories’ highly specialized facilities, cutting-edge technologies, and highly trained scientists, technicians, and other staff represent a significant investment of public funds. DOE’s WFO program has allowed the department to share these capabilities with both other federal agencies and nonfederal entities. DOE has established WFO program requirements—including for project approval, cost recovery, program reporting, and program review—that together are intended to help DOE operate a successful WFO program and avoid adverse impacts on the laboratories’ missions and facilities and to avoid competition with the private sector. DOE falls short, however, in ensuring that these requirements are consistently met. For example, DOE has frequently relied on the laboratories to determine whether WFO projects selected meet the requirements of the WFO order, and DOE officials have accepted the laboratories’ determinations without taking steps to independently verify these determinations. Ensuring that the WFO projects selected meet DOE requirements is a governmental responsibility and, according to the WFO order, a DOE contracting officer or other authorized DOE designee is required to determine whether a proposed WFO project has met all of these requirements before approving the work. By relying instead on the laboratories to make these determinations, DOE cannot ensure that all WFO projects meet requirements. DOE may also not be able to ensure that the costs of WFO projects are recovered according to its pricing order because it has not required the laboratories to establish written procedures to guide development of project budgets or charging of costs to projects, important steps for determining and recovering the full costs of WFO projects’ materials and services. The department’s CFO also does not have assurance that the full costs of WFO projects are charged to the projects’ sponsors because field CFOs do not always conduct biennial pricing reviews according to requirements.\nFurthermore, the WFO order does not specify what should be included in the annual WFO program reviews required by the order. Without clear and specific requirements, it may be difficult for DOE to identify WFO program deficiencies, if any. In addition, DOE officials told us that the requirement to prepare an annual summary report of WFO activities performed at its laboratories is outdated and has not been followed for several years, and that the department plans to eliminate this requirement. However, members of Congress have directed DOE to provide information on the status of WFO activities, and other DOE programs regularly need and collect WFO project data that would be available if DOE prepared the annual summary report. Choosing to report data on a case-by-case basis, rather than in an annual report, may make it difficult for those providing oversight and some users of the data, and because the data are not readily available, DOE will need to generate them, which is time-consuming, and the data may not be comparable across laboratories or over time. Furthermore, while some site offices have made efforts to evaluate the performance of the WFO program, these efforts do not always incorporate key attributes of successful performance measures, such as being quantifiable or having a numerical goal. Moreover, these efforts generally do not directly address the objectives of the WFO program. Without better measures to evaluate program performance, DOE and decision makers will not have the needed information to track the program’s progress in meeting its objectives.", "To improve DOE’s management and oversight of the WFO program, we recommend that the Secretary of Energy take the following six actions:\nEnsure compliance with the requirements in the WFO order for project approval.\nRequire laboratories to establish and follow written procedures for developing WFO project budgets and for charging costs to WFO projects.\nEnsure compliance with the requirements for conducting biennial pricing reviews.\nSpecify in the WFO order what the annual WFO program reviews should include.\nEnsure that annual summary reports of WFO activities are prepared so that data on those activities are readily available for those who need this information.\nEstablish performance measures that incorporate key attributes of successful performance measures and that address the objectives of the WFO program.", "We provided DOE with a draft of this report for its review and comment. In written comments, reproduced in appendix IV, DOE stated that it concurred with the recommendations in the report and provided information on planned actions to address each recommendation. We believe that many of the proposed actions, while good first steps, fall short of our recommendations, however, and may not fully address the issues we discussed in our report.\nFor example, in response to the first three recommendations (i.e., ensure compliance with the requirements in the WFO order for project approval; require laboratories to establish and follow written procedures for developing WFO project budgets and for charging costs to WFO projects; and ensure compliance with the requirements for conducting biennial pricing reviews), DOE stated that it will issue a policy flash, or notice, on the requirements of the WFO program. While reminding staff of the requirements of the WFO order would likely be beneficial, to improve its management and oversight of the WFO program, DOE also needs to take steps to ensure that these requirements are consistently being met by periodically monitoring the processes for project approval, full cost recovery of projects, and biennial pricing reviews.\nDOE also stated that it concurred in principle with the fourth recommendation to specify in the WFO order what the required annual program reviews should include. DOE added, however, that the current WFO order appropriately provides discretion to DOE program offices in determining the scope and extent of WFO program reviews. Again, DOE states that it will issue a policy flash reminding the program offices of the annual review requirement for the WFO program. DOE’s planned action, however, does not directly address our recommendation to update the WFO order with specific requirements for these reviews. Likewise, DOE stated that it concurred in principle with the fifth recommendation that it ensure that annual summary reports of WFO activities are prepared so that data on those activities are readily available for those who need this information. However, rather than preparing annual summary reports, DOE stated that the WFO order requires revision to reflect its current practice of providing current WFO program summary information. As we said in our report, choosing to report data on a case-by-case basis rather than in an annual report may make it difficult for those providing oversight, and for some users of the data, because the data are not readily available and DOE will need to generate them, which is time- consuming, and they may not be comparable across laboratories or over time. Finally, in response to the sixth recommendation to establish performance measures that incorporate key attributes of successful performance measures and that address the objectives of the WFO program, DOE plans to issue a policy flash on the current requirements of the WFO program related to program assessments. In our report, we discussed that the WFO order, however, does not include specific requirements for program assessments and a policy flash that repeats the current requirements for program assessments would, therefore, not address the recommendation.\nDOE also provided clarifying comments that we incorporated, as appropriate. In particular, DOE requested that we consider its laboratory contractors’ Cost Accounting Standards (CAS) disclosure statements describing their cost accounting practices and procedures as written procedures for charging costs to ongoing projects. We have added information to our report about the CAS disclosure statements. While these statements describe how the laboratory plans to allocate costs, we do not agree that these disclosure statements constitute procedural guidance for developing project budgets and charging costs to projects. Moreover, as we point out in the report, we found that several laboratories have developed detailed written procedures for developing project budgets and charging costs to projects, which would be unnecessary if the disclosure statements were sufficient as guidance.\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 amount and type of work conducted at the laboratories under the Department of Energy’s (DOE) Work for Others (WFO) program, we requested and obtained DOE data on WFO costs from DOE’s Office of the Chief Financial Officer (CFO) for fiscal years 2008 through 2012, including WFO program costs by sponsor and by laboratory, as measured in costs incurred. We also requested and obtained total costs incurred for each laboratory for these same fiscal years. We selected costs incurred as the measure of the amount of WFO projects performed for our purposes because WFO agreements can span multiple years and these costs are similar to the costs presented in reports by DOE and its Office of Inspector General. We used data for fiscal years 2008 through 2012 because our last report on DOE WFO projects reported data through fiscal year 2008. We interviewed DOE officials who oversee and collect these cost data for DOE’s Office of the CFO and determined that these data were obtained from DOE’s Standard Accounting and Reporting System (STARS) financial reporting system.\nTo assess the reliability of DOE’s WFO project cost data and total laboratory costs, we reviewed information about DOE’s STARS financial reporting system, as well as a recent external audit of the STARS system and DOE’s financial data. We also reviewed recent GAO assessments of the STARS system. No material weaknesses were reported. For data verification purposes, we obtained fiscal year 2012 cost data on WFO projects from each laboratory and compared that data with the fiscal year 2012 cost data on WFO projects obtained from the DOE CFO. Although we identified some differences between the data, through discussions with the DOE CFO, we determined that those differences were the result of variances in the cost elements that were included in the information provided by each laboratory. Based on our assessment, we concluded that the data obtained from the DOE CFO were sufficiently reliable to describe the dollar amount and percentage of WFO projects performed at the laboratories. To determine the number of WFO projects that were active during fiscal year 2012, we used information from the fiscal year 2012 WFO project lists provided by each laboratory, as the DOE CFO does not have the capability to identify individual nonfederal projects. To determine the type of WFO projects performed at DOE’s laboratories, we gathered data on the costs of WFO activities performed for federal versus nonfederal sponsors. We also reviewed the lists of WFO projects provided by each laboratory, we conducted interviews with DOE headquarters officials, and we conducted structured interviews with DOE site officials and officials for the 17 laboratories to gather more information about examples of WFO projects performed for one federal and one nonfederal WFO sponsor from each laboratory with activity during fiscal year 2012. We judgmentally selected three laboratories to visit; including the National Nuclear Security Agency’s (NNSA) Sandia National Laboratory in Albuquerque, New Mexico, the DOE laboratory with the largest dollar amount of WFO project work conducted in fiscal year 2012. We also visited NNSA’s Los Alamos National Laboratory in Los Alamos, New Mexico, due to its size and proximity to Sandia National Laboratory; and Pacific Northwest National Laboratory—a larger Office of Science of laboratory located in Richland, Washington. We contacted officials at the remaining 14 laboratories by phone.\nTo determine the extent to which DOE ensures that WFO program requirements are met, we reviewed federal regulations, DOE requirements, and DOE and laboratories’ policies and procedures governing the WFO program, including for selection and approval of WFO projects and for cost recovery—establishing project budgets and charging costs to ongoing projects—for WFO projects. We discussed these policies and procedures and how they are carried out in practice in our structured interviews with DOE site office and laboratory officials responsible for the WFO program at each laboratory. We reviewed and analyzed biennial pricing reviews conducted by the DOE field CFOs responsible for oversight of each laboratory covering fiscal years 2010 and 2011, the most recent data available. We discussed procedures for review and approval of WFO project proposals in our structured interviews with DOE site office and laboratory officials. We discussed DOE requirements for WFO project pricing, pricing reviews, and review results with officials from DOE’s CFO offices at headquarters and the seven DOE field CFOs that oversee the laboratories. We also reviewed DOE program office and site office review reports on laboratory WFO programs that were conducted from calendar years 2008 through 2012 to identify findings related to the WFO programs. For additional information applicable to all of our objectives, we reviewed external reports on the WFO program, including several reports issued from calendar years 2009 through 2013 by the DOE Office of Inspector General, a December 2010 report issued by the Department of Defense Office of Inspector General, a February 2012 report issued by the National Research Council, and a January 2013 report issued by the National Academy of Public Administration. We contacted officials from these external entities to discuss their reports.\nTo determine the extent to which DOE and the laboratories have measured WFO program performance against WFO program objectives, we reviewed DOE orders, performance requirements in DOE’s contracts with laboratory management and operating contractors, DOE evaluations of laboratories’ performance, and laboratories’ strategic plans. We also reviewed policies and procedures for establishing and for executing WFO projects at each laboratory. We discussed laboratories’ strategies and goals for their WFO programs and WFO program performance measurements with DOE headquarters officials, and in our structured interviews with DOE site office officials, and with officials from each of the laboratories.", "", "Research area Rare earths and other critical materials, applied energy, fossil energy, and nonproliferation programs.\nPhysical, energy, environmental, and life sciences; energy technologies and national security.\nExperimental and theoretical particle physics, astrophysics, and accelerator science.\nSustainable energy and national and homeland security.\nParticle and nuclear physics; physical, chemical, computational, biological, and environmental systems.\nNational defense, nuclear weapons stockpile stewardship, weapons of mass destruction, and nuclear nonproliferation.\nLos Alamos, NM National defense, nuclear weapons stockpile stewardship, weapons of mass destruction, and nuclear nonproliferation.\nEnvironmental stewardship, clean energy.\nRenewable energy and energy efficiency research.\nNeutron scattering, advanced materials, high-performance computing, and nuclear science and engineering.\nElectricity management, sustainability, threat detection and reduction, in situ chemical imaging and analysis, simulation and analytics.\nPlasma and fusion energy sciences.\nNational Laboratory Sandia National Laboratories Albuquerque, NM National defense, weapons of mass destruction, transportation, energy, telecommunications, and financial networks, and environmental stewardship.\nEnvironmental stewardship, national and homeland security, clean energy.\nMenlo Park, CA Materials, chemical and energy science, structural biology, and particle physics and astrophysics.\nFundamental nature of confined states of quarks, gluons, and nucleons; superconducting radio-frequency technology.", "Appendix III: Department of Energy National Laboratory Work for Others Costs and Total Costs, as Measured in Costs Incurred, in Fiscal Year 2012 Total Work for Others (WFO)", "", "", "", "In addition to the individual named above, Dan Feehan and Janet Frisch, Assistant Directors; Joseph Cook; Elizabeth Curda; Paul Kinney; Jeff Larson; Cynthia Norris; Josie Ostrander; Kathy Pedalino; Tim Persons; Cheryl Peterson; Carl Ramirez; and Kiki Theodoropoulos made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_title", "h0_full", "h0_full", "h3_title h1_full", "h1_full", "h1_full", "h3_full h1_full", "h1_full", "h2_full", "h3_full h1_full", "", "", "h3_full h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What was the rate of change of performed WFO projects?", "How were the 6,500 WFO projects spread out in 2012?", "What kind of work was done in a WFO?", "How deep is the lack of DOE oversight on the WFO program?", "What bars most the laboratories from being able to develop budget paperwork for WFOs?", "What are the ramifications of this inability to procure budget paperwork?", "Despite DOE's requiring of official annual WFO reviews, what oversights are still possible?", "How has the DOE measured WFO project performance against project objectives?", "What seems to be lacking in some DOE sites that account for this measurement?", "What were the ramifications of the DOE's lacking of oversight with regards to WFO projects and projecct results?", "What was the DOE's response to GAO's recommendations?", "What is housed in DOE laboratories and how does the DOE use the equipment during WFOs?", "What encompassed a GAO review of the WFO program?", "How did GAO collect information for this review?" ], "summary": [ "In fiscal years 2008 through 2012, the Department of Energy (DOE) performed about $2 billion annually of Work for Others (WFO) projects, as measured by the costs incurred. Although the amount of WFO performed has remained relatively constant over the last 5 years overall, WFO as a percentage of the total work performed at the laboratories--measured in total laboratory costs incurred--has declined from 17 percent in fiscal year 2008 to about 13 percent in fiscal year 2012.", "In fiscal year 2012, the WFO program included more than 6,500 projects.", "For example, one project for the Army applies a laboratory's expertise in laser decontamination of surfaces to develop a system that will remove chemical agent residues from equipment. The remaining WFO work was sponsored by nonfederal entities, including state and local governments, universities, private industry, and foreign entities.", "DOE officials have not ensured that WFO program requirements are consistently met. For example, a DOE official is required to determine whether a proposed WFO project has met DOE requirements for accepting work before approving, or certifying, the work and this responsibility may not be delegated to the laboratories. However, DOE officials from site offices at 8 of the 17 laboratories reported that these determinations were made by the laboratories and that the DOE officials did not take steps to independently verify the determinations prior to approving the work.", "DOE also cannot ensure that the full costs of materials and services for WFO projects are charged to sponsors because 12 of 17 laboratories have limited or no written procedures for developing WFO project budgets or charging costs to ongoing projects, two important steps for recovering the full costs of materials and services.", "A 2013 DOE Office of Inspector General report found that the costs of administering WFO projects at one laboratory were allocated to DOE projects, resulting in an estimated $400,000 in WFO project costs that were not reimbursed to the laboratory.", "DOE requires that its program offices annually review the WFO program at each of its laboratories. However, DOE requirements do not specify what the reviews should include, and DOE program offices varied in what they consider to be an annual review. DOE also requires the department's Chief Financial Officer to report annually on the activities conducted under the WFO program, but DOE officials told GAO that they no longer produce the report because the requirement is outdated, choosing instead to fulfill data requests on a case-by-case basis. As a result, DOE does not have data that are comparable across laboratories or over time.", "DOE has not measured the extent to which WFO program performance is measured against program objectives and has not established performance measures to do so.", "Some DOE site offices and laboratories have taken steps to evaluate the performance of the WFO program, but these steps are not consistent across the laboratories, do not incorporate key attributes of successful performance measures, and do not address the WFO program objectives.", "Recent internal and external reviews of the laboratories have recommended that DOE establish clear measures to evaluate laboratory WFO program performance against the WFO program objectives.", "DOE officials told GAO that they do not believe it is appropriate to develop one set of measures for all laboratories and that they do not plan to do so.", "DOE's 17 national laboratories house cutting-edge scientific facilities and equipment, ranging from high-performance computers to ultra-bright X-ray sources for investigating fundamental properties of materials. DOE allows the capabilities of the laboratories to be made available to perform work for other federal agencies and nonfederal entities through its WFO program, provided that the work does not hinder DOE's mission or compete with the private sector, among other things.", "GAO was asked to review the WFO program. GAO examined (1) the amount and type of work conducted under the program, (2) the extent to which DOE has ensured that WFO program requirements are met, and (3) the extent to which program performance is measured against WFO program objectives.", "GAO reviewed DOE and laboratory data and documents, internal and external review reports, and interviewed officials from DOE and the laboratories." ], "parent_pair_index": [ -1, -1, -1, -1, -1, 1, -1, -1, 0, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0 ] }

{ "title": [ "", "Layers of the Internet", "Accessing and Navigating the Dark Web", "Communicating On (and About) the Dark Web", "Navigating the Deep Web and Dark Web", "Is the Dark Web Anonymous?", "Why Anonymize Activity?", "Online Privacy", "Illegal Activity and the Dark Web", "Payment on the Dark Web", "Government Use of the Dark Web", "Law Enforcement", "Military and Intelligence", "Going Forward" ], "paragraphs": [ "Beyond the Internet content that many can easily access online lies another layer—indeed a much larger layer—of material that is not accessed through a traditional online search. As experts have noted, \"[s]earching on the Internet today can be compared to dragging a net across the surface of the ocean. While a great deal may be caught in the net, there is still a wealth of information that is deep, and therefore, missed.\" This deep area of the Internet, or the Deep Web, is characterized by the unknown—unknown breadth, depth, content, and users.\nThe furthest corners of the Deep Web, known as the Dark Web, contain content that has been intentionally concealed. The Dark Web may be accessed both for legitimate purposes and to conceal criminal or otherwise malicious activities. It is the exploitation of the Dark Web for illegal practices that has garnered the interest of officials and policy makers. Take for instance the Silk Road—one of the most notorious sites formerly located on the Dark Web. The Silk Road was an online global bazaar for illicit services and contraband, mainly drugs. Vendors of these illegal substances were located in more than 10 countries around the world, and contraband goods and services were provided to more than 100,000 buyers. It has been estimated that the Silk Road generated about $1.2 billion in sales between January 2011 and September 2013, after which it was dismantled by federal agents.\nThe use of the Internet, and in particular the Dark Web, for malicious activities has led policy makers to question whether law enforcement and other officials have sufficient tools to combat the illicit activities that might flow through this underworld. This report illuminates information on the various layers of the Internet, with a particular focus on the Dark Web. It discusses both legitimate and illicit uses of the Dark Web, including how the government may rely upon it. Throughout, the report raises issues that policy makers may consider as they explore means to curb malicious activity online.", "Many may consider the Internet and World Wide Web (web) to be synonymous; they are not. Rather, the web is one portion of the Internet, and a medium through which information may be accessed. In conceptualizing the web, some may view it as consisting solely of the websites accessible through a traditional search engine such as Google. However, this content—known as the \"Surface Web\"—is only one portion of the web. The Deep Web refers to \"a class of content on the Internet that, for various technical reasons, is not indexed by search engines,\" and thus would not be accessible through a traditional search engine. Information on the Deep Web includes content on private intranets (internal networks such as those at corporations, government agencies, or universities), commercial databases like Lexis Nexis or Westlaw, or sites that produce content via search queries or forms. Going even further into the web, the Dark Web is the segment of the Deep Web that has been intentionally hidden. The Dark Web is a general term that describes hidden Internet sites that users cannot access without using special software. While the content of these sites may be accessed, the publishers of these sites are concealed. Users access the Dark Web with the expectation of being able to share information and/or files with little risk of detection.\nIn 2005, the number of Internet users reached 1 billion worldwide. This number surpassed 2 billion in 2010 and crested over 3 billion in 2014. As of July 2016, more than 46% of the world population was connected to the Internet. While data exist on the number of Internet users, data on the number of users accessing the various layers of the web and on the breadth of these layers are less clear.\nSurface Web. The magnitude of the web is growing. According to one estimate, there were 334.6 million Internet top-level domain names registered globally during the second quarter of 2016. This is a 12.9% increase from the number of domain names registered during the same period in 2015. As of February 2017, there were estimated to be more than 1.154 billion websites. As researchers have noted, however, these numbers \"only hint at the size of the Web,\" as numbers of users and websites are constantly fluctuating.\nDeep Web. The Deep Web, as noted, cannot be accessed by traditional search engines because the content in this layer of the web is not indexed. Information here is not \"static and linked to other pages\" as is information on the Surface Web. As researchers have noted, \"[i]t's almost impossible to measure the size of the Deep Web. While some early estimates put the size of the Deep Web at 4,000–5,000 times larger than the surface web, the changing dynamic of how information is accessed and presented means that the Deep Web is growing exponentially and at a rate that defies quantification.\"\nDark Web. Within the Deep Web, the Dark Web is also growing as new tools make it easier to navigate. Because individuals may access the Dark Web assuming little risk of detection, they may use this arena for a variety of legal and illegal activities. It is unclear, however, how much of the Deep Web is taken up by Dark Web content and how much of the Dark Web is used for legal or illegal activities.", "The Dark Web can be reached through decentralized, anonymized nodes on a number of networks including Tor (short for The Onion Router) or I2P (Invisible Internet Project) . Tor, which was initially released as The Onion Routing project in 2002, was originally created by the U.S. Naval Research Laboratory as a tool for anonymously communicating online.\nTor \"refers both to the software that you install on your computer to run Tor and the network of computers that manages Tor connections.\" Tor's users connect to websites \"through a series of virtual tunnels rather than making a direct connection, thus allowing both organizations and individuals to share information over public networks without compromising their privacy.\" Users route their web traffic through other users' computers such that the traffic cannot be traced to the original user. Tor essentially establishes layers (like layers of an onion) and routes traffic through those layers to conceal users' identities. To get from layer to layer, Tor has established \"relays\" on computers around the world through which information passes. Information is encrypted between relays, and \"all Tor traffic passes through at least three relays before it reaches its destination.\" The final relay is called the \"exit relay,\" and the IP address of this relay is viewed as the source of the Tor traffic. When using Tor software, users' IP addresses remain hidden. As such, it appears that the connection to any given website \"is coming from the IP address of a Tor exit relay, which can be anywhere in the world.\"\nWhile data on the magnitude of the Deep Web and Dark Web and how they relate to the Surface Web are not clear, data on Tor users do exist. According to metrics from the Tor Project, the mean number of daily Tor users in the United States across the first two months of 2017 was 353,753—or 19.2% of total mean daily Tor users. The United States has the largest number of mean daily Tor users, followed by Russia (11.9%), Germany (9.9%), and United Arab Emirates (9.2%).", "There are several different ways to communicate about the Dark Web. One of the first places individuals may turn is Reddit. There are several subreddits pertaining to the Dark Web, such as DarkNetMarkets, DeepWeb, or Tor. These forums often provide links to sites within the Dark Web. Reddit provides a public platform for Dark Web users to discuss different aspects of the Tor. It is not encrypted or anonymous, as users who wish to engage in forum discussion must create an account. Individuals who wish to use a more secure form of communication may choose to utilize email, web chats, or personal messaging hosted on Tor:\nEmail service providers, for instance, typically only require users to input a username and password to sign up. In addition, email service providers generally offer anonymous messaging and encrypted storage. A number of anonymous, real-time chat rooms such as The Hub and OnionChat are hosted on Tor. Feeds are organized by topic. While some sites do not require any information from users before participating in chats, others require a user to register with an email address. Personal messaging, through Tor Messenger, is another option for Tor users who wish to communicate with an added layer of anonymity. Bitmessage is a popular messaging system which offers encryption and strong authentication. Decentralized, peer-to-peer instant messaging systems, such as Ricochet, also run on Tor and allow for anonymized communication. Specific vendor sites may host private messaging as well.", "Traditional search engines often use \"web crawlers\" to access websites on the Surface Web. This process of crawling searches the web and gathers websites that the search engines can then catalog and index. Content on the Deep (and Dark) Web, however, may not be caught by web crawlers (and subsequently indexed by traditional search engines) for a number of reasons, including that it may be unstructured, unlinked, or temporary content. As such, there are different mechanisms for navigating the Deep Web than there are for the Surface Web.\nUsers often navigate Dark Web sites through directories such as the \"Hidden Wiki,\" which organizes sites by category, similar to Wikipedia. In addition to the wikis, individuals can also search the Dark Web with search engines. These search engines may be broad, searching across the Deep Web, or they may be more specific. For instance, Ahmia, an example of a broader search engine, is one \"that indexes, searches and catalogs content published on Tor Hidden Services.\" In contrast, Grams is a more specific search engine \"patterned after Google\" where users can find illicit drugs, guns, counterfeit money, and other contraband.\nWhen using Tor, website URLs change formats. Instead of websites ending in .com, .org, .net, etc., domains usually end with an \"onion\" suffix, identifying a \"hidden service.\" Notably, when searching the web using Tor, an onion icon displays in the Tor browser.\nTor is notoriously slow, and this has been cited as one drawback to using the service. This is because all Tor traffic is routed through at least three relays, and there can be delays anywhere along its path. In addition, speed is reduced when more users are simultaneously on the Tor network. On the other hand, increasing the number of users who agree to use their computers as relays can increase the speed on Tor.\nTor and similar networks are not the only means to reach hidden content on the web. Other developers have created tools—such as Tor2web—that may allow individuals access to Tor-hosted content without downloading and installing the Tor software. Using bridges such as Tor2web, however, does not provide users with the same anonymity that Tor offers. As such, if users of Tor2web or other bridges access sites containing illegal content—for instance, those that host child pornography—they could more easily be detected by law enforcement than individuals who use anonymizing software such as Tor.", "Guaranteed anonymity is not foolproof. While tools such as Tor aim to anonymize content and activity, researchers and security experts are constantly developing means by which certain hidden services or individuals could be identified or \"deanonymized.\"\nFor example, in October 2011 the \"hacktivist\" collective Anonymous, through its Operation Darknet, crashed a website hosting service called Freedom Hosting—operating on the Tor network—which was reportedly home to more than 40 child pornography websites. Among these websites was Lolita City, cited as one of the largest child pornography sites with over 100GB of data. Anonymous had \"matched the digital fingerprints of links on [Lolita City] to Freedom Hosting\" and then launched a Distributed Denial of Service (DDoS) attack against Freedom Hosting. In addition, through Operation Darknet, Anonymous leaked the user database—including username, membership time, and number of images uploaded—for over 1,500 Lolita City members. In 2013, the Federal Bureau of Investigation (FBI), reportedly took control of Freedom Hosting and infected it with \"custom malware designed to identify visitors.\" Since 2002, the FBI has supposedly been using some form of a \"computer and internet protocol address verifier\"—consistent with the malware in the Freedom Hosting takeover—to \"identify suspects who are disguising their location using proxy servers or anonymity services, like Tor.\" In February 2017, hackers purportedly affiliated with Anonymous took down Freedom Hosting II—a website hosting provider on the dark web that was stood up after the original Freedom Hosting was shut down in 2013. Hackers claimed that over 50% of the content on Freedom Hosting was related to child pornography. Website data were dumped, some of which may now identify users of these sites. Of note, security researchers estimated that Freedom Hosting II housed 1,500–2,000 hidden services (about 15-20% of their estimated number of active sites). The FBI conducted an investigation into a child pornography website known as Playpen, which was operating on the Dark Web and had nearly 215,000 members. In 2015, Virginia District Court judge authorized a search warrant allowing law enforcement to employ a network investigative technique to try to identify actual IP addresses of computers used to access Playpen. Through the use of the NIT, the FBI was able to uncover about 1,300 IP addresses and subsequently trace those to individuals. Criminal charges have been filed against more than 185 individuals.", "A number of reasons have been cited why individuals might use services such as Tor to anonymize online activity. Anonymizing services have been used for legal and illegal activities ranging from keeping sensitive communications private to selling illegal drugs. Of note, while a wide range of legitimate uses of Tor exist, much of the research on and concern surrounding anonymizing services involves their use for illegal activities. As such, the bulk of this section focuses on the illegal activities.", "Tor is used to secure the privacy of activities and communications in a number of realms. Privacy advocates generally promote the use of Tor and similar software to maintain free speech, privacy, and anonymity. There are several examples of how it might be used for these purposes:\nAnti-Censorship and Political Activism. Tor may be used as a \"censorship circumvention tool, allowing its users to reach otherwise blocked destinations or content.\" Because individuals may rely upon Tor to access content that may be blocked in certain parts of the world, some governments have reportedly suggested tightening regulations around using Tor. Some have purportedly blocked access to it at times. Political dissidents may also use Tor to secure and anonymize their communications and locations, as they have reportedly done in dissident movements in Iran and Egypt. Sensitive Communication . Tor may also be used by individuals who want to access chat rooms and other forums for sensitive communications—both for personal and business uses. Individuals may seek out a safe haven for discussing private issues such as victimization or physical or mental illnesses. They may also use Tor to protect their children online by concealing the IP addresses of children's activities. Businesses may use it to protect their projects and help prevent spies from gaining a competitive advantage. Leaked Information . Journalists may use Tor for communicating \"more safely with whistleblowers and dissidents.\" The New Yorker 's Strongbox, for instance, is accessible through Tor and allows individuals to communicate and share documents anonymously with the publication. In addition, Edward Snowden reportedly used Tails (an \"operating system optimized for anonymity\")—which automatically runs Tor—to communicate with journalists and leak classified information on U.S. mass surveillance programs. Among the documents leaked by Snowden was a top-secret presentation outlining National Security Agency (NSA) efforts to exploit the Tor browser and de-anonymize users.", "Just as nefarious activity can occur through the Surface Web, it can also occur on the Deep Web and Dark Web. A range of malicious actors leverage cyberspace, from criminals to terrorists to state-sponsored spies. The web can serve as a forum for conversation, coordination, and action. Specifically, they may rely upon the Dark Web to help carry out their activities with reduced risk of detection. While this section focuses on criminals operating in cyberspace, the issues raised are certainly applicable to other categories of malicious actors.\nTwenty-first century criminals increasingly rely on the Internet and advanced technologies to further their criminal operations. For instance, criminals can easily leverage the Internet to carry out traditional crimes such as distributing illicit drugs and sex trafficking. In addition, they exploit the digital world to facilitate crimes that are often technology driven, including identity theft, payment card fraud, and intellectual property theft. The FBI considers high-tech crimes to be among the most significant crimes confronting the United States.\nThe Dark Web has been cited as facilitating a wide variety of crimes. Illicit goods such as drugs, weapons, exotic animals, and stolen goods and information are all sold for profit. There are gambling sites, thieves and assassins for hire, and troves of child pornography. Data on the prevalence of these Dark Web sites, however, are lacking. Tor estimates that only about 1.5% of Tor users visit hidden services/Dark Web pages. The actual percentage of these that serve a particular illicit market at any one time is unclear, and it is even less clear how much Tor traffic is going to any given site.\nOne study from the University of Portsmouth examined Tor traffic to hidden services. Researchers \"ran 40 'relay' computers in the Tor network ... which allowed them to assemble an unprecedented collection of data about the total number of Tor hidden services online—about 45,000 at any given time—and how much traffic flowed to them.\" While about 2% of the Tor hidden service websites identified were sites that researchers deemed related to child abuse, 83% of the visits to hidden services sites were to these child abuse sites—\"just a small number of pedophilia sites account for the majority of Dark Web http traffic.\" As has been noted, however, there are a number of variables that may have influenced the results. Another study from King's College London scanned hidden services on the Tor network. Starting with two popular Dark Web search engines, Ahmia and Onion City, they used a web crawler to identify 5,205 live websites. Of these 5,205 websites, researchers identified content on about half (2,723) and classified them by the nature of the content. Researchers determined that 1,547 sites contained illicit content. This is a sample of websites on hidden services in Tor; the researchers' crawler accessed about 300,000 websites (including 205,000 unique pages) on the network of Tor hidden services. Of note, in 2015 Tor estimated that there were about 30,000 hidden services that \"announce themselves to the Tor network every day.\" Further, Tor estimated that \"hidden service traffic is about 3.4% of total Tor traffic.\" More recent data from March 2016 to March 2017 indicate that there were generally between 50,000 and 60,000 hidden services, or unique .onion addresses, daily.\nThe Dark Web can play a number of roles in malicious activity. As noted, it can serve as a forum—through chat rooms and communication services—for planning and coordinating crimes. For instance, there have been reports that some of those engaged in tax-refund fraud discussed techniques on the Dark Web. The Dark Web can also provide a platform for criminals to sell illegal or stolen goods. Take the role of the Dark Web in data breaches, for example:\nMalware used in large-scale data breaches to capture unencrypted credit and debit card information has been purchased on the Dark Web. One form of malware, RAM scrapers, can be purchased and remotely installed on point-of-sale systems, as was done in the 2013 Target breach, among others. Thieves can sell stolen information for profit on the Dark Web. For instance, within weeks of the Target breach, the underground black markets were reportedly \"flooded\" with the stolen credit and debit card account information, \"selling in batches of one million cards and going for anywhere from $20 to more than $100 per card.\" Such \"card shops\" are just one example of the specialty markets on the Dark Web. Not only can data be stolen and sold through the Dark Web, it can happen quickly . In one experiment by security vendor BitGlass, researchers created a treasure trove of fake \"stolen\" data including over 1,500 names, social security numbers, credit card numbers, and more. They then planted these data on DropBox and seven well-known black market sites. Within 12 days, the data had been viewed nearly 1,100 times across 22 countries.\nCybercriminals can victimize individuals and organizations alike, and they can do so without regard for borders. How criminals exploit borders is a perennial challenge for law enforcement, particularly as the concept of borders and boundaries has evolved.\nPhysical Borders. For law enforcement purposes, jurisdictional boundaries have been drawn between nations, states, and other localities. Within these territories, various enforcement agencies are designated authority to administer justice. When crimes cross boundaries, a given entity may no longer have sole responsibility for criminal enforcement, and the laws across jurisdictions may not be consistent. Criminals have long understood these phenomena—and exploited them.\nPhysical–Cyber Borders. The relatively clear borders within the physical world are not always replicated in the virtual realm. High-speed Internet communication has not only facilitated the growth of legitimate business, but it has bolstered criminals' abilities to operate in an environment where they can broaden their pool of potential targets and rapidly exploit their victims. Frauds and schemes that were once conducted face-to-face can now be carried out remotely from across the country or even across the world. For instance, criminals can rely upon botnets to target victims across the globe without crossing a single border themselves.\nCyber Borders. While cyberspace crosses physical borders, boundaries within cyberspace—both jurisdictional and technological—still exist. Some web addresses, for instance, are country-specific, and the administration of those websites is controlled by particular nations. Another barrier in cyberspace involves the lines between the Surface Web and the Deep Web. Crossing these boundaries may involve subscriptions or fee-based access to particular website content. Certain businesses—news sites, journals, file-sharing sites, and others—may require paid access. Other sites may only be accessed through an invitation.\nDo malicious actors need, or benefit from, the Dark Web to carry out their activities? Researchers have pointed to pros and cons of relying upon the anonymity of the Dark Web. Criminals selling illicit goods may benefit from the Dark Web's added protection of anonymity by being better able to evade law enforcement. However, they may have more trouble getting business. Trend Micro's study of the Dark Web notes that on it, \"[s]ellers suffer from lack of reputation caused by increased anonymity. Being untraceable can present drawbacks for a seller who cannot easily establish a trust relationship with customers unless the marketplace allows for it.\" In other words, anonymity can be a barrier online if one is trying to sell goods and has not been otherwise vetted.", "Bitcoin is the currency often used in transactions on the Dark Web. It is a decentralized digital currency that uses anonymous, peer-to-peer transactions. Individuals generally obtain bitcoins by accepting them as payment, exchanging them for traditional currency, or \"mining\" them.\nWhen a bitcoin is used in a financial transaction, the transaction is recorded in a public ledger, called the block chain. The information recorded in the block chain is the bitcoin addresses of the sender and recipient. An address does not uniquely identify any particular bitcoin; rather, the address merely identifies a particular transaction.\nUsers' addresses are associated with and stored in a wallet. The wallet contains an individual's private key, which is a secret number that allows that individual to spend bitcoins from the corresponding wallet, similar to a password. The address for a transaction and a cryptographic signature are used to verify transactions. The wallet and private key are not recorded in the public ledger; this is where Bitcoin usage has heightened privacy. Wallets may be hosted on the web, by software for a desktop or mobile device, or on a hardware device.", "Because of the anonymity provided by Tor and other software such as I2P, the Dark Web can be a playground for nefarious actors online. As noted, however, there are a number of areas in which the study and use of the Dark Web may provide benefits. This is true not only for citizens and businesses seeking online privacy, but also for certain government sectors—namely the law enforcement, military, and intelligence communities.", "Just as criminals can leverage the anonymity of the Dark Web, so too can law enforcement. It may use this to conduct online surveillance and sting operations and to maintain anonymous tip lines. While individuals may anonymize activities, some have speculated about means by which law enforcement can still track malicious activity.\nAs noted, the FBI has put resources into developing malware that can compromise servers in an attempt to identify certain users of Tor. Since 2002, the FBI has reportedly used a \"computer and internet protocol address verifier\" (CIPAV) to \"identify suspects who are disguising their location using proxy servers or anonymity services, like Tor.\" It has been using this program to target \"hackers, online sexual predators, extortionists, and others.\" Law enforcement has also reportedly been working with companies to develop additional technologies to investigate crimes and identify victims on the Dark Web.\nIn addition to developing technology to infiltrate and deanonymize services such as Tor, law enforcement may rely upon more traditional crime fighting techniques; some have suggested that law enforcement can still rely upon mistakes by criminals or flaws in technology to target nefarious actors. For instance, in 2013 the FBI took down the Silk Road, then the \"cyber-underworld's largest black market.\" Reportedly, \"missteps\" by the site's operator led to its demise; some speculate that \"federal agents found weaknesses in the computer code used to operate the Silk Road website and exploited those weaknesses to hack the servers and force them to reveal their unique identifying addresses. Federal investigators could then locate the servers and ask law enforcement in those locations to seize them.\"\nLess than one month after federal agents disbanded the Silk Road, another site (Silk Road 2.0) came online. After discovering that the site's proprietor made critical errors, such as using his personal email address to register the servers, federal agents seized the servers and shut down the site. While law enforcement may aim to defeat criminals operating in the Dark Web technologically, some of their strongest tools may be traditional law enforcement crime-fighting means. For example, law enforcement can still request information from entities that collect identifying information on users. In March 2015, federal investigators \"sent a subpoena to Reddit demanding that the site turn over a collection of personal data about five users of the r/darknetmarkets forum [a subreddit where users discussed anonymous online sales of drugs, weapons, stolen financial data, and other contraband].\" Though, as some have suggested, such law enforcement actions could drive these conversations and activities to anonymous forums such as those on Tor.", "Anonymity in the Dark Web can be used to shield military command and control systems in the field from identification and hacking by adversaries. The military may use the Dark Web to study the environment in which it is operating as well as to discover activities that present an operational risk to troops. For instance, evidence suggests that the Islamic State (IS) and supporting groups seek to use the Dark Web's anonymity for activities beyond information sharing, recruitment, and propaganda dissemination, using Bitcoin to raise money for their operations. In its battle against IS, the Department of Defense (DOD) can monitor these activities and employ a variety of tactics to foil terrorist plots.\nTor software can be used by the military to conduct a clandestine or covert computer network operation such as taking down a website or a denial of service attack, or to intercept and inhibit enemy communications. Another use could be a military deception or psychological operation, where the military uses the Dark Web to plant disinformation about troop movements and targets, for counterintelligence, or to spread information to discredit the insurgents' narrative. These activities may be conducted either in support of an ongoing military operation or on a stand-alone basis.\nDOD's Defense Advanced Research Projects Agency (DARPA) is conducting a research project, called Memex, to develop a new search engine that can uncover patterns and relationships in online data to help law enforcement and other stakeholders track illegal activity. Commercial search engines such as Google and Bing use algorithms to present search results by popularity and ranking, and are only able to capture approximately 5% of the Internet. By sweeping websites that are often ignored by commercial search engines, and capturing thousands of hidden sites on the Dark Web, the Memex project ultimately aims to build a more comprehensive map of Internet content. Specifically, the project is currently developing technologies to \"find signals associated with trafficking in prostitution ads on popular websites.\" This is intended to help law enforcement target their human trafficking investigations.\nSimilar to the military's use of the Dark Web, the Intelligence Community's (IC's) use of it as a source of open intelligence is not a secret, though many associated details are classified. According to Admiral Mike Rogers, Director of the National Security Agency (NSA) and Commander of U.S. Cyber Command, they \"spend a lot of time looking for people who don't want to be found.\" Reportedly, an investigation into the NSA's XKeyscore program—one of the programs revealed by Edward Snowden's disclosure of classified information—demonstrated that any user attempting to download Tor was automatically fingerprinted electronically, allowing the agency to conceivably identify users who believe themselves to be untraceable.\nWhile specific IC activities associated with the Deep Web and Dark Web may be classified, at least one program associated with Intelligence Advanced Research Projects Activity (IARPA) may be related to searching data stored on the Deep Web. Reportedly, conventional tools such as signature-based detection don't allow researchers to anticipate cyber threats; as such, officials are responding to rather than anticipating and mitigating these attacks. The Cyber-attack Automated Unconventional Sensor Environment (CAUSE) program seeks to develop and test \"new automated methods that forecast and detect cyber-attacks significantly earlier than existing methods.\" It could use factors such as actor behavior models and black market sales to help forecast and detect cyber events.", "The Deep Web and Dark Web have been of increasing interest to researchers, law enforcement, and policy makers. However, clear data on the scope and nature of these layers of the Internet are unavailable; anonymity often afforded by services such as Tor for users accessing the deepest corners of the web contributes to this lack of clarity, as does the sometimes temporary nature of the websites hosted there. Individuals, businesses, and governments may all rely upon the digital underground. It may be used for legal and illegal activities ranging from keeping sensitive communications private to selling illegal contraband. Despite some reaching for increased privacy and security online, researchers have questioned whether there will be a corresponding uptick in individuals turning to anonymizing services such as Tor. They've suggested that while there may not be the incentive for individuals to migrate their browsing to these anonymizing platforms, \"it is much more likely for technological developments related to the Dark Web to improve the stealthiness of darknets.\" As such, law enforcement and policy makers may question how best to contend with evolving technology such as encryption and the challenges of attribution in an anonymous environment to effectively combat malicious actors who exploit cyberspace, including the Dark Web." ], "depth": [ 0, 1, 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", "h1_full", "h1_full", "h1_full", "h0_title h2_full h3_title", "h2_full", "h0_full h3_full h2_full", "", "h3_title", "h3_full", "h3_full", "h0_full" ] }

{ "question": [ "To what extent is internet content accessible through typical searches?", "What is the name for content that cannot be accessed by search engines?", "Is all Deep Web content purposely concealed?", "What activity is typical of the Dark Web?", "Why has the Dark Web become of interest to policy makers and officials?", "How can the dark web be accessed?", "To what extent is access to the dark web anonymous?", "How can the Dark Web be navigated?", "How can individuals communicate on the dark web?", "What kinds of activities can Tor be used for?", "What are some advantages to using Tor?", "How have criminals used the Dark Web?", "How common are criminal activities on the Dark Web?", "Besides criminals, what are some other groups that use the dark web?", "How do these other groups use the Dark Web?", "How does the anonymity of the Dark Web affect these groups?", "How are officials responding to challenges with anonymity on the dark web?" ], "summary": [ "The layers of the Internet go far beyond the surface content that many can easily access in their daily searches.", "The other content is that of the Deep Web, content that has not been indexed by traditional search engines such as Google.", "The furthest corners of the Deep Web, segments known as the Dark Web, contain content that has been intentionally concealed.", "The Dark Web may be used for legitimate purposes as well as to conceal criminal or otherwise malicious activities.", "It is the exploitation of the Dark Web for illegal practices that has garnered the interest of officials and policy makers.", "Individuals can access the Dark Web by using special software such as Tor (short for The Onion Router). Some developers have created tools—such as Tor2web—that may allow individuals access to Tor-hosted content without downloading and installing the Tor software, though accessing the Dark Web through these means does not anonymize activity.", "Tor relies upon a network of volunteer computers to route users' web traffic through a series of other users' computers such that the traffic cannot be traced to the original user. Some developers have created tools—such as Tor2web—that may allow individuals access to Tor-hosted content without downloading and installing the Tor software, though accessing the Dark Web through these means does not anonymize activity.", "Once on the Dark Web, users often navigate it through directories such as the \"Hidden Wiki,\" which organizes sites by category, similar to Wikipedia. Individuals can also search the Dark Web with search engines, which may be broad, searching across the Deep Web, or more specific, searching for contraband like illicit drugs, guns, or counterfeit money.", "While on the Dark Web, individuals may communicate through means such as secure email, web chats, or personal messaging hosted on Tor.", "Anonymizing services such as Tor have been used for legal and illegal activities ranging from maintaining privacy to selling illegal goods—mainly purchased with Bitcoin or other digital currencies.", "They may be used to circumvent censorship, access blocked content, or maintain the privacy of sensitive communications or business plans.", "However, a range of malicious actors, from criminals to terrorists to state-sponsored spies, can also leverage cyberspace and the Dark Web can serve as a forum for conversation, coordination, and action.", "It is unclear how much of the Dark Web is dedicated to serving a particular illicit market at any one time, and, because of the anonymity of services such as Tor, it is even further unclear how much traffic is actually flowing to any given site.", "Just as criminals can rely upon the anonymity of the Dark Web, so too can the law enforcement, military, and intelligence communities.", "They may, for example, use it to conduct online surveillance and sting operations and to maintain anonymous tip lines.", "Anonymity in the Dark Web can be used to shield officials from identification and hacking by adversaries. It can also be used to conduct a clandestine or covert computer network operation such as taking down a website or a denial of service attack, or to intercept communications.", "Reportedly, officials are continuously working on expanding techniques to deanonymize activity on the Dark Web and identify malicious actors online." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, 0, -1, -1, -1, 0, -1, 2, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Statutory Framework of OPA", "Liability", "Determination of Damages", "Trustees", "Oil Spill Liability Trust Fund", "The NRDA Process Under the OPA Regulations", "Preassessment Phase", "Restoration Planning Phase", "Injury Assessment", "Developing Restoration Alternatives", "Restoration Implementation Phase", "NRDA and the 2010 Deepwater Horizon Oil Spill", "The Trustees and the Responsible Parties in the Gulf NRDA Process", "Restoration Planning for the 2010 Deepwater Horizon Oil Spill", "NRDA Funding for the 2010 Oil Spill", "The RESTORE Act", "Conclusion" ], "paragraphs": [ "", "The estimated 4.1 million barrels of oil released during the 2010 Deepwater Horizon oil spill is considered to be the largest accidental marine oil spill in the history of the petroleum industry and will have an impact on the natural resources of the Gulf region for the foreseeable future. Under the Oil Pollution Act of 1990 (OPA), federal, state, tribal, and foreign governments may seek compensation for the costs of restoring damaged natural resources from the parties responsible through the Natural Resource Damage Assessment (NRDA) process. Under the NRDA process, damages are assessed to restore the natural resources to their prior condition and to compensate the public for their lost use of these resources.\nThis report examines the NRDA process under the OPA in the context of the Deepwater Horizon spill. In particular, this report describes the statutory requirements of OPA, the NRDA process under the implementing regulations, and developments in the Gulf of Mexico.", "OPA (sometimes known as OPA 90) applies to discharges of oil into the navigable waters of the United States, adjoining shorelines, and the exclusive economic zone of the United States. It was enacted partially in response to the Exxon Valdez spill in 1989, where liability was imposed primarily through the Clean Water Act (CWA). OPA amended the CWA and several other statutes imposing oil spill liability to create a unified oil spill liability regime, to expand the coverage of such statutes, increase liability, to strengthen federal response authority, and to establish a fund to ensure that claims are paid up to a stated amount. Several federal district courts have held that OPA preempts other general maritime remedies.", "Pursuant to OPA, the parties responsible for causing the oil spill are responsible for damages to natural resources. In the case of offshore drilling, a responsible party is the lessee or permittee of the area in which the facility is located. When the Coast Guard receives information of an incident, it is required to designate the responsible parties.\nLiability under OPA is strict, and joint and several. Joint and several liability means that where there are multiple responsible parties, each is potentially liable for the whole amount of the damages, regardless of its share of blame. Responsible parties, however, can bring separate actions for subrogation to resolve reimbursement issues among themselves. Strict liability means liability is assigned regardless of fault or blame. There does not have to be a mistake, negligence, or a willful action for a party to be responsible.\nIt is important to note that while OPA provides a federal remedy for natural resource damages, it does not preclude liability under other laws. For instance, the federal government may impose criminal liability for harming protected species. Moreover, OPA specifically allows states to impose additional liability for oil spills and/or requirements for removal activities.", "Under OPA, each responsible party for an oil spill is liable for removal costs and six specified categories of damages. One of these categories is natural resource damages, which replaced the CWA natural resource damages provisions for oil spills. OPA defines natural resource damages as \"[d]amages for injury to, destruction of, loss of, or loss of use of, natural resources, including the reasonable costs of assessing the damage, which shall be recoverable by a United States trustee, a State trustee, an Indian tribe trustee, or a foreign trustee.\" Removal is defined as \"containment and removal of oil or a hazardous substance from water and shorelines or the taking of other actions as may be necessary to minimize or mitigate damage to the public health or welfare.\" Thus, harm to natural resources is categorized as a damage under OPA; removal is separate.\nIn the case of natural resource damages, OPA provides that responsible parties are liable to the United States government, states, Indian tribes, or foreign governments for damages to natural resources under each of their respective jurisdictions. OPA provides three factors for measuring natural resource damages. The first allows for \"the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of, the damaged natural resources.\" The second considers \"the diminution in value of those natural resources pending restoration.\" And the third allows for recovery of the reasonable costs incurred in \"assessing those damages.\"\nDamages are capped under OPA unless one of the enumerated statutory exceptions applies. For offshore facilities, a responsible party's liability for economic damages is limited to $75 million, but there is no cap on removal costs. Exceptions that would nullify the cap include gross negligence, willful misconduct, or violating an applicable federal regulation.", "The governmental entities with jurisdiction over resources—federal, state, tribal, and foreign—are the Trustees throughout the NRDA process. Under OPA, the function of the Trustees is to assess natural resource damages, as well as to \"develop and implement a plan for the restoration, rehabilitation, replacement, or acquisition of the equivalent, of the natural resources under their trusteeship.\" Accordingly, they are charged with acting \"on behalf of the public.\"\nThe Trustees must give a written invitation to the responsible parties to participate in the NRDA process, and if the responsible parties accept, they must do so in writing. Significantly, OPA requires presenting NRDA claims to the responsible parties before any suit can be filed or other action taken to allow for pre-trial settlement. Under Section 1006(e)(2) of OPA, if the Trustees satisfy the NOAA's NRDA regulations in estimating damages, their assessment is treated as having a rebuttable presumption of accuracy in any judicial or administrative proceeding. This means that a responsible party would have the burden of proving that the assessment is wrong, rather than the Trustees having to show that the assessment is right.\nTypically, Trustees form a Trustee Council, to develop a restoration plan that addresses the damages to all of the Trustees' resources. These Trustees must reach consensus on the extent of damages and restoration when issuing a unified plan. When the goal is to have one plan to address all of the impacts, which is how NRDA generally operates, the Trustees must work cooperatively to determine the magnitude and extent of injury to natural resources and create a plan to restore those injured resources to baseline (pre-spill) levels. When more than one state's natural resources are involved, each state gets one vote on these issues, even if a state has multiple state agencies represented among the Trustees. Each federal department also gets one vote, despite the number of subagencies involved.\nLitigation may be avoided altogether if the responsible parties consent to the Trustees' restoration plan. Once money is recovered by a Trustee under OPA, including to cover the costs of assessing the damages, it is deposited in a special trust account in order \"to reimburse or pay costs by the trustee ... with respect to the damaged natural resource.\" By establishing a collaborative process for resolving liability issues, NRDA is thus designed to avoid litigation. According to discussion on the House floor about OPA, \"[OPA] is intended to allow for quick and complete payment of reasonable claims without resort to cumbersome litigation.\"\nOPA also includes a citizen suit provision for natural resource damages. It states that \"any person\" is permitted to sue a federal official \"where there is alleged to be a failure of that official to perform a duty ... that is not discretionary with that official.\"", "OPA provides for an Oil Spill Liability Trust Fund (OS Trust Fund), which is financed chiefly by a per-barrel tax on crude oil produced in or imported to the United States. Administered by the National Pollution Funds Center, an independent Coast Guard unit that serves as its fiduciary, the OS Trust Fund can be used to remedy natural resource damages if the responsible parties refuse to accept the Final Restoration Plan and the Trustees choose not to sue. The OS Trust Fund can likewise be used in the interim period before the responsible parties are identified, as well as in circumstances where the responsible parties cannot be identified.\nOS Trust Fund monies are available for a range of remedial and compensatory uses, including the payment of removal costs and costs incurred by Trustees during the NRDA process. For example, the Trustees may use the Fund for assessing natural resource damages and for developing and implementing restoration plans. Money for the Trustees' immediate assessment of the natural resource damage may come from the OS Trust Fund until the responsible parties are identified and provide reimbursement to the Fund.\nThe OS Trust Fund has compensation limits for damaged natural resources. It can be used to pay damages up to its per-incident cap of $1 billion. However, only $500 million of that amount can go toward natural resource damage assessments and claims in connection with any single incident. The remaining money from the OS Trust Fund can be used for the payment of removal costs and the other costs, expenses, claims, and economic damages included in OPA. The money available from the OS Trust Fund exceeds an offshore facility's liability limit of $75 million for economic damages under OPA.\nWith some exceptions, a claim for removal costs or damages must first be presented to a responsible party or its guarantor before it may be presented to the National Pollution Funds Center for payment from the Fund. The OS Trust Fund could also be used if the responsible parties are not known, insolvent, or refuse to give money for assessment before they are found responsible by a court.", "The National Oceanic and Atmospheric Administration (NOAA) of the Department of Commerce oversees the NRDA process under OPA. Currently, NOAA is involved in 13 other NRDA oil spill cases in the Gulf in addition to the BP spill. Although Trustees are not obligated to follow NOAA's NRDA regulations, Trustees have an incentive to comply with the regulations because of the rebuttable presumption accorded such determinations.\nUnder the OPA regulations, the Trustees may take emergency restoration action before completing the NRDA process, provided that (1) the action is needed to avoid irreversible loss of natural resources; (2) the action will not be undertaken by the lead response agency; (3) the action is feasible and likely to succeed; (4) delay would result in increased damages; and (5) the costs of the action are not unreasonable. The regulations also provide that settlement for natural resource damages may occur at any time, if the terms of the settlement are adequate to satisfy the goal of OPA and are \"fair, reasonable, and in the public interest.\"\nUnder the OPA regulations, the Trustees are required to invite the responsible parties to participate in the NRDA process \"as soon as practicable\" but not later than the delivery of a Notice of Intent to Conduct Restoration Planning. The regulations further state that the Trustees and responsible parties should consider entering into binding agreements to facilitate their interactions and resolve any disputes. Once the responsible parties accept an invitation to participate, the Trustees determine the scope of their participation in accordance with the regulations. Furthermore, the regulations allow Trustees to take other actions to expedite the restoration of injured natural resources, including pre-incident planning and the development of regional restoration plans.\nThe Trustees' work occurs in three steps: a Preassessment Phase, the Restoration Planning Phase, and the Restoration Implementation Phase. These phases are discussed in detail below.", "In the Preassessment Phase, the Trustees initially establish whether there is jurisdiction under OPA and whether it is appropriate to try to restore the damaged resources. Under 15 C.F.R. Section 990.42, the Trustees must determine that there are injuries, that those injuries have not been remedied, and that there are feasible restoration actions available to fix the injuries. If any of those evaluations result in a negative finding, the NRDA process ends. Determining whether injuries exist involves data gathering, and the Trustees use multiple sources, including the public, to obtain the information they need.\nOnce injuries have been found, the Trustees complete the second step of the Preassessment Phase—preparation of a Notice of Intent to Conduct Restoration Planning Activities. This Notice is published in the Federal Register and also is delivered directly to the responsible parties.\nFinally, the Trustees open a publicly available administrative record, which includes the documents considered by the Trustees throughout the process. This record stays open until the Final Restoration Plan is delivered to the responsible parties.", "The second phase in the NRDA process, known as the Restoration Planning Phase, focuses on designing the restoration plan. This phase is composed of two primary steps: (1) injury assessment and (2) developing restoration alternatives.", "First, the Trustees determine if the injuries to natural resources resulted from the incident. An injury is defined by the regulations as \"an observable or measurable adverse change in a natural resource or impairment of a natural resource service.\" The Trustees will also evaluate harm resulting from the response actions, such as the in situ burning, the use of dispersants, or vehicle damage to shores and marshes. These injuries are also compensable under OPA.\nThe Trustees must likewise quantify the injuries and identify possible restoration projects. In particular, they must quantify the degree, and spatial and temporal injuries relative to the baseline. The baseline is the level the Trustees agree the resources were at prior to the injury and to which they will be restored under NRDA. The regulations allow the Trustees to use historical data, reference data, control data, and/or data on incremental changes to establish the baseline. Thus, the activities that occur in the Restoration Planning Phase may include field studies, data evaluation, modeling, injury assessment, and quantification of damage, either in terms of money needed to restore the resource or in terms of habitat or resource units. To quantify injury, the Trustees are required to estimate the time for natural recovery without restoration, but including any response actions.", "Information from the injury assessment is used to develop a restoration plan that includes specific projects for remediation. Restoration can include restoring, replacing, rehabilitating, or acquiring the equivalent of the natural resource harmed or destroyed by the incident. Once the information on the injuries justifies restoration, the Trustees must \"consider a reasonable range of restoration alternatives before electing their preferred alternative.\" Only alternatives considered technically feasible can be included in a restoration plan.\nThe regulations indicate that each restoration alternative is composed of primary and/or compensatory restoration components that will address one or more of the specific injuries resulting from an oil spill incident. For each alternative, the trustees must consider primary restoration actions, which is action taken to return injured natural resources and services to the baseline. This must include a natural recovery alternative, in which no intervention would be taken to restore injured natural resources and services to baseline.\nAt the same time, the Trustees must consider compensatory restoration actions for the interim loss of natural resources or services pending recovery. For compensatory restoration, the Trustees are first directed to consider actions that would provide services of the same type and quality as the injured resources. If these cannot provide a reasonable range of alternatives, the Trustees should then identify actions that \"provide natural resources and services of comparable type and quality as those provided by the injured natural resources.\" According to the House Conference Report, the priority in planning restoration is \"to restore, rehabilitate and replace damaged resources. The alternative of acquiring equivalent resources should be chosen only when the other alternatives are not possible, or when the cost of those alternatives would, in the judgment of the trustee, be grossly disproportionate to the value of the resources involved.\"\nOnce the range of alternatives is chosen, the Trustees evaluate the alternatives and choose one as the basis of the restoration plan. At a minimum, the proposed alternatives must be evaluated based on (1) the cost to carry out the alternative; (2) the extent to which each alternative is expected to meet the trustees' goals; (3) the likelihood of success for each alternative; (4) the extent to which each alternative will prevent future injury and avoid collateral injury; (5) the extent to which each alternative benefits more than one natural resource; and (6) the effect of each alternative on public health and safety. The Trustees are required to select a \"preferred\" restoration alternative, and if the Trustees conclude that two or more are equally preferable, they must select the most cost-efficient alternative.\nThe regulations set forth what the Draft Restoration Plan should include, such as a summary of the injury assessment procedures, a description of the injuries, the range of restoration alternatives considered, and the objectives of restoration. The regulations also require that the Trustees \"establish restoration objectives that are specific to the injuries,\" which \"should clearly specify the desired outcome, and the performance criteria by which successful restoration will be judged.\"\nOPA requires the Trustees to provide opportunities for public involvement during the development of restoration plans. A Draft Damage Assessment and Restoration Plan is submitted to the public for formal comment. Those comments are addressed within the Final Restoration Plan.\nNEPA requires that major federal actions that significantly affect the human environment must be reviewed to assess the impacts of the action. The extent of the environmental review depends on the extent of the impacts on the environment. Final Restoration Plans that have significant impacts on the human environment will require an environmental impact statement, which will evaluate the impacts, provide alternatives to the chosen activity, consider possible mitigation, and involve the public in the process. Lesser impacts may mean that an environmental assessment is appropriate.", "Once the Trustees have agreed on a Final Restoration Plan, they begin phase three, Restoration Implementation. Within a \"reasonable time\" after completed restoration planning, the Trustees must close the administrative record and present a written demand in writing to the responsible parties. The demand must invite the responsible parties to implement the Final Restoration Plan subject to Trustee oversight and reimburse the Trustees for their assessment and oversight costs. In the alternative, the demand may invite the responsible parties to advance a specified sum to the Trustees, representing all of their direct and indirect costs of assessment and restoration. The regulations require that the demand identify the incident, identify the trustees, describe the injuries, provide an index to the administrative record, and provide the Final Restoration Plan.\nThe responsible parties then have 90 days to respond. They may respond \"by paying or providing binding assurance that they will reimburse trustees' assessment costs and implement the plan or pay assessment costs and the trustees' estimate of the costs of implementation.\" If the responsible parties do not agree to the demand within 90 days, the trustees may either file a judicial action for damages or present the uncompensated claim for damages to the Oil Spill Liability Trust Fund. Pursuant to the regulations, judicial actions and claims must be filed within three years after the Final Restoration Plan is made publicly available. At least one court has held that the responsible parties could demand a jury for such a trial.\nThe regulations further provide that sums recovered by the Trustees in satisfaction of a natural resource damage claim must be placed in a revolving trust account. Moreover, sums recovered for past assessment costs and emergency restoration costs may be used to reimburse the Trustees. All other sums must be used to implement the Final Restoration Plan.\nLastly, the regulations state several measures the Trustees can take to facilitate the implementation of restoration. These include establishing a Trustee committee, developing more detailed workplans, monitoring and overseeing restoration, and evaluating the success of the restoration, as well as the need for corrective action.", "", "For the 2010 Deepwater Horizon oil spill, the responsible parties identified are BP Exploration and Production, Inc., Transocean Holdings Inc., Triton Asset Leasing GmbH, Transocean Offshore Deepwater Drilling Inc., Transocean Deepwater Inc., Anadarko Petroleum, Anadarko E&P Company LP, and MOEX Offshore 2007 LLC. As of April 2012, BP was the only responsible party participating in the cooperative NRDA process.\nThe federal government Trustees include the following:\nU.S. Department of the Interior, as represented by the National Park Service, U.S. Fish and Wildlife Service, and the Bureau of Land Management; NOAA, on behalf of the U.S. Department of Commerce; U.S. Department of Agriculture; U.S. Department of Defense (DOD); EPA; various agencies of the state of Louisiana, including the Coastal Protection and Restoration Authority, Oil Spill Coordinator's Office, Department of Environmental Quality, Department of Wildlife and Fisheries, and Department of Natural Resources; state of Mississippi Department of Environmental Quality; state of Alabama Department of Conservation and Natural Resources, and Geological Survey of Alabama; state of Florida Department of Environmental Protection, and Fish and Wildlife Conservation Commission; and various agencies of the state of Texas, including the Texas Parks and Wildlife Department.\nThe Federal Lead Administrative Trustee is the Department of the Interior. The state Trustees are the governors and various agencies of the states affected by the spill: Alabama, Florida, Louisiana, Mississippi, and Texas. Federally recognized Indian tribes may be Trustees for affected tribal lands; at least one state recognized Indian tribe has sued BP for alleged fishing losses and damages to ancestral lands. No foreign governments appear to have been affected, but Canada might have a claim if the habits of migratory birds are disrupted; damage to Mexican resources is also a possibility, but the search for potential harms in Mexican territory remains inconclusive.\nPast NRDA processes have occurred on a much smaller scale with fewer Trustees. Accordingly, the size of the 2010 spill and the diverse range of federal and state Trustees may make consensus more difficult. Because the range of natural resources do not conform to political boundaries, it is also possible that different Trustees may argue the same resources belong to them. OPA doesn't appear to prohibit separate NRDA processes resulting from one spill, and the implementing regulations allow Trustees to operate independently from one another.\nOPA does not explicitly state whether the Trustees are required to work together to develop a single plan, or whether multiple plans are permitted. It states only that the act will not provide double compensation for the same loss. At the same time, Section 2706(c) of OPA assigns each type of Trustee (federal, state, tribal, and foreign) the responsibility of developing its plan for the restoration of the resources it oversees, rather than requiring all the Trustees to develop just one plan for all damaged resources.\nIn the legislative history of OPA, Congress identified these issues and recognized that separate plans may result, while indicating that cooperation was the preferred method. After acknowledging that in some cases more than one Trustee may share control over a natural resource, the House Conference Report on OPA states that \"trustees should exercise joint management or control over the shared resources. The trustees should coordinate their assessments and the development of restoration plans, but [OPA] does not preclude different trustees from conducting parallel assessments and developing individual plans.\"\nHowever, the NOAA regulations state that \"[i]f an incident affects the interests of multiple trustees, the trustees should act jointly\" to ensure that full restoration is achieved without double recovery of damages. The regulations also provide that the Trustees may act independently where the resources can reasonably be divided. If separate NRDA processes conducted pursuant to these regulations were challenged, a court would likely defer to NOAA's interpretation of OPA to allow multiple damage assessments in some circumstances.\nFor the Gulf oil spill NRDA process, the Trustees have formed a Trustee Council. It appears that a joint restoration plan may enhance the Trustees' negotiating position with responsible parties. However, as the NRDA process evolves, individual interests may diverge because of different restoration priorities and related individual interests.", "The natural resources under the jurisdiction of the federal and state Trustees have been and continue to be threatened as a result of discharged oil from the Deepwater Horizon spill and the subsequent removal efforts. While the full extent of the potential injuries is presently unknown, exposure to oil discharges has resulted in adverse effects on aquatic organisms, birds, wildlife, vegetation, and natural habitats. In particular, over 950 miles of shoreline habitats, including salt marshes, sandy beaches, and mangrove areas have been jeopardized. A variety of visibly oiled wildlife, including birds, sea turtles, and marine mammals has been captured or collected dead. Meanwhile, the human use associated with natural resources in the Gulf region has declined, including fishing, swimming, beach-going, and viewing birds and wildlife.\nThe NRDA process in the Gulf is currently in the Restoration Planning Phase. On October 1, 2010, the Trustees announced its Intent to Conduct Restoration Planning regarding the discharge of oil from the Deepwater Horizon into the Gulf of Mexico. As discussed above, pursuant to OPA, federal and state Trustees are authorized to (1) assess natural resource injuries resulting from the discharge of oil, and (2) develop and implement a plan for the restoration of the injured resources. The Notice of Intent also includes the Trustees' determination of jurisdiction to pursue restoration under OPA, as well as their determination that the injuries to natural resources in the Gulf resulted from the incident. The Notice of Intent further lists the types of response actions already employed for this spill and indicates that feasible restoration actions exist to address the natural resource injuries and losses.\nLater, on February 17, 2011, NOAA announced its plans to develop a Programmatic Environmental Impact Statement (PEIS) in cooperation with its state co-trustees, as part of the ongoing NRDA process. The PEIS will assess the environmental, social, and economic attributes of the affected environment and the potential consequences of alternative actions to restore, rehabilitate, replace, or acquire the equivalent of natural resources potentially injured by the oil spill.\nThe initial step in the PEIS process included public scoping meetings in each of the affected Gulf Coast states and the District of Columbia. The purpose of the scoping process was \"to identify the concerns of the affected public and federal agencies, states, and Indian tribes, involve the public early in the decision making process, facilitate an efficient PEIS preparation process, define the issues and alternatives that will be examined in details, and save time by ensuring that draft documents adequately address relevant issues.\" The comments provided during scoping helped to define the parameters of a draft PEIS, on which the public will be allowed to comment. The scoping meetings also gave the public the opportunity to learn more about damage assessment and the environmental impacts of the spill.", "Early in the NRDA process, BP provided $45 million to state and federal trustees for NRDA preassessment and assessment activities. At that time, BP acknowledged that the Trustees retain the right to obtain additional payments for assessment costs that may exceed the initial payments. DOI Trustees have received an additional $12.4 million in reimbursement from BP for actual costs. DOI also has an Interagency Agreement with the U.S. Coast Guard for OS Trust Fund money totaling $47.8 million to support initial baseline data collection, and has used $5.9 million of DOI NRDA funding for assessment activities. DOI has presented a claim of $67.5 million to the responsible parties for estimated costs to implement selected assessment procedures. Trustees are required to submit claims to the responsible parties before funds can be advanced by the OS Trust Fund.\nOn April 21, 2011, the Trustees for the Deepwater Horizon oil spill announced that BP agreed to provide $1 billion toward early restoration projects in the Gulf of Mexico to address injuries to natural resources caused by the spill. Under the agreement, DOI, NOAA, and the five Gulf states affected by the spill each will receive $100 million to implement projects. The remaining $300 million will be allocated by NOAA and DOI for projects proposed by state trustees. All projects must then conform to the requirements of the agreement and be approved by BP and the Trustee Council. NOAA has stated that the money:\nrepresents a first step toward fulfilling BP's obligation to fund the complete restoration of injured public resources, including the loss of use of those resources by the people living, working and visiting the area. The Trustees will use the money to fund projects such as the rebuilding of coastal marshes, replenishment of damaged beaches, conservation of sensitive areas for ocean habitat for injured wildlife, and restoration of barrier islands and wetlands that provide natural protection from storms.\nThe Trustees have since selected and planned 10 early restoration projects costing nearly $71 million.\nBP's agreement, however, does not limit the authority of the Trustees to perform assessments, engage in other early restoration planning, or select and implement additional restoration projects. BP additionally established a $20 billion escrow fund known as the Gulf Coast Claims Facility, targeted toward individual and business losses from the oil spill. The Gulf Coast Claims Facility has since ceased operations, with a court-supervised claims settlement program having begun on June 4, 2012.", "During the 112 th Congress, President Obama signed the Moving Ahead for Progress in the 21 st Century Act (MAP-21). Included in MAP-21 is the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (RESTORE Act). It would appear that the requirements under the new law would overlap with NRDA. Significantly, the RESTORE Act establishes in the Treasury the Gulf Coast Restoration Trust Fund, which is available to restore the Gulf Coast region. It requires the Secretary of the Treasury to deposit into this fund 80% of all administrative and civil penalties paid by responsible parties in connection with the Deepwater Horizon oil spill under the Clean Water Act. Amounts in the fund are available for expenditure without further appropriation for eligible activities and are to remain available until expended.\nThe RESTORE Act specifies that 35% of the fund must be available to the states of Alabama, Florida, Louisiana, Mississippi, and Texas \"in equal shares for expenditure for ecological and economic restoration of the Gulf Coast region.\" In particular, these funds may be used for a variety of enumerated activities, including restoration and protection of natural resources, mitigation of damages, implementation of certain federally approved plans, workforce development and job creation, infrastructure projects, coastal flood protection, and, in certain circumstances, activities to promote tourism and seafood.\nMeanwhile, with 30% of funds from the Gulf Coast Restoration Trust Fund, the RESTORE Act additionally established the Gulf Coast Ecosystem Restoration Council, consisting of members appointed by the President from federal agencies. The Council is required, among other things, to develop a comprehensive plan and identify certain projects with respect to the restoration of the ecosystem and natural resources of the Gulf Coast Region, as well as collect and consider related scientific research.\nAlso of importance, the RESTORE Act requires an additional 30% of the Gulf Coast Restoration Trust Fund to be disbursed to the five Gulf Coast states using a formula that weighs the mileage of oiled shoreline, the distance from the affected shoreline to the Deepwater Horizon drilling unit, and the population of coastal counties. Lastly, the RESTORE Act requires 5% of funds to be distributed for a marine research program and for making certain research grants.", "The NRDA process has been successful in the past, but it has never been tested on such a large scale as the 2010 Deepwater Horizon oil spill. In this case, more oil was spilled; a greater geographic area is involved; and more Trustees are involved than in past spills. The Trustees may have difficulty agreeing on the assessment of damages, baseline conditions, the value of the damaged resources, and the proper method of restoring them. If a unified restoration plan is sought, the Trustees must make unanimous decisions on these issues, and then BP has the option not to accept the Final Restoration Plan. If BP rejects the Trustees' Plan, the Trustees may sue BP under NRDA to resolve these issues, extending the final conclusion, which could delay restoration of the natural resources." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 3, 3, 2, 1, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_title h2_title h1_title h3_title", "", "h2_full h1_full", "h0_full h2_full h1_full", "h3_full h2_full", "h2_full", "", "", "", "", "h2_full", "h3_title", "", "h3_full", "", "h3_full", "" ] }

{ "question": [ "What were the effects of the 2010 Deep Horizon Oil Spill?", "What is the Oil Pollution Act?", "How does the Oil Pollution Act affect state property?", "What authorization does OPA allow governments?", "What types of damage are covered under the OPA?", "Is there a limit for liability of damages under OPA?", "What is the Natural Resources Damage Assessment?", "How is the NRDA implemented?", "How are NRDA plans funded?", "What happens if responsible parties do not fund the plan?", "How can the Oil Spill Liability Trust Fund be used to fund the plan?", "At what stage is the NRDA process in the Gulf?", "Why has this issue captured Congress' attention?", "How did the Obama Administration address the issue of Gulf restoration?" ], "summary": [ "The 2010 Deepwater Horizon oil spill leaked an estimated 4.1 million barrels of oil into the Gulf of Mexico, damaging the waters, shores, and marshes, and the fish and wildlife that live there.", "The Oil Pollution Act (OPA) allows state, federal, tribal, and federal governments to recover damages to natural resources in the public trust from the parties responsible for the oil spill.", "Under the public trust doctrine, natural resources are managed by the states for the benefit of all citizens, except where a statute vests such management in the federal government.", "In particular, OPA authorizes Trustees (representatives of federal, state, and local government entities with jurisdiction over the natural resources in question) to assess the damages to natural resources resulting from a spill, and to develop a plan for the restoration, rehabilitation, replacement or acquisition of the equivalent, of the natural resources.", "The types of damages that are recoverable include the cost of replacing or restoring the lost resource, the lost value of those resources if or until they are recovered, and any costs incurred in assessing the harm.", "OPA caps liability for offshore drilling units at $75 million for economic damages, but does not limit liability for the costs of containing and removing the oil.", "The process established by OPA for assessing the damages to natural resources is known as Natural Resources Damage Assessment (NRDA).", "In the three steps of the NRDA process, the Trustees are required to solicit the participation of the responsible parties and design a restoration plan. This plan is then paid for or implemented by the responsible parties.", "This plan is then paid for or implemented by the responsible parties.", "If the responsible parties refuse to pay or reach an agreement with the Trustees, the Trustees can sue the responsible party for those damages under OPA.", "In the alternative, the Trustees may seek compensation from the Oil Spill Liability Trust Fund, but there is a cap of $500 million from the Fund for natural resources damages. The federal government may then seek restitution from the responsible parties for the sums taken from that Fund.", "The NRDA process in the Gulf is in the Restoration Planning Phase.", "The caps on the Oil Spill Liability Trust Fund and on OPA liability have captured Congress's attention, as has Gulf restoration.", "In 2012, President Obama signed the RESTORE Act, which establishes from Clean Water Act penalties the Gulf Coast Restoration Trust Fund, which is available for restoration activities in the Gulf Coast region." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, 0, 0, 2, 2, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "The Commercial Space Industry", "Satellites", "Launch Services and Vehicles", "Launch Services", "Launch Vehicles", "Ground Systems", "Space-Related Products and Services", "Insurance", "New Entrants Change the Industry", "U.S. Government Redefines Procurement", "Private Financing Increases", "Growing Deployment of Small Satellites", "Commercial Space Workforce Declines", "Policy Issues for Congress", "Regulating and Managing Commercial Space", "Export Controls", "Spectrum Allocation" ], "paragraphs": [ "", "Rockets, satellites, and the services they provide, once the domain of governments, are increasingly launched and managed by privately owned companies. Until 1982, the U.S. government launched all civil and commercial payloads into orbit, and U.S. launch vehicle manufacturers produced vehicles only under contract to the National Aeronautics and Space Administration (NASA) or the Department of Defense (DOD). Most of the satellites they carried into orbit were owned by U.S. or foreign government agencies. Now, commercial payloads are generally launched by private providers, and the payloads themselves are increasingly likely to be owned by private entities: Of the 576 U.S.-owned satellites currently in orbit, 286 were launched for commercial reasons and another 12 on behalf of academic users.\nThe growth of the commercial space sector is a result of a deliberate shift in federal policy. The Commercial Space Launch Act of 1984 states the following:\n[T]he United States should encourage private sector launches, reentries, and associated services and, only to the extent necessary, regulate those launches, reentries, and services to ensure compliance with international obligations of the United States and to protect the public health and safety, safety of property, and national security and foreign policy interests of the United States .\nThat law was amended in 2004 to provide that \"the regulatory standards governing human space flight ... evolve as the industry matures so that regulations neither stifle technology development nor expose crew or space flight participants to avoidable risks as the public comes to expect greater safety for crew and space flight participants from the industry.\"\nNational security agencies have emphasized the importance of the commercial space industry, in particular the space industrial base. To foster its growth, the commercial space industry has purposely been insulated from some types of federal regulation often applied to other industries. For example, the Commercial Space Launch Act directs the Secretary of Transportation to issue regulations affecting the design and operation of launch vehicles only to protect the safety of crew, thereby giving launch vehicle manufacturers and operators wide leeway in developing new rockets. An initial eight-year \"learning period\" for this limited regulation has been twice extended, most recently until 2023.", "Global spending on space activity reached an estimated $323 billion in 2015. Of this amount, nearly 40% was generated by commercial space products and services and 37% by commercial infrastructure and support industries. The U.S. government—including military and national security agencies and NASA—accounted for about 14% of global spending, and government spending by other countries the remaining 10%.\nThe commercial space industry has distinct subsectors. Most commercial payloads are placed in orbits around Earth by launch vehicles that have the thrust to escape Earth's gravity. Typically, the firms that provide commercial launch services also design and assemble the rockets they launch. The payloads, such as satellites and manned space capsules, are manufactured by other firms. Service providers (such as television broadcasters) may design and build their own satellites, or purchase them from third-party manufacturers. The ground stations that control and communicate with the payloads, which form an integral part of the spacecraft operations, may be operated by the launch services, the payload owners, or entirely separate entities.", "The satellite supply chain is global, with a small number of manufacturers. Satellites are custom-made for their users, using specialized parts, which require extensive testing to ensure they will operate in a space environment where replacement and repair are generally not options. Because there are a limited number of rocket launches each year, supply chain deadlines are governed by a satellite launch window; if that window is missed because of production or regulatory delays, it may be many months or even years before another launch vehicle will be available to carry the satellite into orbit. Minimizing the mass and physical dimensions of a satellite is critically important, because heavier or bigger satellites are likely to require larger, more costly launch rockets. Appendix A shows a range of existing satellites, their weight, and corresponding familiar objects that approximate the same mass.\nThe United States is the largest manufacturer of spacecraft, followed by the European Union and Russia. The global commercial satellite manufacturing sector, with $6 billion in revenues in 2015, attempted 86 launches carrying 262 spacecraft. Of these, 126 were satellites weighing less than 22 pounds (10 kilograms). The growing use of these smaller satellites has led to a doubling in the number of satellites launched. However, smaller satellites comprise a tiny portion of the mass of vehicles sent into space: Of 392 tons of satellites launched in 2015, the total weight of satellites under 22 pounds was barely half a ton.\nRegardless of their size and type, satellites generally utilize similar types of components and instruments ( Figure 1 ), including the following:\nS olar panels generate electricity that is stored in onboard rechargeable batteries . A propulsion tank adjusts altitude and orbit control and assists in placing the satellite into final orbit; several thrusters assist with these maneuvers and may be used later to move the satellite into a new orbit or, when the satellite's useful life is over, into a \"graveyard\" orbit farther away from Earth. T hermal control is the skin that prevents damage to the internal components in the extreme temperatures of space. Satellites pass through a wide range of temperatures, ranging from about -300°F to +200°F. Certain components, such as batteries, have an optimum operational range of about +50°F to +85°F. The skin is composed of a multilayer thermal blanket made of lightweight reflective films. In addition, a coated or mirrored optical solar reflector may be used, which acts like a radiator to keep the components from overheating due to solar energy and radiation. An electronics system controls satellite functions, such as flight operations, the direction in which the satellite points, and mathematical analysis. A communications system includes a transmitter, a receiver, antenna e that send data to and receive instructions from ground stations, and an amplifier that produces high-power radio frequency signals. Specialized components are determined by the core mission of the satellite. For example, a remote sensing satellite might include an image sensor, a telescope, and a digital camera.\nSatellites are placed into different types of Earth orbits depending on their planned use: low Earth orbit, medium Earth orbit, geosynchronous Earth orbit, and high Earth orbit ( Figure 2 ). The altitude of the orbit determines how frequently the spacecraft orbits the Earth. Some types of space activities require closer proximity to Earth for supply and maintenance and to provide higher-resolution images of Earth. Others operate farther in space to more effectively deploy their services. The International Space Station (ISS), for example, is in low Earth orbit, taking 90 minutes for a full orbit, while a television or weather satellite in geosynchronous orbit will take a full day. A satellite in geosynchronous orbit matches the Earth's rotational speed, so unlike other types of satellites, it will remain in the same place above the Earth and can therefore provide the same locations with weather monitoring or telecommunications.\nAt the end of June 2016, 1,419 satellites were in operation, with 55% in low Earth orbit, 36% in geosynchronous orbit, 7% in middle Earth orbit, and the remainder in high Earth orbit. Of these, 576 are U.S. satellites, 140 Russian, 181 Chinese, and 522 from other countries. Of the U.S. satellites, 286 are commercial, 146 military, 132 government, and 12 civil.", "The commercial launch industry booked $2.6 billion in revenues in 2015, when it attempted 86 rocket launches. Of these, 83 launches successfully placed payloads into orbit. Twenty-two launches carried commercial satellites and 64 carried government payloads; some carried both. It has been estimated that total costs of global launches for commercial, civil, and military purposes (including servicing the ISS) in 2015 were about $8 billion. The U.S. Government Accountability Office (GAO) identified three factors spurring the growth of the U.S. launch industry:\nthe NASA commercial cargo program and other federal contracts; aggressive pricing by SpaceX and some other private providers, which are \"more price competitive compared with foreign launch providers\"; and the emerging space tourism and small satellite industries.", "A traditional spaceport was a facility owned by the federal government, such as Kennedy Space Center and Cape Canaveral Air Force Station (both in Florida) and Vandenberg Air Force Base (in California). The federal government has used these facilities for its own launches and also promoted their use for commercial space access. Several private providers of launch services have chosen to build their own facilities. The Federal Aviation Administration (FAA) has licensed 10 spaceports in seven states: California, Florida, Texas, Oklahoma, Alaska, Virginia, and New Mexico. California, Florida, and Texas each have two licensed spaceports. Additional launch sites have been proposed in other states.\nSpaceports are configured for specific uses. Some are planned only to launch large vertical rockets, while others hope to lure space tourism with facilities for winged launch vehicles. Regardless of the type of launch vehicles using the sites, they have common infrastructure needs, including access for delivery of large launch vehicle components; room to assemble rocket parts into a launch vehicle; facilities for receiving and storing propellants and loading them aboard rockets; secure facilities for storing cargo, payloads, and scientific experiments; work space for crews, engineers, and launch personnel; and meteorological equipment to monitor weather patterns prior to scheduled launches.\nThe ISS also increasingly offers certain types of launch services; part of it is designated as a national laboratory, a shared resource for NASA and private industry; astronauts have used its robotic arm to launch small satellites into orbit, many of them only 4-inch cubes. In 2015, 42 small satellites, primarily with commercial functions, were launched as cargo to the ISS for later deployment into individual orbits. U.S. crew members and cargo were transported to the ISS in NASA's Space Shuttle from 2000 until 2011, when the shuttle was retired. Since then, the ISS has been resupplied by commercial launches through NASA's Commercial Orbital Transportation Services (COTS) program—the companies SpaceX and Orbital ATK are participants—as well as launches by the Japan Aerospace Exploration Agency (JAXA) and Russian Soyuz rockets.", "Launch vehicles have the primary function of putting a spacecraft into an orbit or a suborbital trajectory. In the process of launching a satellite, most of the rocket stages fall away in sequence until the spacecraft reaches its planned orbit; the first stage of the rocket propels the rocket from the launch pad, and then the second-stage rocket boosts the payload to orbit. Launch vehicles generally are used only once, although some commercial providers are developing vehicles that are intended to be reusable. Figure 3 is a cross section of a typical launch vehicle, the United Launch Alliance Atlas V. Its major components—from top to bottom—include the following:\nThe nose cone or fairing , a structure made with a vented aluminum-honeycomb core and graphite epoxy covering, carries the payload. Manufacturers offer clients a choice of three payload fairings, depending on the size of the payload. The fairing protects the payload from atmospheric pressure changes and aerodynamic heating during launch. The second - stage rocket consists of fuel and oxygen tanks, control systems, and a rocket engine that carries the payload to orbit. The Atlas V is propelled by a single RL 10 Centaur engine and stainless steel fuel tanks, providing 22,300 pounds-force (lbf) of thrust, fueled by liquid hydrogen and liquid oxygen. The walls of the stainless steel tanks are insulated and so thin that they cannot support their own weight before they are pressurized, a design developed to maximize engine performance. The Centaur second stage also includes flight and guidance computers that autonomously control all aspects of the flight. A dapters connect the first and second stages of the rocket and provide the structure for housing vehicle electronics. The first stage consists of additional fuel and oxygen tanks, control systems, and rocket engines, sometimes supplemented with strap-on boosters. The Atlas V main booster is made of a special aluminum and, unlike the stage-two tanks, is structurally stable. The launch vehicle is fueled by rocket propellant (or highly purified kerosene) and liquid oxygen that provide 860,300 lbf of thrust. The RD 180 engine was developed in Russia and is produced by a U.S.-Russian joint venture.", "Ground systems are the Earth-bound infrastructure that transmits directions to satellites and receives data they collect.\nGround systems include antenna services for transmission and reception of satellite radio frequency (RF) signals. There has been experimentation with optical communications (using lasers), but most satellite communication is through RF, generally using 30 megahertz (MHz) to 30 gigahertz (GHz) bands. Antenna services decode embedded data streams before passing them on for distribution and analysis. Ground service options are customized for each satellite program and may include government-owned and commercial antenna assets to maximize a satellite's communications capability. A satellite that is in frequent contact with ground stations will need smaller amounts of onboard data storage than a spacecraft that has limited opportunities to transmit data to the ground.\nGround facilities include user terminals , which can be handheld mobile terminals, rooftop dish antennae for satellite television, satellite radios in cars, or large corporate dish antennae.\nGround systems also include data accounting and distribution services and data processing services. In addition to data storage, these services identify data missing from transmissions and take action to retrieve it from the satellite. These services are highly automated \"lights-out\" systems that function around the clock with only occasional monitoring by employees. As the global space economy continues to expand, the need for international standards is growing to ensure interoperability among systems from different countries and service providers.\nWith more than $100 billion in revenue, ground stations and related equipment comprise the largest part of commercial infrastructure. This subsector provides consumer products such as satellite phones and television, navigation chips in mobile phones, and many other products. Three-quarters of the revenue stems from geolocation and navigation equipment, such as Global Positioning System (GPS) receivers.", "Global commercial space products and services generated $126 billion in revenue in 2015. The space component of some of these products and services is not always well understood by the users, who may take some of them—such as GPS—for granted. The major commercial categories include the following:\nC ommunications systems relay radio and television signals sent from a point on the ground to a satellite and then to another ground point. These signals may carry such content as television programs, in-flight calls from airplane passengers, and some smartphone data. Satellite television alone accounts for almost a third of all space-related commercial activity. Earth observation provides environmental monitoring of oceans, forests, deserts, wildlife habitats, and natural disasters. G lobal atmospheric monitoring includes data collected for meteorological use to help predict weather patterns, hurricanes, and El Niño. It also measures soil water content to assist in prediction of droughts and floods. T ransportation uses provide geolocation services to delivery trucks and ride-sharing services and their passengers. Safety enhancement provides data to first responders at oil spills and forest fires and prevents train collisions with geolocation services.\nSatellites also have noncommercial, national security purposes, including detecting the launch of missiles; detecting nuclear explosions in the ground or atmosphere to monitor nuclear treaty compliance; and providing global jam-resistant communications for strategic and tactical forces during a conflict.", "Space launches are risky: three of the 86 commercial launches attempted in the United States in 2015 failed, resulting in the destruction of launch vehicles and costly payloads. Given the potential losses, insurance coverage is likely to play an important role in the development of a commercial space industry. Worldwide space insurance premiums were more than $700 million in 2015, and insured losses exceeded $600 million in 2014. Major insurers such as American International Group, Munich Re, and Allianz compete in the market.\nNonetheless, insurance on space-related risks appears to have limitations. In September 2016, a rocket owned by SpaceX exploded while on the launchpad at Cape Canaveral, Florida, destroying the satellite it was preparing to launch. The Falcon 9 rocket was reportedly not insured. The owner of the satellite it was attempting to launch held $300 million of coverage. However, the policy may not be applicable because the rocket explosion took place during a prelaunch test and not during the actual launch.", "Three developments are changing the shape of the commercial space industry: a shift in government space activities toward the use of commercial services, an increase in private financing, and an increase in the launch of small satellites. These changes are supporting the development of new entrants with new launch products.", "Whereas NASA once owned the spacecraft produced for it by suppliers like Boeing, it now is in some cases transferring risk by contracting out for services, leaving the ownership of the launch vehicles to commercial entities. Its choice of traditional procurement or a more commercially oriented approach ( Table 1 ) depends on the program mission. With the commercially oriented approach, NASA agrees on a fixed price for the services a contractor is to provide, rather than using a cost-plus methodology that reimburses the contractor's allowable expenses and a dds an additional payment to ensure a profit .\nOne example of the new approach is procurement of transportation of astronauts to the ISS. NASA traditionally would have provided detailed descriptions of each step in development of a launch vehicle and funded it as well. Now, however, more project development is left to the contractor, which shares the cost. The commercial partner is expected to meet project milestones. If it does, it is paid and the project moves to its next stage.\nDuring the final years of the space shuttle program, NASA encouraged and funded commercial providers to develop systems that could transport crew and cargo to the ISS. The first of these was the SpaceX Dragon capsule and Falcon 9 rocket, which has ferried supplies to the ISS since 2012. Last year, four ISS cargo launches were conducted by Orbital ATK and three more by SpaceX. (Boeing and SpaceX are each developing ISS crew transportation capabilities for first use in the next few years.)\nNew entrants are changing the economics of launches by reuse of rocket boosters. SpaceX's entry into the launch market provides NASA and DOD with new options, and it is also cutting into the international launch market formerly dominated by foreign providers. SpaceX has had several successful launches and relandings. Blue Origin has to date launched several prototypical rockets that have returned to their launchpads.", "Space-related industries are taking advantage of a range of private financing options, including venture capital, debt financing, and acquisition, receiving more than $13 billion in such investments between 2000 and 2015. According to Tauri Group, a space industry research organization, this trend has accelerated over the past five years, with 2015 recording $2.3 billion in space-related capital investment, a record level for one year. Several wealthy business owners—some with ties to Silicon Valley—and corporations are also investing in space-related companies, as are banks, including the U.S. Export-Import Bank. These combined capital sources have spurred the establishment of new companies: In the last five years, an average of eight new space ventures were established annually, almost triple the level of such firm creation in the early 2000s. According to Tauri Group, investors find space attractive because launch vehicle costs are forecast to drop with the use of new types of launch hardware, including reusable rockets, and because they anticipate the development of new products and services, such as space tourism and new satellite sources for collecting and analyzing data obtained in space.", "The development of small satellites for Earth imaging and establishing space-based Internet networks from LEO is now possible because satellite components have been miniaturized and standardized. Groups of small satellites are referred to as constellations; Planet Labs, for example, has a constellation of 36 small satellites in orbit, with customers paying for the images it can capture at less distance from Earth than is possible with larger satellites in higher orbits. Some observers argue that demand for data may be driving the market for small satellites, as much as the new technologies.\nSmall satellites allow access to space by researchers, companies, and governments that cannot afford larger spacecraft. Because small satellites can travel as a secondary payload on many launch vehicles, launch costs may be only a few million dollars per satellite, although multiple small satellites may be required for many purposes.\nThe small satellite market is addressed by a number of startup firms that hope to succeed in providing broadband, remote imaging, or communication services, such as Firefly Space Systems in Texas, Rocket Lab in California, and OneWeb in Virginia. While small satellites are normally launched on rockets with other, larger payloads, Virgin Galactic is proposing a new type of launcher: a rocket attached to the wing of a modified commercial 747 jet will launch a payload into orbit when the plane reaches an altitude of 35,000 feet. Virgin Galactic believes this form of launch vehicle, using smaller rockets, will significantly reduce the cost of putting small satellites into orbit.\nNASA is also utilizing small so-called CubeSats to address scientific questions and broaden the involvement of students and researchers. In 2015, 42 small satellites, primarily with commercial functions, were launched as cargo to the ISS for later deployment from there. NASA has announced that it will help develop new CubeSat technologies and will launch six small Earth-observing satellite missions.", "The space industry workforce includes employees in private-sector firms as well as those working at NASA, DOD, and other government agencies. The increasing public attention given to the commercial space industry belies a dichotomy: the commercial and civil space workforces are declining, while national security workforces remain steady.\nCommercial employment in the space industry peaked in 2006 at about 267,000 employees and has declined steadily since then. The termination of NASA's space shuttle program in 2011 resulted in the loss of many private-sector jobs. Other major reasons for the decline in space industry employment may be many skilled workers reaching retirement age and difficulties in recruiting young talent.\nJobs in this industry generally require advanced skills, such as engineering, differentiating them from the average U.S. manufacturing or service-industry job. The Space Foundation has identified six industry sectors that collectively approximate the space industry. Bureau of Labor Statistics (BLS) data show that employment in these six sectors dropped by 16% in the 10 years from 2005 to 2015 ( T a ble 2 ).\nThese data do not show the full scope of the space industry workforce. The categories listed in Table 2 include both space and nonspace activity, while employees in other sectors who are working on space-related tasks are excluded because most of the employment in the sector is not related to space.\nAn alternative approach to assessing the size and breadth of the space industry workforce is the 2012 space industry report by the U.S. Department of Commerce (DOC), based on a survey of 3,780 respondents in 16 different manufacturing and service segments of the space economy, including spacecraft and launch vehicles, communications systems, ground systems, electronic equipment, and software. This survey, conducted once and covering the years from 2009 to 2012, shows a somewhat larger workforce of 254,179 employees in 611 commercial companies that viewed themselves as dependent on federal space programs.\nIn addition to commercial employment, DOC identified 13,897 space-related jobs in the U.S. government, 19,630 in nonprofit organizations, and 60,533 at universities, for a total of 348,239 workers dependent on space-related programs. The report shows shrinkage of nearly 7% in employment at companies dependent on commercial space programs from 2009 to 2012.\nWages in the commercial space industry are higher than average U.S. wages. The average space industry salary of $111,000 (in 2014) is double what the average private-sector employee receives. Average salaries vary within the six industry categories cited in Table 2 , from about $92,000 in missile and vehicle propulsion (NAICS 336415) to more than $124,000 in missile and vehicle manufacturing (NAICS 336414).", "Three overarching issues will affect the development of commercial space in the future: how the industry is regulated by diverse federal agencies, the effects of new export control laws and regulations that seek to increase U.S. space industry competitiveness, and the allocation of spectrum for satellite use.", "The commercial space industry is governed by federal agencies with diverse regulatory interests. The major federal agencies with commercial space policy responsibilities are as follows:\nFAA 's Office of Commercial S pace Transportation regulates launches and reentries of space vehicles, as well as the U.S. launch and reentry sites, including rerouting aircraft that may interfere with a nearby rocket launch. The Department of Commerce has two major space industry interests. The National Oceanic and Atmospheric Administration (NOAA) licenses commercial imaging satellites and utilizes commercial space capabilities for improved weather forecasting and environmental data collection, and also oversees the Office of Space Commerce, which promotes the U.S. commercial space industry's economic growth and technological advancement. DOC's Bureau of Industry and Security (BIS) administers export controls and licensing for strategic technologies, including space industry components. NASA provides infrastructure and operations support and encourages private-sector investment in its launches and other activities through its Commercial Crew and Cargo Programs. Department of Defense utilizes commercial space systems and technologies for national security purposes. Through the Air Force, it provides infrastructure, operations support, and safety oversight for government and commercial launches at its launch sites. Additionally, through the Defense Technology Security Administration (DTSA), it reviews and comments on applications for export licenses, in conjunction with Department of State review. Department of State (DOS) is responsible for the export and temporary import of defense articles and services—including some commercial space components—through the International Traffic in Arms Regulations (ITAR). Federal Communications Commission licenses commercial satellite radio frequencies and determines placement of satellites in geostationary orbit.\nThe current regulatory and management structure may require changes if the commercial space indus try grows. Private firms may take on more responsibilities for launching government satellites (including military satellites), offer space flights for tourists, undertake mining operations on asteroids and the moon, and attempt to explore and even settle Mars. This could lead to greater commercial demand for FAA to process licenses, permits, and safety reviews. Congress may need to set additional legal parameters to establish a legal basis for regulation of passenger safety in space tourism and space traffic management. In addition, the current legal provision for liability risk-sharing between launch companies and the U.S. government may require changes as the industry matures and more private individuals become passengers or crew.\nA better system for integrating commercial space launches into the air traffic control system is a particular concern for FAA. Currently, when a launch or reentry is planned, FAA closes airspace near the site because equipment onboard aircraft often cannot track rockets and spacecraft moving at very high speeds. Since launch times may vary from initial plans, FAA may close the airspace for a long period, causing both commercial and military aircraft to be delayed or rerouted. The FAA alert system utilizes email and phone calls to commercial and military airspace users. As the number of rocket launches increases, FAA may face pressure to reduce the length of air space closures. The agency plans to use an automated system to deliver alerts to aircraft pilots to minimize air traffic impact.\nIn the 114 th Congress, H.R. 4945 has been proposed to change federal oversight of commercial space. In addition to making organizational changes within DOD, the legislation would direct NASA to develop a 20-year plan to land astronauts on Mars, and would require the Department of Transportation to establish an Office of Commercial Space Transportation and an Office of Spaceports and also to designate a lead government agency for space traffic management. DOC would be directed to develop a plan to coordinate space-related economic and regulatory activities, and DOS would be required to begin developing an international traffic management regime.", "Spacecraft, ground stations, and some unique components are regulated by the U.S. export control system. They are considered dual-use items, as even those developed primarily for commercial or civil purposes have possible military applications. During the Cold War era, these space industry products were regulated exclusively by DOS and were considered munitions, as many of them were then designed specifically for military purposes. Although the regulation of these dual-use space products was transferred to DOC in the 1990s, Congress returned regulatory authority to DOS in 1998 after some satellite designs were improperly transferred to China.\nDOS's administration of export controls came under strong criticism from manufacturers of space-related equipment. The satellite industry asserted that the long licensing process led to a loss of sales abroad, and the Aerospace Industries Association (AIA) claimed that the U.S. share of the global commercial satellite market fell from 63% before export controls were transferred to DOS to 30%. A DOC survey of manufacturers found that many believed that the DOS export controls \"eroded U.S. competitiveness in the international space market.\" In 2013, Congress transferred export control responsibilities for 80% of satellites and related items back to DOC regulation for sales to most countries. AIA and others are calling for controls on some commercial items that are still under DOS, such as apertures on electro-optical satellites used for remote sensing, integrated propulsion systems, and plasma thrusters, to be transferred to DOC.\nAIA also has raised concerns about the launch vehicle restrictions in the international Missile Technology Control Regime (MTCR), which regulates missile proliferation. As space tourism becomes a possibility, some MTCR rules—as incorporated into U.S. export controls—could affect the development of this commercial activity, including limitations on the type of rocket that could be used to boost space tourists into suborbital space. In addition, a space tourism rocket that is launched in one country and descends in another country could be considered a missile export subject to strict MTCR controls.", "The satellite industry is concerned that sharing of certain bands for future wireless 5G use—some of which are currently used solely for satellite transmissions—could jeopardize the reliability and cost-effectiveness of their service.\nFor decades, satellites have communicated on dedicated frequency bands assigned by the International Telecommunications Union (ITU). The specific band used by a satellite depends on its purpose. For example, lower frequencies—the L-, S-, and C-bands—are not affected by heavy rainfall and are therefore used in tropical regions; they can also simultaneously serve large areas of the globe. The Ku and Ka bands are used for television broadcasting and data services. Satellites are built to transmit a specific frequency and cannot be reprogrammed after launch.\nThe Obama Administration directed the FCC to identify spectrum that could be used to expand Wi-Fi services in the future. To address that goal, FCC and the National Telecommunications and Information Administration (NTIA) collaborated in identifying 500 MHz of spectrum suitable for wireless broadband use, including future domestic 5G terrestrial mobile providers. Some of this spectrum was obtained by sharing frequencies in the 28 GHz band previously dedicated to satellite transmissions.\nThe satellite industry expressed concern over sharing spectrum, particularly the 28 GHz band, contending that current satellite services could be undermined without a deeper understanding of how future 5G services will be used:\n[S]atellites are providing vital services to all Americans using spectrum bands above 24 GHz. Satellites \"distribute point-to-multipoint video and other high bandwidth services more efficiently and more cost effectively than any other technology.\" In addition, high-throughput satellites are bringing competitive broadband services to all of the United States. Satellites also provide advanced services to ships, aircrafts and motor vehicles.... Consideration of repurposing spectrum access from existing users with a supporting record would result in the loss of critical services to U.S. consumers, and to vital enterprise users such as first responders and the U.S. military.\nThe FCC contends that its approach in its July 2016 ruling struck a balance between wireless services and satellite operations and that the spectrum sharing provided in the decision would \"ensure that diverse users—including federal and non-federal, satellite and terrestrial, and fixed and mobile—can co-exist and expand.\" The FCC also noted that there had been \"dueling studies\" from affected industries and said it would continue to study the issue and make adjustments if necessary.\nThere has been congressional interest in the FCC's activities with regard to satellite spectrum. H.R. 4945 (114 th Congress) would direct the FCC to preserve primary electromagnetic access in the 27.5-28.35 GHz band for satellite operators. The FCC is also evaluating a proposal by Ligado Networks, a satellite-communications company developing a network to support 5G service, for sharing the 1675-1680 band with NOAA. DOC, the Air Force, and the Aerospace Industries Association have expressed concern that this sharing arrangement might interfere with GPS signals and the emergency response, homeland security, and aviation safety sectors that rely on them.\nAppendix A. Satellite Size Comparison" ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 2, 2, 1, 1, 2, 2, 2, 1, 1, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "h1_full", "h0_title", "", "h0_full", "", "", "", "", "", "h0_title", "h0_full", "h0_full", "h0_full", "", "h1_full", "h1_full", "h1_full", "h1_full" ] }

{ "question": [ "How is NASA planning to support the commercial launch industry?", "Why is NASA planning to support the commercial launch industry?", "Why are space-related companies attracting more funding now?", "Why are these new companies interested in space?", "How is the commercial space industry promoting growth?", "How will federal regulation affect the industry?", "How will export controls affect the industry?", "How will wireless communication regulations affect the industry?" ], "summary": [ "NASA's commercial cargo program and other federal contracts are supporting the growth of the commercial launch industry, with less expensive rockets, some of which are planned to be reusable.", "Many of the new space-related companies are attracting rising levels of venture capital.", "Aggressive pricing by U.S. entrants is cutting into the international launch market once dominated by foreign providers.", "A renewed interest in low-cost satellites, some of which are small enough to be held in one hand, is prompting a range of start-ups and providing new accessibility to space by educational institutions, small businesses, and individual researchers.", "In order to spur innovation and growth, the commercial space industry has been purposely insulated from some types of federal regulation often applied to other industries.", "One is the structure of federal regulation and management; those responsibilities currently are dispersed among many agencies, and there is congressional interest in reorganizing commercial space functions at NASA and the Departments of Defense, Commerce, Transportation, and State.", "A second issue is the extent to which U.S. export controls are hampering U.S. satellite industry sales abroad. Export controls have recently been revamped to enable export of more commercial space products and services, but impediments may remain to reestablishing U.S. space product competitiveness.", "A third concern is that new Federal Communications Commission (FCC) regulations allowing wireless communication providers to share spectrum previously dedicated to satellite transmissions may result in interference." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 4, 4, 4, 4, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Data on CEO Pay", "The Economics of Executive Pay", "How Executive Compensation Is Set", "Executive Pay in the Neo-Classical World", "The Principal-Agent Problem and the Free-Rider Problem", "The \"Managerial Power\" Critique of the Neo-Classical Model", "Board \"Capture\"", "Stealth Compensation and Outrage Costs", "Performance Based Pay: Part of the Solution or Part of the Problem?", "Pay for Performance or Managerial Power?", "Pay for Performance and Corporate Scandals", "Criticisms", "Executive Pay in the 1990s: Being in the Right Place at the Right Time?", "Can \"Excessive Pay\" Be Empirically Measured?", "A Brief History of the Regulation of Executive Pay", "The Omnibus Budget Reconciliation Act (OBRA) of 1993's Cap on the Deductibility of Executive Compensation", "The Sarbanes-Oxley Act", "Requirement that Shareholders Approve Equity-Based Compensation Plans for NYSE and Nasdaq Listed Firms", "Requirement that NYSE-Listed Companies Have Compensation Committees Solely Composed of Outside Directors", "FASB's Options Accounting Rule", "SEC Rules on Disclosure of Executive Pay", "Policy Options", "Maintain the Status Quo", "Eliminating or Significantly Restricting OBRA", "A Cap on the Deductibility of Executive Pay When It Exceeds a Certain Ratio of Non-Managerial Pay", "Disclosure of Corporate Services Provided by Firms Affiliated with Compensation Consultants or a Ban on Such Services", "Increase Shareholder Roles in the Election of Board Members", "Give Shareholders a Non-binding Vote on Executive Pay", "Increase the Progressivity of the Tax Code", "Appendix. A Primer on Stock Options" ], "paragraphs": [ "", "For years, many observers have characterized the annual pay packages awarded to the executives and chief executive officers (CEOs) of the nation's largest firms as excessive. According to one estimate, the total median CEO pay at the nation's 350 largest publicly owned firms grew from $2.7 million in 1995 to $6.8 million in 2005. The overall increase in CEO pay has outstripped inflation and the growth in non-managerial pay over the same period, fueling criticism of executive compensation packages.\nAmong the quite vociferous critics of executive pay are public officials, academics, shareholders, and some Members of Congress. For example, William J. McDonough, chairman of the Public Company Accounting Oversight Board, has said that there is \"... nothing in economic theory to justify the levels of executive compensation that are widely prevalent today.\" Warren Buffett has observed that \"...it's difficult to overpay the truly extraordinary CEO of a giant enterprise. But this species is rare.\" Former Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Jr. has written that \"these huge paydays, I believe, undermine corporate governance and send a signal that boards are willing to spend shareholders' money lavishly...\" In addition, a 2006 survey found that 90% of institutional investors, who are the largest owners of outstanding domestic corporate shares, said that executives at most companies are overpaid.\nThere are also a number of current examples of congressional concerns over executive pay. For example, the version of H.R. 2 (the minimum wage bill) passed by the Senate on February 1, 2007, included several tax provisions, one of which applies to executive pay. Current tax rules permit individuals to defer taxes on income that is held in non-qualified deferred compensation plans. Under the Senate version of H.R. 2 , an individual could defer no more than $1,000,000 annually from taxable income by contributing to such a plan. The version passed by the House had no similar provision. Arguing for the cap, Chairman Max Baucus of the Senate Finance Committee, which unanimously passed the tax provisions that became part of the Senate version of H.R. 2 , observed:\nRank-and-file workers generally have to pay taxes on their compensation when they earn it. The exception is deferred compensation provided through qualified retirement plans with statutory limits on contributions and benefits. A 401(k) is the best example. Management, on the other hand, has no limit on the amount that can be deferred to nonqualified arrangements—no limit...\nWith respect to CEO pay, Chairman Barney Frank of the House Financial Services Committee said that:\nI do not think the boards of directors work as effective independent checks. They are not the fox guarding the hen house. They are the hens guarding the rooster. And I think the time has come to say we need the shareholders to do this....\nIn the 110 th Congress, Representative Frank has introduced the Shareholder Vote on Executive Compensation Act ( H.R. 1257 ), which was approved by the House on April 19, 2007. Soon afterwards, Senator Obama introduced an identically named companion bill, S. 1181 .\nThe bills would require publicly held companies to hold annual non-binding shareholder votes on their executive compensation plans and any new \"golden parachute\" compensation offered to executives during mergers and acquisitions.\nCritics argue that excessive executive pay can be significantly traced to the fact that the members of corporate boards are not sufficiently independent of managerial influence. In this view, boards formulate executive pay packages that often allow executives to extract hefty compensation deals that bear little relationship to their contribution to the firms. In addition, if corporate executives are overpaid, other potentially significant concerns include the following:\nIssues over pay inequality and worker productivity. According to one estimate, between 1994 and 2005, the ratio of annual median CEO pay to median production worker pay nearly doubled, growing from 90 to 1 to 179 to 1. Indeed, for many workers, the perceived excessiveness of executive pay has become the most visible embodiment of growing pay inequality, contributing to a feeling that workers have not shared in the gains from economic growth. For example, adjusted for inflation, average worker pay rose 8% from 1995 to 2005; median CEO pay at the 350 largest firms rose about 150% over the same period. And while it is very difficult to quantify the impact of executive pay packages on worker morale and productivity, there are concerns that both could be affected detrimentally. For example, there have been several high profile stories of executives who have laid off employees at the same time their own compensation was rising. A potentially negative direct impact on shareholder returns. If executive compensation has been receiving a share of corporate resources that far exceeds the executives' contribution to the firm's value, shareholder returns may be compromised. Although not directly addressing the issue of whether increases in executive pay have been accompanied by commensurate increases in their value to the firms, one study compared the total pay given to the top five executives relative to corporate earnings at S&P 1500 firms between 1993-1995 and 2001-2003. It found that the ratio of executive pay to aggregate corporate earnings doubled between the two periods. A potential proxy for sub-par board performance in monitoring executives. When a corporate board is unable to get a handle on excessive CEO pay, it may be a sign of the board's failings in its central role of corporate governance. A purported link between excessive executive pay and the corporate scandals of recent years. Critics argue that a misalignment of incentives from executive pay helps explain the occurrence of scandals involving stock options backdating, accounting fraud, and earnings manipulation.\nBut this \"managerial power\" perspective of how flawed corporate governance serves to inflate CEO pay is at odds with an alternative notion that the increase has largely been a function of natural market-driven changes in the demand and supply for CEOs. For example, during a 2006 interview with The Wall Street Journal , then Treasury Secretary John Snow observed that \"in an aggregate sense... [CEO pay] reflects the marginal productivity of CEOs.... Until we can find a better way to compensate CEOs, I'm going to trust the marketplace.\" Like Secretary Snow, others argue that market forces are more likely than government to solve any problems that do exist with excessive pay. In his state of the economy address on January 31, 2007, President Bush said:\nGovernment should not decide the compensation for America's corporate executives, but the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders. America's corporate boardrooms must step up to their responsibilities. You need to pay attention to the executive compensation packages that you approve. You need to show the world that American businesses are a model of transparency and good corporate governance.\nWhether or not policy intervention is merited to tackle the issue of executive pay will depend on whether the managerial power or the market-based view of executive pay is the accurate one. Given congressional concerns with the potentially serious implications of excessive executive pay, this report examines critical and supportive evidence surrounding the premise that the executives are generally overpaid from an economic perspective. The report also provides a brief history of executive pay regulation and analyzes policy options. But first, the report looks more closely at the available data.", "Median CEO pay began its rapid rise in 1993. As seen in Figure 1 , which goes to 2005, it rose 35% in 2001 alone, which would later prove to be the high point. The current economic expansion has not been as favorable to CEOs. Contrary to popular belief, executive pay does not always rise—following the large decline in stock prices, median pay fell 13% from 2001 to 2002. Since then it has made up lost ground, and median pay in 2005 was nearly equal to its 2001 peak. The 1990s were not the first time that CEO pay had risen rapidly; it also rose by about one half from 1982 to 1987.\nAs important as the trend in the level of CEO pay is the trend in the composition of CEO pay. Since 1995, median annual cash salary has risen relatively slowly, from $0.7 million in 1995 to about $1 million in 2006. But over the same period, median performance-based pay, which includes stock and stock option grants, grew 13% a year, from $1.3 million to $4.1 million. As will be discussed later, the role of stock and stock options in executive pay helps explain why it rose so quickly in the 1990s, and why it fell in 2002.\nThe disparity between the pay given to U.S. executives relative to the compensation awarded to CEOs in other nations is often mentioned as evidence that American executives are overpaid. For example, controlling for various firm characteristics such as size, one study examined pay for CEOs in the United States and the United Kingdom (UK) in 2003. It found that CEO pay in the United States to be about 1.3 times that of CEOs in the UK and argued that a significant portion of the greater U.S. CEO pay could be attributed to the higher proportion of equity-based pay, such as stock options, in the United States, and the higher risk premiums associated with such pay. Research on Japanese executives found that after controlling for firm size, their pay constituted about a third of the pay of their U.S. counterparts in 2004. However, in Japan, the UK, and many other nations of the developed world, there are reports that CEO pay levels abroad have been slowly converging with the United States over time.", "High and rising executive pay could be a cause for policy concern on efficiency grounds or on equity grounds. Current pay levels would be economically inefficient if they resulted from a market failure that prevented pay levels from reflecting an equilibrium between supply and demand in the labor market for executives. If so, a policy response might be justified on the grounds that resources could be allocated in the economy more efficiently. However, even if pay levels were the result of perfect competition, policymakers could still be concerned that high executive pay resulted in an inequitable distribution of wealth that had negative social ramifications. The grounds for concern about executive pay matters greatly in determining the appropriate policy response. If current pay levels are economically efficient, then policy responses that disrupted the market outcome would lead to a misallocation of resources and deadweight loss by distorting people's career choices. Rather than targeting executive pay specifically, a more economically efficient response to address equity concerns would be through the normal channels of government redistribution, such as the progressivity of the tax system and social welfare spending (although it should be noted that these channels create efficiency tradeoffs of their own). Equity concerns are, at heart, matters of competing societal values for which economic theory cannot offer definitive answers. The non-economic gains of policies to improve equity would need to be balanced against their economic costs.\nSome economists argue that the trend in executive pay is not just an equity issue, it is the result of market imperfections that allow executives to manipulate the market outcome. If this is the case, then executive pay is causing resources to be misallocated to an extent that is, arguably, non-negligible. For example, one study estimated that the compensation of the top five executives averaged 6.6% of total corporate earnings from 1993 to 2003. Other economists argue that, despite its flaws, the market for executive pay delivers results that are close enough to efficiency that potential policy changes run the risk of doing more harm than good. This section first describes how the market would determine executive pay under perfect competition (the so-called \"neo-classical approach\"), and then considers real-world deviations from that model. Readers who would first like a brief description of the mechanics of setting executive pay should read \" How Executive Compensation Is Set ,\" in the box below.", "", "In a \"neo-classical\" model of perfect competition, the compensation of an executive (or any worker) is determined by the executive's marginal product. In other words, the executive will be paid just as much as the revenue he contributes to the firm. If the firm tries to pay him less than his marginal product, he will seek employment elsewhere. If the firm tries to pay him more, it will be undercut by competitors (who are paying their executives at a competitive rate) and become unprofitable. A number of economists and business experts believe this world view is a reasonable facsimile of reality. For example, Roy Smith, a professor of finance at New York University, has written that\nThe best chief executives have proven track records demonstrating management ability in large, complex corporate situations. Such people are always in demand. But most get only one shot at being a CEO, and they want to make the most of it. They also know that the rate of CEO turnover at large corporations has increased significantly in recent years, and that 50 percent of departures are the result of mergers or performance issues. If things go wrong, their contracts may be all they have to hang on to, so they negotiate the best ones they can going in.... Today's CEOs are paid well when they deserve to be (and sometimes when they don't), but most corporate directors will tell you that over the past 20 years, public companies have become better managed, with increased profit margins, productivity and returns on investment...\nIn this model, high pay is not a sign of an executive being overpaid, it is a sign that the executive is highly productive. It therefore follows that the burden of proof should be on critics to show that the high level of executive pay is not simply a reflection of the executive's strong skills, hard work, and successful business strategies. Nor, from this perspective, is the relative increase in executive pay compared to worker pay necessarily a sign of excessive pay. The superior performance of U.S. firms on average over the past decade, relative to foreign firms and U.S. firms in the past, could be taken as evidence in favor of the neo-classical model. It could also be that the increase in pay is driven by a relative increase in the demand for executives. If running a company requires more skill now than in the past—because, for example, markets are now more competitive or firms are more complex—it would be expected in a neo-classical world that firms would be willing to pay more now in order to attract these skills. For example, economists have described a \"superstar effect,\" where the pay of entertainment celebrities rose once their market draw increased through the development of mass media. Because so much of the market is captured by a few individuals, small differences in talent or public preferences lead to large differences in pay. Some economists have suggested a similar effect may be at work in the market for executives: as firms have gotten larger and begun to operate in a global rather than domestic market, the value that executives can add to a firm has increased, and their compensation has followed suit. Using this logic, one study concluded that \"the six-fold increase of CEO pay between 1980 and 2003 can be fully attributed to the six-fold increase in market capitalization.\"\nIn the neo-classical model, executive pay is held in check not just by competition in the labor market for executives, but also by competitive forces in capital markets and the firm's product markets. The key point made by this model is that for an executive to be overpaid, the firm must be generating excess profits that the executive is able to skim off, and in a world of perfect competition, no excess profits (profits beyond a normal, risk-adjusted rate of return) exist for the executive to capture. (It could be argued that the amount the executives are skimming off is too negligible to affect the firm's profitability; but, if so, excessive compensation is presumably of rather minor importance.) There is ample evidence that capital markets and most product markets are efficient, so for executives to be overpaid without placing their firms at a competitive disadvantage, there must be something in the compensation arrangement that is placing most firms at the same disadvantage. Otherwise, the company would be unable to raise sufficient capital or become vulnerable to a hostile takeover. In a world of perfect competition, there is no need to try to measure whether executives are overpaid, because excessive pay is an unsustainable outcome that would be driven out by market forces. For executives to be overpaid, something must be impeding the efficient market allocation of resources. Economists who have argued that executives are overpaid have pointed to the principal-agent problem as the market failure that could lead to executives being widely overpaid.", "The principal-agent problem is a well-known market failure that exists when a principal's (owner's) interests are represented by an agent (in this case, the CEO) whose goals or incentives diverge from the principal, and the principal is unable to closely enough monitor the agent to keep their interests aligned. The agent could be pursuing any number of private interests, including minimizing his own effort, maximizing his own reputation (by unprofitably expanding the firm, for example), covering up his own mistakes, minimizing risk, and so on. The key point is that the agent is not always pursuing the principal's goal: profit maximization. Profit maximization is in the agent's self-interest only insofar as it maximizes his own compensation or well-being. Yet there is a tradeoff, since an increase in the agent's pay decreases the company's profits, all else equal.\nFor a publicly listed corporation, the principal-agent problem is particularly hard to avoid because of another well-known market failure: the free-rider problem. For a publicly listed corporation, the (collective) principal is the firm's thousands of shareholders. Assuming for a moment that barriers to shareholder action (which will be discussed below) did not exist, it is still unlikely that shareholders could avoid the principal-agent problem because it would be highly costly for any individual shareholder or group of shareholders to monitor the agent. Any benefits that resulted from monitoring the executives would not be captured solely by the shareholders undertaking the monitoring; they would flow to all shareholders. Hence, it is in any individual shareholder's self-interest to leave monitoring the executives to other shareholders since that will lead to the same benefit with none of the cost of personal monitoring. As a result, every shareholder chooses not to monitor, and this is the essence of the free-rider problem.\nIn theory, the firm's board of directors is meant to safeguard the shareholders' interests and monitor the firm's executives: the free-rider problem has been overcome by the shareholders banding together and appointing a board to represent them. But does the board really represent the shareholders' interests? For the board faces a principal-agent problem of its own: since each board member's financial stake in the firm typically makes up a negligible share of the firm's total value, the board members may also have an incentive to pursue private interests other than profit maximization. This incentive opens the door to a number of ways in which the executives could \"capture\" the board so that the board members were not truly \"independent,\" as will be discussed below.\nIn this context, it is easy to see how an endemic problem of overpaying executives could potentially arise. Since neither the executives nor the board are acting solely in the shareholders' interests, they may agree to pay the executive more than his marginal product. Since executives at competing firms are also overpaid, the firm's performance would not fall behind its competitors. If the burden of proof is on critics to prove that the real world outcome does not match the neo-classical ideal, then the \"managerial power\" critique, discussed in the following section, attempts to make a comprehensive case that the principal-agent problem has led to excessive executive pay.", "Does the neo-classical or the principal-agent model more accurately describe executive pay setting in the United States today? In support of the principal-agent model, law professors Bebchuk and Fried (hereafter, BF) have set out a \"managerial power\" critique, which identifies the numerous ways in which the structure of executive pay and the relationship between the executive and the board differs from the neo-classical ideal. Although the managerial power critique cannot numerically estimate how much executives are overpaid, BF argue it is prima facie evidence that executives are paid excessively and pursue the goal of maximizing pay rather than shareholder value. The primary elements of the managerial power critique are laid out below.", "The neo-classical model assumes that executive pay is determined through \"arm's length contracting\": in negotiating the executive's pay, the board of directors (typically through its compensation committee) is charged with driving the best bargain it can obtain on behalf of shareholders. BF argue that the typical board structure has little in common with this ideal. In many corporations, the CEO is also the chairman of the board and other company \"insiders,\" who may be loyal to the CEO, serve on the board. BF argue these arrangements are susceptible to the boards being \"captured\" by the executives.\nSome fears of board capture were allayed in 2003 when the NYSE required that boards of its listed companies have a majority of outside directors, and the boards' nominating, compensation, and audit committees consist solely of outside directors. (The NASDAQ has similar rules, except for those pertaining to the compensation and nominating committees.) But even \"outsiders\" who serve on the board may owe their positions—and hence, BF argue, their allegiance—to the CEO. For example, the only candidates who appear in the official proxy given to shareholders for election are individuals selected by the board's nominating committee. It is commonly perceived that the CEO strongly influences the nominating committee's selections. Shareholders can withhold support from a director but cannot vote against a director, which means that a director technically needs only one favorable vote to be elected. There are few ways that the shareholders can directly select members of the board. Alternative directors proposed by shareholders are costly, difficult, and rare.\nBoard members may feel that they must keep on the CEO's \"good side\" in order to be re-nominated when their terms expire. Furthermore, board members are frequently executives at other corporations, which may make them predisposed to view executive compensation requests favorably and may make them hesitant to be critical board members since their criticisms could be used against them at their own companies. Boards are also dependent on executives to furnish them with information and advice in order to fulfill their duties, and must maintain the executives' good will in order to receive this information. In fact, the CEO compensation packages that boards approve typically originate from the company's human resources department, which, of course, is subordinate to the CEO.\nIf boards are captured by the executives, one would expect that arm's length bargaining would be compromised. There is evidence that less independent boards are correlated with higher executive pay, all else equal. Some studies have shown that CEO pay is 20%-40% higher when the CEO is also the chairman of the board. One study showed that executive compensation is higher when the CEO picked the board's outside directors. There are studies that found that executive pay is lower in situations where shareholders have more influence over the board—for example, when there is a single large shareholder or institutional shareholders with a significant ownership position.\nCompanies often hire outside compensation consultants to help them determine the level and characteristics of the executive compensation package. But BF argue that these consultants can also be \"captured\" by management because the consultants are eager for more business from the firm (including business unrelated to executive compensation); as a result, they tell the executives what they want to hear.\nIf shareholders thought that the board was allowing executives to be overpaid, institutional barriers would limit their influence over the board. The general terms of the company's overall performance-based compensation packages, such as stock options plans, may be subject to an up or down vote by the shareholders, but shareholders cannot modify the details of the package or offer alternatives. Only fifteen of 2000 options plans were voted down by shareholders from July 1997 to June 1998. Shareholders can introduce resolutions on executive pay, but even if they attract a majority of voters, the resolutions may not be binding.", "BF argue that one of the main constraints on executive compensation levels are \"outrage costs\"—a fear on the part of executives that if their compensation is too excessive they will face hostility from shareholders and negative publicity from the media. BF argue that outrage costs have two effects. First, they reduce executive compensation levels below what they would otherwise be. (This factor works to the extent that outrage exists—BF argue one reason why executive pay rose in the late 1990s is because CEOs were exalted during the stock market boom, causing outrage costs to diminish.)\nSecond, they encourage executives to seek \"stealth compensation\"—compensation delivered in a form that is difficult for shareholders and the public to understand—in order to avoid outrage. \"Golden parachutes,\" generous severance or retirement packages (details of which do not have to be disclosed beforehand), \"golden hellos\" (additional incentives to join a company), life insurance, deferred compensation, personal loans (before the Sarbanes-Oxley Act), bonuses that are not linked to company performance, and company-provided perks in the form of vehicles, aircraft, and club memberships are all examples of stealth compensation.\nBF believe that the rapid growth in executive stock options is explained by the desire for stealth compensation. From a neo-classical perspective, it is difficult to understand why stock options are awarded rather than stock—when the options are too far \"underwater\" (the stock price is below the option's strike price), there is no incentive effect, and when it is close to the strike price, executives may be extremely risk averse for fear that the option will fall below the strike price. After they are exercised, options cease to have any influence on executives' behavior. And options, unlike stock, are not necessarily aligned with the shareholder's interest since they discourage the payment of dividends (i.e., the money can be used to buy back the stock to boost its price instead). But BF argue that from the managerial power perspective, the prevalence of stock options is logical because accurately pricing options at the time they are granted is complex and controversial. Until recently, options were not expensed on a firm's balance sheet, so some argued this treatment made their effect on shareholder value less transparent. Stock options may also be a way to increase compensation without generating as much shareholder outrage since options are worth more when the stock price is high and shareholders are doing well, without exposing the executives to any risk when the share price falls below the strike price.\nBF also attribute the \"ratcheting up\" of executive pay to outrage costs. Executive pay is often set relative to some (self-selected) peer group, typically identified by the compensation consultant. To justify compensation levels, the board sets CEO pay somewhat higher than the industry average, reasoning that its executive is an above average performer (which critics have compared to the mythical \"Lake Wobegon,\" where all of the children were above average). Of course, it is mathematically impossible for everyone's performance to be above average, but as long as compensation is close to the industry norm, shareholders are unlikely to complain and the company is unlikely to attract unwanted publicity. But if each executive is having their pay set above the average, then the average will rise over time—inadvertently, the practice will cause pay to be ratcheted up to levels that may have little to do with marginal product. If pay levels are set based on peer groups, they will also be insensitive to performance, the subject of the next section.", "In the 1980s and early 1990s, many academics complained that executives were well compensated regardless of whether their firm performed well or poorly. In a much cited article, Jensen and Murphy argued\nThe relentless focus on how much CEOs are paid diverts public attention from the real problem— how CEOs are paid. In most publicly held companies, the compensation of top executives is virtually independent of performance.... Is it any wonder then that so many CEOs act like bureaucrats rather than the value-maximizing entrepreneurs that companies need...?\nAccording to their estimates, a $100 increase in firm value led to a 26 cents median increase in CEO wealth, of which cash compensation rose only 4 cents. They argued that the way to solve the principal-agent problem was to align executive incentives with profit maximization by making compensation more sensitive to the firm's performance. (They estimated executive compensation was no more sensitive to firm performance than workers' wages.) One way to accomplish this goal was through performance-based bonuses. Another way was by compensating executives with firm stock or stock options, so that when executives made decisions that made the firm more profitable, the firm's stock price would rise, causing the value of the executive's compensation to rise. In theory, executives would no longer wish to pursue private goals that undermine firm profitability because it would reduce their compensation.\nThe authors argued that if pay were more closely linked to performance, average pay would probably rise because bad executives would be forced out, more talented individuals would be drawn to managing, executives would be motivated to work harder, and firm performance would improve. In addition, pay would need to be higher if it were riskier (since incentive-based pay would fall if the executive missed the performance benchmarks) because individuals must be compensated to take on risk. They argued that performance-based pay could exacerbate inequality but society as a whole would be better off overall.\nWhile most studies confirmed that cash pay and bonuses were fairly unresponsive to firm performance, the literature is divided about the relation of total pay to performance, once executive stock holdings and stock options are included. For example, Hall and Liebman argue that pay for performance rose throughout the 1980s and early 1990s because of the rising share of compensation that consisted of stock and stock options. They estimate that CEO wealth rose about sixty cents for every $100 increase in firm value in 1994, significantly higher than Jensen and Murphy's earlier estimate. Furthermore, they argue that executive pay is much more sensitive to performance than Jensen and Murphy's measure implies because the firms involved are so large that even if the ratio of the change in wealth and the change in firm value is small, the dollar change in wealth is very large. For example, they estimated that a CEO who increased the performance of his company from below average to above average would increase the median value of his stock holdings by $4 million, all else equal. Similarly, Core et al. estimated that the median portfolio value of an S&P 500 CEO's own firm holdings was $30.1 million in 2003, and a 1% change in the firm's stock price would cause the median portfolio value to change by $430,000.\nIn the context of this report, this shift to so-called \"performance-based\" pay turns out to be important because it was the source of most of the rise in executive pay in the 1990s and 2000s. The estimated value of options granted to CEOs (at the time of the grant) increased nine-fold from 1992 to 2000, while other types of compensation rose three-fold over that period.", "BF argue that the growing share of non-cash executive compensation should not be taken as a sign that pay is now tied more closely to performance. The managerial power critique identifies several standard components of executive pay that may appear to be performance-based pay, but arguably allow executives to circumvent the link between pay and performance in practice.\nFor example, severance packages often handsomely reward executives for leaving their jobs, on good or bad terms. These packages have only negative effects on incentives since they send the message that regardless of whether an executive succeeds or fails, he will be rewarded after the fact. Bonuses should be an important part of performance-based pay, but studies have found that instead they are often paid for reasons unrelated to profit maximization.\nBF identify several common characteristics of stock options that seem inconsistent with the pay for performance mantra. Stock options are almost always designed to reward absolute performance rather than relative performance. For example, if a company's stock price rises by just as much as the overall market, then the executive's compensation will have risen because of trends largely beyond his control. Even if a company is outperformed by its competitors, the options could still have value in a bull market since \"a rising tide lifts all ships.\" Furthermore, stock options are usually granted \"at the money\" (they have a strike price equal to the market price at the time the option is granted). Since stocks usually rise over time, this will generally reward executives for doing nothing, a phenomenon Warren Buffett characterized as \"a royalty for the passage of time.\" Once exercised (usually after a vesting period), the options no longer provide executives with any incentives.\nThere is also a more basic question to ask: in instances where firms offered incentive-based pay, why did it typically supplement rather than substitute for cash salary? The thrust of the pay for performance argument was that executives should be paid differently, but in practice they were also paid more. Instead of rewarding good executives and punishing incompetent executives as many academic obeservers prescribed, everyone was made better off.\nBesides pay, some argue that executives have a degree of job security that is at odds with the pay for performance mantra. For example, Murphy found that the correlation between firm performance and CEO turnover was low and fell in the 1990s to a statistically insignificant relationship. CEOs also have more contractual job protection than employees: Schwab and Thomas found that only 25 of 375 of the CEOs they examined served \"at will,\" like regular employees, while the remainder could only be dismissed without penalty for \"just cause.\"", "The corporate scandals of recent years have brought greater scrutiny to executive pay practices, particularly stock-based and option-based compensation. Linking compensation to the stock price can only mitigate the principal-agent problem if the stock price is an accurate proxy for firm value. The assumption that it is a good proxy is at the heart of the efficient market hypothesis, and most economists would consider it true over long periods of time. But it is difficult to argue that the stock price is a good proxy for firm value over short time periods when stock prices tend to fluctuate widely and unpredictably, implying that the value of the firm can fluctuate by millions or even billions of dollars in a matter of days. If it is not a good proxy, a potential problem arises because the agent's incentive is linked to a goal that is not perfectly aligned with the principal's interests. In other words, the agent can increase his compensation by taking advantage of—or even causing—short-term changes in the firm's stock price, which could be detrimental to the long-term performance of the firm. Unsurprisingly, the agent may decide to take actions that boost the short-term stock price when the firm's long-term prospects are bleak. In this situation, the large stock and stock option holdings of the typical executive arguably offer a powerful incentive to take actions to boost the stock price long enough to divest one's stock holdings. In this context, performance-based pay exacerbates the principal-agent problem.\nThis problem was the essence of many of the corporate scandals that followed the 2001 recession. Some of the scandals involved executives pumping up the firm's stock price by manipulating reported earnings in order to increase their performance-based pay (or prevent it from falling). Other scandals revolved around executives attempting to hide financial problems from the public to prevent their stock and option holdings from losing value. In other cases, executives used inside information to exercise their options before the firm's share price fell. Likewise, the ongoing scandal involving the backdating of stock options revolves around executives retroactively manipulating the timing of the option grant to a day when the firm's stock price was unusually low in order to increase the option's value when it is exercised. These scandals suggest that, on balance, the principal-agent problem seems to have survived the shift to performance-based pay intact. In fact, the growth of performance based pay and accounting problems seems to have gone hand-in-hand—700 firms issued financial restatements from 1997 to 2000, compared with 11 from 1992 to 1993, when performance-based pay was less prevalent. Burns and Kedia find that firms whose executives have a higher share of option-based compensation are more likely to restate their earnings.\nWhile the incentives for executives to manipulate earnings seems straightforward, the rationale for the board's failure to prevent it seems less clear: the board would not profit substantially from manipulation and could face high costs if the manipulation is detected, unless \"board capture\" has occurred or the board is operating under the same short-term time horizon as the executives. Of course, the board may have been unaware of the executives' actions, but that may raise the question of why it did not monitor the executives more closely. There may also be a human tendency to use less scrutiny when results appear positive.\nAlthough the corporate scandals that have unfolded over the past few years may not be proof of the managerial power theory, they can be shown to be consistent with it. Boosting pay through accounting fraud and earnings smoothing is consistent with executives' desire for stealth pay. Bergstresser and Philippon show that at firms that appear to have managed earnings, executives exercise options and sell stock at a higher rate than average and have a greater share of performance-based pay. The failure of the board to prevent such activities is consistent with board capture. Allowing executives to exercise their options at their discretion (after a vesting period) is primarily what made accounting fraud and manipulation profitable, yet there is little purpose in allowing options to be exercised at will if the options are meant to keep the executive's interests aligned with the shareholders' on an on-going basis. It is also difficult to see why firms would allow backdated options except to mask the true size of executive compensation (relative to the \"performance\" required to earn the compensation). Firms could have legally paid executives just as much by either issuing them more options or options with a lower strike price, but doing so would have drawn more attention from shareholders and the media. One study found that favorably dated option grants, potentially caused by backdating, was one-third more likely at firms where independent directors did not make up a majority of the board.", "Criticisms of the managerial power theory can be split into two broad categories, disagreements with BF's findings and alternative explanations for the phenomena that BF identify. On their findings, critics have disagreed with the following:\nIf pay were determined by managerial power, then executives hired from the outside should not receive the same generous pay packages as insiders, but they do. BF reply that the board and compensation consultants have the same incentive to reward someone who will have influence over their welfare in the future as they do over someone who can influence it now. BF's claim that executive pay is not well linked to performance. As noted above, some studies have argued that executive pay is highly sensitive to performance because of their large holdings of their firm's stocks and options, which gives them powerful incentives to maximize the firm's profitability. BF's ability to explain the change in executive pay over time. First, BF's theory depends on the CEO's ability to \"capture\" the board so that it does not act in the shareholders' interests. Yet boards have become more independent and active in recent years. For example, in 2003 the NYSE and Nasdaq required that a majority of a company's directors must be independent in order to be listed on their exchanges. Second, changes to SEC rules required more disclosure of options granted to executives in 1992—at the very time that options began to increase in value. This pattern seems at odds with BF's argument that executives prefer options because they are a form of stealth compensation. Third, Murphy argues that outrage costs were much higher in the early 1990s, with the introduction of legislation and new regulations to curb pay, than the late 1990s, when compensation escalated. Although executive pay is higher in the United States than abroad, that could be evidence in favor of efficient markets since the United States stock market has consistently outperformed foreign stock markets. This finding casts doubt on BF's claim that excessive pay is undermining firm profitability.\nAlternative explanations have been offered for several of the phenomena that the managerial power theory describes. Some of them are related to the incentives offered by accounting rules. For example, the shrinking share of executive compensation being paid in cash wages has been attributed to the million dollar cap on pay that corporations are able to deduct from taxes, which is described below. Similarly, certain standard characteristics of options (such as setting the strike price equal to the actual price at time of issue and using options that reward absolute instead of relative changes in the stock price) were encouraged by accounting rules that, until recently (see below), did not require that options with those characteristics be expensed.\nHall and Murphy have argued that the managerial power theory cannot adequately explain the recent burgeoning of stock option compensation because most stock options (90% in 2002) are paid to non-executives. They offer a \"perceived cost theory\" of why stock options have become so popular: because stock options do not require the company to outlay any cash when granted and were not expensed in the company's accounting statements before the rule change in 2005, they argue that options became popular because they appeared costless to issue. On the contrary, options do have a cost—they dilute the existing shareholders' ownership position when they are realized. The shortcoming of this explanation is it begs the question of whom Hall and Murphy believed were being duped into thinking the options were costless—the board or the shareholders? In the former case, BF argue that \"...if directors had so little financial sophistication, then the board-monitoring model of corporate governance is in even worse shape than our analysis suggests.\" In the latter case, the perceived cost argument is consistent with, but not proof of, the managerial power view that options are a form of stealth compensation. Alternatively, the perceived cost view could be rejected on the grounds of market efficiency. For example, although options were not expensed, information about the options were included in the footnotes to corporations' financial statements. If market actors use all of the information available to them, as market efficiency requires, then the stock price would already reflect the information presented in the footnotes, and the stock price would decline, all else equal, when options were granted. Otherwise, market participants who were aware of the real costs associated with options could systematically profit by short-selling firms that offered employees overly generous stock options.\nIt has also been suggested that there are alternative explanations to the managerial power theory for why executive compensation could exceed marginal product. In a well-known article, Lazear and Rosen argued that executive pay could be much higher than the executive's marginal product and still be economically efficient from the perspective of the overall firm. They argued that this could be true if the firm's pay structure is likened to a tournament. If the firm has no easy way to accurately identify each of its workers' marginal product, then the most efficient way to induce maximum effort from its workers could be to attach a large monetary incentive to the \"winner\" of each promotion. At the top of this ladder is the CEO, with a correspondingly larger prize each step of the way to motivate workers to strive for further promotions. As long as the CEO's high pay motivates his subordinates to work harder to strive to some day replace him, it will be profitable for the firm to compensate him at that rate regardless of his marginal product. Anabtawi argues that the tournament model explains why executive pay is not more closely linked to performance (because reductions would weaken incentives of subordinates to try to win the tournament).", "The decision to base executive stock options in the 1990s on absolute performance rather than relative performance had important implications during the stock market boom of the 1990s. When the board chooses how much stock option compensation to award to an executive, it is basing its decision on the ex ante expected value of the options. But actual executive pay depends on what happens to the stock price ex post . For example, if an executive were granted one option with a strike price of $40, and the board expected the stock price to rise to $50 when the executive exercised it, the executive's expected pay gain ex ante would be $10. But if the stock price actually rose to $60, his actual pay increase would be $20—double what the board expected him to earn.\nA strong case can be made that since the sharp appreciation in stock prices in the 1990s was largely unexpected, much of the pay increase tied to the stock price or other metrics of firm performance was also unexpected windfalls. For example, in the 50 years preceding December 1995, the inflation-adjusted annual appreciation rate of the Standard & Poor's 500 stock index averaged 2.3%. From December 1995 to December 1999, the average real rate of appreciation was 22.8%. Figure 2 shows the expected value (based on the historical average) and actual value for a stock option issued in December 1994 and exercised at any point from December 1995 to 1999. If the company set the strike price at the firm's current stock price and expected the stock price to follow the historical average, then the company would expect the nominal stock price to rise about 26% by 1999. Instead, the average stock over that period rose by 214% in nominal value. Assuming a strike price at the firm's current stock price, the actual payment from options over that period would be over eight times higher than expected for the average firm.\nFigure 2 suggests that much of the increase in pay in the 1990s may have been unrelated to competitive forces or managerial power, but instead was unanticipated on the part of executives and board directors. In a rapidly rising market, almost all executives, regardless of talent or effort, arguably profited from being in the right place at the right time. But even if the windfall was unintentional, that begs the question of why executive pay did not fall further in the 2000s when the stock market declined by nearly one half. It would be expected that boards would react to the stock option windfalls received by executives in the 1990s by offering less generous stock options from that point on or tying future options to relative rather than absolute performance. Indeed, even if directors had made no changes to ex ante option packages, one might expect sharp declines in option-based pay from 2000 to 2003 since stock prices were falling. Instead, overall pay fell by only 11% between 2001 and 2003 (which was still higher than it was in 2000) and returned to its previous peak in 2004, which seems difficult to reconcile with the neo-classical model. While windfalls are consistent with arm's length contracting in a world of uncertainty, executives would not be expected in a neo-classical world to permanently lock in windfall payments after the source of the windfall had disappeared. This experience does seem consistent with the managerial power theory, however. Shareholder satisfaction with the large stock market returns of the 1990s may have greatly reduced the outrage costs associated with the corresponding increase in executive stock options. Executives may have been able to maintain those pay increases in the 2000s despite the fall in the stock market by using past pay levels as a benchmark for future pay as a way to limit outrage.", "Excessive pay might be defined from an equity perspective in terms of material need or in relation to the pay of others in society. In economic discussions concerning the efficient allocation of resources, these definitions are not likely to be useful. From an economic perspective, the starting point for determining whether pay is excessive is likely to be whether or not pay exceeds marginal product. Unfortunately, economists have no way to directly measure an executive's marginal product (what monetary value should be placed on, say, decision making?), so there is no way to directly determine whether executives are being overpaid in absolute terms. (In the neo-classical model, that is not a concern since nobody is overpaid.) All that can be measured is what specific executives are being paid relative to others, and how their firms have performed (based on profitability, rate of return, stock price, and so on) relative to others. Many economists have attempted to determine whether executive pay is correlated with firm success. In these studies, executives with above average compensation can be thought to have \"earned it\" if their firm outperformed its rivals. As useful as this exercise may be, it should be noted that it does not attempt to answer the underlying question of whether, overall, executives are excessively paid on average, and whether firms could achieve the same results if they paid their executives less.\nSome economists define excessive pay more broadly than the marginal product definition, defining it in terms of executives who are capturing economic rents. Taken literally, an economic rent is defined as any level of pay above the worker's reservation wage, which is the lowest wage the worker would be willing to accept to work. Thus, according to this definition, an executive could be paid less than the value he adds to the firm (i.e., his marginal product), but still be overpaid since he would have been willing to perform the same job for less. This broader definition is somewhat problematic from a measurement perspective—since the reservation wage cannot be observed, classifying an executive as overpaid becomes purely subjective. In a perfectly competitive labor market, one would expect the reservation wage to converge with marginal product since there are a very large number of interchangeable workers for any job, and jobs for any worker. In the market for executives, where the candidates and openings are limited and not perfectly substitutable, a wedge between the reservation wage and marginal product could theoretically exist. But it would be expected that the wedge would ultimately be limited by the fact that any executive paid less than his marginal product could be profitably snatched away by another firm willing to pay slightly more. Furthermore, the rent will exist whether it is captured by the executive or the firm's shareholders. Therefore, equating the executive's capture of the rent with excessive pay (and all the negative connotations that entails) implies that one views capital (shareholders) as a more deserving recipient of the rent than labor. Defining excessive pay as pay above marginal product remains less controversial, since it has clearer implications for economic efficiency.\nArguments about efficiency mostly come down to incentive effects—the fear that attempts to curb executive compensation would also reduce executive productivity. This would be true if current compensation levels are needed to entice the best possible candidates to become executives instead of pursuing other career paths that would not maximize these individuals skills. Given the wide gulf between executive pay and pay in nearly any other profession (although some elite members of the financial, legal, and medical professions are comparably paid), some might be skeptical that a pay cut that left a portion of the gulf intact would scare off suitable candidates. For example, one economist recently pointed out that one CEO with a net worth of $16 billion would need to spend $30 million per week just to keep his net worth from rising. But most would agree that some reward is needed to compensate for job attributes such as stress and long hours that are expected of executives.\nPerhaps also implicit in efficiency concerns is the neo-classical assumption that higher pay leads to higher levels of utility. In other words, individuals are motivated to work harder to earn more because earning more makes them happier. Thus, policymakers looking to curb executive pay may need to weigh the loss of welfare it would cause as one of the costs of such a proposal. But recent empirical evidence on compensation and welfare suggests that this might not be the case. This research suggests that after a certain point, people are not made happier by further increases in absolute income. That is because when income increases, people quickly adapt to their new circumstances, and any temporary rise in happiness caused by greater income dissipates. Rather, the research suggests that people are made permanently happier by increases in relative income, a sentiment captured in the saying \"keeping up with the Joneses.\" According to this theory, the ratcheting up in executive pay in recent years has not made anyone better off since all executives' pay is rising simultaneously. It also suggests that, hypothetically, if there were a costless way to reduce executive pay across the board (admittedly, an unrealistic assumption), it might not make anyone worse off (once individuals had adapted to their new circumstances) as long as enough of the gulf between executive pay and other professions were maintained to leave a sufficient superiority in relative income intact. Executives may also derive utility from non-material aspects of their job, such as fame and power, that could be unaffected by an absolute decline in income. Obviously, across-the-board changes would require some type of collective action; if any single board decided to reduce executive pay, those executives would lose utility since their income relative to their peers would fall.", "A corporation's bylaws lay out the general rules regarding a company's corporate governance protocol, including procedures for the determination of executive pay. In turn, the general parameters of a firm's corporate governance are principally dictated by the state corporate law that prevails in the state in which a company is incorporated. By some estimates, about half of publicly traded companies are incorporated in the state of Delaware, giving its corporate laws a disproportionately large influence in this area. Delaware's influence also extends to the Delaware Chancery Court, which is widely viewed as the preeminent national legal forum for corporate disputes.\nIn spite of the primacy of state law in this area, the federal government and regulatory entities, like the SEC and the nation's securities exchanges, have also promulgated policies in this area. The existing rules governing CEO pay have developed through a variety of legislation, executive branch regulation, and regulation by independent, self-governing bodies. Most regulation involves disclosure of pay, and does not set compensation levels. The following legislative and regulatory developments have affected CEO pay, although that was not always their primary focus. Starting with the earliest developments, they are listed in chronological order.", "Corporations can generally deduct employee pay, including executive pay, from their corporate income subject to taxation. In 1993, in response to outrage at executive pay levels, OBRA ( P.L. 103-66 ) added section 162 (m), titled \"Certain Excessive Employee Remuneration,\" to the Internal Revenue Code. It imposes a $1 million cap on the deductibility of compensation that applies to the CEO and the four next highest-paid officers. (Pay itself is not capped, only the deduction of pay from corporate income.) No tax deduction for compensation above the $1 million limit is permitted except for \"performance-based\" pay, such as commissions or stock options, where the ultimate compensation received by the executive depends on the stock price, reported sales or profits, or some other financial indicator. To qualify for the exception, the goals underlying the performance-based compensation must have been determined by a compensation committee that is comprised solely of two or more outside directors. The terms under which the performance-based compensation is to be paid, including the performance goals, must be disclosed to shareholders and approved by a majority shareholder vote.\nExecutives' cash compensation, the type of pay most directly affected by OBRA, increased slowly after OBRA took effect. But this provision in OBRA is widely believed to have contributed to the growing importance of stock options in CEO compensation in the mid and late 1990s. As a result of this trend, overall compensation grew even more quickly than before, so OBRA may have had the unintended consequence of increasing CEO pay if stock options played the enabling role in excessive pay that critics claim.", "Enacted in the wake of accounting scandals at firms like Enron and WorldCom, the Sarbanes-Oxley Act of 2002 ( P.L. 107-204 ) contains a broad range of corporate governance and accounting reforms, two of which are particularly relevant to executive pay:\nProhibition on Personal Loans to Executives. Section 402 of the law makes it unlawful for any public company, directly or indirectly, to extend credit, maintain credit, or arrange for the extension of credit in the form of a personal loan to, or for the benefit of, any director or executive officer. More Timely Reporting of Corporate Insider Stock-Based Transactions. Section 403 of the law requires insiders (defined as officers, directors, and shareholders owning at least 10% of outstanding stock) to file reports of their trades of the issuer's stock and stock options with the SEC before the end of the second business day on which the trade occurred. Previously, option grants did not have to be disclosed until 45 days after the end of the fiscal year.", "In 2003, the SEC approved changes to the listing standards for firms listed on the New York Stock Exchange (NYSE) and the NASDAQ Stock Market that require shareholder approval of almost all equity-based compensation plans. Firms must disclose the material terms of their stock option plans prior to the shareholder vote. The required disclosures include the terms on which stock options will be granted and whether the plan permits options to be granted with an exercise price that is below the market value of the company's stock on the date of the grant. While the regulation requires shareholder approval of the overall compensation plan, it does not require shareholder approval of the specific amount of compensation received by individual executives.", "In 2003, the SEC also approved other changes to the listing standards for firms listed on the NYSE. The standards require companies listed on the NYSE to have a compensation committee that is entirely composed of outside directors. In addition, if a compensation consultant is to be used to assist in the evaluation of director, CEO, or senior executive officer compensation, the compensation committee is required to have the sole authority to retain the consultant and approve the consultant's fees.", "In 2004, the Financial Accounting Standards Board (FASB), a private sector entity that writes accounting standards, released accounting directive FAS 123R, which requires companies to \"expense\" (count as a cost) the value of employee stock option grants in their income statements in their next fiscal year, beginning in June 2005 for large companies and December 2005 for small companies. Recognition of the cost of options has the effect of reducing the corporation's reported earnings, which may make granting options less desirable to companies. Previously, most companies had simply noted the value of options grants in the footnotes to the financial statements, which had no effect on earnings. Thus, FAS 123R may constrain executive pay even though that was not its primary intent.", "The requirement that publicly traded companies disclose how much they pay top executives dates from the 1930s. The SEC has modified the disclosure format several times, as the forms of CEO pay have become more varied and complex. In 1992, the SEC required that proxy statements include tables setting out several categories of pay for the top five executives. These included base salaries, bonuses, deferred, and incentive-based compensation, including stocks and stock options. Corporations were required to place an estimated value on options granted to executives.\nBy 2006, the SEC had concluded the 1992 disclosure rules were, in the words of SEC Chairman Christopher Cox,\nout of date.... [They] haven't kept pace with changes in the marketplace, and in some cases disclosure obfuscates rather than illuminates the true picture of compensation.... We want investors to have better information, including one number—a single bottom line figure—for total annual compensation.\nIn July 2006, for the first time since 1992, the SEC adopted major changes to executive disclosure rules contained in public companies' registration and proxy statements. The disclosure requirements apply to the CEO, the chief financial officer (CFO), and the next three most highly compensated executive officers. The rules require the disclosure of the executives' total compensation, the fair value of their stock option grants, estimates of potential post-employment payments and benefits, and tabular disclosure of director pay. It requires that statements include a Compensation Discussion and Analysis (CD&A), which is a narrative that must explain the objectives and implementation of a company's executive pay program. And in response to the stock option grant backdating controversy, the rules require detailed information about a company's option grant practices in the both the CD&A and a supplemental table. The rules also require the disclosure of directors' compensation figures for the preceding fiscal year. The disclosure requirements went into effect in 2007.\nSEC officials have said that the central contribution of the disclosure reform is the provision of enhanced transparency with respect to executive pay. They may also be intimating that the new disclosure requirements could at least indirectly help improve shareholders' ability to exert pressure on management to temper executive pay:\nBy restraining executives from self-indulgent behavior—and using salary, bonuses, options, long term benefits, and other financial incentives in very purposeful ways—compensation committees acting on behalf of the shareholders can increase management's incentives to improve corporate performance. So our purpose in this very aggressive new executive compensation rule is very straightforward: It is to protect and advance the interests of shareholders.\nBut those who would hope that the reform will have a dampening effect on executive pay levels may not be encouraged, at least so far: a survey of directors at 110 firms, conducted at the conclusion of 2006 by Mercer Human Resource Consulting, found that 70% planned only minimal changes to their executive compensation programs as a result of the new SEC rules. Only 15% of the directors said that the reform would have a substantial impact on their approach to executive compensation.", "In the theoretical neo-classical world, executive pay would be determined by marginal product. Since the outcome would already be economically efficient, any policy response that created a wedge between executive pay and executives' marginal product would reduce economic efficiency. Those who believe that market forces are the best curb on excessive pay argue that government should be doing less, not more, in this area because government cannot determine appropriate levels or forms of executive pay more accurately than shareholders or boards.\nThe managerial power critique makes the case that executive pay is not determined by arm's length contracting. It suggests a number of reforms to bring executive pay closer to an arm's length contracting ideal. These reforms could be promoted by shareholders, board members, or in some cases, mandated by the government, through legislation or regulation. They fall under three broad categories: improving the transparency of executive pay, strengthening board independence to reduce the potential for board capture, and strengthening shareholder control over the board and management. Proponents often argue that they are not trying to interfere with market forces, but to level the playing field for shareholders in their interactions with management. Some of the reforms they promote do not affect executive pay directly (e.g., not allowing the CEO to be chairman of the board); rather, their stated intent is that reforms that strengthen shareholders' rights or board independence should lead to lower pay (or pay that is more sensitive to performance). But a few proposals do affect executive pay directly, and are analyzed below.", "Some observers favor the status quo, arguing that Congress should continue to defer to more specialized regulatory bodies, such as the SEC, with an expertise in corporate governance. The regulatory bodies have focused on making occasional minor policy modifications to enhance transparency and align boards' incentives more closely with shareholders' interests. In this view, hasty policy changes in reaction to rising pay levels would risk undermining the current system that, on the whole, is effective at rewarding good executive performance.", "In 1993, OBRA added Section 162(m) to the Internal Revenue Code, which limited a company's tax deduction for what it pays each of its top executives to $1 million, but exempted \"performance-based\" pay like stock options. Supporters of the neo-classical model argue that the million dollar deduction limit is a good example of how government intervention in markets can have unintended consequences that cause a policy to backfire. Despite the deduction limit, overall executive compensation continued to rise rapidly, and the limit may have contributed to the rapid growth of executive stock options, which critics argue are at the heart of the corporate scandals. Critics see this as an example of a policy with unintended consequences, in which government regulation encourages behavior that circumvents the regulation's original intent. Tax policy may be too blunt a tool to effectively encourage these goals.\nSince the deduction limit failed to curb the growth in executive pay, some would argue that it should be eliminated or scaled back. Alternatively, if the purpose of the deduction limit is to curb overall executive pay levels, others would argue the limit would be more effective if expanded to cover all forms of pay (perhaps at a different deduction level). Some research found that the deduction limit appears to have been a factor in the growth in executive stock options and overall executive pay. But other research concluded that the statute had little to do with subsequent increases in the sensitivity of overall executive pay to performance-based components like stock options. Factors that may have played a larger role in the growth of stock options include the bull market of the 1990s, not having to treat stock options as a corporate expense, and pressure on firms to provide executive pay that better aligned their interests with those of shareholders. Alternative research concluded that while the million dollar cap may have initially helped to compress executive salaries around the $1 million level, it did not appear to have had a significant impact on total compensation and other components of pay, such as bonuses and stock option awards.", "Some critics of executive pay have advocated changing Section 162(m) of the Internal Revenue Code to prohibit businesses from taking tax deductions for compensation provided to executives when the ratio of executive pay to that of its employees exceeds a certain level. The ratio could be set relative to, say, the average employee's pay or the lowest-paid employee's pay. A very few firms have voluntarily implemented such a policy. For example, the CEO of Whole Foods Markets limits his pay to no more than 14 times the pay of the firm's average employee.\nUsing the tax code to mandate such a policy might arguably help address some concerns with the erosion of pay equity and growing income inequality. Supporters of this policy argue that discouraging excessive pay through tax disincentives is preferable to—and less disruptive than—prohibiting excessive pay directly. Critics could argue that the growing ratio between worker and CEO pay owes itself in part to an unrelated development—the moribund growth in worker pay. Critics could also argue that the reform could undermine the core investor concern of whether a CEO receives compensation commensurate with his or her performance. Furthermore, wage levels vary by company primarily because different companies hire different types of workers. For example, the average pay at a software company is likely to exceed average pay at a chain of fast food restaurants. Under this proposal, the fast food company would face higher taxes if it wanted to pay its executives a comparable wage to the software company. As with complaints about the OBRA cap, such a cap could result more in maneuvering by businesses to avoid the cap than fulfillment of its intended goal—for example, any such cap would have to delve into the complexities of what forms of employee and executive compensation should or should not fall under the cap, creating incentives for stealth pay. Detractors could also cite research that concluded that the tax deductibility of executive compensation tends to have a minimal impact on firm's ultimate profitability, raising additional questions about the ability of such a policy to help constrain executive pay.", "Outside compensation consultants are generally hired to help boards craft the firm's executive compensation packages. In a number of cases, the consultants are part of larger companies that furnish additional consultation services to the firms. It could be argued that when firms provide multiple consultancies to individual firms, there is a conflict of interest that makes it difficult for their compensation consultant subsidiaries to resist pressure to recommend favorable executive pay packages. Two possible options to address such concerns would be (1) an SEC requirement that a firm's proxy statements disclose all of the services it receives from companies that offer it compensation consulting services; or (2) a law to ban outfits that furnish executive compensation consulting services to a firm from offering other consultant services to them, similar to the Sarbanes-Oxley Act of 2002's proscription on auditors providing certain ancillary services to the firms they audit. If the latter alternative were pursued, some companies might stop offering compensation consulting services. These reforms might not lead to any change in behavior, however, because the basic incentive to recommend high pay remains even if compensation consulting is the firm's sole business, for reasons discussed earlier.", "While directors must be approved by shareholders, the nominees are typically chosen by the board or management. At present, shareholders can nominate directors, but the process is arduous, expensive (estimates range up to $1 million), and thus rarely pursued. To ease the process, the SEC proposed a rule in July 2003 that would have allowed shareholders with more than 5% of a company's voting securities to under certain conditions have their board nominees included in a company's proxy materials, which carry the management's slate of board nominees. A response to widespread concerns over the accountability of corporate directors after a number of corporate scandals, the proposal received the support of various observers, including some institutional investors. They argued that the integrity of corporate boards would be enhanced because the reform would result in boards being populated with a greater number of outside directors who are less beholden to management and better able to provide independent oversight and scrutiny of executive compensation practices and excesses, such as backdating. Although publicly listed firms are required to have outside directors, some critics have questioned the independence of outside directors recommended by management. For example, one study found that large numbers of outside directors inexplicably appear to have been the beneficiaries of options manipulation. Opponents of shareholder access reform argue that it could potentially result in antagonistic directors, and thus dysfunctional boards. Shareholders may also be less able to identify the most qualified candidates for the position.\nIn the end, the SEC did not adopt the proposed 2003 shareholder proxy reform rule, a decision that many ascribe to vehement business opposition. But the issue re-emerged in August 2006, when the United States Court of Appeals for the Second Circuit reached a decision in American Federation of State, County and Municipal Employees Pension Plan v. American International Group, Inc. This ruling was the appeal's courts response to an earlier petition by the American Federation of State, County and Municipal Employees (AFSCME) to reverse the American International Group's (AIG) rejection of its effort to place a binding shareholder proposal in the company's proxy materials that would have changed its bylaws to facilitate shareholder nomination of directors. Historically, the SEC has generally allowed firms to exclude shareholder proposals relating to an election from their proxies, as it did in this case. However, the Second Circuit found the SEC's policy in this area to be historically inconsistent and asked the agency to clarify it.\nAfter the decision, the SEC basically chose not to rule on proxy access petitions, which Chairman Cox said injected a note of uncertainty into the proxy process for 2007.\nIn July 2007, the SEC proposed two quite divergent policy proposals. One proposal, the short proposal, would essentially codify longstanding SEC practices of denying shareholder-proposed candidates for board director positions to be included in company proxy statements (called proxy access). The proposal, which the agency eventually adopted in late November of the year, appears to have been a response to the uncertainty that prevailed after the AIG decision. The second proposal, the so-called long proposal was not adopted. It would have allowed shareholders or shareholder coalitions with greater than 5% of outstanding shares to propose binding bylaw provisions that could permit specified shareholders to nominate directors and require the company to include the nominees in the company's proxy statement.\nGenerally, business interests applauded the agency's decision to adopt the short proposal, while shareholder interests derided it. Chairman Christopher Cox claimed that the agency's vote would create legal certainty for the upcoming annual proxy season in spring of 2008, but conceded that investor advocacy groups and others would be disappointed. He has, however, indicated that the agency will probably revisit the subject of shareholder proxy access in 2008 when the Commission has its full complement of Democratic members.\nAfter the SEC's vote, Senate Banking Chairman Dodd said that he might try to offer legislation to reverse the decision, saying that he did not think it was a fair decision. And Barney Frank, Chairman of the House Financial Services Committee, expressed disappointment that the SEC would deny shareholders the right to offer proxy-access proposals. Chairman Frank also stressed that the SEC should have deferred action until it was at full strength.", "While shareholders are required to vote on a company's overall equity-based compensation programs, they do not vote on pay packages for individual executives. The managerial power critique has fueled growing interest in giving shareholders a non-binding vote on individual executive pay packages. Along these lines, there is Representative Frank's Shareholder Vote on Executive Compensation Act ( H.R. 1257 ), which was approved by the House on April 19, 2007, and Obama's companion and identically named bill ( S. 1181 ).\nFurthermore, in anticipation of the 2007 annual corporate meetings, activist investors have submitted shareholder proposals at about 60 companies seeking the right to have a non-binding vote on executive pay.\nProponents believe that votes against individual pay packages, or merely the threat, could raise outrage costs, thus prompting directors to exercise greater restraint in pay setting and to be more conscientious in linking pay to performance. They argue that the vote would not overly burden or restrict the board since the vote would be non-binding. Several countries, including the United Kingdom, Australia, and Sweden, have given their shareholders the right to such a non-binding vote. Domestically, at least one firm, the insurer Aflac, has reportedly agreed to provide its shareholders with such a vote. Many other firms, however, are publicly opposed to the idea.\nTwo main arguments are made in opposition to a mandatory non-binding shareholder vote on pay. First, to the extent that current levels of executive pay are largely explained by legitimate market forces, as some have argued, giving shareholders a non-binding vote on pay might inject undesirable distortions into the pay setting process and the demand and supply of CEOs. Second, the minutiae of CEO compensation packages can be difficult enough for corporate directors to master. Thus, it has been argued that expecting shareholders with relatively limited resources available for comprehending such things to be a knowledgeable presence in the pay setting process would be unrealistic.", "If the underlying concern with executive pay is equity, not efficiency, then the policy goal may be to reduce inequality in the least economically costly way. A more progressive tax system is widely considered to be the least costly way to redistribute income, in terms of lost economic efficiency. Of course, the tax code cannot target executives specifically without also affecting other high income individuals. Thus, while progressive taxation can be viewed as an effective way to promote equity goals, it is not well targeted toward reducing potential efficiency losses that result from the principal-agent problem that affects executive compensation.\nGiven the importance of stocks and stock options in executive pay, policymakers attempting to increase the tax code's progressivity could consider reducing the tax preference currently given to capital income compared to labor income. For example, capital gains and dividends are taxed at a lower marginal rate than labor income and a sizeable portion of capital income tax can be deferred through tax-preferred savings vehicles. Stock options are taxed at regular income rates but receive favorable treatment because tax liability is deferred until gains are realized. Economists are divided over whether taxing labor and capital at the same rate would be economically efficient, but given the unequal distribution of financial assets in the United States, it would undoubtedly increase the tax code's progressivity.", "A stock option allows the holder the right to buy a company's stock at a predetermined fixed price, called the strike price , regardless of the stock's price at the date of purchase. The holder exercises the option when he subsequently buys the stock. After the option is granted, the company's stock could either rise above or fall below the strike price. If the market price fell below the strike price, the option would have no value and would not be exercised (because the holder could buy the stock for less on the open market). An option with a strike price above the market price is said to be under water . If the market price rose above the strike price, the value of the option would be equal to the difference between the strike price and the actual price (because the holder can buy the stock at the strike price and then sell it at the market price). For example, if a person was granted an option to purchase company X's stock in one year at $100, and the stock turns out to be worth $125 in one year, then he would earn $25 by exercising the option in a year. Alternatively, if the stock turns out to be worth $75 in one year, he would not exercise the option and would neither gain nor lose any money. Thus, the option's value can never fall below zero. Because the future is uncertain, economists and accountants must use complex formulas to place a value on an option when it is granted that takes into account how much value, if any, the option is expected to have when it is ultimately exercised. There is a consensus among economists that the expected value at issuance is the amount that should be included in measures of executive pay. The value of the option when it is ultimately exercised is unlikely to be the same as its expected value when it is issued, however.\nGenerally, stock options can be bought and sold on the open market by anyone. There are a subset of stock options called employee stock options in which firms issue their own stock to their workers and executives. Employee stock options cannot be sold to others, and often the holder must wait until a vesting period is over before being able to exercise them in order to encourage employees to stay with the firm. Usually, the strike price for employee stock options is set at the firm's current price. The firm does not have to outlay any cash when it grants employees stock options. For this reason, employee stock options are particularly popular with start-up firms with limited cash flow and high growth prospects. However, when the options are exercised, new stock is created, which dilutes the ownership of the existing stockholders. The firm can offset this dilution by buying back an equivalent amount of outstanding stock from the open market, which would require a cash outlay at that point.\nThe prevalence of employee stock options is somewhat puzzling to economists because if employees, firms, and shareholders acted rationally, they would each have reasons not to prefer them. Employees should prefer cash wages to options since the options expose them to risk, and people are generally risk averse. (Options do have tax advantages for the executives, however, which are particularly valuable for executives facing high marginal tax rates). For firms, options can be thought of as a loan from employees (in the form of forgone wages) that must be paid back when the option is exercised. If capital markets are efficient, it should be cheaper for the firm to borrow on the open market than through their employees. For shareholders, options are undesirable since they dilute their ownership position. In light of these drawbacks, BF see the popularity of options as evidence of their \"managerial power\" theory. Alternatively, some economists have argued that the popularity of employee stock options is the result of the perceived cost of options being lower than their actual cost, because they require no cash outlay and because until recently they did not have to be expensed (were not counted as a cost) on the firm's balance sheet." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 4, 4, 3, 2, 2, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "", "h0_full h2_title h1_title", "", "", "h0_full", "h0_title h2_title h1_title", "", "h0_full h2_full", "h0_title h2_title h1_full", "h1_full", "h0_full h2_full", "", "h2_full h1_full", "h0_full", "h2_full", "h2_full", "", "", "", "", "", "h2_full", "", "", "h2_full", "", "", "h2_full", "", "" ] }

{ "question": [ "How has CEO compensation changed over time?", "Why could this change be cause for public concern?", "Why is it difficult to determine whether CEO pay is excessive across the board?", "Why is an upward trend in pay insufficient proof of an inefficient market?", "How can executive pay be proven to be excessive?", "How might this type of market failure occur?", "How might boards of directors be contributing to excessive executive pay?", "Why do critics believe that boards have been \"captured\" by the executive?", "Why are stock options the fastest growing portion of executive pay?", "How do absolute and relative performance conflict in the justification of stock options?", "How did this phenomenon contribute to the increase in executive pay in the 1990s?", "How are recent corporate scandals related to stealth compensation?", "How might boards of directors covertly increase executive pay?", "How do stock market fluctuations incentivize executives to act against shareholder interests?", "How do current policy proposals address this issue?", "How could increasing the progressivity of the tax system affect income inequality?", "How are the details of proposed legislation reported?" ], "summary": [ "In the past ten years, the pay of chief executive officers (CEOs) has more than doubled, and the ratio of median CEO to worker pay has risen to 179 to 1.", "High and rising executive pay could be an issue of public concern on two different grounds. First, it is contributing to widening income inequality that may be of concern from an equity perspective. Second, it could be the result of economically inefficient labor markets.", "It is difficult to determine whether executive pay is excessive across the board since executives' marginal product cannot be directly observed.", "An upward trend in pay over time is not sufficient proof that the market is not efficient since factors determining supply and demand, such as the skills required of the position, can change over time.", "To show that pay is excessive from an economic perspective, one must first demonstrate that there is a market failure that is preventing the market from functioning efficiently.", "The market failure could originate in the division in large modern firms between management and ownership, which is typically dispersed among millions of shareholders.", "Critics of executive pay have argued that boards have all too often been \"captured\" by the executive and are no longer negotiating pay packages that are in the shareholders' best interests.", "They point to a number of common practices that they call \"stealth compensation\" which are inconsistent with arm's length contracting. These include \"golden parachutes,\" generous severance packages, company-provided perks, and bonuses that are unrelated to firm performance.", "Stock options have been the fastest growing portion of executive pay since the 1990s, and critics believe this pattern can also be explained through the prism of stealth compensation.", "Rewarding executives with employee stock options was often justified in terms of the \"pay for performance\" mantra, but options are usually designed to reward absolute, not relative, performance. This means that in the bull market of the 1990s, when virtually all stock prices were rising, a company could fall behind its competitors and its executives could still receive handsome options payouts.", "Indeed, a sizeable portion of the increase in executive pay in the 1990s was likely due to options that turned out to be much more valuable than expected because of the unprecedented price increases of the bull market.", "Many of the recent corporate scandals appear consistent with stealth compensation as well.", "Stock options backdating, earnings manipulation, and accounting fraud might have been motivated by attempts to covertly increase executive pay.", "If short-term fluctuations in the stock price are not good proxies of firm performance, then tying compensation to the stock price can create incentives for executives to engage in activities that are detrimental to shareholders.", "Policy proposals mostly focus on improving transparency, increasing board independence, and strengthening shareholder control rather than attempting to curb pay directly. S. 1181 (Obama) and H.R. 1257 (Frank), which the House approved on April 19, 2007, would give shareholders a non-binding vote on executive pay. Another proposal would modify the limit on deductibility of executive pay from corporate taxation.", "More broadly, income inequality could be reduced by increasing the progressivity of the tax system.", "For current developments and legislation, see CRS Report RS22604, Excessive CEO Pay: Background and Policy Approaches." ], "parent_pair_index": [ -1, 0, 0, 2, 2, 4, 5, 5, -1, 0, 1, -1, 0, 0, -1, 3, 3 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2, 2 ] }

{ "title": [ "", "The Technology Boundary: A Perennial Issue", "Communications Assistance for Law Enforcement Act (CALEA)", "Crypto Wars", "Law Enforcement Use of Cell Phone Data", "Current Debate", "Major Components: Communications and Stored Data", "Real-Time Access to Encrypted Communications", "Encryption of Data Stored on Smartphones", "Master Keys", "Cryptanalytic Attack", "Going Dark or Going Forward?", "Evaluating a Need for Action", "Requirements for Communications and Stored Data Access", "Law Enforcement Tools", "Law Enforcement Capabilities" ], "paragraphs": [ "F ast-changing technology creates a challenging environment for crime-fighting. According to former Attorney General Eric Holder, \" [r]ecent technological advances have the potential to greatly embolden online criminals, providing new methods ... to avoid detection. \" Technology is a two-faced creature. On the one hand, it has enhanced the speed and ease of communication and legitimate business, providing a bridge across international borders. On the other, it has opened the doors for potential exploitation by a range of malicious actors.\nJust as the growth of technology offers advances and challenges, so does its security. The stronger the security features of our technology, the less vulnerable the technology may be. However, if the security is sufficiently strong, the technology and its associated information may become inaccessible to legitimate law enforcement investigations. This is one aspect of the current debate surrounding smartphone and other mobile technology and security.\nSmartphone ownership is on the rise, with 64% of adult Americans owning a smartphone as of October 2014. Smartphones have become valuable targets for hackers because, in part, of the breadth of personal information they contain. Because of this, manufacturers regularly update their devices' security features, and experts have encouraged consumers to take advantage of these features—such as locking smartphones with a passcode and encrypting the contents. One current concern is that such strong security measures could not only keep out potential malicious actors, but legitimate individuals as well, including users who forget their passcodes or law enforcement with a lawful search warrant.\nThis report provides an overview of the perennial issue involving technology outpacing law enforcement and discusses how policymakers and law enforcement officials have dealt with this issue in the past. It discusses the current debate surrounding smartphone data encryption and how this may impact U.S. law enforcement operations. The report also discusses existing law enforcement capabilities, the debate over whether law enforcement is \"going dark\" because of rapid technological advances, and resulting issues that policymakers may consider.", "Technology as a boundary for law enforcement is by no means a new issue in U.S. policing. In the 1990s, for instance, there were concerns that increasing adoption of technologies such as digital communications and encryption could hamper law enforcement's ability to investigate crime. More specifically, concerns have been whether these technologies could interfere with surveillance or the interception and understanding of certain communications.", "In the 1990s, there were \"concerns that emerging technologies such as digital and wireless communications were making it increasingly difficult for law enforcement agencies to execute authorized surveillance.\" Specifically, the Government Accountability Office (GAO; then, the General Accounting Office) cited the increasing use of digital, including cellular, technologies in public telephone systems as one factor potentially inhibiting the Federal Bureau of Investigation's (FBI's) wiretap capabilities.\nCongress passed the Communications Assistance for Law Enforcement Act (CALEA; P.L. 103-414 ) to help law enforcement maintain its ability to execute authorized electronic surveillance in a changing technology environment. Among other things, CALEA requires that telecommunications carriers assist law enforcement in executing authorized electronic surveillance. There are several notable caveats to this requirement, however:\nLaw enforcement and officials are not authorized to require telecommunications providers (as well as manufacturers of equipment and providers of support services) to adopt \"specific design of equipment, facilities, services, features, or system configurations.\" Similarly, officials may not prohibit \"the adoption of any equipment, facility, service, or feature\" by these entities. Telecommunications carriers are not responsible for \"decrypting, or ensuring the government's ability to decrypt, any communication encrypted by a subscriber or customer, unless the encryption was provided by the carrier and the carrier possesses the information necessary to decrypt the communication.\"\nA decade after the passage of CALEA, federal law enforcement officials were again concerned that their ability to conduct electronic surveillance was constrained because of constantly emerging technologies. Not all telecommunications providers had implemented CALEA-compliant intercept capabilities. As such, the Department of Justice (DOJ), FBI, and Drug Enforcement Administration (DEA) filed a Joint Petition for Expedited Rulemaking asking the Federal Communications Commission to extend CALEA provisions to a wider breadth of telecommunications providers. Subsequently, the FCC administratively expanded CALEA's requirements to apply to both broadband and VoIP providers.\nNotably, CALEA is not viewed as applying to email or data while stored on smartphones and similar mobile devices. Reportedly, there has been \"intense debate\" about whether it should be expanded to cover this content. For instance, there have been reports over the past several years that the Administration has considered legislative proposals to amend CALEA to apply to a wider range of communications service providers such as social networking companies.", "Also in the 1990s, what some have dubbed the \"crypto wars\" pitted the government against data privacy advocates in a debate surrounding the use of data encryption. This tension was highlighted by the federal investigation of Philip Zimmermann, the creator of Pretty Good Privacy (PGP) encryption software, the most widely used email encryption platform. When PGP was released, it \"was a milestone in the development of public cryptography. For the first time, military-grade cryptography was available to the public, a level of security so high that even the ultra-secret code-breaking computers at the National Security Agency could not decipher the encrypted messages.\" When someone released a copy of PGP on the Internet, it proliferated, sparking a federal investigation into whether Zimmerman was illegally exporting cryptographic software (then considered a form of \"munitions\" under the U.S. export regulations) without a specific munitions export license. Ultimately the case was resolved without an indictment. Courts have since been presented with the question of how far the First Amendment right to free speech protects written software code—which includes encryption code.", "As cell phone—and now smartphone—technology has evolved, so too has law enforcement use of the data generated by and stored on these devices. As cell phones have advanced from being purely cellular telecommunications devices into mobile computers that happen to have cell phone capabilities, the scope of data produced by and saved on these devices has morphed. In addition to voice communications, this list can include\ncall detail records, including cell phone records that indicate which cell tower was used in making or receiving a call; Global Positioning System (GPS) location points, stored both on the device and in some of its applications, indicating the location of a particular device; data—such as email, photos, videos, and messages—stored directly on a mobile device; data backed up to the \"cloud\" and stored off a mobile device.\nCell phones \"are potentially rich sources of evidence\" for law enforcement. Where these data are stored varies based on factors such as default smartphone settings, users' personalized settings, and telecommunications providers' policies.\nWhen law enforcement accesses, or attempts to access, this information, it is often gathered through authorized wiretaps or search warrants. Its not always clear, however, exactly how often law enforcement gathers or relies upon these data in their investigations. Data exist on the number of wiretap requests and intercept orders that are issued in investigations of felonies as well as on how often law enforcement encounters encryption in carrying out these orders. These data provide a snapshot of law enforcement use of wiretaps and possible encryption barriers.\nIn 2014, judges authorized 3,554 wiretaps, of which about 36% (1,279 orders) were under federal jurisdiction. Notably, 96% (3,409) of total authorized intercept orders were for portable devices. From the 1,279 federally authorized intercept orders, they produced an average of 5,724 intercepts, including an average of 886 \"incriminating intercepts.\"\nIn 2001, the Administrative Office of the U.S. Courts began collecting data on whether law enforcement encountered encryption in the course of carrying out wiretaps as well as whether officials were able to overcome the encryption and decipher the \"plain text\" of the encrypted information. Law enforcement has reported encountering encryption in at least one instance each year, with the exception of 2006 and 2007. The first known, reported instance of an authorized wiretap being stymied by encryption came in 2011. In 2014, there were 4 such instances—lower than the 10 known instances from 2013 in which encryption foiled officials. From the 3,554 total authorized wiretaps in 2014—of which 25 contained encrypted communications—officials could not decipher the plain text in 4 instances (or 0.11% of authorized wiretaps). Notably, these numbers relate to lawful wiretaps of certain suspected or actual criminal offenses, as authorized by Title III of the Omnibus Crime Control and Safe Streets Act of 1968. The data do not include wiretaps as authorized by the Foreign Intelligence Surveillance Act of 1978 (FISA)—the law which authorizes surveillance primarily of foreign intelligence and international terrorism threats. See Figure 1 for an illustration of the 2014 data.\nAs noted, law enforcement has reported encountering encryption nearly every year since 2001, though law enforcement has only encountered encryption it could not circumvent since 2011. The number of instances in which this has occurred, however, has fluctuated and has been relatively low, such that analysts cannot make claims as to whether or not this number is on a specific trajectory. The presence of reported surveillance attempts wherein encryption could not be circumvented by law enforcement may have contributed to claims that advances in encryption have outpaced law enforcement's (and others') ability to crack it.", "In September 2014, Apple released a major update to its mobile operating system, iOS 8. In the accompanying privacy policy, Apple noted that personal data stored on devices running iOS 8 are protected by the user's passcode. Moreover, the company stated, \" Apple cannot bypass your passcode and therefore cannot access this data. So it 's not technically feasible for us to respond to government warrants for the extraction of this data from devices in their possession running iOS 8. \" The company has also stated with respect to certain communications—namely, iMessage and FaceTime—that \"Apple has no way to decrypt iMessage and FaceTime data when it's in transit between devices ... Apple doesn't scan your communications, and we wouldn't be able to comply with a wiretap order even if we wanted to.\"\nSimilarly, Google 's Android 5.0 mobile operating system, which launched in November 2014, includes default privacy protections such as automatic encryption of data that is protected by a passcode. When devices running Android 5.0 are locked, data on them are only accessible by entering a valid password, to which Google does not have a key. Thus, like Apple, Google is not able to unlock encrypted devices.\nEnhanced data encryption, in part a response to privacy concerns following Edward Snowden's revelations of mass government surveillance, has opened the discussion on how this encryption could impact law enforcement investigations. Law enforcement officials have likened the new encryption to \"a house that can't be searched, or a car trunk that could never be opened.\" There have been concerns that malicious actors, from savvy criminals to terrorists to nation states, may rely on this very encryption to help conceal their illicit activities. There is also concern that law enforcement may not be able to bypass the encryption, their investigations may be stymied, and criminals will operate above the law. Critics of these concerns contend that law enforcement maintains adequate tools and capabilities needed for their investigations.", "Developments in encryption—and companies' implementation of enhanced data protections—have reinvigorated the debate regarding the balance between privacy needs and information access. Most recently, the conversation has largely been in the context of smartphones and mobile devices. These devices present a unique discussion point because they bridge the realms of communications and stored data.", "CALEA requires that telecommunications carriers (including broadband Internet access and VoIP providers) assist law enforcement in executing authorized electronic surveillance of real-time communications. However, some developments in the communications landscape have allowed some communications to be exempt from being wiretap-ready, as is otherwise mandated by CALEA.\nFirst, some companies, for instance Apple, have implemented text messaging systems—Apple's is the iMessage—that are not readable by telecommunications (or broadband or VoIP) providers. Therefore, these communications fall outside of CALEA mandates. Also, Apple has implemented end-to-end encryption of messages sent through the iMessage system between Apple devices and does not maintain a key to decrypt these messages. CALEA exempts from its requirements encrypted communications for which telecommunications carriers (as well as manufacturers and service providers such as Apple) do not have a key.\nAs evolving technology changes how communication takes place, not all communications may be readily accessible to law enforcement, regardless of whether law enforcement presents a warrant for a wiretap. If technology companies do not retain the ability to decrypt certain communications, they, in turn, may be unable to help law enforcement conduct court-authorized electronic surveillance of these communications.", "In addition to encryption's effect on access to communications data generated and received by smartphones, encryption also directly affects access to data stored on these mobile devices (as well as data stored elsewhere that may be retrieved via the mobile device). If companies like Apple and Google provide for encryption of data on locked mobile devices—and do not maintain the keys to unlock these devices—the companies may be unable to assist law enforcement in carrying out court-authorized searches of content stored on the device—even if the police possess a warrant. As these companies have noted, because they cannot break the encryption of a locked device, they also cannot provide decrypted information to authorities.\nSome have questioned how challenges for police in cracking encryption to obtain information on smartphones compare to those in obtaining information stored in other types of containers such as home safes and safe deposit boxes.", "Technology companies like Apple and Google are not required under federal law to maintain a key to unlock the encryption of their devices sold to consumers. If they did maintain a key, however, they may be required to provide this key to unlock devices for law enforcement presenting a valid search warrant.\nSimilarly, safe manufacturers are not required under federal law to maintain the combination or key to safes sold to consumers. However, if manufacturers voluntarily maintained such a master key, they, too, may be required to provide assistance to law enforcement to access the safe. In addition, if law enforcement presents a warrant to search an individual's safe deposit box, a bank may assist law enforcement by providing a master key for the box.", "Since some companies may not retain a key to open a locked mobile device, one option for law enforcement in attempting to obtain information on a device for which they have a valid search warrant may be to use a cryptanalytic attack. One such form of cryptanalytic attack has been referred to as \"brute force.\" Using this method, law enforcement would likely use software to try every possible combination of keys in an attempt to unlock the device. The success of this method may depend, among other things, on the amount of time available to try and unlock a device and on the number of keys used in the passcode. FBI Director Comey has cited barriers to law enforcement relying upon brute force tactics to break encryption. One challenge he has noted is increasingly advanced encryption techniques that even \"supercomputers\" may not be able to crack. In addition, \"some devices have a setting whereby the [data] is erased if someone makes too many attempts to break the password, meaning no one can access that data.\"\nJust as police may use brute force to try and break encryption when executing a search warrant, they are authorized to break other locks—such as those to physical buildings—in order to carry out a lawful search with a warrant. The Supreme Court has noted that \"[i]t is well established that law officers constitutionally may break and enter to execute a search warrant where such entry is the only means by which the warrant effectively may be executed.\"", "As modern technology has developed, there has arguably been an evolving gap between law enforcement's investigative authorities and capabilities to carry out authorized activities. This is not a new phenomenon; rather, as experts have noted, \" [l]aw enforcement has been complaining about 'going dark' for decades now. \" The FBI, for instance, established a Going Dark i nitiative in an attempt to maintain law enforcement's ability to conduct electronic surveillance in a rapidly changing technology environment.\nOriginally, the \"going dark\" debate centered on law enforcement's ability to intercept real-time communications. As communications technologies evolved, so did questions about whether or how law enforcement could work within existing electronic surveillance laws to carry out court-authorized surveillance on real-time communications. Experts, officials, and stakeholders debated whether certain laws such as CALEA should be expanded to require additional entities—such as all VoIP and Internet service providers—to assist law enforcement in accessing this real-time information. The most recent encryption enhancements by companies like Apple and Google \"highlight the continuing challenge for law enforcement in responding to new technologies. Other innovations, such as texting, instant messaging and videogame chats, created hurdles to monitoring communication,\" though some contend that law enforcement has found means to overcome many of these technological challenges. Others, however, are concerned about law enforcement's ability to keep pace with advancing technology, particularly \"the expansion of online communication services that—unlike traditional and cellular telephone communications—lack intercept capabilities because they are not required by law to build them in.\"\nConcerns over \"going dark\" have become two–pronged. More recent technology changes have potentially impacted law enforcement capabilities to access not only communications, but stored data. As a result, current law enforcement concerns around \"going dark\" now involve how, in practice, encryption of stored data as currently implemented by technology companies may affect law enforcement investigations. Analysts have not yet seen data on whether or how encryption has affected law enforcement access to stored data or influenced the outcome of cases. In the past, Congress has requested that similar information be collected and reported. P.L. 106-197 required the Administrative Office of the U.S. Courts to report on whether law enforcement encountered encryption in the course of carrying out wiretaps, as well as whether officials were prevented from deciphering the \"plain text\" of the encrypted information. While current data collection and reporting requirements on encryption relate to real-time communications , policymakers may debate the potential utility of asking law enforcement to report on encryption relating to stored data as well.\nWhile some contend that law enforcement is \"going dark,\" others have argued that law enforcement and intelligence agencies are in a \"golden age of surveillance,\" with more robust surveillance capabilities. They contend that police access to location data, information about individuals' contacts, and a host of websites that collectively create \"digital dossiers\" on a person all enhance law enforcement surveillance. Those who see the current technology environment as a golden age of surveillance may believe that, while technology advances (such as encryption) may slow or stymie law enforcement access to certain information, these advances can also create alternate opportunities for information access that law enforcement can learn to harness.\nOne particular case has recently highlighted this debate. Following the December 2, 2015, terrorist attack in San Bernardino, CA, investigators recovered a cell phone belonging to one of the suspected shooters. FBI Director Comey testified before Congress two months later and indicated that the bureau was still unable to unlock the device. On February 16, 2016, the U.S. District Court for the Central District of California ordered Apple to provide \"reasonable technical assistance to assist law enforcement agents in obtaining access to the data\" on the cell phone. The outcome of this case may have implications for how law enforcement and policymakers respond to the broader conversation on enhanced encryption.", "If there is evidence that investigations are hampered or that lives are at risk because of law enforcement's inability to access critical encrypted information, will there need to be some sort of compromise between law enforcement and the technology industry? What might be the congressional role? Policymakers may weigh whether aiding federal law enforcement will involve incentives or requirements for communications and technology companies to provide specified information to law enforcement, enhanced investigative tools, bolstered financial and manpower resources to help law enforcement better leverage existing authorities, or combinations of these and other options.", "In debating law enforcement's need to access certain real-time communications and stored data, Congress could move to update CALEA and related laws to cover a broader range of communications and data. Currently, requirements under CALEA apply to telecommunications carriers as well as facilities-based broadband Internet access and interconnected Voice over Internet Protocol (VoIP) providers. Proposals have reportedly been floated that would extend CALEA requirements to apply to a wider range of technology services and products such as instant messaging, video game chats, and real-time video communications like Skype. Proponents of expanding CALEA mandates may believe that it would enhance law enforcement's abilities to carry out existing authorities to intercept real-time communications. Opponents to CALEA expansion proposals, however, may contend that mandating other communications services and technology manufacturers to build in intercept capabilities could be costly, both financially and in terms of security. Financially, companies may need to dedicate resources to reengineer their products; they may need to add or allocate personnel to liaise with law enforcement to facilitate wiretap requests. On the security front, companies would necessarily need to build in a \"back door\" to allow for authorized access, and any means of access necessarily opens the doors to exploitation.\nIf policymakers are interested in requiring technology companies to assist law enforcement carry out authorized surveillance and searches, legislators may consider options other than amending CALEA. One such option may be to directly mandate that technology companies build in \"back door\" access for law enforcement into specified communications products sold in the United States. One unintended consequence of this could be that U.S. consumers, in search of privacy, might buy more products from overseas, and consumers outside the United States might decline to buy certain U.S. products that conform with these requirements.", "While placing requirements on technology companies may be one route to assisting law enforcement, policymakers may also debate options that could enhance the tools available to law enforcement. These could include making it a crime for an individual (when presented with a court authorized warrant) to fail to turn over his passcode or other information that would allow law enforcement to decrypt a given device. However, those in support of encryption note that a search warrant is \"an instrument of permission, not compulsion.\" In other words, individuals need not proactively reveal or open hiding places for investigators presenting a search warrant. Additionally, judges may in some cases be able to hold individuals in contempt for failure to turn over information that would help law enforcement unlock certain electronic devices.\nAlthough technology companies like Apple and Google may not have the ability to unlock and thus reveal some information stored on locked, encrypted smartphones, they generally retain the ability to turn over information on unencrypted communications and data stored off the devices in locations such as the \"cloud.\" As such, some supporting encryption may contend that regardless of what data in motion may be encrypted or what data is encrypted on locked devices, law enforcement still has effective tools to retrieve digital data. Encryption proponents may also suggest that stronger digital security could benefit law enforcement by helping prevent malicious activity, including hacks and data breaches.", "Combating malicious actors (including cybercriminals and those who exploit technology to conceal their crimes) is an issue that cuts across the investigative, intelligence, prosecutorial, and technological components of law enforcement. Because clear data on how technological advances such as enhanced encryption of communications and stored data on mobile devices may impact law enforcement capabilities to combat these bad actors do not exist, policymakers may be hesitant to take any significant legislative actions to \"fix\" a problem of an unknown magnitude. Even if policymakers believe there is a significant problem with law enforcement's ability to carry out authorized activities, they may debate whether expanding requirements for certain technology companies and communications services or adding to law enforcement's toolbox of authorities may be the more appropriate options. Some have argued that another option may be to enhance law enforcement's financial resources and manpower. This could involve enhancing training for existing officers or hiring individuals with bolstered technology expertise." ], "depth": [ 0, 1, 2, 2, 1, 1, 2, 3, 3, 4, 4, 1, 2, 3, 3, 3 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_full h2_full h1_full", "h1_full", "", "", "h4_full", "h4_title", "", "h4_title", "", "h4_full", "h0_title h2_full h4_title h3_title", "h3_full h4_full h0_title", "h3_full h4_full", "", "h0_full h3_full" ] }

{ "question": [ "Why must law enforcement work to keep pace as time goes on?", "How have interconnectivity and technology created challenges for law enforcement?", "How have technological advances directly impacted law enforcement's effectiveness?", "How has technology affected law enforcement over time?", "How did technology pose challenges to law enforcement in the 1990s?", "How did Congress combat these challenges?", "Why is law enforcement concerned about technological changes?", "What are the origins of the going dark debate?", "How has the debate changed over time?", "How might policymakers respond to hampered investigations?", "How can Congress address the issue of smartphone data?", "How could Congress address the issue of encryption?", "How might increased funding for law enforcement be beneficial?", "How could law enforcement gain access to smartphones?", "Why might this strategy have drawbacks?", "What is the alternative option to this strategy?" ], "summary": [ "Because modern-day criminals are constantly developing new tools and techniques to facilitate their illicit activities, law enforcement is challenged with leveraging its tools and authorities to keep pace.", "For instance, interconnectivity and technological innovation have not only fostered international business and communication, they have also helped criminals carry out their operations.", "At times, these same technological advances have presented unique hurdles for law enforcement and officials charged with combating malicious actors.", "Technology as a barrier for law enforcement is by no means a new issue in U.S. policing. In the 1990s, for instance, there were concerns about digital and wireless communications potentially hampering law enforcement in carrying out court-authorized surveillance.", "In the 1990s, for instance, there were concerns about digital and wireless communications potentially hampering law enforcement in carrying out court-authorized surveillance.", "To help combat these challenges, Congress passed the Communications Assistance for Law Enforcement Act (CALEA; P.L. 103-414), which, among other things, required telecommunications carriers to assist law enforcement in executing authorized electronic surveillance.", "Law enforcement has concerns over certain technological changes, and there are fears that officials may be unable to keep pace with technological advances and conduct electronic surveillance if they cannot access certain information.", "Originally, the going dark debate centered on law enforcement's ability to intercept real-time communications.", "More recent technology changes have potentially impacted law enforcement capabilities to access not only communications, but stored data as well.", "If evidence arises that investigations are hampered, policymakers may question what, if any, actions they should take.", "One option is that Congress could update electronic surveillance laws to cover data stored on smartphones.", "Congress could also prohibit the encryption of data unless law enforcement could still access the encrypted data.", "They may also consider enhancing law enforcement's financial resources and manpower, which could involve enhancing training for existing officers or hiring more personnel with strong technology expertise.", "Some of these options may involve the application of a \"back door\" or \"golden key\" that can allow for access to smartphones.", "However, as has been noted, \"when you build a back door ... for the good guys, you can be assured that the bad guys will figure out how to use it as well.\" This is often maintained to be an inevitable tradeoff.", "Policymakers may debate which—if either—may be more advantageous for the nation on the whole: increased security coupled with potentially fewer data breaches and possibly greater impediments to law enforcement investigations, or increased access to data paired with potentially greater vulnerability to malicious actors." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 0, -1, 0, 1, -1, 0, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 3, 3, 3, 5, 5, 5, 5, 6, 6, 6 ] }